Chegg 2015 Annual Report Download - page 63

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Our core value of putting students first may conflict with the short-term interests of our business.
We believe that adhering to our core value of putting students first is essential to our success and in the best interests of
our company and the long-term interests of our stockholders. In the past, we have forgone, and in the future we may forgo,
short-term revenue opportunities that we do not believe are in the best interests of students, even if our decision negatively
impacts our operating results in the short term. For example, we offer free services without advertising to students that require
investment by us, such as our Internships service, in order to promote a more comprehensive solution. As part of our College
Admissions, and Scholarship Services marketing efforts, we identify select partner organizations who offer complementary
content and services that support students in exploring colleges. We enable these partner organizations to use our college match
service through their websites to enable students to request information about colleges of interest. We also developed the Chegg
for Good program to connect students and employees with partners to engage them in causes related to education and the
environment. We work with the nonprofit conservation organization American Forest to plant trees around the world and our
funding has enabled the planting of more than six million trees to date. We formed the Chegg Foundation, a California
nonprofit public benefit corporation, to engage in charitable and education-related activities, which we funded with one percent
of the net proceeds from our IPO in November 2013. Our philosophy of putting students first may cause us to make decisions
that could negatively impact our relationships with publishers, colleges and brands, whose interests may not always be aligned
with ours or those of our students. Our decisions may not result in the long-term benefits that we expect, in which case our level
of student satisfaction and engagement, business and operating results could be harmed.
If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be
adversely affected.
Laws or regulations may be enacted which restrict or prohibit use of emails or similar marketing activities that we
currently rely on. For example:
• the CAN-SPAM Act of 2003 and similar laws adopted by a number of states regulate unsolicited commercial
emails, create criminal penalties for emails containing fraudulent headers and control other abusive online
marketing practices;
• the U.S. Federal Trade Commission (FTC) has guidelines that impose responsibilities on companies with respect
to communications with consumers and impose fines and liability for failure to comply with rules with respect to
advertising or marketing practices they may deem misleading or deceptive; and
• the TCPA restricts telemarketing and the use of automated telephone equipment. The TCPA limits the use of
automatic dialing systems, artificial or prerecorded voice messages and SMS text messages. It also applies to
unsolicited text messages advertising the commercial availability of goods or services. Additionally, a number of
states have enacted statutes that address telemarketing. For example, some states, such as California, Illinois and
New York, have created do-not-call lists. Other states, such as Oregon and Washington, have enacted “no rebuttal
statutes” that require the telemarketer to end the call when the consumer indicates that he or she is not interested
in the product being sold. Restrictions on telephone marketing, including calls and text messages, are enforced
by the FTC, the Federal Communications Commission, states and through the availability of statutory damages
and class action lawsuits for violations of the TCPA.
Even if no relevant law or regulation is enacted, we may discontinue use or support of these activities if we become
concerned that students or potential students deem them intrusive or they otherwise adversely affect our goodwill and brand. If
our marketing activities are curtailed, our ability to attract new students may be adversely affected.
Our business and growth may suffer if we are unable to hire and retain key personnel.
We depend on the continued contributions of our senior management and other key personnel. In particular, we rely on
the contributions of our Chief Executive Officer, Dan Rosensweig. All of our executive officers and key employees are at-will
employees, meaning they may terminate their employment relationship at any time. We compensate our employees through a
combination of salary, benefits and equity compensation. Volatility or a decline in our stock price may affect our ability to
retain and motivate key employees, each of whom has been granted stock options, RSUs or both. Competition for qualified
personnel can be intense, and we may not be successful in retaining and motivating such personnel, particularly to the extent
our stock price remains volatile or at a depressed level, as equity compensation plays an important role in how we compensate
our employees. Such individuals may elect to seek employment with other companies that they believe have better long-term
prospects. If we lose the services of one or more members of our senior management team or other key personnel, or if one or
more of them decides to join a competitor or otherwise compete directly or indirectly with us, we may not be able to
successfully manage our business or achieve our business objectives. Our future success also depends on our ability to identify,
attract and retain highly skilled technical, managerial, finance and media procurement personnel. Qualified individuals are in