Chegg Cuts $15 Million Check to Buy AI-Feedback Tool, WriteLab
Reading, writing and AI—that turned out to be the winning combination for startup, WriteLab.
Chegg announced today that it bought the Berkeley-based startup for about $15 million in an all-cash transaction. (There’s an additional payment of $5 million to key employees over the next three years, assuming they stay.)
WriteLab was founded in 2013 by Matthew Ramirez, then a PhD candidate at the University of California, Berkeley and Donald McQuade, a long-time English professor at the same school.
They started the company to solve a challenge that they both knew well: how to provide fast and actionable feedback to writing students. As a teaching assistant, Ramirez wound up grading more than 100 papers a semester and realized that students weren’t getting adequate feedback. He’s said that he frequently felt that he was leaving the same notes, paper after paper.
Ramirez also had studied computational linguistics. In December 2013, he began to work with McQuade to write algorithms that would capture some of the feedback he so regularly provided. The goal wasn’t to replace a teacher, Ramirez has observed, but to help students polish their writing before handing in their papers.
Together, Ramirez and McQuade created a research-based product that relies on machine learning algorithms to provide different categories of advice—grammatical comments including misspellings and incorrect words; questions around the logical structure of a piece of writing; around clarity and also concise writing.
Educators have appreciated their work. Both K-12 and higher-ed institutions have begun to use WriteLab’s tools, including the likes of Stanford University, UC Riverside and the charter network, Carpe Diem. The company has also begun partnering with other companies such as Pearson and Microsoft.
Even so, Ramirez described the edtech environment as “extremely challenging.” Incumbants have an advantage, he pointed out. That’s due in part because students want solutions that help them solve more than one challenge. “Students need to have solutions that touch on many things and serve the many needs they have,” Ramirez observed. “Typically this requires a lot of engineering components. That can be hard for a small team to accomplish especially when you’re dealing with AI.”
What made the offer from Chegg appealing, Ramirez said, “is the opportunity not just to be an isolated component of students’ work, but to simplify the student experience and provide them with more of what they need to succeed in college.”
His advice to other edtech entrepreneurs? Stay close to the problem they are trying to solve. “The best way to demonstrate a lot of value is to stay close to the problem. That’s challenging because when you’re a small company, you’re often a lot of engeineers in a room and you’re not in the classroom.” Ramireze said. “But even though it’s not the most natural path – it’s the most important.”
The acquisition by Chegg is the kind of outcome that entrepreneurs and investors have long hoped to see in the edtech world. WriteLab had previously raised about $3.2 million in funding from investors including Reach Capital, Kapor Capital, Learn Capital and Sinovation Ventures.
It’s also a win for Chegg, which has acquired about a dozen companies since about 2010 and is eager to grow the array of tools it offers to schools. “As we see the education space being a trillion-dollar market, we continue to prioritize expanding our [total addressable market]; so we are making smart investments and adding new subjects, new content, new formats and new services,” Dan Rosensweig, CEO of Chegg, said during an earnings call on April 26. Writing tools are particularly interesting to the company. On that call, Rosensweig noted: “Seventy-five percent of 12th graders lack proficiency in writing, and we believe subjects, like writing, can be taught at scale, using machine learning and A.I., to meet a student at their current level and improve their competency.”
Prior to buying WriteLab, in October 2017 Chegg paid €12.5 million (approximately US $15 million) in cash for Cogeon GmbH, a Berlin-based developer behind the math app, Math 42, used by more than 1.8 million middle- and high-school students around the world. That startup was the brainchild of the Nitsche family—brothers Maxim and Raphael, their father Thomas, and his wife, Oxana. In 2016, Chegg paid $42 million for Imagine Easy, which included citation tools and other writing tools, as well as about $1.8 million for London-based writing tool, RefME.
For Ramirez and McQuade, seeing Chegg embrace their work and make it available to a wide audience is a step toward a long-held dream.
“Our biggest gamble,” Ramirez told Forbes in 2016 when he was named to be on the Forbes 30 Under 30 list (at age 26), “is betting that everyone can use this, regardless of their demographic or competency level.”
Editor’s note: Reach and Learn Capital are investors in EdSurge.
This story has been updated with information from WriteLab and Chegg.
Author: Betsy Corcoran
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