ChatGPT’s First Victim + The Department of Government Efficiency (DOGE)
Prof G Markets
Deep Dive
Why did Chegg's business suffer after the launch of ChatGPT?
Chegg's revenue, subscribers, and web traffic fell by double digits in the latest quarter, and the company laid off 21% of its workforce. Chegg directly blamed ChatGPT for losing half a million subscribers since its launch, leading to a 99% decline in share value and a loss of $14.5 billion in market value.
What potential investment opportunity does Scott see in Chegg's distressed situation?
Scott suggests that distressed credit investors might find value in Chegg's bonds. He believes that if these investors buy the bonds and the company goes bankrupt, they could cut costs and potentially turn the company around, making a profit from its subscriber base.
Why does Scott believe that fears about AI's negative impact on sectors may have been overstated?
Scott points out that the big victim of AI so far is Chegg, a relatively small company, and that no major industries have been significantly affected. He argues that AI will likely lead to winners and losers within each sector rather than causing entire industries to disappear.
What is the Department of Government Efficiency (DOGE) proposed by Donald Trump?
The Department of Government Efficiency, also known as DOGE, is a proposed entity headed by Elon Musk and Vivek Ramaswamy. Its goal is to dismantle bureaucracy, slash regulations and expenses, and restructure federal agencies, aiming to save at least $2 trillion.
Why does Scott criticize the idea of the Department of Government Efficiency?
Scott criticizes the idea because it lacks feasibility. He points out that only Congress controls federal spending, and significant budget cuts would require eliminating major spending areas like social security and national defense, which would harm the economy. He also questions the track record of the proposed leaders, Elon Musk and Vivek Ramaswamy, in managing efficiency.
What positive aspect does Ed see in the Department of Government Efficiency?
Ed sees a positive aspect in the potential to make government jobs aspirational by using successful figures like Elon Musk and Vivek Ramaswamy to attract high-IQ talent. He believes this could make government service more appealing and attract brighter human capital into public service.
- Chegg's revenue, subscribers, and web traffic fell by double digits.
- The company laid off 21% of its workforce.
- Leadership denied an AI budget request, potentially missing an opportunity to innovate.
Shownotes Transcript