Mark Cuban Talks About Funding Packback And The Future Of EdTech
Mark Cuban was first introduced to Packback when the company’s founders, Kasey Gandham and Mike Shannon, pitched investors on ABC’s Shark Tank in March 2014. At the time, Packback was an e-textbook rental operation. Cuban liked what he saw and gave the company $250,000 in funding in exchange for 20% equity.
After Cuban’s initial investment, Packback Inc. went on to raise$900,000 in seed funding to grow its textbook rental business, and then it did something unexpected–it pivoted to AI. While Packback still has a toe in the textbook business, it’s taken a backseat to the company’s main focus, which is using artificial intelligence in college classrooms to create more critical thinkers by grading students’ curiosity. Company cofounder Jessica Tenuta laid out the case in her TED x talk, but the real proof that Packback may be on to something came in the form of $1.5 million in additional funding.
While many investors would be dismayed by such a dramatic shift in focus, Cuban couldn’t be more thrilled. We chatted with the serial investor about the promise of edtech, artificial intelligence, and the secret to every company’s success.
Fast Company: Was edtech an issue you had thought about before Packback appeared on Shark Tank?
Mark Cuban: Yes. Obviously applying technology to education is an opportunity a lot of people, including me, had looked at. I had a nice exit with Ranku and saw Packback as a great opportunity with two great entrepreneurs.
FC: You invested back in 2014. Why did you stick with them when other backers may have bailed?
MC: The performance question is for the management to answer. As far as why I stuck with them, I thought they were focused on pushing the company into markets where they could provide unique, differentiated solutions. They didn’t get discouraged. They kept on grinding and making their customers happy. It’s easy to stay with a company when the customers are raving about them.
Success never comes on a straight line. I’ve been broke. Terrified. Excited. Rewarded. But every step of the way, I had to grind. Packback reminded me of that … every successful student, every happy school has been taking them closer to the rewards I know are in store.
FC: The company pivoted from text book rentals to building AI and curricula for college professors to improve student critical thinking. What led the company to decide to make that move? What can other companies learn from Packback’s evolving mission?
MC: I’m a huge fan of AI and the impact it will have on the world. Integrating AI into their solutions for students wasn’t an option. It was a necessity and we saw it. They have been able to put themselves in their [customers’] shoes and have been focused on identifying the real problems to solve. They kept asking questions. They questioned what really mattered in education, then questioned the value textbooks had to what matters in building up critical thinking in our education system. And now, asking questions is what their platform is all about. I’ve said before that companies don’t fail because of a lack of cash or attitude; they fail for a lack of brains and effort.
FC: What is it about edtech that inspires you to invest?
MC: In 2014, there weren’t a lot of companies taking the first steps. Packback was early and they were able to gain an early foothold that was attractive to me. Education is tough and it can turn off a lot of entrepreneurs and investors, but it’s obvious the opportunity is there. I don’t think you should avoid something because it’s hard. It just means you have to work harder to find a team that can make it. Sales and hard work cures all. These guys proved they had what it takes to make it in education.
FC: You said in a statement that “AI will play a huge role in the future of education.” What do you see as the role of AI in education? What about that appeals to you?
MC: AI will impact everything, everything education touches, from curriculum to teaching to learning. It will touch it all, and Packback is positioned to be a leader because they maximize the teacher’s impact in their classes. Throughout history we’ve seen that human potential is unlocked when we can save ourselves time through automation. AI will help humans live better lives. And when you apply that to education with its impact across students, educators, and administrators, it’s pretty clear the opportunity is huge.
FC: You also said that developing independent critical thinkers is the future of education. Hasn’t that always been the point of education, or is this something new?
MC: Yes. But goals and execution don’t always align. If this was the case, college degrees would guarantee you a full-time job after graduation, and they definitely don’t anymore. Packback finally aligns goals and execution together.
FC: What other aspects of education do you think need to be disrupted by tech?
MC: I think we need to increase our efforts and expectations to younger students. I’m worried about the kids who don’t get an education beyond high school. My hope is that Packback can improve results at university levels and then apply what they do down to elementary school kids.