Kara Swisher

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Exclusive: Chegg Buys Cramster

According to sources close to the situation, online textbook rental company Chegg has acquired Cramster, a social online homework help platform.

The Pasadena, Calif.-based Cramster is the leading online study community, offering expert Q&A help, study groups and practice tests and problems. College and high school students, teachers, professors, parents and other experts add information into the network on a large range of subjects.

It was founded in 2002 and now has one million members, using either a free or premium service.

The Cramster purchase is one in a series of start-up acquisitions that Chegg has been making of late, part of a strategy to be a central place for student needs.

In late September, the company bought CourseRank, a Mountain View, Calif., start-up that helps students share course schedules, take classes with friends, and read and write reviews on classes and professors, as well as find out how professors grade.

To expand, Chegg has raised a whopping $220 million in funding from a number of venture firms, including Kleiner Perkins.

That’s because Chegg has become the front-runner in the increasingly competitive online textbook rental space, as it seeks to disrupt the $10 billion college textbook business.

Chegg got its start in 2005 at Iowa State University as a classified rental service, where books were the dominant item, but evolved its business to focus on actually doing the textbook rentals.

The company’s unusual name, Chegg, is a mashup of “chicken and egg,” and its model is similar to that of innovative video rental outfit Netflix.

Chegg now serves close to 7,000 schools across the U.S.

Typically, renting a book costs a fraction of what buying one outright does. It is ordered online and then sent to a renter, who then returns it.

Terms of the Cramster deal were not clear.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik