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Mark Cuban called this nightclub tool a horrible idea — but ‘Shark Tank’ founder built a $7M company anyway

Derek Pacque shocked everyone (and himself) by rejecting Mark Cuban's offer, but still built a business worth millions

Regular viewers of ‘Shark Tank’ might know how entrepreneurs often struggle to get a great offer from the judges, and sometimes even accept a deal that might incur a loss to the company in the future. However, this was not the case for Derek Pacque, who had impressed investor Mark Cuban and received a $200,000 offer for a 10% stake in his company. The season four contestant pitched a seasonal, ticketless coat check system, CoatChex. 

According to Market Realist, the entrepreneur said, "I have risked a lot to turn this business into a career, I've put in all my savings, I've taken money from family and friends, and turned down many great job offers, getting a deal with the sharks is exactly what I need." His product was basically a computerized system that matched coats to owners using facial recognition. This could help bars and nightclubs upgrade their coat check services to a quick and easy solution that would eventually generate extra income in their operations. The outlet also reported that the business graduate intended to franchise the technology, which the Sharks did not approve of. 

While talking about his sales, the contestant told the judges that he had made tens of thousands of dollars during Super Bowl week in Indianapolis, that too back when his product was just a basic check-out coat system. This intrigued Daymond John to inquire further about sales, to which Pacque replied, "No, I've not made the technology, we just started." Pacque mentioned his partnership with a college professor, Hayes. "I can get 50 franchises open, I'm willing to put down $150,000 to start off with equipment to get this out there," he said.

Cuban called him out, saying, "Horrible idea. Let me ask you something, how do you really feel about it? Horrible because you haven't tested anybody who's done anything in technology, knows that the only certainty is that it's going to screw up." Kevin O’Leary was the first to back out from investing, calling Pacque’s company a “seasonal” business. Soon, Barbara Corcoran and John followed suit, thinking that the system was overvalued. Robert Herjavec, on the other hand, thought the business still had some value. The contestant then tried to negotiate and went up 15%, an offer that Herjavec refused before dropping out. 

It was just Cuban left on the panel with a deal in mind, and he offered the contestant $200,000 for a 33% stake in the company. Upon hearing this offer, Pacque appeared confused as he called his professor for guidance. In a counteroffer, Pacque asked for $200,000 for 20%, which Cuban declined. Towards the end of the episode, Paque was heard saying, "I'm in dead shock that I just turned down a deal from Mark Cuban." As per Shark Tank Blog, the contestant later rebranded his company to Chexology and turned it into a $7 million business. The technology now goes beyond coats and provides kiosks for all sorts of events. Their client list includes American Express, Nike, Barclays Center, House of Blues, Live Nation, as well as the Museum of Modern Art.