Renting books, saving money

>>> what is the actual problem you're trying to solve? and once you understand it, what's the most efficient and adaptable way to actually solve it? those are two questions that our next guest has helped create the bustling business around us. hosting us here at chegg, a web property that's really much more than that. it's a go-to student center not only on the internet, but a distributor of text and learning throughout this country in a way that's vastly more efficient than you and i may remember from our college days. the problem they had was how to save students time and money and help them learn too? the answer was a business that allowed students to rent or buy used textbooks at a fraction of the price. and that was simply the beginning for them. joining us is chegg's ceo who also worked at yahoo. for the guitar hero fans, he ran that division as well. thank you for hosting us.

>> welcome, dylan. we want to welcome you to silicon valley . we understand you're a huge 49ers fan. welcome. it's going to be a great witheekend here.

>> are they going to kill the giants?

>> i'm happy to say they win either way , after being born in new york.

>> what's a chegg?

>> the concept of chegg is chicken or egg? which is in order to afford college, you need to make money. in order to make money, which means you need to get a job by going to college. so how can we help students save time and money? the first was to lower the cost of textbooks. in public schools today, 20% of kids go to private schools . the rest go to tax-payer funded schools. everything is being cut. facilities, teachers, money. the cost of a textbook was as much as 25% of the cost of taking the class. so we have created a business.

>> what does it cost now?

>> the average new textbook is about $100. we'd rent it for $40. so we take the risk. we had to raise a lot of capital. we buy the textbooks. we trust the students to treat them well and they do. we're grateful for it.

>> beyond that, that's a classic example of what we talked about. you want to actually have the resource when you need the resource, but not have to have the resource forever. but you have gone well beyond renting textbooks. give us a sense of how that's been a gateway.

>> we're trying to build the largest network of students. it's become obvious to us that students are taking matters into their own hands. they can't wait for the government or their administration. they are using technology and using it faster and more often and learning for themselves. and so we're creating a large connecting network of students where they can help them get into college by building their profile. when they get in, we help schedule courses through a company we acquired here at stanford. we have 400,000 students using that. you can ask questions like what's the cheapest way to get through my major? after that, we get them their require required textbooks and other learning material. for example, you have the con academy here. we hope to bring that content. then as the season goes on, we get them homework help and class notes. we're going to add services students will benefit from. . several services were started by students where they make money helping students learn.

>> we were talking about salcan would not be possible. what is the lesson for all of us in resource allocation and in relationship what values would you say are determining the way you make decisions?

>> technology should make things less expensive and allow you to get directly to the consumer. the data available should bring only relevant things to customers. . you can be national or global at any time. so resource allocation is about building a brand take and taking costs out and having to deliver on behalf of the customer. historically, you didn't have to deliver to the customer. you had no direct relationship . those days are gone. if you don't treat the customer well, you're not going to be in business.

>> at the same time, this is the thing we're seeing all over the place. it's disruptive to powerful institutions. many of whom served you and me and the rest of this country very well over the past 100 years. how do we reconcile our desire to seize on this new way, and at the same time, have the necessary ruthlessness and compassion to resolve the transition?

>> it's a difficult question. and i think we have to focus on what we're trying to do. as a country, there's 300 million americans. there's seven billion people in the world. we can no longer compete as a country. we can't compete in this country. we have to learn and educate the workforce. we have to create a curriculum that's about the jobs of the future. and certain companies will no longer be able to succeed. but certain companies will be able to transition. you see that now. every industry, some companies go away. new companies come up. if we create better access to thing, less friction, less regulation, we have a chance to grow and compete.

>> i could not agree with that more. i thank you for being a teacher for us and a leader for us to not only talk about it, but to show it. action speaks louder than words. you're a man of action, dan. thank you very much.

>> thank you for joining us here.

>> here's for the giants and 49ers. you win either way . after this, ripped from the pages of "greedy bastards," even schools aren't safe from these money-sucking vampires. we're following the money trail after this. cranberry