Dan Rosensweig’s Crystal Ball Goes Cloudy With Chegg IPO

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Rosensweig got a nasty reminder that the market calls the shots when it comes to setting share value, when shares in Chegg dropped by 22 percent from their opening price.

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Dan Rosensweig / Getty

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Dan Rosensweig, who twice revalued the shares in Chegg , the company that he heads, before the Initial Public Offering(IPO)  last week received a rude awakening as the market set the price on what they thought what the shares were really worth.

It was all looking very rosy on Tuesday of last week, when the initial flotation saw the online textbook portal  sell 15 million shares at the  $12.50 per share that Rosensweig wanted, ostensibly raising $187.5 million.  The initial IPO target range began at  $9.50 a share, which Dan initially asked to be raised to $11.50 and later $12.50.

Rosensweig’s optimism soon proved to be unfounded when the share value dropped immediately and continued to drop going into the weekend at $9.68, a drop of more than 22 percent, a sure sign that investors are nowhere near as as convinced  as Dan Rosensweig that the company is as bound for great things. Possibly asking “what went wrong?” are the venture capitalists that have invested in Chegg, in particular Foundation Capital, Kleiner Perkins Caufield & Perkins and Floodgate Capital, who between them have  invested around  $200 million in the company.

Certainly Chegg’s bottom line must be giving investors a certain cause for concern, with the company have recorded a loss in 2012 of $49 million on $213.3 million in income. Not that things are looking more encouraging so far this year, with losses of just over $50 million being recorded on $178.5 million in revenue for the first nine months of this year.

Interviewed at the end of a hectic week last week, Rosensweig refused to be downhearted about the, so far, disappointing results of the IPO, stating that they were just another step in what will be a long journey.

“Going public was the right thing to do as puts us significantly ahead of where we would be if we stayed private.” Rosensweig summed up, whilst adding that  potential e-textbook competitors will ne unable to come up with the full range of educational offerings that Chegg has to offer.

However analysts are already pointing out that  investors are hanging back to see some profits as  tangible proof that Chegg’s plan is working  before they pay over the top prices for their shares.

Dan Rosensweig was born in Dobbs Ferry, New York, and later raised in Scarsdale, New York. After successfully completing high school in Scarsdale, Rosensweig enrolled at Hobart and William Smith, graduating in 1983 with a Bachelor of Arts in political science.

Dan first piece of major professional experience was gained at the Ziff Davis Publishing Company, where he was an outside salesperson selling computer orientated magazines too small privately owned computer stores that were springing up all over the country.

The young Rosensweig displayed a good head for business, remaining with Ziff Davis for more than ten years, working his way through a myriad of departments, till he was given full responsibility publishing PC Magazine. Under Dan’s leadership, PC Magazine grew to become the leading English computer magazine in terms of circulation and advertizing and sales income.

Rosensweig’s ability soon captured the attention of some of the Internet’s leading companies, and in 1996 Dan began a long association with Yahoo first of all involved in the launching of a series of Internet magazines including Yahoo’s Internet Life Magazine.

Two years later, in collaboration with Yahoo, Dan acquired Ziff Davis’ Internet operations changing their name to ZDNet, and then taking the company public before selling it to CNET in 200.

The following year Dan Rosensweig joined Yahoo, taking up the role of COO with special responsibility for product development, marketing, international operations and North American operations.

After leaving Yahoo in 2006, Rosensweig held a number of other jobs in the Internet industry before joining Chegg in 2010.

Since joining Chegg, Dan has led the company from being simply a textbook rental company on to a much wider yet interconnected platform, dramatically increasing sales in the process.

Apart from his busy schedule at Chegg, Dan also is involved in the  non-profit organization DonorsChoose.org, as a member of their advisory Board , is a member of the Executives in Residence program at Columbia University, sits  on the Board of Adobe Systems as well as Katalyst Media, Ashton Kutcher and Jason Goldberg’s social media company. Rosensweig is also an active investor in many Silicon Valley -based Internet startups.

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