The Gateway Drug to Laundromats with Mr. Passive, Michael Hoffman

Jordan Berry [00:00:00]:
Hey, what’s up guys. It’s Jordan with the laundromat Resource Podcast. This is show 179 and I’m pumped to hear today because today we are interviewing who I would consider a gateway drug to laundromats here, actually. And it’s Michael Hoffman, mister passive. And we talk about various different passive income streams. And, you know, I use that word very loosely. He uses that word very loosely. I know the joke going around about lawn rats being quote unquote passive.

Jordan Berry [00:00:32]:
However, we’re gonna talk about vending machines today, which again are not passive per se. However, they do disconnect money earning from time, and I guess that’s the definition I’m gonna go with, for this. And I would also use for laundromats. They disconnect the money you earn from the time you put in. There’s not a one to one correlation there. So that’s what we’re going with. And today, we’re talking a lot about vending machines, and this episode will be great if you are a laundromat owner and you have vending machines or you’re thinking about getting vending machines. We talk a lot, about how to optimize your vending and all that stuff.

Jordan Berry [00:01:12]:
So there’s a lot of great stuff there if you already own laundromats. If you’re looking to get in the laundromat business and maybe you don’t have a ton of capital at the moment, vending might be an intriguing way for you to get your foot in the door, and make some progress towards getting a laundromat. I’ll be honest, I was not super, you know, I’m not super into the vending thing. However, after talking with Michael slash mister passive, I was very intrigued by the direction the vending industry is going to. So we talk a lot about the future of the vending, industry and some new vending products that I didn’t even know existed that are pretty cool that might go really well in your laundromats. Okay. With that said, let’s jump into it with Michael Hoffman, mister passive, right after this exciting announcement slash advertisement for you. What’s up, laundromat owners? I have got the opportunity of a lifetime for you.

Jordan Berry [00:02:13]:
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Jordan Berry [00:03:23]:
But wait, there’s more. There’s also going to be secondary prizes going out to everybody. Probably some discounts and some other stuff. And you know what? I feel like the last name drawn out of the hat probably should get a poster of me on the beach in the speedo that Dave Mintz got me. That will be free of charge for the last name drawn. Look forward to that. I don’t know if you want the 1st place or the last place now because they seem pretty close in value there. I’m just kidding.

Jordan Berry [00:03:52]:
I wouldn’t do that to anybody, but don’t miss this incredible opportunity to level up your business, the professional website, and a full branding package. Set your laundromat up to dominate your market. Enter today. Again, build with bmr.com/win, and, hey, let’s get out there and make 2025 the year that we change our lives. I love it. I am super excited to have Michael Hoffman, AKA mister passive, here on the show today. We’re gonna talk about some passive income streams and specifically what I would consider a gateway drug to laundromats, today. But, Michael, man, thank you for coming on the show.

Jordan Berry [00:04:38]:
Super excited to have you here. How are you doing?

Michael Hoffman [00:04:41]:
Jordan, fired up to be here. Thanks for having me.

Jordan Berry [00:04:43]:
Yeah. I’m fired up too. And, you know, I’ve been looking forward to this one because this is a little bit different from what the normal stuff is. However, I will say, man, I get questions about vending and vending routes, and, you know, it’s like, something that’s in a very similar vein as Laundromats in terms of cash flow wise and, you know, being able to make it more passive than a lot of other businesses, but it’s a lower entry point when it comes to cost a lot of times. So I think a lot of people are interested in this and will enjoy this episode. So why don’t you give us a little bit of background on you and who you are and how you became misterpassive, and then we’ll jump into it from there.

Michael Hoffman [00:05:21]:
Yeah. No. That’s awesome. Yeah. So I think, from my side, the the big thing was, fresh out of college. I was, in human performance in collegiate athletics working 80, 90 hours a week, and I remember Sunday afternoons, you you know, during the football season, you don’t have a day off. And I was at work on a Sunday after we played Saturday, and I was like, what am I doing? You know, I just calculated. I was literally making $1200 a month at the time in 2011.

Michael Hoffman [00:05:50]:
I was, like, factoring in my per hour rate, and I was like, this is below minimum wage. So I was like, I went down this path like a classic entrepreneur of how do I earn with my mind, not my time, and, started in real estate like most people do. And at the end of the day, like with real estate, I couldn’t keep affording to put another down payment on another homes. The great thing about Bendy.

Jordan Berry [00:06:13]:
Did you do sorry. Sorry to interrupt. Did you do, like, long term rental? What do you mean you did real estate? What what was that?

Michael Hoffman [00:06:19]:
So my first rental, in 20 I think it was, like, 2012 was a, you know, a $70,000 home in the Midwest that rented out for $900. And I was pocketing after expenses and property management fees and all that. Maybe 200 and I just knew the 1% rule. So I was like, okay. I bought it for 70 k. It’s renting for 900. I’m over the 1%, so the numbers will make sense. And, you know, $14 down payment on a 70 k home was a lot for someone making $1200 a month.

Michael Hoffman [00:06:48]:
So

Jordan Berry [00:06:48]:
It’s a lot.

Michael Hoffman [00:06:49]:
Yeah. Yeah. So, I just kinda got addicted to that, like, every month getting a deposit to my account for that rental and wanted to scale it more without having to do down payments every time, which led me to Vendee.

Jordan Berry [00:07:04]:
Yeah. Did sorry. I think that anything was going by. No worries. Did, chaos over here. First of all, like, kudos to you for being able to get that down payment down. Like, that’s a year’s worth of salary plus there. So that’s that’s a big deal.

