The Vending Machine Revolution with Mike Hoffman

Brent Peterson (00:01.341)
Welcome to this episode of Uncharted Entrepreneurship. Today I Mike Hoffman. He is the passive income guy. Mike, go ahead, do an introduction for yourself. Tell us your day-to-day role and maybe one of your passions in life.

Mike (00:15.47)
Thanks Brent, fired up to be here. So for me, when you talk about entrepreneurship, it's kind of, you know, looking back on it where it all started for me back in the Midwest with the lemonade stand when I was 12 and just kind of parlaying that entrepreneur spirit to where I am today. And now, you know, I have a little diversification with different passive income streams from vending to...

Bitcoin mining to e-commerce stores and real estate. So try to dabble in a little bit of everything and then double down when it's working.

Brent Peterson (00:50.803)
That's awesome. a passion in life? What do you have as a passion?

Mike (00:56.015)
Yeah, I think for me it's all about freedom. Before I really kind of realized like with vending machines you're making money when you're sleeping. Literally, I was living in the Silicon Valley.

Mike (01:12.75)
working a ton. So for me now it's like looking back like that was a good phase of my life but now it's all about freedom to spend more time with my family, my health, all of those things.

Brent Peterson (01:25.065)
That's awesome, perfect. And I know Portland has a great marathon. So I haven't done Oregon yet, but I'm gonna get to it.

Mike (01:33.674)
Come on out, there's a lot of runners here with Nike HQ around.

Brent Peterson (01:38.441)
Yeah, no kidding. Wow. All right, so before we get into content though, you have been volun- you have volun-told or volunteered for the Free Joke Project. I'm just going to tell you a joke. Just give me a rating one through five. So here we go. Managing your- okay, I'll start over. Delivery problem. Here we go. One more time. Managing your weight around the holidays just requires a little planning. For example, I took the batteries out of my scale on Wednesday.

Mike (02:08.802)
I like that one. I thought it was gonna be something around weight. I'd give it a four.

Brent Peterson (02:12.859)
good. All right. Thank you. All right. Even with the poor delivery, I appreciate it. All right. give me a little background on you and how you got into what you're doing. You mentioned Silicon Valley. So I'm assuming that you weren't doing virtual vending machines there or starting a SaaS company around vending. Tell us about how you got into what you're doing.

Mike (02:42.284)
Yeah. So my background is actually in human performance and the whole idea around health and longevity. And I was a human performance coach in the Bay with elite level athletes, a lot of pro and special operations community where we would do beta testing with different wearables to really kind of push the envelope with training. And that job led me to traveling a lot, which led me to being in an airport a lot, which led to

a lot of delayed flights late at night when there was no restaurants open and airports, hence vending machines. And then also what was in these vending machines. was like, we already have a national obesity crisis. Like what the heck? So that led me back to the entrepreneurial spirit down a path of kind of understanding the market a little bit of, so this machine, like how does it.

does it cost? And one of the things too, I was at that phase pre-COVID was I got into real estate, I could never come up with like the hurdle with real estate, scaling your portfolio is always more down payments without getting creative with financing. so what fascinated me about vending was when I got my first vending machine, I went to buy it from a very legit manufacturer in the Midwest by you.

They were like, okay. Yeah, you can finance it with no money down and I was like wait what and then they were like, yeah and your first payments not till 90 days after The machines been delivered. So I was like great timeout So no money down and I can do 90 days of sales before my first hundred dollar payment like why wouldn't I get? 25 of these so Yeah, that's kind of what led me to building a route my

here in Eugene and then I bought a route that we manage remotely in Chicago as well.

Brent Peterson (04:43.625)
Okay, yeah, I was gonna, I guess my next follow-up question on that was I have a friend who did or does vending machines and I know that he talks about the logistic part of it is something you have to be, he has to be present for, but it sounds like for Chicago you have somebody that handles the logistics part of it.

Mike (05:02.23)
Yeah, so that must be the Silicon Valley in me because I'm all about, I'll do something active and then I want to make it as passive as possible. And if that means I have to pay someone to do that, I'll do it. So yeah, that's what I've been on this kind of mission of like, how do we build out a system that's rinse and repeat? And then also the coach in me. Now I help a lot of people build vending routes wherever they live, ranging from Hawaii to Miami and Boston and everywhere in between. So.

with that, there's a system of how to run her out and build her out.

Brent Peterson (05:41.897)
When it comes to building a route, do you have to have a certain demographic or is it big town, small town or tell us a little bit about how the demographics works in that?

