Featured in Crain’s Chicago Business
Packback is betting that the only thing college students find more irresistible than cheap books is social media.
The startup, which famously landed Mark Cuban as an investor after an appearance on “Shark Tank,” now is emphasizing a classroom social-media platform called Packback Questions.
Students use it to ask questions of professors and each other. The idea is to help professors engage with students and better manage their classes, while giving students another learning tool.
Questions is free to the professors, but students pay $18 a semester, per class, unless they rent textbooks from Packback. (The average digital textbook rental costs $65.) The Questions platform provides the bulk of Packback’s revenue, says CEO Mike Shannon.
“It’s more of a SaaS (software-as-a-service) business model, as opposed to annual transactions that have be re-created,” Shannon said. “It provides a recurring account/customer base with professors who aren’t graduating every four years.”
Questions is in use on 50 campuses.
“This is an entirely new customer base, as we previously were engaged solely with students and not the professors,” says Shannon, noting that the company has a professor retention rate over 75 percent for Questions.
“We wanted to prove we could establish relationships where we didn’t have previous (textbook) relationships,” he said. “Now we’re focused on getting deeper penetration with students in multiple classes.”
Packback got its start renting digital copies of textbooks for $5 a day. It’s not abandoning textbooks. The company still has 500,000 digital textbook titles available. But they’re now “an ancillary revenue stream,” Shannon says.
The shift seems to be working for Packback, which began dabbling with a social platform a year ago, when it raised $1.5 million. The company has more than doubled its headcount to about 24 from nine a year ago.
“Higher ed is changing so fast,” Shannon said. “We couldn’t have created Packback Questions without getting into the weeds with students and professors on campus.”
Packback got off to a fast start and generated a lot of buzz. Now the company has to prove it has staying power.