Jordan Berry [00:07:17]:
Were you, like, like, living at home at the time? Like, how were you saving that much money to get that going?

Michael Hoffman [00:07:23]:
Yeah. I was doing a lot of, you know, just kind of disciplined option. You know, I had a roommate, and we we live very, very simple lifestyle. And I dipped into my emergency fund, not gonna lie, to help with the down payment. So there was there was a little risk like any entrepreneur, and, yeah, that’s kinda what led me down this path.

Jordan Berry [00:07:44]:
Yeah. That’s awesome, man. And just, again, not not to make this all kinda too far real estate, but you you mentioned you bought in the Midwest. Were you living in the Midwest, or was this an out of state rental that you did?

Michael Hoffman [00:07:57]:
Yeah. No. I was living in the Midwest at the time. So I was living in Saint Louis. I got the rental there in, 2012. And then 2 years later, I got a call like, hey. Do you wanna move out to the Silicon Valley and work for a tech startup in the human performance space. And at the time, I was going through a a breakup in my personal life.

Michael Hoffman [00:08:15]:
So I was like, let’s just let’s go west and

Jordan Berry [00:08:17]:
Clean slate. That’s right.

Michael Hoffman [00:08:19]:
Oh, man. I didn’t really

Jordan Berry [00:08:20]:
West goes best coast anyways. Come on.

Michael Hoffman [00:08:22]:
Yeah. Yeah. But, you know, Palo Alto was probably the most expensive city in the world, so I didn’t really

Jordan Berry [00:08:27]:
I lived there 8 years too. Yeah.

Michael Hoffman [00:08:30]:
Man, Phil’s Coffee is is the place.

Jordan Berry [00:08:32]:
That’s great. Yeah.

Michael Hoffman [00:08:34]:
Yeah. Yeah. Yeah. So, yeah, that’s that’s kinda what led me west, and now I live in Oregon.

Jordan Berry [00:08:39]:
Awesome. Awesome. Awesome. Do you still have that house or did you sell it?

Michael Hoffman [00:08:44]:
I sold it in 2021 right at the peak of COVID. And actually, 1031 it into a vacation rental in Bend, Oregon.

Jordan Berry [00:08:53]:
Dude, I also love Bend, Oregon. Bend is great. Dang, man. Flowing down the river, so good.

Michael Hoffman [00:09:00]:
Absolutely.

Jordan Berry [00:09:01]:
Yeah. Okay. So sorry I derailed us a little bit. You you said, okay. You kinda got addicted to that paycheck. And then how did you come across vending?

Michael Hoffman [00:09:11]:
Yeah. So for that company in Palo Alto that I was working for, it required a lot of travel. So I was going everywhere from New Zealand to South Africa and basically anywhere where there was an elite sports organization or special operations unit And long story short out.

Jordan Berry [00:09:26]:
Real quick. It’s kinda weird that, like, we never crossed paths, you know, being an elite athlete myself. It’s just kinda weird. But, anyways, keep going.

Michael Hoffman [00:09:34]:
Yeah. We might have. We just don’t know it. You never know. You might have bought something from one of my vending machines.

Jordan Berry [00:09:38]:
Yeah. Yeah. Maybe that that’s probably the only way we’d have crossed paths. I’m no elite athlete over here. Okay. Go ahead. Yeah.

Michael Hoffman [00:09:45]:
No. But, yeah. So the classic grinding for a software company out of the bay and being in the valley, you’re freaking you’re hustling as you know. And so, I was on the road 3 weeks out of the month, and I’d be in these airports and, of course, flight delays, and you got that. I remember one time I was in the Denver airport 11 PM. Flight delayed, pilots can’t take off to get us back because they are over time and blah blah blah. And, of course, I’m hungry, and there’s nothing around that’s open. So I go to the machine that’s sitting there, and I’m like, someone’s literally charging me $5 for a bottle of water.

Michael Hoffman [00:10:20]:
And I know it costs, like, 20¢ at Costco, and they’re clearly sleeping at home making money off me while I’m at this machine. And so that kinda that lit a fire in me to learn more, and and I I literally self taught myself ever since.

Jordan Berry [00:10:35]:
Dude, that’s awesome, man. That’s like, speaking of classic entrepreneur that you already mentioned is, like, that’s classic entrepreneur. Right? It’s, like, looking at something that’s like, hey, man, this solves a problem because here I am with the problem, and somebody else is solving it for me at a pretty good profit. And like you said, they’re napping. They’re not they’re not stuck at an airport traveling, trying to, you know, slave away the 9 to 5. Not that there’s anything wrong with that necessarily, but, you know, I classic just classic entrepreneur stuff right there happening. Yeah. You know, what’s what really intrigues me about vending is that you can be, you know, you can make good money doing it, but it’s it’s relatively low upfront cost.

Jordan Berry [00:11:24]:
Right? If you’re buying a laundromat, there are ways to buy them or get them for low money down and stuff like that, but they are the risk easiest ways to get in the business by far. But vending relatively inexpensive to get going, but I feel like you’ve gotta kinda know what you’re what you’re doing. How did you I mean, can you tell us about your first deal and, like Absolutely. First vint, I guess not a deal, but your first vending machine that you purchased, where you put it, and how it went, and all that stuff?

Michael Hoffman [00:11:57]:
Yeah. And Jordan, this is what really got me down this path was I went into an apartment complex right down the road of of where we live, and I was like, hey. Do you guys offer any snacks to your residents? And they’re like, oh, this is right before COVID. They’re like, oh, no. We don’t. We’d be open to putting a vending machine in our social line where the pool table, everything is. And I was like, okay. Great.

