How a Stolen North Face Jacket Sparked a New Business Idea
While a student at Indiana University, Derek PaquÃ© brought a $245 North Face fleece to a bar, hid it behind a Christmas tree and, at the end of the night, discovered it had been stolen. The business major brainstormed ways to improve the jacket-storage process and the result was CoatChex, a ticketless coat-checking system that runs off an iPad to make coat-checking more efficient and reduce the risk of lost or stolen coats.
Now 23 and a recent college grad, PaquÃ©'s company, which he co-launched in 2011 with one of his professors Gerry Hays, has two patents pending on the CoatChex technology. He has 11 clients including ESPN and Maxim, which used the technology at a Super Bowl party last year. CoatChex also built a custom system for a client that sponsored Fashion Week.
Of course, being able to hobnob with high-profile publishers didn't just happen overnight. The young trep first had to land his 15 minutes. In September, PaquÃ© appeared on an episode of ABC's Shark Tank, where he asked fellow Indiana alum Mark Cuban for a $200,000 investment in exchange for a 10 percent stake in the company. When Cuban countered with a 33 percent stake, PaquÃ© shocked viewers by turning him down.
Was he upset? Did he want to run back to Cuban and relent? To find out, we chatted with PaquÃ© about walking away from Cubanâs offer and how he's fared since:
Q: How does CoatChex work?
A: We've done away with tickets. Instead, we have a digital coat check system that runs off an iPad. When someone comes up to the station, they give us their phone number and our iPad takes a picture of both them and their coat simultaneously. That way at the end of the night, they could see a picture of your coat, a picture of you and where it is on the rack, so they can guarantee who they're giving their coat back to.
And on top of that, we're mobile. Our CoatChex Keg, for instance, allows venues to open up multiple check-in stations.
Q: How did you get one of your professors on board as a co-founder?
A: I had already started a coat checking business during my senior year of college. The CoatChex idea simply expanded on that idea. Gerry Hays was an advisor on that project, and, as he heard more about it, he saw the potential.
Also, I didn't really have the necessary resources: the knowledge of how to source, manufacture and raise capital. So we started CoatChex together in November 2011 after I graduated.
Q: So how did you end up funding CoatChex?
A: Initially, we bootstrapped by using equity instruments known as convertible notes. Now, we're now in the process of closing a seed round.
Q: Tell us about Shark Tank. Was it tough to turn down Mark Cuban's offer?
A: Yeah, it was tough, because I really wanted to bring him on the team. It was just bad timing really. When the offer to be on the show came in, we hadn't tested our product yet. But we didn't want to turn down the opportunity either.
We just weren't going to give away that much of our company without being able to test it, prove it and get some sales. So I wish I could have gone on there a year from now, but it did end up being a great branding opportunity.
Q: Where can people find CoatChex?
A: Weâre focused heavily in Indy, back in Bloomington, our college town, and we're going to go to a couple of big cities this year: Chicago, New York City, Philadelphia and Boston. We're also going to try out some remote locations and test it in places like the mountains, maybe Canada.
Q: What advice would you offer to other young entrepreneurs?
A: Don't sit on your ideas. The biggest hurdle for young entrepreneurs is what I call watchpreneurs, when people just think about something, rather than do something about it. If you have a great idea, go out and create something. Open a bank account. Put a couple hundred dollars in, and just go try and make money.
-This interview was edited for clarity and brevity.