Pakistani-American Founder's Silicon Valley Company to Go Public

Book rental companies like Silicon Valley based Chegg, founded by Pakistani-American Osman Rashid and Indian-American Aayush Phumbhra, are helping American college students deal with rising textbook costs. Their business is inspired by Netflix movie rental business. Other major contenders in this space are Bookrenter,, eCampus, BookByte, Direct Textbooks, Student Book Trades and Textbook Recycling.

Osman Rashid
Osman Rashid is the son of  a Pakistani diplomat. He was born in London and raised in Islamabad. He came to the United States from Pakistan in 1990s to study electrical engineering at University of Minnesota and earned a BSEE there.

Rashid is a serial entrepreneur who has founded four companies so far. He left Chegg in 2010 to start his current gig as CEO at Kno which he also founded along with fellow Pakistani-American Babur Habib. Habib has a BSEE from University of Minnesota, MS from Stanford and Ph.D. from Princeton. He serves as CTO at Kno. The Silicon Valley based company offers electronic textbooks and associated software for K-12 and college courses. It is backed by Intel, Goldman Sachs and Netscape founder Mark Andreeson's VC firm Andreeson Horowitz.

In its filing for initial public offering, Chegg says it plans to raise nearly $200 million by offering its stock for sale at $9.50 to $11.50 a share. At the midpoint of the range, that would value Chegg at nearly a billion dollars.

The name Chegg combines chicken and egg. It rents textbooks for a semester at a time at about 50% off the retail price. It has 180,000 titles in its catalog. It also offers more than 100,000 electronic textbooks and has rolled out offerings like helping high school students find colleges and scholarships, according to New York Times.

Like its competitors, Chegg offers book return guarantees and shipping speed. Chegg is a selling point for your own books as well as textbook rentals at low prices. What differentiates Chegg is that it offers course reviews and grade distributions as well as homework help for selected courses. Along with first hand reviews of a course, you get a detailed schedule of the books you need for it. Chegg claims it now reaches about 30 percent of all college students in the United States and 40 percent of college-bound high school seniors.

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Riaz Haq said…
Osman Rashid's Kno acquired by Intel, reports Tech Crunch:

We had a tip about, have now confirmed, Intel’s latest acquisition: Kno, the education startup that started life as a hardware business and later pivoted into software — specifically via apps that let students read interactive versions of digitized textbooks. Intel was among Kno’s investors — the company had raised some $73.4 million in funding since being founded in 2009, with Intel leading the Series C round in April, 2011 (in the $37.5m round, Intel invested $20m).

“I can confirm Intel has purchased Kno,” a spokesperson told me just now. They are not disclosing deal terms but I’m hopefully going to speak to John Galvin, the GM of Intel Education, to get more details. (I’ll update as I learn more.)

Update: Intel has now published a more detailed statement on its site. “The acquisition of Kno boosts Intel’s global digital content library to more than 225,000 higher education and K-12 titles through existing partnerships with 75 educational publishers. Even more, the Kno platform provides administrators and teachers with the tools they need to easily assign, manage and monitor their digital learning content and assessments,” Galvin writes. “We’re looking forward to combining our expertise with Kno’s rich content so that together, we can help teachers create classroom environments and personalized learning experiences that lead to student success.”

We have still to find out who and what is coming over with the acquisition. Osman Rashid, the co-founder and CEO, was also a co-founder of Chegg.

Update 2: A bit more detail on how this is playing out. It turns out that just about everyone is joining Intel. The one major standout… CEO Rashid.

“He was definitely the figurehead behind it,” Galvin admitted to me in an interview, but ultimately the two did not see eye to eye about the direction of Kno under Intel. “That was something that Osman and I talked about early in the process,” he said. “But where I wanted to take Know and where Osman wanted to take it were two different things. His direction was to continue with a North American focus and I want to go international, and for us to go international, that’s about integrating with Intel’s sales teams, working on bringing this to new markets.”

It’s unclear where Rashid is going next. We are trying to find out.

Using Kno for an international education play is not an out-of-left field idea. The two companies had already been working together in markets like China on textbook digitising initiatives. “It became more attractive to me to have them be a part of the portfolio rather than just a partner,” said Galvin to me. He pointed out the company’s ingestion engine as a particularly interesting aspect of the business to help Intel work more closely with the publishing world.

There are also some aspects that play into Intel’s bigger investments into areas like AI and natural language processing. “It’s a very nice e-learning platform, and perhaps eventually also a natural language support platform, with an analytics engine. The capabilities are there. We can perhaps push them into areas they weren’t ready to go in on their own.” He said that while there is still some IP left from the company’s previous incarnation as a hardware play, for now the focus will be on more software development.

