Edtech beware! Even if you have adopted ChatGPT. Just ask Chegg

By the Feathercap team
10 minute read

Back on May 1st, Chegg’s stock price dropped from $17.60 to $9.08 on May 2, a decline of more than 48%. The news search results suggest that the main reason for the drop was the company’s announcement that ChatGPT, an artificial intelligence chatbot developed by OpenAI, was hurting its customer growth and creating uncertainty about its future prospects. Chegg provides online education services such as homework help and tutoring, which could be challenged by ChatGPT’s ability to generate natural language responses. Even though, Chegg previously announced they are developing their own ChatGPT AI product, CheggMate. 

As many of us are aware, ChatGPT is an artificial intelligence chatbot that can generate natural language responses to any text input. It was developed by OpenAI, a research organization dedicated to creating and promoting beneficial AI. ChatGPT has been widely used by students for various purposes, such as getting homework help, writing essays, and learning new skills. However, ChatGPT has also posed some challenges and threats to the ed tech sector, as some companies have reported a negative impact on their revenue and growth due to the technology.

Other ed tech companies that could be affected by ChatGPT are those that offer online courses, content creation, and language learning. For example, Coursera, Udemy, Duolingo, and Pearson are some of the companies that have seen their shares fall after Chegg’s warning. These companies could face increased competition from ChatGPT’s ability to generate high-quality text outputs in various topics and languages. ChatGPT could also challenge the quality and credibility of their content, as well as the value proposition of their certificates and degrees.

However, not all ed tech companies are pessimistic about ChatGPT’s impact. Some see it as an opportunity to leverage the technology for enhancing their own products and services. For example, Google launched its own AI chatbot, Bard, in March 2023, which could be integrated with its education offerings such as Google Classroom and Google Workspace for Education. Bard is designed to be more creative and diverse than ChatGPT, and could be used for generating stories, poems, lyrics, and other forms of text. Similarly, Pearson’s CEO Andy Bird said that he sees generative AI as a lucrative opportunity for combining AI capabilities with Pearson’s existing intellectual property. He said that Pearson owns some very rich and pure data sets that could be inputted into generative AI models to produce better outputs.

Our take:

Why we think Chegg’s stock price drop is something to watch:

ChatGPT essentially is a free replacement to much of their offerings. Even though Chegg is creating a ChatGPT powered tutoring application that really won’t be competitive with ChatGPT. ChatGPT after all has access to ALL available internet content including the subject matter Chegg offers. As for the CEO of Pearson’s comment that Pearson has “very rich and pure data sets” that could be inputted into their ChatGPT iteration, ChatGPT offers a free version which can answer most any question a Chegg customer may have. Combined with bing, users may wonder why should they pay for Chegg or Pearson? It’s hard to compete with free.

Why making the argument that Chegg, Coursera and even existing B2B learning companies like Degreed have “inherent” learner behavior, skill set data which makes adding ChatGPT a win-win won’t hold water.  

ChatGPT does not need to have learning history or personal details to provide an engaging conversation with users. ChatGPT can generate natural language responses based on any text input, regardless of the user’s identity or background. ChatGPT can also adapt to different topics, tones, and styles of conversation, depending on the user’s input and preferences. However, having some learning history or personal details could certainly enhance the quality and relevance of ChatGPT’s outputs. For example, if ChatGPT knows the user’s skill level, interests, goals, and preferences, it could provide more tailored and personalized learning content and feedback. ChatGPT could also use the user’s name, location, hobbies, and other personal details to create a more friendly and human-like conversation. ChatGPT could also remember the user’s previous interactions and use them to build rapport and continuity.

Therefore, ChatGPT could benefit from having some learning history or personal details, but it is not necessary for providing an engaging conversation with users. In fact, we’ve noticed it does very well on it’s own without such datasets. ChatGPT could also respect the user’s privacy and consent, and only use the information that the user is willing to share. 

Degreed is a B2B ed tech company that provides a platform for learning and skill development. Degreed helps individuals and organizations discover, measure, and recognize all kinds of learning. Degreed also partners with other companies that offer AI solutions for talent management, such as Eightfold.AI and Phenom.

Degreed like Chegg is embracing ChatGPT as an opportunity rather than a threat. Cheggs, Cheggmate ChatGPT offering looks like an impressive tutoring system along with their existing products. However, both companies like most of ed tech are addressing ChatGPT like its icing on the cake to their product offerings. Degreed is positioning it as an iterative addition to their existing AI tech stack adding to their existing product IP. However, as we develop our own answer platform, it’s clear to us that ChatGPT is a disruptive technology.  A disruptive technology sweeps away the systems or habits it replaces because it has attributes that are recognizably superior. And in the case of ChatGPT, much cheaper to use. In our view, it’s not going to be an add-on to their offerings but a shakeup. 

About Feathercap 

Feathercap is your team’s answer platform. We leverage ChatGPT and our own context tracking to automatically generate and tailor the right answers and responses to every employee, vendor, partner or customer query. Current customer support, customer success and enterprise search relies on hardcoded workflows and content links to answer questions. Our customers tell us we save them time, money and energy managing their flow of knowledge and actions by getting everyone answers that they need.  

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