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…
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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