No comment from Galvin about the pricing on the acquisition.

The deal is the latest development in Intel’s wider efforts to build out its education business. Among other things, recently Intel has put out reference designs for Android-based educational tablets, and it has gotten involved in e-education initiatives....
Riaz Haq said…
Here's Yahoo Finance news on Pakistani start-up Convo getting $5 million from US VC Morgenthaler Ventures:

SAN FRANCISCO, Sept. 16, 2013 /PRNewswire/ -- Convo, a cloud-based collaboration service, today announced a $5 million Series-A investment from Morgenthaler Ventures. This financing is the company's first investment by an institutional venture capital firm. The funding will be used to evolve its offerings, introduce their service on more platforms, and accelerate user reach and growth.

Convo is a multi-platform service designed to allow teams to share and work together simply and naturally by combining discussions with messaging, images, docs, presentations and PDFs.

Since 2012, Convo has seen exceptionally high levels of engagement in their paying accounts, with an average monthly-active over daily-active ratio of 75%, which is noticeably higher than even the 30% of most social games.

Convo is available across all major platforms and has launched versions of its software for Windows, Mac, Web, iPhone, and Android.

"We built our company with slim resources and a small team, and therefore are excited about our prospects with Morgenthaler Ventures in our corner. They have helped companies at our stage and with our enterprise focus grow exponentially," said Faizan Buzdar, founder and CEO of Convo. "Our immediate priority is to use the new infusion of capital to continue delivering a service that meets the ease-of-use, reliability, and security demands of our customers."

Said Rebecca Lynn, Partner at Morgenthaler Ventures, "We have been amazed at the level of engagement we have seen from Convo's early customers, including many global brands. These organizations won't settle for inconsistent, light-weight solutions. Multinational organizations have selected Convo after putting them through a battery of security tests. There are collaboration services you use to run chit chat, and there are those that run your company. Convo is relied on for the latter."

"Looking across our portfolio, there is a common trait amongst our entrepreneurs, one of extraordinary tenacity and vision, which Faizan has in spades," said Alex Nigg, Venture Partner, Morgenthaler Ventures. "Faizan started his business in Pakistan, moved it to San Francisco, and overcame considerable odds to attract a list of loyal customers from around the world."

About Convo

Convo ( is designed to help any group of people working together to achieve great things. Convo allows creative and innovative teams to easily have the real-time conversations needed to advance a cutting-edge campaign, launch a new product or break the latest news story. Convo, an interactive workspace, is made for people who thrive on the creative process and who want to "get there first." The company (formerly Scrybe) has recently reincorporated in the United States and is headquartered in San Francisco with an offshore office in Pakistan.
Riaz Haq said…
International publishers forced to re-write approach in India

Copyright infringement and mercurial regulation prove hurdles to lucrative market

Dharam Pal Singh Bisht stoops to pick up a fresh stack of hot paper from the out tray of his photocopy machine and hands it to a student, who gives him Rs50 — less than $1 — for 100 pages of material.

With this transaction and hundreds like it every day, Mr Bisht has single-handedly defeated three international publishers, slashed costs for students at Delhi University, and threatened an entire industry.

Mr Bisht runs Delhi University’s photocopy shop, a crowded room crammed with photocopiers and computers where students queue to get their entire course material copied for a fraction of what it would cost to buy the books.

Following the decision in March of three international publishing companies — Oxford University Press, Cambridge University Press and Taylor & Francis — to drop their legal case against Mr Bisht, his business is functioning with impunity.

The trio claimed his photocopying business undermined their intellectual property, but the Delhi high court ruled that it was not in students’ interests to shut him down. The companies appealed but later dropped the case, citing “longer-term interests”. Executives say they had given up hope of winning, but believed they could still make money in the country long term.

India is potentially very lucrative for English-language academic publishers. These include privately owned companies such as McGraw Hill Education of the US and Macmillan Education, which is owned by the German company Springer Nature, as well as publicly listed ones such as Informa — through its Taylor & Francis division — and Pearson.

The country is the sixth-biggest publishing market in the world, and the second-largest English-language market behind the US.

India has 25m students in 3m schools and, as of 2012-13, 700 universities and 35,000 affiliated colleges. That market is growing quickly, with the population increasing at 1.2 per cent per year and economic output by about 7 per cent annually.

Though the companies do not declare how much they make in India, figures from Nielsen, the research group show, that overall revenues in the academic publishing sector have rocketed.

