Are modern colleges more interested in their bottom lines than the needs of students? Dan Rosensweig, the CEO of Chegg, says more and more parents are looking at alternative ways for their children to become successful in business and as citizens. If colleges, many of which are on shaky financial footing, don’t adapt – the whole system is ripe for disruption.
Dan Rosensweig: There’s a really interesting question which is: what are the ramifications of the college education system—potentially, and we believe—in a bubble that’s likely to burst (and is already bursting), and with parents and employers looking to find alternative ways to get their kids or their students the skills they need to be able to be successful citizens and successful in business?
So what was interesting about the education system is everything in the education system was designed to support the existing system, like most businesses—designed to serve the publisher, the professor, the administrator, all the people that worked at the school.
But you looked at the student and you said they’re forced to live in a dorm they don’t want to live in, pay a price they don’t want to pay. They’re forced to use a cafeteria the first year or so because it’s in the best interest of the school, not the student. They have to pay a fortune for books that they don’t want to buy and subjects they don’t want to take. You just think of all the things. You go to an ATM on a college campuses, the kid takes out $10 and they pay $3.50 as a fee. And so we realized very quickly that the biggest problem with the education system was that it served everybody in it but its core constituent, which was the student. And so one day I wrote on the bottom of my email to the staff – I just put it in as a tagline – “We put students first.”
And that became the way in which every decision we get made gets filtered through it. What we do, why we do it, when we’re going to do it. What we can charge for it. The order in which we offer it. How many different modalities or languages or devices can it be on? All of those things are if you put the student first what would the student want?
Now some people say, “Well if you do that, Dan, they’d all want it for free.” The truth is they wouldn’t if they didn’t think they could get it for quality for free.
So, for example, there are free alternatives to Chegg Study but they all prefer to pay for Chegg Study, because what we give is not free—We give overwhelming value for the money. And so by putting the student first the choices that we make become limited. The definition of success becomes clearer. How does this help the student and can we benefit by doing that? The order in which you do it, how much you’re willing to invest and the return on that investment become much clearer by putting the customer first.
And look, we live in a world now where everybody in the middle is being cut out if possible. So we’re living in a much clearer world of direct consumer if you will. So think about it. If you can’t satisfy your customer you don’t have a business. If your customer is forced to use you it’s easier to disrupt you.
But if your customer looks at you and says they know who I am, they understand my problems, they care about me, they give me overwhelming value then you build a giant moat versus your competitor.
So the best way I can put it to quote or paraphrase I should say Marc Andreessen, software is eating the world. So think about it this way. Colleges are a lot like movie theaters. You go to the movie theater and you have to wait in a line or if you get the ticket you get to go in, but you’re still going to sit next to somebody you don’t know to watch a movie you may or may not want to see. You’re going to pay a fortune for popcorn… or would you rather be sitting at home on your couch watching Netflix, what you want to watch, when you want to watch it, how you want to watch it with the people you want to watch it with, at a price you can afford? And college is the same way. Why do you want to go to a campus which takes an hour to get to, an hour to get home to take a single class? So that’s half a day when you need money, when you’re hungry.
So the consequence of this ultimately has to play out in a pretty dramatic way. There’s no sort of incremental fixes. There are things that colleges are doing that can sustain some of them for a while. They’re working with really good organizations like 2U or companies that allow them to build new lines of revenue by putting their graduate schools or specific classes online. But overall if you were to interview (and we have and we’ve read the surveys and you can find the surveys), 50 percent of college presidents and their CFOs feel that their college is on shaky financial footing.
Just start with that. So the more expensive it gets, the fewer kids that can go. And so to get kids to go you’ve got to create a discount rate. When you create a discount rate then you’re really not getting the revenue that you need to get into the school.
But then on the flip side of this, this is really since 80 percent of college kids will tell you the primary reason they go to college is to get a better job. Then we really have to involve the employer also.
So companies like Chegg we have the employment data. I can predict if you go to X school, take X classes, get X majors and you’re going to live in Y state, I can predict with pretty good certainty the eight companies you’re likely to work for and what you’re likely to get paid. And because we’ve read a hundred million resumes over ten years and followed that pattern to see.
From our perspective though we ought to be able to figure out what skills you want as a person, what skills benefit you depending on the career path you’re looking to go to.
So liberal arts is extraordinarily beneficial for a subset of people. Critical thinking, communication, all of those things. But modern day critical thinking, modern day decision making and modern day communication and rhetoric, those are all things like SEO, SEM, right. They’re no longer how to write a speech and stand up. They’re different forms of communication. So all that has to evolve.
But from my perspective once employers are willing to believe that somebody who’s learned these skills from this place is employable and can be successful in their environment those things will change. And so today there’s a lot of companies working on it. There’s micro degrees at Udacity. There’s Coursera. There are college universities that are doing exclusively online now. They’re just doing it under their brand name. There’s going to be a lot of different ways that people are going to attempt to do it. But at the end of the day many of the jobs are going to require some sort of technical background. It doesn’t mean you have to be an engineer. In fact the majority of employees at Chegg are non-engineers. They’re finance people and marketing people and business people and PR people—There’s lots of people in lots of different kinds of jobs even in tech companies.
But everything is utilizing technology which means you can actually test for proficiency. And so a lot of the things that we’re going to focus on is whatever level you’re at, how can we level you up? Because if you want to get better somebody ought to be able to help you get better and that will help you both in school and in your career.