When disruption comes for a business, it doesn’t knock—it kicks down the door.
That’s exactly what happened to Chegg (CHGG).
Chegg is a subscription-based online tutoring and textbook rental company. It helps students with homework, test prep, and study guides.
From 2016 to 2022, the company grew subscribers from 1.5 million to 8.2 million. But then ChatGPT showed up and made its business obsolete virtually overnight.
Suddenly, everyone had access to their own interactive artificial intelligence (AI) that could function like a private tutor… for free.
I warned readers this would make Chegg a ticking time bomb back in 2023.
CHGG has plummeted 88% (!) since that article:
And its problems continue...
The company’s recent earnings release was ugly. Total subscribers cratered 40%. Revenue tumbled 36%. And Chegg posted a $35.7 million net loss last quarter.
Continue to avoid. It’s been taken to the AI slaughterhouse.
Today, I’ll revisit why AI is a superior tool for students and teachers… and what we can expect as AI continues to disrupt education.
My daughter’s schooling is basically the same as mine was… which isn’t all that different from what my mother’s was.
What other industry has stood still for 50 years? Airlines maybe.
We’re still packing 30 kids into a stuffy classroom and lecturing them for an hour. Boring. Worse, it’s been proven that one-on-one tutoring is the holy grail of learning.
In 1984, MIT professor Benjamin Bloom showed that students receiving personalized tutoring achieve much better grades.
With just a few weeks of individual lessons, a group of average students outperformed 98% of others in the class.
The results have been recreated many times since. No one doubts that kids do far better with one-on-one guidance that fits their needs, as opposed to one-size-fits-all teaching.
But before AI, it was impossible to tailor lessons to each individual kid in a classroom.
That’s now changing…
And two AI-powered teaching assistants are paving the way.
Synthesis is an interactive math tutor, born out of the experimental school Elon Musk created for his kids at SpaceX. It’s open to everyone, everywhere.
Instead of drilling kids with facts or multiple-choice questions, Synthesis throws them into fast-paced simulations with no easy answers.
Students might redesign a failing Mars colony, negotiate a trade deal, or debate how to allocate scarce resources. They have to strategize and explain their logic on the fly.
In other words, Synthesis is designed to teach students how to think. It runs on AI models trained to mimic world-class teachers and push students to concentrate on hard problems.
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Khanmigo is Khan Academy’s AI-powered tutor, built in partnership with OpenAI. For students, Khanmigo is an infinitely patient guide who asks probing questions to help them arrive at an answer independently.
Take a student who struggles figuring out a math problem that the rest of the class has grasped. Instead of being left behind, he’ll ask Khanmigo for help.
Khanmigo can patiently guide him to the correct answer in the same way a teacher would, but can’t, because the teacher has dozens of other kids to worry about.
It’s free for US teachers, courtesy of Microsoft (MSFT).
Without it, teachers spend 40%–60% of their time on admin and prep.
Khanmigo acts as a tireless assistant, capable of drafting lesson plans in minutes and providing personalized feedback on students’ work.
This frees up educators to answer questions and mentor their students. Maybe that will help reignite the spark of curiosity in the children it tutors.
If you explore these tools, keep in mind the golden rule of disruption: This is the worst they’ll ever be.
Right now, they’re a little like dial-up internet in the '90s. Aspects will be frustrating. That’s okay. Through experimentation and innovation, they’ll get better fast.
AI is going to steamroll education and build it back better. What a time to be a parent.
...and why access to a better education is one of the main reasons my family and I moved to Abu Dhabi. If you’d like to read it, you can check out that article here.
And if you’re interested in learning more about big, world-changing technologies changing humanity for the better, be sure to sign up for The Rational Optimist Society.
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I’d love for you to join us.
Stephen McBride
Chief Analyst, RiskHedge