Chegg: Disrupted Overnight
Chegg built a billion-dollar business selling students fast, correct answers, step-by-step solutions and homework help behind a monthly subscription, with the stock once above $110. Then ChatGPT launched in late 2022 and gave better answers instantly, for free. By 2025 revenue was down roughly a third year over year, the company had cut about 22 percent of staff, and the stock had fallen toward a dollar.
For founders and operators, this is the cleanest case study in substitution risk you'll find. It forces an uncomfortable audit: how much of what you sell is really just 'we'll find the answer for you,' the exact thing a model trained on the internet now does for nothing? The case sharpens how you locate the part of your product that can't be copied, before a free tool decides for you.
Frequently asked questions
What happened to Chegg after ChatGPT launched?
Chegg built a billion-dollar business selling students step-by-step homework answers behind a subscription, with the stock once above $110. After ChatGPT launched in late 2022 and gave better answers instantly for free, Chegg's business collapsed. By 2025 revenue was down roughly a third year over year and the stock had fallen toward a dollar.
How much did Chegg's revenue and staff fall by 2025?
By 2025 Chegg's revenue was down roughly a third year over year, and the company had cut about 22 percent of its staff. The stock, once above $110, had fallen toward a dollar. It is one of the sharpest examples of a company disrupted almost overnight by a free AI tool.
Why is Chegg considered the textbook case of AI substitution risk?
Because the core of what Chegg sold, finding correct answers for students, is exactly what a model trained on the internet now does instantly and for free. When your value proposition is substitutable by a free tool, the moat disappears fast. Chegg is the cleanest illustration of that danger.
What can founders learn from Chegg's disruption?
Audit how much of what you sell is really just we will find the answer for you, because that is the exact thing AI now does for nothing. The lesson is to locate the part of your product that cannot be copied before a free tool decides for you. CaseBook turns this into a move you apply to your own company, with an AI coach that reads your answer.