ELMHURST – Mike Shannon grew up in Elmhurst and spent some summers as a deckhand on Chicago Line Cruises.
Now he’s trading the Chicago River for ABC’s “Shark Tank.”
“It was obviously an intense experience,” Shannon, 24, said of delivering his pitch to the famous sharks, including Dallas Mavericks owner Mark Cuban.
Shannon and his business partner, Kasey Gandham, who went to Lyons Township High School, co-founded Packback. The company rents digital textbooks for $5 or less a day, benefiting students and publishers.
“It was very clear that the issues around the textbook purchasing cycle were underlying issues for every single student,” Shannon said.
Both former presidents of their business fraternity Alpha Kappa Psi at Illinois State University, Shannon and Gandham teamed up for a business plan competition sponsored by their school.
Their plan looked at not only the high cost of textbook purchases for college students, but also the lost profits publishers suffer as a result of the used book market.
“We provide a new revenue stream for publishing companies,” Shannon said.
Packback signs agreements with publishing companies that allows them to tap into the bargain shopping market.
“[Students] are immediately trying to buy the cheapest books possible,” Shannon said.
Often, that means buying used textbooks, the profits of which go to the resellers, not the publishers. In turn, Shannon explained, higher education publishers raise prices on new textbooks each year to make up for lost revenue.
At the same time, Shannon said professors have so many sources of information today, many times students barely use a book purchased for class. Packback allows students to rent digital books on a day-to-day basis for just a few bucks.
After the duo won $5,000 for first place at their business plan competition two years ago, they decided to pursue the idea.
That’s when Shannon remembered his summers on the river working for Terry Johnson of Elmhurst, an attorney and owner of Chicago Line Cruises. Shannon called up his old boss for advice and soon was meeting with a marketing research firm in Chicago.
“As college students we were basically just looking for any resources we had,” said Shannon, explaining the duo made plenty of cold calls to publishers and looking for advice.
During their lengthy application process for “Shark Tank,” Shannon ran into Elmhurst neighbor Jeremy Whitmore, a freshman at York High School, who shot and edited the Packback video entry for “Shark Tank.”
“I think the biggest thing that we saw was that as more students started to get aware of what we were doing with Packback, it was really easy to rally support,” 23-year-old Gandham said.
Last fall, Packback launched its first pilot program at ISU with just 21 books available in the system. Knowing their catalogue limited how many students could use Packback, the company added two free services. The website offers a price comparison option for titles not available through Packback as well as one that compares prices retailers are paying for used books.
“They’re getting nickels on the dollar back from the bookstore,” said Shannon of the traditional route students take when selling back their textbooks.
Now, Packback is live for any student to use with more than 2,000 books available. New titles are added every month.
The company targets universities one at a time and has implemented a student ambassador program to market its product.
“We do some pretty selective recruiting on campuses,” Shannon said.
The ambassador program, which is about 50 large as of now, gives student leaders the opportunity to network with Packback investors and gain management experience leading marketing efforts on campus.
While Shark Tank was a highlight of their adventure so far, Gandham said he can’t pick just one defining moment from the entire experience.
“A new [highlight] happens probably every week,” Gandham said.