When Derek Pacque was a student at Indiana University, he’d often go to the bars. As the weather turned colder there was always a decision that weighed heavily on his mind:Should he wear a coat out at night or brave the cold?
There were no coat checks in the bars, so if you wore one you risked it being spilled on or stolen.
Pacque, now 23, wondered why the bars didn’t implement some kind of coat service. When he asked the owners, some said they didn’t have room or staff for a coat check. Others said they didn’t want the liability. Pacque set out to solve both problems.
In 2010, the then senior borrowed $500 from his parents to buy a bunch of coat racks and hangers. He and his friends created a company, CoatChex, and they volunteered to run the service for the local bars and clubs. The bars could decide how much to charge per coat, and Pacque would keep 85 per cent of whatever was made. Within five months Pacque raked in $50,000.
He spruced up his equipment, sought help from a business professor, and started building mobile technology to make a smoother, ticketless CoatChex system. He started getting more gigs. His company even worked the ESPN/Maxim Super Bowl party.
Just as he was in the process of testing the mobile equipment and rolling out CoatChex in new cities, Pacque read a life-changing tweet.
“I was sort of just joking to my professor and said, ‘Wouldn’t it be funny if we got on the show?’ He encouraged me to apply,” Pacque tells Business Insider.
Pacque wrote two paragraphs for his initial application. “I filled it out sort of as a joke,” he says. “I figured they wouldn’t read it. I wrote, ‘I’m exactly like Marc Cuban. I started a business in college and we’re both Philly fans. I made $50,000 in my first five months.'”
Shortly after submitting the application, Pacque received a call from the show’s producer.
After a two month screening process, Pacque became a contestant on ABC’s Shark Tank. He spent an hour pitching Mark Cuban, Barbara Corcoran, Daymond John, Kevin O’Leary and Robert Herjavec. ABC spliced it up into a dramatic 10-minute segment.
At the end of his CoatChex pitch, Marc Cuban offered to invest $200,000 for 33 per cent of the company. Pacque wisely walked away from the offer.
“People are so curious to know why I turned down Cuban,” Pacque tells Business Insider. “He wanted one-third of my company. Now maybe if he had offered a $5 million investment and he was going to flip it for $20 million in a year, then I’d be ok with it,” he jokes. “But at this early stage I just can’t give that much equity to someone who’s not going to be there day-to-day to test this thing with me. Cuban has places I can put CoatChex, but my problem isn’t finding opportunities for the service, it’s scaling the business.”
Despite what ABC aired, Pacque says Cuban wasn’t surprised that he turned down the offer, and the two are still in touch.
“Mark would be a great guy to have as an investor eventually,” says Pacque. “He’s still very interested in hearing where we are in our testing process.”
Here’s the clip of Pacque’s pitch and public Cuban rejection (zip to 2:16):
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