Written by Adam Jun
CHICAGO — For the first time in several months, it was a beautiful night. You could even get away with a light jacket. The night served as a fitting backdrop for two local startup heroes to splash into the national consciousness of over 8 million viewers in living rooms and viewing parties across the country, via ABC’s hit series, Shark Tank.
After navigating the unrelenting obstacles “Mr. Wonderful” and his fellow Shark cronies are famous for, Packback Books co-founders Kasey Gandham and Mike Shannon hit their pre-targeted mark, reeling in billionaire entrepreneur Mark Cuban as an investor.
Not only does Cuban’s addition strengthen a team of already heavy digital-hitters such as Redbox, it’s more signaling that this scrappy Illinois State startup is intent to change the academic book buying experience for students and parents alike. Renting e-textbooks for $5 a day figures to fit today’s on-demand, digital culture more naturally than the current chaotic structure.
Packbook landed the final segment on the show, reserved for the most suspenseful exchange. The spot didn’t disappoint. The boys walked in and delivered their solution to the all too familiar pain point students and parents around the country feel before each semester.
Gandham: “There’s been a serious epidemic on the rise since your college days. And it’s the cost of textbooks.”
Shannon: “Hey Mark, did you know, that since you hung up your Hoosier hat, [Indiana, class of 1981] textbook prices have risen 812%?”
Gandham: “In fact, students are even dropping out of their courses, in order to avoid the book costs.”
After showing the Sharks a quirky video, Gandham wrapped up the opening pitch this way.
“Our e-textbooks are fully equipped with highlighting and note-taking capabilities and we’re already working with major U.S. textbook publishers to bring the Packbook service to students nationwide.”
A question from Kevin O’Leary — Shark Tank’s straight-talking Simon Cowell equivalent — immediately prompted Shannon to paint a vivid picture of how Packback’s plan is designed to help students.
“Let’s say Daymond is a sophomore in college. He’s fed up. Freshman year, he spent $1,200 on new books. He realized he didn’t use half of them enough for the purchase price. We allow Daymond to hold off on buying anything, rent for a day at a time at $5 or less, as he has a quiz or homework assignment.”
Herjavec: “In your format, how much is it going to cost [the student]?”
Gandham: “We rent digital textbooks for $5 a day.”
Fashion mogul Daymond John asked why companies who own the e-textbooks don’t use this idea and rent the e-books out themselves.
“Yes, e-textbooks are being sold,” Gandham explained. “They have been on the market for around 8 years. They’re being rented per semester at approximately $100 to $150 per book.”
“But you’re doing it differently,” Barbara Corcoran — of real estate success — asked, “The only difference being you’re doing it by the day?”
“We’re introducing a micro-transactional…”
“You’re pay-per-view.” Cuban interrupted.
“Yeah, we’re pay-per-use.”
An important element of Packback’s strategy was revealed when a question was asked about the company’s major competitors.
“If an Amazon or a Chegg were to offer daily e-textbook rentals, they’d be directly cannibalizing their used books.” Gandham said.
“They’re in so much trouble because this used book market is such a disaster for their revenue.” Shannon added.
Corcoran then blitzed the Packback boys with a series of questions to see how much money a student would spend on average using the Packback format. For one year, Shannon explained a student could expect to spend $280. A dramatic difference from the $2,000 or more students are often on the hook for in textbook costs.
To which Corcoran excitedly said “That’s a great savings!”
But Herjavec wasn’t so sure.
“Are you telling me that my kids are only opening their textbooks four times a semester?” he asked.
“Robert, it’s not because they’re not studying, Shannon said. It’s because the professor’s have a wealth of resources to put out the necessary information. The book is one more resource, it’s not the end all, be all.”
Daymond, citing his unfamiliarity with the space, decided he was out.
Next, Corcoran bowed out, citing concerns about the publishers coming aboard.
O’Leary endorsed the idea, and alluded to the fact that he made the majority of his net worth working with publishers, but didn’t want to spend more time in the space.
O’Leary: “Guys, I like what you’re doing, okay. I know your industry inside and out…I will give you one small piece of advice, it’ll take you a lot longer than you think to get those deals…It sends a tingle up my spine to go back in the education market, which is where I made the bulk of my net worth. I can’t go back there.”
Gandham countered with the fact that similar companies like Netflix and iTunes weren’t overnight successes.
O’Leary: “I’m not saying that it’s not a noble pursuit. I have spent thousands of hours in their offices. You will have no hair, you will both look like me when this is over. I am out.”
Herjavec then bowed out.
One Shark remained.
It was Cuban — notorious in the Tank for intently listening to a pitch play out before making a move — who expressed his interest, thanks in part to his familiarity with the tech-ed space.
But he wanted a bigger slice of the pie.
“I like the concept, but 10% isn’t enough.” Cuban said. “I want you guys to come back to me, and tell me, what’s the most equity I can get, how and how much.”
Sensing the urgency of the moment to act soon, Shannon looked at Gandham and quickly back at Cuban before ABC dramatically cut to commercial.
After the break, Gandham and Shannon made an offer of 17.5% equity for $200,000. Cuban countered with 20% for $250,000. Gandham came back with something that won’t be soon forgotten in Shark Tank lore.
A lower offer!
Amid exclamations from different Sharks — you can audibly make out Corcoran yelling “WHAT?” in the background — Cuban immediately accepted the 20% for $200,000 before Gandham realized what had happened.
Fortunately, Shannon stepped right in and asked Mr. Cuban to have a seat while they gave it some more thought.
Now that’s teamwork.
Everybody in the tank had a nice laugh as Cuban, Shannon and Gandham all congratulated each other on their newly minted partnership.
To close the episode, Gandham says “When you’re in the tank, it’s not that easy.”
That’s likely true. But in the cause of renting e-textbooks online for $5 a day, the college experience just got a little easier on student’s wallets.
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