1Mby1M Virtual Accelerator Investor Forum: With Seong Kim, Corporate Strategy & Development at Chegg Inc. (Part 3)

Sramana Mitra: Is the driver in that acquisition strategy upselling from your current user base and giving them more products to get into?

Seong Kim: Yes, it serves the two purposes that I alluded to before. It expands the suite of products and services and support we can offer to our existing base. It also extends our addressable market and audience. You look at the other three-quarters or so of language learners out there in the world that engage with this platform or other platform, they are looking at learning for work.

Approximately, a quarter of the people who are learning languages say they’re doing it because they need to be able to do their job. Now you start seeing this extension beyond the educational context. Then you always have people who are simply learning it, because it’s leisurely or fun.

Sramana Mitra: What is the size of your install base?

Seong Kim: I would say we have several million paying subscribers.

Sramana Mitra: Talk about the acquisition you made in language learning. What percentage of that subscriber base, whether it’s free or paid, are you looking to convert?

Seong Kim: We’re assessing that opportunity. What I can say is, there is a meaningful opportunity for us to bring this capability. It’s useful because we know that students and employees are looking to brush up on their language skills. We know that contextual impact of adding language learning tools and capabilities to our product suite enhances the stickiness of our product, increases retention, and drives reasons for engagement that span beyond academic support. We think that we’re creating the Chegg for all seasons, so to speak.

Sramana Mitra: The reason I’m trying to have this conversation along these lines is so that people listening can understand how an acquirer thinks about acquisition targets. Chegg is a B2C play in EdTech. There is an existing install base of users. One of the ways a company like Chegg expands its footprint is by bringing in another company that will help them monetize that install base.

In EdTech in particular, I’ve looked at several companies that have very large free user bases. EdTech, for some reason, has come from a lot of free users kind of dynamics. If you look at CourseHero, they have a huge install base of free users. These companies need to figure out how to deliver quarter after quarter of significant growth. That means some of that user base has to be monetized. That thinking is quite prevalent in the B2C businesses that have come from this freemium kind of dynamics. Is that a correct observation?

Seong Kim: Absolutely. To make the conscious decision to serve this audience and be a direct-to-consumer business at that and not going after the deep pockets, you have to have a perspective on how to deliver overwhelming value. To be able to do that at scale, you need to be part of a platform that can benefit from the network effects of adding a capability that can be disseminated across the platform internationally and globally.

Companies in the past have often prioritized the free aspect of freemium and worry about monetization later. Having an understanding or a plan of attack to convert free usage into value-added services that people are willing to pay for, that’s a tough question to answer.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Seong Kim, Corporate Strategy & Development at Chegg Inc.
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