Mike (05:53.614)
Yeah, that's a really good question, Brent. think it just kind of depends. mean, obviously you don't want it. We tried to help build a route for someone in Western Nebraska that had a town of, think 2000 and they had one like target and it was the super eight along I-80. That was the kind of the truck stop only location that would justify the foot traffic. So you definitely need some type of people that live there. And then with regards to demographics, it's kind of.

twofold. It's at end of the day, you want a place that has a busy parking lot, whether that's a apartment complex, whether that's a airport, whether that's a medical office that has, you know, orthopedics on the first floor, oncology on the second floor, but everyone's coming through a main entrance. Like at the end of the day, you kind of the simplest thing is if it's a parking lot that's full, then it probably justifies having a machine.

Brent Peterson (06:50.069)
When you talk about the locations, you have to, I'm assuming you have to arrange the putting the machine in the place that you don't own, right? And I just read an article about Redbox and how many Redbox vending machines or Redbox disk machines that are, that it's out of business, but they can't be disconnected and the electrical bills for all these Redbox machines. How does that work if you have to?

you have to arrange with the landlord to put the machine and all the logistics around that.

Mike (07:22.678)
Yeah, we definitely don't yeah, so the red box machines that's interesting so they must have to be like hardwired into the building like a sauna because I'm really big and not the old-school vending machines with the motors and the codes more of a What I would consider a smart cooler with a point of sale on the door And so those are all newer models that are eco-friendly. So a 110 outlet so, you know, those are

I mean, it's literally like a smart fridge is how you can think of it or like a commercial fridge that plugs into the wall. those are pretty easy to move around compared to the big old red box vending machines.

Brent Peterson (08:06.246)
Do you, I guess getting back then to the logistics of, you have to arrange the landlord to put the machine there and all those things that you help with that part of it.

Mike (08:17.879)
Yeah, it could be a landlord. It could be a business owner. I mean, it could be anything. We've done YMCAs where it's like the city. mean, anywhere that there's foot traffic. And for a lot of these places, they just want their residents, clients, employees happy. They're not looking for, hey, Brent, I want like, most people think, you got to pay revenue share. And it's like, when I started building my route,

of the first 20 locations I think I put in only two of them wanted a revenue share.

Brent Peterson (08:52.861)
And when you say, I mean, there's revenue sharing, there's just, does anybody want electricity or anything like that? Or is they just, it's negligible and they just like, like you said, they would like their employees to be happy. So I envision employee lunchrooms are the biggest ones that is something where if they have enough employees in house that a lunchroom would be somewhere to put it.

Mike (08:59.438)
.

Mike (09:15.63)
Yeah, break rooms are perfect. I think the electricity on the machines less than 10 bucks. Like I think one of our properties told us it like increase their bills $6 a month or something. again, paying for convenience, but you're right on the employee side. We have a roofing company that only has 25 employees and you think 25 employees, there's no way that's foot traffic. Well, the founder of this roofing company

He actually did a business plan where he broke out all my employees going to the seven 11 during their lunch break. They're taking our work trucks there. It's a roughing company. They're paying way too high a prices and literally taking our paychecks and going to spend it at a seven 11. So like he had this whole business model to the point where everything in our coolers, he cuts the price in half to the employees.

and then we bill him for the other half. So if it's like a $5 sandwich, he doesn't want them going to the 7-Eleven to get a sandwich for let's say $6. So he's like, I want to charge $2.50 for that sandwich. And then you invoice me for the other $2.50.

Brent Peterson (10:29.037)
that's interesting. So I had, I had a meeting yesterday and, in the hallway was a donut vending machine. So you talked a little bit about health. and by the way, the donuts are four bucks each, which I think is a little bit expensive, but you know, they, it's been, that machine's been there for a long time. So I'm assuming it, sells because it's still there. how do you insure, how, how do you balance out?

Mike (10:47.649)
Absolutely, for a doughnut?

Brent Peterson (10:58.333)
the Cheetos compared to something that's a little bit more healthy.

Mike (11:03.106)
Yeah, so this is part two of why I got into vending was this whole obesity crisis and working with our elite military. You kind of realize like our number one national security issue is high school graduates aren't fit enough to pass the requirements to join the Navy or the army. They literally can't even do a two mile run or any of that kind of stuff, which is a little scary. So my stance on that is you always start with.

things they want. So you get them to come by the machine and then over time, you meet them in the middle. remember one of the machines we started with our number one sellers in like 2020 were diet Cokes and like your traditional Reese's and stuff. And now that machine, I don't think we have anything in that machine that has more than three grams of sugar. Like it's all your kind of grain free chips. Like, you know, your quest chips that have 18 grams of protein, not your lays or barbecue potato chips from

from the early 2000s.