Michael Hoffman [00:12:20]:
Yeah. I can do that. And keep in mind, I didn’t know where I was gonna find a machine. I didn’t even know. I just went in classic, hey. Solve a problem for you. Figure it out later type of thing. And I didn’t even know at the time you could finance machines.

Michael Hoffman [00:12:35]:
So then she’s like, yeah. We want a machine in this apartment complex. So I literally went to Google and I typed in vending machines for sale, and the only company that popped up in my my search that wasn’t from China was a company out of Des Moines, Iowa. And I’m from the Midwest. I’m I’m from Iowa originally. So, like, okay, Midwest values. I can trust this company. I called them up, and they’re like, hey.

Michael Hoffman [00:12:59]:
We actually provide machines at no money down, finance it for, to you over 60 months just like a car, and your first payment’s not due for 90 days after the machine arrives. So then I was like, wait. I’m gonna do 90 days of sales at this machine before my first $112 a month payment is due on a $6,000 machine. No money out of pocket. So all I had to pay for was the $3 to $400 to stock the machine, a credit card reader to put on it, which now they just bake into the financing. And that was it. And right away, I was doing like, $20 a day. Then after a month or 2, I was doing $25 a day when people knew the machine was there, and then I started doing $30 a day.

Michael Hoffman [00:13:49]:
And now with this whole unattended retail revolution that’s going on, I mean, I think it’s gonna be 40 +1000000000 by 2026. So in 2 years, like, just, you know, you go through an airport. Now these Hudson bookstores literally had no employees. They’re just AI cameras and checkout kiosks. Yeah. But that’s kind of where we’re so I swapped out that. So that machine, just a traditional vending machine was doing $1200 a month. I was profiting 50%.

Michael Hoffman [00:14:16]:
So cost of goods was about 30 to 35%. I would hire a stocker at $20 an hour to go by there twice a week. So right away, I was profiting 5, $600. So I was cash flowing more than my rentals. And so I was like, this is really interesting. And then I got into this whole concept of, like, smart machines and micro markets and the whole, you go to a Marriott and they have to grab and go over to the left, but, like, there’s no checkout kiosk. And it didn’t make sense when I would go stay out of Marriott and I grab a bottle of water, and then I had to go wait in line at the check-in desk behind 4 people checking in. I was like, this I just wanna water.

Michael Hoffman [00:14:52]:
Just do a room charge. It can’t be that hard. Why am I waiting for 20 minutes?

Jordan Berry [00:14:56]:
Mhmm.

Michael Hoffman [00:14:56]:
So back to classic entrepreneur and friction and trying to remove it, I went down this path of smart machines and micro markets. And that location, the apartment complex, I was doing $1200 with a traditional machine. I swapped it out with a smart machine, which is just a lot think of it as like a locked fridge with AI cameras. You unlock the door with a credit card, and then you can grab 15 different things rather than enter in the code and watch the motor spiral down a Snickers bar and you have to reach now you unlock the door, open it up, grab whatever you want. Well, my transaction values started to 3 x at the same location. So now that location doing $1200 with a traditional machine was now doing $25100. And so I was just like, wow. There’s something to this, and we’ve talked about it before with, like, laundromats and stuff for sale.

Michael Hoffman [00:15:47]:
Well, nowadays, a lot of these baby boomers are trying to sell vending routes for sale, and they just have the old school Pepsi. So there’s a there’s a whole, like, flipping homes concept to vending that you could do right now if you really wanted to do it. But a lot of the people we help we help them find locations wherever they live and help them build the route. And then if they wanna, like, parlay that to buying routes with some capital, they can do that. But, yes, it’s been a fascinating journey.

Jordan Berry [00:16:16]:
So I’ve owned vending machines in laundromats, never a vending route. One of the things I hated was having to get the inventory, and then it just always took longer than you would think. Maybe not that you would think, but that I thought beforehand to actually do the restocking and stuff. I I’m, like, pumped to hear that you hired somebody pretty early on to do that stuff. How hard was that to find somebody? How did you find somebody to actually do that for you?

Michael Hoffman [00:16:47]:
See, this is I’m I’m very, maybe it’s the software mindset in me from living in the bay. But how like, I wanna learn something so I know what to delegate, and then I wanna make it as passive as possible. And in fact, we we have an ad running on Craigslist all the time for stalkers because we’re constantly scaling. But, yeah, I mean, it was super simple. I the great thing is, like, if you look at Craigslist, for example, for job ads, they have what’s called a gig section, which is like your your Uber Eats, DoorDash y type jobs where it’s like, hey. You just turn on the app and you’re you work when you wanna work type of thing. And that’s that’s where I post these. I’m like, I don’t care if you’re an early riser and you wanna stalk at 5 in the morning like one of our stalkers does who’s a teacher, or you’re you’re a night owl and you wanna stalk at 10 PM while you’re listening to some tunes and whatever.

Michael Hoffman [00:17:38]:
Yeah. It’s I always start out like $20 an hour typically. And then after 90 days, if they do a good job, might bump it up to $25 an hour. And then after a year, maybe give them a percent of profits. And then after after 2 years, maybe give them a percentage of equity in

Jordan Berry [00:17:53]:
the route. Nice. So you’re really trying to incentivize these guys to stay and, like Yeah. Curb that that turnover. Because, I mean, the turnover kills we we feel that a lot in the laundromats. I mean, any of those sorta, like, low paying, you know, jobs that really anybody can’t like, a lot of people don’t want to, but anybody who can really do it, they’re just hard to keep good employees, hard to find and hard to keep good employees. But I I like that there’s a path of progress there for employees. And I think it’s, I think it’s pretty genius in it.

