How To Get Good At Making Tough Decisions, According To A Former Netflix And Chegg Executive
Gibson Biddle, former chief product officer at Chegg and VP of product at Netflix, led a Labs session to talk about how he and the team at Chegg thought through three tough choices. Here's what you can learn from their experiences.
Decision 1: Growth or profits?
The situation: In 2011, Chegg needed to make a choice: should they lean into growth or slow down and show their investors that they could monetize their product? Their growth was slowing and the company was too young to prove that the business could make money, but their Net Promoter Score was high and they felt their customers were happy with their product. The CFO wanted to take it slow and monetize; the CEO wanted to grow and raise money.
The decision: The company bet on growth. However, the CFO, who wasn’t originally on board with that plan, was holding people back from acting on the company’s choice. He was gone shortly thereafter.
The takeaway: First, companies have to prioritize. In this case, the order of Chegg’s priorities was growth, then engagement, then monetization. Second, you have to over-communicate your company priorities so that everyone is on the same page, or gets on the same page quickly. And third, once you decide, the company has to act without delay.
Decision 2: Build or buy?
The situation: In 2011, Chegg saw textbook rentals slowing and hoped that the decline meant it was time to get into the etextbook space. They found a 10-person Israeli team with promising tech. Should Chegg build its own tech and team or buy the Israeli team?
The decision: In the span of about four weeks, Chegg chose to buy the team for $10 million instead of build. And even though it turned out that Chegg couldn’t use the team as originally thought due to rights issues with textbook publishers, the team became the core of Chegg’s mobile offerings.
The takeaways: Don’t focus on the valuation of a potential acquisition—just focus on whether or not your company should buy them. Biddle initially thought $10 million was too much for the Israeli team, but the CEO explained that it wasn’t a question of how much, but a simple yes or no. Next, don’t waste time and energy trying to get 100 percent of the information you think you need to make the decision—get 70 percent and decide based on that. Finally, treat acquisitions as experiments, and remember that learning throughout the process is usually more important than having all of the answers from the start.
Decision 3: What company should we buy?
The situation: Also in 2011, Chegg was deciding which of five companies to buy. They were all related to education, with some aligning more closely to the textbook rental space than others. One had no revenue; one had $10 million. One had two employees; another three had 30 each. The common thread was that they’d all lead Chegg beyond textbook rentals.
The decision: After internal debate, Chegg bought all five companies—CourseRank, Student of Fortune, Cramster, Zinch, and Notehall. Some, like Zinch, were failures. But others were successes. Cramster, which offered textbook solutions for more than 1,000 textbooks at the time of the acquisition, now accounts for roughly two-fifths of Chegg’s yearly revenue.
The takeaway: Treat acquisitions as learning opportunities and learn quickly from successes and failures. Don’t shy away from internal disagreements and debate, so long as they’re productive. And once you make a decision as a company, don’t delay in acting on it.
This post is based on content from a WeWork Labs programming session.
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