Brent Peterson (12:04.137)
My vision of seeing somebody at a machine is banging on it because the little dial thing hasn't dropped it. Is that a thing of the past now?

Mike (12:11.209)
Motor? Yeah.

Mike (12:16.126)
Yeah, I don't I don't try to use old-school machines because you're also limited by what fits in the motor So like with a lot of our smart coolers, we'll do everything from big old jugs of laundry detergent to tiny Nyquil and and they will add the little travel pack so I Can you you know the headaches of well this item fit in the motor now? It's just a smart cooler with shelf space. So if it fits on the shelf

It's going to be totally, or you just take out the shelf and then you have an extra gap to put taller items in there.

Brent Peterson (12:49.117)
One of the vending machines that I walk by at the airport is the Best Buy has, the Twin Cities airport anyway, said Best Buy has vending machines where they have all kinds of very expensive headphones and stuff in there. Do you work in non-food type of vending machines?

Mike (12:59.598)
Mm-hmm.

Mike (13:04.716)
Yeah, we're doing, there's some momentum right now, Brent, in this whole, what I call the incidentals market. for those that aren't aware, like Walgreens and Dollar Tree and CVS are closing a lot of their stores. So even back in Chicago, there's a high rise commercial office building that is half occupied, but the Walgreens pulled out from the first floor.

So now they're like, we do incidentals in a machine? Because our tenants are asking more for literally like Advil and Tylenol than they are, you know, Snickers.

Brent Peterson (13:46.345)
How about machines that have adult items? And I'm thinking of, you in the past, well, when I was younger, was sometimes you'd come across one that had beer in it. But there's also in, I'm sure in Oregon, there's, know, THC beverages and things like that. How do those fit in and are they legal anywhere?

Mike (13:59.086)
Mm-hmm.

Mike (14:10.358)
Yeah, so they definitely fit in the technologies there. There's machines now that have clear. So if you think of like TSA pre-check when you go to the airport or like the clear pre-check, a lot of these machines, you can have them have clear built into them. like

and facial recognition with your ID. The key with regards to like liquor is like you need a liquor license at the property. So if you're gonna throw this machine in, let's say an apartment complex, if the apartment complex doesn't have a liquor license, you're kinda at a

Brent Peterson (14:50.561)
interesting. If you had some advice for somebody giving or who wanted to start a vending machine route or get into this passive income business, give us three things that you would tell somebody.

Mike (15:04.238)
Yeah, so I think the first thing is it's not get rich quick. It's a total numbers game. You know, what's the same like baseball, your best hitters in an all star game have a batting average of 300. So be prepared to strike out seven times and that's okay. You just need more at bats. The second thing is there's opportunity. mean, old school machines are on their way out. even

that you might think like, they already have a vending machine. Well, that's like your talk track because if they already have a machine with old school motors on it, you come in with these micro markets, let's say there's huge opportunity there, even if you think the market's already saturated where you're going to be. And then I think the third thing is it's just the classic like entrepreneur DNA, you know, you'd be a self starter. And once you go for it, you got to go all in because if you do it, you know,

with half the effort you're going to get half the return.

Brent Peterson (16:06.515)
How about competing routes? I think there's some movies out there that have vending machine routes where somebody's competing against somebody else. Is that a thing where somebody would have something plugged in and maybe the landlord's opened another machine, but somebody doesn't want you in their territory?

Mike (16:29.81)
Potentially, I think so. think, you know, that's, I don't really try to kind of compete. If they already have the location, like I don't really try to bark up that tree, but I will say that there's enough to go around. And what I mean by that is there's a lot of full parking lots out there and, and any city, whether that's Minneapolis or a smaller city where you could have 30.

vendingpreneurs and they wouldn't be even feeling like they're on top of each other.

Brent Peterson (17:03.975)
What, in that very beginning, you did mention that a lot of these companies will do no cash down and they'll finance it for you. Do they typically cash flow after that 90 days?

Mike (17:17.646)
absolutely. Yeah. That's why I got so excited. My first machine was cash flowing more than my first rental and I put 20 % down on a $100,000 house and I put no money down on those vending machines.

Brent Peterson (17:33.605)
If you have enough teenage kids, do you think that you could make it work at home?

Mike (17:38.51)
Absolutely. have multiple, I think there is no easier way, Brent, to teach your kids and, or to teach your kids supply and demand and economics 101 than a vending machine. We actually have a vending printer from, from Minnesota that has, I think he's up to 40 locations now and he has four kids between the age of 13 and 17. And he gives each kid a different machine and they set the prices, they pick the products and they track.

sales and inventory. So you want to talk about like teaching them, are you priced too high? Are you giving the residents what they want? Like it's a real world lemonade stand of 2024.