Jordan Berry [00:18:26]:
Since your margins are so high on the vending side, given up, doing a profit share even like an equity split kind of makes sense. I mean, do you, do you mind sharing like ish, like profit, like what you offer once they get to that point?

Michael Hoffman [00:18:41]:
Yeah. 5%. And then equity, you can set it up where it’s like 5% over 4 years, which is like a standard, like vesting schedule to kind of, incentivize the long term. And that’s what I did. The guy that I hired to stock my first two machines, he was working, 3 hours a week to start, and that included stocking the machines and then also going to Costco at the time. And now he’s been with me 5 years and he’s on a full time salary and everything.

Jordan Berry [00:19:12]:
I love that. I love that. Where where are you getting inventory these days? I mean, I know, you know, I’ve done, like, the wholesale store, the Jettros, and, you know, that kind of thing. I’ve done Costco. Where do you normally get your stuff?

Michael Hoffman [00:19:28]:
Yeah. So we we pounded the pavement initially with Costco and doing the whole variety tax of Celsius and CredoLay and all that. But as part of so we’ve we’ve built a pretty robust Venningpreneur community in our community. And so, what I’ve what I’ve actually built out recently is a a Vend Market, which is a market where they can go in and order products through us. And then, we have partners with distribution channels to get them the product, whether that’s, okay, they’re ordering Pepsi product, and we have a a deal with Pepsi both on the Frito Olay side, but also on the bottler side to get them that product. And then the great thing about that versus going to Costco or Sam’s is then we can offer rebates back to our vendingpreneurs versus, you know, if you go to to Costco and you order Poppy, you’re not getting any rebate. Where now with our new, think of it as Amazon for vending snacks. Now if you get poppy through us, you’re gonna get a rebate back on that purchase.

Jordan Berry [00:20:26]:
Killer. Killer. And that’s, like, the power of having a community like that too. Right? As you can start developing these relationships with the vendors.

Michael Hoffman [00:20:33]:
Buying power. Yeah.

Jordan Berry [00:20:34]:
Yeah. And pass those savings on to people. And, like, that’s, you know, one of the things that I try to advocate for in our industry is, like, hey, like, we’re stronger, we’re better together, we can go farther and faster when we’re together, and that’s that’s part of it. Right? Is that there’s power in the collective there. So that’s killer. I love that. Yeah. Are you well, okay.

Jordan Berry [00:20:55]:
Let me back up. I was gonna ask you about well, okay. Let me back up and just say, okay. So you’ve got a couple machines, you know, at at at some point, you’ve got your guy who’s stuck and he’s working a few hours a day. What kinds of locations did you look for then, and has that evolved over time since you’ve been doing this? What kinds of locations to look for now to put

Michael Hoffman [00:21:16]:
these things? I think, it’s a really good question. The simplest way is I look for a full parking lot. If the parking lot’s full, it’s gonna be a good location, whether that’s the YMCA, you know, a school, any type of business with a lot of workers. The second piece to that is if there is long hours there. So, like, for us, for example, we have a a pumpkin farm we work with, and they actually have 3 shifts a day. So they have a night shift. So we’ll have people get off work at 7 AM, and they’re getting, like, all our pastries and Sunny d. And then the 7 AM shift starts, and then we’ll have our lunch guys that’ll get all their lunch snacks, like, you know, lunchables, sandwiches, whatever.

Michael Hoffman [00:21:59]:
And then what we’ll have an another afternoon shift. So I think anything that’s, like, 247, you know, like an urgent care, I don’t know, vet hospitals. Think of, like, those places where there’s a lobby and there’s always gonna be foot traffic and or the flip side is there’s a lot of workers and they they they’re there a long time.

Jordan Berry [00:22:16]:
Dude, I love the full parking lot method. Like, that’s you need to, like, trademark that. Like, that’s genius. I love that because it’s just a simple way to, you know, to to know if a location’s got you know, one of the one of the things in in Laundromaster, Adam, like, look for, you know, stores that are similar to that that our demographic is gonna wanna go to. So, like, you know, Walmart’s 99¢ stores, Dollar General’s, fast food restaurants, Dollar Tree, all the dollar whatevers. Fast food restaurants. Like, they have done all the hard work of researching, like, where their locations are gonna succeed, and we reach a similar demographic. So just use their research dollars to do it.

Jordan Berry [00:23:00]:
And the full parking lot method is killer. That’s the same concept.

Michael Hoffman [00:23:04]:
What and then even to take it a step further, when people get the location and now the machine’s arriving and they’re like, hey. I’m Jordan. I live in Hawaii. What should I set the prices in my machine? The first thing I say is go find the nearest convenience store to that apartment complex you’re gonna put the machine and just walk through the aisles and observe the prices. And, like, there’s don’t reinvent the wheel. These convenience stores have done the work for you.

Jordan Berry [00:23:29]:
Yeah. Yeah. Okay. So here’s I mean, here’s what you gotta do is you have to name these these methods that you have here. Because I just find that once you give it a name, like the grocery store method or maybe something cooler or the parking lot method or whatever, like Allego. It becomes like comes like a thing, you know? Like, that’s killer. Super powerful. I love that.

Jordan Berry [00:23:50]:
You’re and you’re right. Like, you’re dead on with the grocery store thing because they they do their stuff in in the benefit you have is that you don’t have a lot of the overhead those grocery stores have when you have a vending machine. And you’ve got that convenience factor as well. I love it.

Michael Hoffman [00:24:06]:
Yeah.

