Chegg shows what happens when AI comes to take your business

Chegg (CHGG) became the clearest example yet of what AI disruption looks like.

In 2022, it was a $14 billion company built on a simple idea. Help students solve their homework and charge $19.95 a month for it.

Then ChatGPT showed up.

Five months later, Chegg admitted it was already losing customers. The stock dropped 48% in a single day.

Things didn’t stabilize. They got worse.

Revenue got cut in half. Traffic started disappearing too as Google AI Overviews began answering students’ questions directly in search results.

Its stock evaporated, losing +99% of its value.

Education needs to be disrupted.

Today`s schooling is basically the same as it was 30 years ago… which isn’t all that different from what it was in the previous century.

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.

For the first time, AI can give every student their own expert super-teacher.

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.

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.

Khanmigo is also a revolutionary tool for teachers…

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.