Brent Peterson (18:19.623)
Yeah, that's awesome. And so what sort of technology are in these machines now? Are you able to see them from an app so you know what the inventory level is and things like that?

Mike (18:30.35)
Mm-hmm.

Mike (18:36.822)
Absolutely in real time. like right now I'm in Oregon. I could pull up in our dashboard and see, we just sold a Dr. Pepper at a property in the loop in Chicago.

Brent Peterson (18:46.941)
Wow, that's incredible. Mike, as we have a few minutes left, and I give everybody a chance to do a shameless plug about anything they want at the end of the podcast. So what would you like to plug today?

Mike (18:55.647)
you

Mike (18:59.886)
I don't know. I'm a coach that gives away a lot of free content. So if you're interested at this as an intrigue, you feel free to check out Mr. Passive on Twitter or on X. cause I literally share everything from what are the margins on a, if you're doing three grand a month with a machine, like how much of that's take home like to, where to find locations and how to go door knocking to.

Whatever. I'm an open book to how to teach teenage kids to go stock a machine. So I'm an open book on sharing content on X. Yeah, you can get in touch with me on there or vendingpreneurs.com. You can schedule a call with our team. And if you're interested in really going down the route of a route.

Brent Peterson (19:39.027)
Great, and where's the best place to get in touch with you?

Brent Peterson (19:56.969)
Perfect, I'll make sure I get those all on the show notes. And last question, your favorite wearable device that's gone from the military to, and you were in the Bay Area, so you part of Strava. Is there some devices that we should be looking at? Because if you're a numbers geek and you want to make sure you track every power step and all that other fun stuff.

Mike (20:08.846)
Mm-hmm.

Mike (20:14.819)
Yeah.

Mike (20:19.372)
Yeah. So I'll actually challenge you. So I got a Garmin and an Aura ring on right now, but I actually think the most significant when it comes to changing your daily habits is going to be wearing a continuous glucose monitor. In fact, I think Abbott and Dexcom just got approved to start selling these over the counter. But the way that those will show you how

your blood glucose is impacted by the littlest things, whether that's exercise brand or I'll give you a perfect example. When I would have chips and salsa, my blood glucose would spike. The minute I had chips, guacamole and salsa in the same meal, the healthy fats from the guac would keep it neutral.

Brent Peterson (21:05.673)
Wow, tortilla chips are my weakness.

Mike (21:10.358)
Yeah. Yeah. But even like, even when you talk about, you know, we were chatting with about Hawaii before the call, like you think about poke, like what types of sauces on the poke will spike your glucose or apple, you know, nowadays people know about the apple, the apple cider vinegar type pills you can take, but you now understand why people in the blue zone.

Brent Peterson (21:22.6)
Hmm.

Mike (21:35.7)
areas of the world, they have a salad with apple cider vinegar as a dressing before they eat their pasta and that has stabilized their glucose to now crush pasta without spiking it.

Brent Peterson (21:46.823)
Wow, yeah, good. All right. Thanks for that.

Mike (21:49.014)
Yeah. So I think a glucose monitor is, and it'll teach you how you respond to exercise, obviously. But for me, I mean, there's no better way to have an impact on your health and nutrition.

Brent Peterson (22:00.585)
Anywhere, it's not like a patch, you wear it just 24-7.

Mike (22:03.98)
Yeah, can, yeah, and then it just syncs with your phone. You just hold your camera over it, it'll Bluetooth register. you're literally, there's probably a five minute lag, but tracking, mean, I'll do experiments of like drinking a Pilsner beer versus a whiskey on the rocks. And it's amazing. Like even the littlest, like the lightest beers will spike my glucose.

Brent Peterson (22:07.571)
Right.

Brent Peterson (22:26.835)
Huh, so whiskey on the rocks is the answer. Got it. Yeah, right. My other weakness is beer. So beer and tortilla chips, I give them up at Lent. anyway. Yeah, maybe not. All right, Mike Hoffman, passive income guy. I'll make sure I all your, I'll get all those, and those vendorpreneur, right?

Mike (22:29.932)
Yeah, vodka soda.

Mike (22:38.434)
Yeah, maybe you don't want that glucose monitor.

Yeah.

Mike (22:52.204)
Yep, vendingpreneurs.com. can schedule a free call if you're interested in learning more. We're an open book and happy to help any way we can.

Brent Peterson (23:02.397)
That's great. I'll make sure I get all those in the show notes. And it's been a great conversation. Thank you so much for being here.

Mike (23:08.28)
Thanks, Brian. Really appreciate what you do.