Jordan Berry [00:24:08]:
Yeah. Okay. So as you got a couple of machines, it sounds like maybe you caught you caught the fever a little bit after you got a couple of them and you’re like, okay. I see I see what’s happening here. I see what’s going on. I need to get more of these. What did what was your kind of method of growing? Like, how do you scale this business?

Michael Hoffman [00:24:27]:
Yes. There’s a couple angles there, but you’re right. I was literally that first machine doing $500 a month in profit. I was like, wow. I’m making more than my rental, and I didn’t do any money down other than the $300 of snacks in the brewery. So I was like, this is let’s parlay this. So, you know, I think the first thing I’m a big believer in a warm intro is better than 10 cold. So, you know, a lot of these people will ask, like, oh, what about revenue share? And so if I ever get that question, I’ll parlay it.

Michael Hoffman [00:24:56]:
So like that apartment complex that was like, hey, do you do revenue share? The first thing I said is, yeah, absolutely, but not normally until we get 5 plus of your sister properties. And so right away, I was able to parlay my route to 2 of her sister properties because she wanted a revenue share for her property and it made her look good with her sister properties because she was bringing a amenity to the properties that they they didn’t have. So she kinda looked like it was her personal win. So that’s a big thing I do is I parlay happy customers into referrals. I think that’s the easiest one. And then, you know, I’m a huge believer in face to face like pop ins. So if the parking lot’s full, what’s stopping you from well, the great thing is if the market’s already saturated with vending machines, it doesn’t matter because these newer machines, newer market concepts are just such a disruptive thing that even if they have a Coke machine, now they want fresh food. Now they want incidentals.

Michael Hoffman [00:25:54]:
Like, we sell a ton of laundry pods at our apartment complex. I mean, you know the deal. Yeah. But it used to be you had to get, like, a laundry specific vending machine. Now that’s not it’s shelf space and whatever fits on the shelf, whether that’s I mean, we have a CrossFit gym that’ll put huge cases of protein jugs in their machine.

Jordan Berry [00:26:13]:
Yeah. That I mean, it is game changing and kind of revolutionary, which, you know, it leads me to my next question, which is where I was trying to jump to earlier, and I I didn’t wanna jump too soon. But let’s say okay. First of all, all very compelling arguments here, and I’m I’m feeling that shiny object syndrome starting to tingle over here. So I’m saying

Michael Hoffman [00:26:34]:
the laundry mats and where you’re gonna put a machine.

Jordan Berry [00:26:37]:
Yeah. I’m like, yeah. Well, the laundromats, they have they got machines. If if I either have a little convenience store, I got machines. So those are taken care of, but I’m like, well, what, you know, what else can I do here? Yeah. And they don’t have the they don’t have the smart machines in them. So but but let’s say I wanna get started. Right? Do you think it’s better to start with, like, just your classic vending machine, or or do I jump straight to one of these smart machines from the get go?

Michael Hoffman [00:27:05]:
I don’t think I think you’re kinda looking at it wrong. I and the reason why I say that is I’ll have people reach out to me and say like, hey. I got 3 of these outdoor machines. And I’m like, okay. Great. What’s the revenue per machine? And they’re like, oh, they’re sitting in my garage. And I’m like, this you you’ve gone. Yeah.

Michael Hoffman [00:27:24]:
Exactly. So so 0. Yeah. But that’s where I think it’s very location dependent. Like, if I was, you know, if I was in a beach town that had a lot of surfers and I you know, everyone goes and parks in this parking hub to go surfing and just go to the beach. And it’s the the the parking lot that’s always full to the beach. And I wanted to approach the county or the city for a machine. You know, I might put put an outdoor machine near the the bathroom or the public area, congregation area.

Michael Hoffman [00:27:54]:
I might put an outdoor machine there that holds, you know, surfing surfing wax and whatever kind of things other than drinks. So like there. Yeah. Exactly. So there. Yes. Speedos. So in that situation, it’s gonna have to be an outdoor machine where, you know, if it’s somewhere that’s indoor in a mall, like, rather than just go with a normal Coke machine in the mall, the elements aren’t an issue.

Michael Hoffman [00:28:17]:
These smart machines with the the locks now, you don’t have to worry about thefts. You’re kinda missing out on the more transactions, and it’s not like it’s that much harder. You’re setting the prices. You’re doing pricing psychology type decisions, whether it’s a old school machine or a new machine.

Jordan Berry [00:28:34]:
Yeah. Yeah. What’s the I mean, I I don’t I don’t know that I’ve I mean, I’ve seen, like, in the airports and stuff, you’ve got almost like little convenience stores where you pull stuff off the shelves or, you know, there’s some of the Amazon stores and stuff like that. I don’t know that I’ve really seen or maybe I haven’t. I just didn’t recognize it as vending machine, but I don’t really know that I’ve seen one of these smart vending where you’re doing that. What’s I mean, it seems like one of the risks is somebody doesn’t, like, latch the door all the way after their transaction. And

Michael Hoffman [00:29:06]:
Yeah.

Jordan Berry [00:29:07]:
You know, like, somebody else comes in and swoops up a bunch of stuff that the last person has to pay for or something like like, what how does how does it work, I guess, is what I’m asking.

Michael Hoffman [00:29:15]:
Yeah. So, visually, think of it this way. You go into a convenience store and you go over to the aisle of of coolers where they have all the sodas, and you open up the black fridge cooler door to grab your buy 1, get 1 free Doctor. Prepper. Well, that same exact fridge, it’s the same exact manufacturer as the smart machines. What they do is they put a point of sale kiosk right on that door. So that door is now locked. So if you take that fridge out of there and throw it in the hallway of the school, you got this black commercial fridge with a what’s a point of sale on the door.

