A national audience on Sept. 21 watched how Indiana University Kelley School of Business alumnus Derek Pacqué handled the pressure of making a pitch for his company, CoatChex. Pacqué started the company while a student at IU’s Kelley School of Business. Former Warsaw resident, Anthony Smith, helped design the website www.coatchex.com, along with his team at www.sticksnleaves.com.
Pacqué, who graduated in May 2011 with a bachelor’s degree in management and entrepreneurship, says the experience wasn’t as tough as some of his business classes at IU, but he told Inside INdiana Business that he rejected an offer from the Shark Tank simply due to timing issues.
During the show, Pacqué was offered $200,000 by Dallas Mavericks owner Mark Cuban to buy in as a third owner. The IU grad explained the CoatChex technology is too early in development to give up such a high stake in the company.
“This experience fostered the confidence in Derek to expand his business idea, and it certainly prepared him for the ‘Shark Tank’,” said Donald F. Kuratko, executive director of the Johnson Center for Entrepreneurship and Innovation and the Jack M. Gill Distinguished Chair of Entrepreneurship.
“Derek is an outstanding example of the determined and innovative IU entrepreneurship student that the Kelley School program develops,” Kuratko added. “We are all extremely proud to have him represent our program on national television.”
Pacqué started CoatChex after a night out with friends at one of Bloomington’s bars. He was accustomed to finding coat checks in most bars and restaurants in the Washington, D.C., area during the colder months, but not in Bloomington. One night, he decided to take a new coat that his mother had given him and stashed it behind a Christmas tree, where he thought no one would find it.
“I thought that I had hid it well, right behind a fake gift, but when I came back it was gone,” he said. “I knew my mom would be mad. I was mad, and I remember going home and ranting, ‘Why don’t they have a coat check?’ And then it occurred to me how much money I could have been making.”
Pacqué approached the local bars with his idea. Several had previously tried to offer coat checking to customers but had deemed it too much of a liability or a hassle. He soon entered into contracts with a couple of establishments in town.
He borrowed $500 from his parents to start the business and within a week paid them back. He started the business with his roommate but soon had 16 employees, pulling in about $1,500 a night. Pacqué’s business made $50,000 its first winter.
CoatChex charges $2 to $3 for each coat checked, depending on the night, and splits the profits with the bars. To make sure that people receive the right coat and to facilitate a swifter process, the company developed an iPad-driven system. It also collects marketing information from customers that can be shared with the restaurant or bar, which may choose to convey info about specials.
His company has since branched out to working large events and venues. For example, CoatChex was used at some of the larger Super Bowl parties in Indianapolis, including those hosted by ESPN and Maxim magazine.
He has established another company, Bailment Technologies, that is looking for other applications for the secure ticketless technology used by CoatChex, such as valet car parking, dry cleaners and storage businesses.
Pacqué said his decision to apply for “Shark Tank” was something of a lark. He spent about two minutes filling out the initial online application in a light-hearted manner, including details like Cuban also being a Kelley alumnus. It was two paragraphs long.
“One day, I was at a parts trade show in Chicago … and I got a call from Santa Monica on my business phone,” he said. “I asked myself why would someone from Santa Monica call a coat check company? It struck me as odd because it’s 70 degrees there year round.”
The call was from the show’s producers. More than 30,000 people applied to be on the show, but Pacqué had made it past the first round. Now he had to produce a much more detailed application, which took him about a week to complete. Two weeks later, he was invited to California to present his pitch in front of the cameras.
“It’s a great validation to be accepted out of tens of thousands of applications to present to the Sharks,” said Gerry Hays, a practicing professor in entrepreneurial finance and a principal of Slane Capital, which has invested in Pacqué’s firm.