Chugg CEO: In Essence We Re-IPOed The Company

With NASDAQ approaching 5,000, the main topic of discussion in the Street currently is whether the valuation at which tech companies are trading at is justified.

Dan Rosensweig, CEO of Chegg Inc CHGG and former COO of Yahoo! Inc. YHOO was on CNBC Friday to opine on the same. He also discussed how Chegg is transforming itself from just a text book lender to a digital content and services company.

Picking Huge Verticals

"I think what we have seen is real separation of winners and losers," Rosensweig said. "So, there's the private market which I don't think you can overlay to the public markets, but scale matters. Everything in the internet that is public is scale."

He continued, "You are either the windshield or you are the bug and so there are companies that have breakaway velocity like the Fecebook, like Google, like the Amazon's and then you have companies like ours which are picking huge verticals and becoming the leading player in that vertical and then we want to see the same kind of ride over the next 10 to 15 years."

"And so, you have to be in big category, you have to be a platform, you have to have a form of monetization and you have to be pure digital because that's where all the profits come from."

Transformation Of Chegg

"In essence we re-IPOed the company and what we have been working towards for a long time is how do you get out of the business that you don't want to be in because that business eventually was going to go away, we all know print is going to go eventually," Rosensweig said.

"What we have been able to do is do a deal with unbelievable distributor Ingram… and they are going to buy the books, own the books, we are going to market and distribute it. So, we keep all the customers, we get all the data, we get all the transactions and we move from a 10 percent gross margin business to a 55 percent gross margin business."