Michael Hoffman [00:29:51]:
It’s locked. To unlock that door, the student at the school has to take mom’s credit card, put it on the door, it’ll authorize it. So if you have like a gift card with $5 of funds or you try to like cheat it, it’s not going to authorize it to unlock the door. Once that door is unlocked, there’s AI cameras in the machine that have a planogram set. And so you know, okay, top left is a 20 ounce Doctor Pepper. Bottom right is a big bag of Doritos. And so if I grab a Doctor Pepper and a Doritos, when I walk away from that machine, there it’s got the the door hinges will shut the machine by itself. But when I walk away, I will get a transaction for the items that were taken from the machine.

Michael Hoffman [00:30:36]:
So you’re right. We’ll have people, especially apartment complexes, a great example of this happens a lot in Houston with one of our vendingpreneurs. We’ll have people that will use these machines as their, like, grocery store trip, and they’ll, like, empty the whole machine with, like, a $400 transaction because they’re so lazy that they’ll just seriously, you’ll watch them because these AI cameras, they’ll walk up to the machine with a laundry bag, and they’ll just start filling it. And then they’ll walk away, and it’ll be like a $350 transaction.

Jordan Berry [00:31:07]:
Yeah. How how okay. So I I’m immediately going to some of the nightmares I’ve had with, like, chargebacks for laundry and stuff. How big of a problem is that with the vending?

Michael Hoffman [00:31:19]:
You mean with the the merchant processors?

Jordan Berry [00:31:21]:
Yeah. Like, yeah, the credit card companies, you know, saying they just bought, like, a soda, not $350 with, you know, or or something like that. I mean, obviously, that’s gonna happen. But how how big of an issue is it?

Michael Hoffman [00:31:34]:
Well, it’s on the machine company because it’s and the great thing is the cameras are monitoring what they grab. So this is the whole, you know, you’re paying a software fee. Typically, it’s around 5% from these machines, like a tech fee. And so there there’ll be times where, you know, they might miss an item and your inventory list catches it on the back end in the dashboard. And so, they have to reimburse you for that item, but it’s not I mean, you’re still even with 5% shrinkage or 5%, I guess, theft or whatever you wanna call it. You know, we we still are, factoring that into our our 50% profit margins.

Jordan Berry [00:32:15]:
Awesome. That’s awesome. Okay. So as you’re as you’re kind of, like, growing your vending company and you’re scaling to full parking lot locations and you’re you’re dialing in your mix of, you know, outdoor machines, indoor machines, smart machines, all that stuff. How how do you choose I mean, you know, the I guess the the obvious question is, like, how do you know what to put in your machines or how do you know, you know, what people are going to like? Is that something you just play around with until you find the right mix or what’s the strategy there?

Michael Hoffman [00:32:51]:
Yeah. So I think the framework is going to be about 80% the same. I’m a huge believer in if it weighs more, you can charge more. So rather than, like, the 1 ounce bag of chips or even the

Jordan Berry [00:33:04]:
2, like This is this is the kind of stuff you need to, like, trademark trademark this stuff. Gosh. That’s great.

Michael Hoffman [00:33:13]:
Yeah. No. Now you got me you got my head spinning on that.

Jordan Berry [00:33:16]:
Yeah. No, man. This is great stuff. Yeah.

Michael Hoffman [00:33:18]:
But, like, that’s why I love movie theaters. If you ever go to a movie theater with your family, they’re not giving you the small bag of emblems. You’re getting the big box of king-size items, and that’s what we go with with our machines. Like, we don’t want the transaction value to be a $2 Snickers. We want you to get like, nowadays, there’s these I’ve I haven’t even had them, but there’s these Skittles gummies. And so they’re not your normal Skittles bag. They’re like these bigger bags of Skittles gummies, and it’s, you know, it’s Skittles, but it’s like basically gummy bears. But they’re but, anyway, these bags are huge.

Michael Hoffman [00:33:51]:
And you can we’ll charge 675 for a bag of Skittles gummies that we get at Walmart for 275.

Jordan Berry [00:33:58]:
Yeah. Dude, I love that. If it weighs more, you can charge. I wrote it down. I’m, like, writing down all your quotes here and I’m I’m fully expecting, you know, these to be trademarked at some point so I’m gonna keep an eye on that.

Michael Hoffman [00:34:13]:
Okay.

Jordan Berry [00:34:14]:
I think I think honestly, like, I think that’ll even just boost business more, you know, create I mean, basically making frameworks out of them. It’s great. I’m getting excited for you and your your online business now.

Michael Hoffman [00:34:25]:
Yeah.

Jordan Berry [00:34:26]:
You know, even as I’m getting excited about vending here. Dude, this is this is awesome. So I’m curious, like, if I wanna get started with this, what do I need in place? Like, how much money do I need? You know, are there relationships I need? Obviously, you know, joining Vendipreneurs is gonna help me tremendously, and that’s I always recommend, like, if you’re starting any kind of business or investment or something like that, get into some sort of community that helps you get started. Don’t reinvent the wheel. Find the people who already have the playbook and just use their playbook and and start off running. But aside from joining Vendrepreneurs, what do I need to get started here?

Michael Hoffman [00:35:06]:
Yeah. I think the the first thing is you need to start, tapping into your network. And we all know people, whether that’s like my daughter’s school or your friend, you know, Like, I have 2 kids under 3, so we’re going to a lot of birthday parties these days. So we’ll go to, like, an arcade, and I’ll be like, oh my gosh. Look at the congregation of kids and parents here again. It’s a full parking lot. So, like, I just come back to I think before you think about what type of machine or do I go with the smart machine or just try to learn it with an old school simpler machine, come back to, like, go start having conversations with some of your network on and then just try to create a win win, whether that’s like a small revenue share. Now, you know, the margins.

