n a cold night in 2010, Indiana University senior Derek Pacqué tucked his coat into a dark corner of a nightclub instead of wearing it on the dance floor. When he went to retrieve it later, it was gone.
Pacqué, an entrepreneurship student, never did find his coat. But he did find the inspiration to start a business. "None of the bars in town had a coat check, so I had to wear a coat around all night or leave it at home and freeze," he recalls. "I thought, There has to be a way to deal with this problem."
Pacqué approached bar owners around Bloomington to assess their interest in offering a coat check and received positive feedback. He invested $500 in materials to make mobile coat racks, hired a handful of college students and launched Hoosier Coat Check. Three local bars signed on; the firm charged $2 to $3 per coat and paid between 10 and 30 percent of its revenue to the venues. On cold nights, Pacqué says, each coat check brought in up to $1,500, and in the first six months of operation, revenue reached $50,000.
The business was more profitable than Pacqué had anticipated, but it posed unexpected challenges, too. "We had to deal with people losing their tickets and having to find the right coats, and we had problems with people leaving with the wrong coats. It was a huge hassle," he recalls.
After graduating in 2011, Pacqué partnered with a former professor to develop a more secure and reliable method to check coats and focused on building a scalable, sustainable business. In 2012, with a new business name--CoatChex--Pacqué secured contracts to provide services for the ESPN and Maxim Super Bowl parties in Indianapolis. He checked up to 2,000 coats at each event, helping CoatChex draw revenue of $100,000 in its third year of operation. With a growing roster, Pacqué knew he had to up his game. CoatChex started focusing entirely on high-capacity venues, charging up to $45,000 per event.
Pacqué had a major breakthrough with the launch of a digital app that uses photographs and QR codes to check coats, increasing the speed and reliability of the service. In the process, he discovered he'd built something far more valuable than state-of-the-art coat-checking technology. "We realized that venues want data on their customers--data that comes from our app," he explains. "We can help venues connect on social media by giving discounts to customers who ‘like' the venue on Facebook or post photos on Twitter or Instagram."
In September 2012, Pacqué appeared on ABC's Shark Tank with the hope that IU alum Mark Cuban would invest $200,000 in CoatChex. Cuban agreed to provide funding in exchange for a 33 percent share in the business, but Pacqué turned it down. "I wanted the cash with fewer terms," he explains, noting that he wasn't willing to offer more than a 20 percent share.
Pacqué is now seeking $1 million from angel investors to develop brand partnerships and expand his coat-checking technology to other services, such as bag checks and valet parking.
"It's not the easiest technology to build, and at first I didn't understand the value it would add to the business," he says. "Until you're doing it, you don't know how much money you can make."
Read more: http://www.entrepreneur.com/article/226384#ixzz2V9fL113S