In 2013-14, about $2.9bn worth of academic books for schoolchildren were sold in India, and $860m worth of higher education books. By 2015-16, these figures had risen to $4.1bn and $1.2bn, respectively.

“Every publisher wants to come to India; there is a huge opportunity here,” says Vikrant Mathur, director at Nielsen.

But while the opportunities are significant, so are the hurdles — none more so than the perception of weak intellectual property protection.

“Access to knowledge will be reduced if this ceases to happen, which we believe is detrimental to the interests of India’s knowledge economy.”

Suprahmanian Seshadri, managing partner at the publishing consultancy Overleaf and a former executive at Oxford University Press, says: “For the publishers, this is already a low-margin market, and it is going to become increasingly difficult for them to make money.”

According to Mr Seshadri, international publishers can expect to make 45 to 50 per cent gross profit margins in India, which translates into 10 per cent earnings before interest, tax, depreciation and amortisation. That compares with gross margins of 65 to 75 per cent and ebitda of 15 to 20 per cent in more developed markets such as the UK.

Copyright infringement is not the only hurdle in India. Academic publishers saw their market abruptly shrink by about 18,000 schools in February when the government decided all schools affiliated to the Central Board of Secondary Education should use only state-published textbooks.

Meanwhile, ministers have also decided to impose a 12 per cent tax on paper as part of the new national goods and services tax due to come into force on July 1.

Riaz Haq said…
Market Overview: Pakistan’s Emerging Publishing Industry

One of the most striking features of the publishing sector in Pakistan—this country which has witnessed more upheavals than many others—is that many of the country’s literary authors who write in English are well known in the West. But there is very little literary publishing in Pakistan: while literary writers from Pakistan publish in the UK, the US, in India and elsewhere, there’s no dedicated literary publishing house for English language-literature in Pakistan.
Writers including Bapsi Sidhwa, Kamila Shamsie, Muneeza Shamsi, Daniyal Moenuddin, Bilal Tanweer, and Uzma Aslam Khan often have double citizenship. Some of them live in two countries, some spending more time in the West than in Pakistan.

Nevertheless, literary festivals are thriving in Lahore, the center for publishing, as well as in Karachi and in Islamabad. The 2016 Literary Festival in Karachi, an event founded six years ago, drew approximately 200,000 visitors and awarded four literary prizes.

The major book fairs are likewise very well attended. The Karachi International Book Fair hosted 327 exhibitors and 450,000 visitors in five days. In contrast to the literary festivals, the book fairs concentrate almost exclusively on educational publishing, with academic and children’s publishers in the mix.

Very little data is currently available about Pakistan’s book publishing industry. Khalid, Aziz, chair of the Pakistan Publishers and Booksellers Association, says that part of the problem is the key players’ reluctance to expose their business reports.


“Also, although every publisher is supposed to hand in two copies of each title to the National Library—and there’s the ISBN agency, as well—these laws are not enforced and therefore many publishers just don’t bother.”

Ejaz Shah, business development advisor for the Karachi International Book Fair, says that the situation is improving “because of exposure to the major book fairs, and in particular the Frankfurt Book Fair. There seem to be more publishers, and they’re doing good business.

“The new publishers are reaching out to the international publishers community for rights transactions and even joint ventures in the long run. Every change takes time, and we’ll need the support of the international publishing community in making this happen.”

With its challenged public educational system (only 2.5 percent of the gross domestic product is invested in education and 57.9 percent of the population is illiterate), Pakistan’s private school sector is booming.

There are de-centralized textbook boards for every province that create textbooks for public schools. These textbooks are then edited, laid out, and printed by the publishers. All government schools in a given province use this content, which frequently is of poor quality.

Private schools are more independent. Imports, reprints, and new content are high in demand, but the state school sector is closed to private sector publishers. Most publishers use material from the UK to reprint or model new work, but there are a few publishers who take a different approach.

One of them is Rehan Saeed, at Kifayat Publishers, established by his father. With his brother, Saeed is testing educational products from German publishers—Cornelsen Verlag and Oldenbourg—and from Turkey.

Of course, book prices are low and not all Western publishers are keen on the deals, but as turnovers are increasing, Saeed says, it gets more worthwhile. He’s also importing a science kit, and margins on that, he says, are better.

“In the beginning,” Saeed says, “the publishers were not very interested in this market, as print runs and prices are low and piracy is huge. But the market has a good future, with a growing number of quality schools for the middle class, and a population of almost 200 million.”

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