Michael Hoffman [00:35:49]:
So what you can maybe get away with a 5% back to them or 5% if they bring us in and intro you to 2 other schools type of things. You know, I’m a I’m a business development guy at heart. So, like, I would start on the front end with tapping into your network first and then figuring out the operational side on the back end. And and I’m I’m a huge believer in, like you said, masterminds and things that are gonna help me avoid the speed bumps that others have already gone through. Like, even the laundromat thing, it’s like if I’m going down that path, I know who I’m going to 1st because I don’t wanna deal with that.

Jordan Berry [00:36:23]:
Yeah. Yeah.

Michael Hoffman [00:36:23]:
My first machine I bought on Craigslist and it broke within 6 months and I’ll never buy another machine on Craigslist. So, like, those type of headaches, I would have never known.

Jordan Berry [00:36:33]:
Yeah. Yeah. So yeah. So many lessons learned the hard way where I’m like and I I say all the time, like, if me back then could have talked for 15 minutes with me today, it would have saved me 6 figures, like, easy. Easy. Yeah. Like, I I’m a huge fan of that. So okay.

Jordan Berry [00:36:50]:
Last question I think I have, unless you think there’s anything else when you talk about is I mean, I’m kinda curious about these smart machines, but can you give me, like, a ballpark? Like, what are these things running these days ballpark wise?

Michael Hoffman [00:37:03]:
Yeah. So they’re probably and my hesitation is the shipping. So if you’re shipping it to Hawaii versus Oregon, it’s gonna be a little bit

Jordan Berry [00:37:12]:
Everything different.

Michael Hoffman [00:37:13]:
Price. Yeah. Yeah. Yeah. Yeah. But these machines, I think they’re like 6 k. We obviously negotiate a a purchasing power in the community that that gives them, 10% off. And then, you know, if you get bulk orders too, if you get 3, 4, or 5 locations in your order, 4 or 5 machines at one time, you’re gonna get another discounts.

Michael Hoffman [00:37:33]:
I if you do like 6 k, let’s say you finance that over 48, 60 months, you’re looking at whatever even at a, whatever the interest rates are on that. I mean, you’re looking at a 100 and, let’s say, $50 monthly payment on a machine that should be doing $1500 a month, minimum and, just kinda, yeah, parlays from there.

Jordan Berry [00:37:57]:
$6 is a lot less than I was anticipating actually.

Michael Hoffman [00:38:01]:
Yeah. It’s literally a commercial refrigerator that’s got a point of sale on the door and it’s only going to get cheaper because more players are coming. I was just at the national vending conference in Dallas. And, I mean, everything coming out of China now, I’m like, oh my gosh. This is just a race to the bottom, which is it’s gonna there’s gonna be I mean, you’re already seeing it. There’s, like, sprinkles vending machines. There’s, like, nail polish vending machines in the LAX airport. I’m like, what is Yeah.

Michael Hoffman [00:38:29]:
This is what but, yeah, no.

Jordan Berry [00:38:30]:
They have, like, shoes, like, for women who wearing heels and their feet get sore. They have, like, AirPods and electronics in there, like, all that. Yeah, man. Anything.

Michael Hoffman [00:38:41]:
There’s a Lego vending machine in O’Hare, and there isn’t a Lego set in that machine less than $75. But if you think about the parent flying across the country with their kid, they’re gonna be like, 6 hours of my kid being distracted. I’ll pay $75.

Jordan Berry [00:39:00]:
Yeah, man. It’s it is interesting. That’s I mean, it’s a huge part of why I wanted you on the on the show is because there is and, you know, you think of, like, Japan. Right? Japan is, like, all of like, I think it’s just a vending nation. Like, they’ve been everything. And and not only that, but, like, I I see in the laundromat industry, which I think is kinda interesting, I see this, like, bifurcation of the industry and, like, half the industry is going to full service laundry center. We do drop off. We do pickup and delivery.

Jordan Berry [00:39:34]:
We’ll take your dry cleaning. We do we do it all self serve everything. We do it all high touch, high service, high value, high price. And then on the other side, I see kind of more this vending model where maybe they’re not attended and maybe there’s, you know, an iPad on the wall where you can if you’ve got a problem, you can, you know, talk to an AI. And if the AI can’t solve your problem, they send you to, you know, somebody to help you out in the Philippines or something. Right? Like, I think there’s an interesting kind of dynamic happening. And so as we talk about vending machines, I almost start to see some laundromat models being moving that way also, which is really interesting, I think. And not only that, but, you know, just as I was talking, sorry, I know I know I’m rambling here, but I was in Europe last year and, you know, you take the train or whatever and you hop off the train and right outside the train at the train station is 2 washers and 3 dryers.

Jordan Berry [00:40:31]:
So like a vending machine, like outside, just kind of all attached together as when you basically a vending machine for laundry. So they that model is there also. Yeah.

Michael Hoffman [00:40:40]:
Yeah. I mean, it’s it’s convenient. It’s convenience. And you you know, I was reading an article last night about this whole, like, AI revolution and and ultimately what you call, like, agents, AI agents that you’re talking to that you don’t know isn’t a bot, but it is. But I completely, I mean, right now, vending unattended retail, like, there is gonna be convenience stores where you put your credit card on the door, walk in, and they have a 100 cameras tracking. It’s already here in basketball and NFL stadiums. Like, the concourse, you go grab your hot dog and your beer. It’s through the little gate that opens up with your credit card.

