Thursday, October 31, 2013

Pakistani-American Founder Osman Rashid's Chegg Plans IPO

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, Textbooks.com, 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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4 comments:

HopeWins Junior said...

http://en.wikipedia.org/wiki/Nabeel_Gareeb

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....

http://techcrunch.com/2013/11/08/intel-has-acquired-kno-to-push-further-into-the-education-market/

Riaz Haq said...

Here's GigaOm.com on Kno acquisition by Intel:

On Friday, November 8, 2013, Kno, a Santa Clara, Calif.-based e-learning startup was acquired by Intel, and the event got the usual news treatment. Friday is usually a day when you announce news for two reasons — you want the media to obsessively cover your news through the weekend, or what is usually the case — bury the news. And my first reaction to the news was summed up by this tweet:


A few phone calls later, it seemed Kno really did want to bury the news. Why?

Because it sold for literally pennies on a dollar. Well placed sources who were in the know told us that the company sold for $15 million with some retention bonuses for the employees. Intel bought the company mostly for its hardware-related intellectual property and the employees. Intel also was one of the largest investors in the company — having pumped in $20 million via its Intel Capital arm.

Kno started life as Kakai Inc. and was co-founded by former Chegg CEO Osman Rashid and semiconductor industry veteran Babur Habib. In its four year lifespan, raised $73.4 million from venture capital firms of Andreessen Horowitz, First Round Capital, FloodGate Capital, Advanced Publications, Ron Conway’s SV Angel, GSV Capital and Intel Capital. It raised about $20.3 million in debt as well. Given how debt deals are structured, the venture investors lost pretty much their shirts on this deal.


http://gigaom.com/2013/11/11/how-much-kno-sold-for-why-it-failed/

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 (www.convo.com) 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.



http://finance.yahoo.com/news/convo-secures-series-funding-morgenthaler-113000482.html