Last modified: Thursday, September 13, 2012
September 12, 2012
IU entrepreneur to pitch his CoatChex business Friday night on 'Shark Tank'
Kelley School of Business graduate Derek Pacque to be contestant on show's season opener
By Mike Leonard
September 13, 2012
For those who would suggest that nothing good ever happens in the college bars in Bloomington, Indiana University alumnus Derek Pacque will assert otherwise.
If someone hadn't stolen Pacque's jacket at a bar one night, the former IU student wouldn't have thought about the valuable service that a secure coat-checking business could provide.
And if he hadn't dived in and started a conventional coat-checking service himself, he wouldn't have understood the problems associated with the once ubiquitous service and looked toward technology to make it work better and more efficiently.
"In talking with my grandparents, coat-checking used to be the standard," Pacque said this week. "But almost nobody does it anymore. It's a system that hasn't been innovated in 100 years."
The 2011 Kelley School of Business graduate's design of a new and modern coat-checking system -- called CoatChex -- is so intriguing it landed him a spot as a contestant on the season premiere of the popular entrepreneur-focused television show "Shark Tank," which airs at 8 p.m. Friday on ABC stations, including Channel 6 in Indianapolis.
The IU graduate was well aware that, by appearing on "Shark Tank," he'd come face to face with one of the university's most prominent alumni, Dallas Mavericks owner Mark Cuban. "Oh yeah, he's definitely one of the big names around Kelley," Pacque said this week. "I've always followed him anyway, because he's from Pittsburgh, like me, and he's one of those guys people aspire to be."
There were a lot of questions Pacque couldn't answer because the show has yet to be broadcast, but he did admit to anxiety over Cuban and the IU connection. "I didn't know which way he was going to play it," he admitted. "Was he going to be hard on me because I came from his school, or would he be a little more lenient?"
Either way, Pacque went into the challenge exceptionally well-prepared, thanks to the Spine Sweat course that students in Kelley's top-rated management and entrepreneurship program have to pass or they can't graduate.
"That's pressure," he said with a chuckle. "I knew going into 'Shark Tank' that if I didn't win, I'd still be OK. But if I didn't pass Spine Sweat, I couldn't graduate. I can't imagine a better preparation, not only for 'Shark Tank' but the real world. I already had an idea of what it was like to pitch an idea to investors and venture capitalists."
The motivation for a service such as CoatChex was already percolating in Pacque's mind before the fateful night his coat was stolen. "You've seen what it's like in the Bloomington bars in winter," he said. "There are two positions you can take. One is standing in line to get in the bar and freezing, and most kids do that. You've seen the girls in short skirts and freezing because it's really cold. But if you wear a coat, there's no place to put it, so you either carry it around or you burn up."
Or you stash it and somebody steals it.
While still an undergraduate, Pacque started a conventional coat check system, got some bars to try it, and learned why it didn't work. "One out of 10 people lose their ticket -- maybe because they're out drinking -- and then the line backs up very quickly while the attendant tries to find the coat. A lot of times in this business, either an event ends or a lot of people leave at the same time, and all too often, you have chaos."
Enter technology. "What we've done now is eliminate tickets entirely. You come to our station, pay to have your coat checked and enter your phone number," he said. While the transaction is going on, the CoatChex system uses an iPad to photograph the client and the coat and link it to the phone number. It also kicks out a QR, or Quick Response code, that goes on the hanger with the coat. The newest iPads can read a QR code from 6 feet away, making a rapid scan of the coat inventory a quick endeavor.
The information collected also can be used for other purposes, such as notifying customers of drink specials or other promotions.
The Kilroy's bars in Bloomington were early adopters of CoatChex. Friday night, the Kilroy's in Broad Ripple will host Pacque's "watch party." A couple of other Broad Ripple bars also have signed on.
"We're expanding pretty rapidly," the now Indianapolis-based entrepreneur said. "We just got a contract out of Chicago and hope to have as many as 50 places signed on within the first year.
"Now that we have the software and the program ironed out, we can handle really large events — events with 3,000 or even 10,000 people. And that's really exciting, because I don't think anyone can touch us with a convention event that gets out and you have that many people wanting their coats at once."
Viewers will have to wait and see what happens on "Shark Tank," and whether CoatChex wins an infusion of expansion capital, but Pacque said he felt like a winner just making the program.
"Just to be able to put your brand out in front of 7 million people? For free? How many people get an opportunity like that?" he asked.