Michael Hoffman [00:41:17]:
Like, it’s here to stay. And so I’m a huge believer in this whole unattended thing, whether that’s laundromats or vending or anything that I see all the time with hotels now. You go to call to check-in or make an appointment, and the person at the Marriott is not in the US that you’re talking to. And pretty soon, it’s gonna be a bot.

Jordan Berry [00:41:40]:
Yeah. I know. Yeah. And it’s very but that’s why I think there’s, like, this interesting dynamic because you’re I think you’re absolutely right. Like, there’s more and more of that coming, but that also leaves an opportunity for the high touch. You know, I think of, like, I’m on the phone with

Michael Hoffman [00:41:56]:
trying

Jordan Berry [00:41:57]:
to get, you know, right now I’m, like, streaming this on my hotspot from my phone because my the Internet just went down. I was I woke up this morning, Internet’s down. It’s been down all day. Right? But I go on trying to talk to Spectrum, trying to get my Internet done, and I gotta go through all these bots that can’t solve my problem before I finally talk to somebody who can. Right? So there’s also a huge opportunity for the high touch model in a lot of these industries and an opportunity to charge a premium for that high touch too. Right? So I think I think it’s really interesting, but the vending thing is, you know, they’re vending everything now, and I think only, like, you’re I think you’re right. I think only more of that is coming. And the AI technology, I I hear that talked about a lot in like this AI revolution but I think talk about a little bit less but equally crazy and equally transformative, I think is a robotics revolution.

Jordan Berry [00:42:49]:
And when those two things start getting paired up together, I think it changes a lot of a lot of the games that we’re playing right now. So Pretty cool.

Michael Hoffman [00:42:58]:
Yeah.

Jordan Berry [00:43:00]:
Listen, man. This is, this has been actually like super fun and super inspiring. I appreciate you coming on. I’m gonna ask, hey, if other people are feeling the the shiny object tingle or maybe they are just not at a point where they’re ready to buy a Laundromat yet, but vending is within their reach here. Where can they go to learn more about you and your community and what you guys have to offer and how to jumpstart their journey in the vending space?

Michael Hoffman [00:43:27]:
Yeah. So if they want to get kind of a from the ground feedback on on what we offer, they can go to vendingpreneurs.com and schedule a free call with one of our vendingpreneurs and just kind of learn what it’s all about, how to make it passive, all those kind of fun things. If they just want to follow like my free, advice and see, you know, just curious. I, YouTube’s probably the easiest place to find me with getting more in-depth so they can go to my YouTube channel. So either of those options would be great.

Jordan Berry [00:43:57]:
Is your YouTube called Vinniepreneur also?

Michael Hoffman [00:44:00]:
I think it’s Mr. Passive. I’ll have to send you that. I always forget. I get them mixed up because like my Instagram one’s separate than my Twitter one, which they can go there too. But like I think YouTube, you get a more thorough, like, how to type

Jordan Berry [00:44:15]:
Yeah. Yeah. So we’ll have all the links. If you’re on YouTube watching this now, we’ll have all the links down below. If you’re listening to this on the podcast, go to the show notes page, and we’ll have the links to vinipreneurs.com, and then also the YouTube channel and all the other socials too. If you’re more of a Twitter, are you on, on blue sky yet? That’s like I’m not.

Michael Hoffman [00:44:33]:
Do you reckon that bit?

Jordan Berry [00:44:35]:
I mean, I don’t I’m not any kind of expert. Look to me, it looks like, Twitter, and I think maybe it’s for Twitter for people who are mad about what’s happening on Twitter, maybe. Mhmm. I’m not positive, but, you know, it’s a new rage. You never know which one of these things is gonna pop off. So

Michael Hoffman [00:44:49]:
Yeah. Yeah.

Jordan Berry [00:44:52]:
Awesome. Well, thank you again for coming on the show, man, and sharing so much really good stuff. Like I said, super inspiring, super informative, and, check out venuepreneurs.com and, in the YouTube channel that we don’t know the name of yet, but we will by the time this comes out, and we’ll have that for you. But appreciate it, man. A lot of fun.

Michael Hoffman [00:45:12]:
My question. Yeah, Jordan. This is awesome. Thanks for your time.

Jordan Berry [00:45:14]:
We’ll have to we’ll have to do more together in the future because I think there’s a lot of synergy there and, you’re doing a lot of really cool stuff. So pretty cool.

Michael Hoffman [00:45:20]:
Yeah. I love it. Let’s do it.

Jordan Berry [00:45:22]:
Awesome. Sounds good, man.

Michael Hoffman [00:45:23]:
Awesome. Thanks, Jordan.

Jordan Berry [00:45:25]:
Okay. I hope that you loved that episode with mister Passive, Michael Hoffman. I know I did. I was surprisingly psyched about, vending machines by the time that episode was over. Maybe you were too. I don’t know if you were. I would love to hear, your thoughts on vending. So shoot me an email, [email protected], and let me know what you’re thinking about vending.

Jordan Berry [00:45:46]:
And if you have any other things that are working vending wise, because I was very intrigued by it actually. But anyways, hopefully, you got a ton out of that. And listen, we’re back next week. We’ve got an incredible episode next week. Cannot wait to share it with you. And again, head over to build with bmr.com/win so that you can get that full website design and full branding package for free, hopefully, fingers crossed for you. And even if not that, maybe you can get that Speedo poster. Who knows? Who knows? Alright.

Jordan Berry [00:46:17]:
We’ll see you guys next week. Peace.