This is Horrifying + Your Next $15k A Month w/ Vending?

Boring businesses win again + What keeps me up at night right now.

Jun 10

Back at it again, this week we’re literally...dispensing cash. Welcome, 802+ of you new Contrarian Thinkers! If you like CT, the biggest thing you can do? Share with a bud (or 12).

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Our mission today should you choose to accept it…

A radical idea that is terrifying me…
How to spot terrible politicians (is that an oxymoron?)
A new framework for wealth creation…
The un-sexiest idea that’s making a dude $10-15k a month part-time…

#1 What if the Music Stops?

I can't believe I'm saying this...

I'm actually concerned we may default on our national debt. Yes, we, these United States. I think there is a very rational (not saying right, but rational) argument. Buckle up, MFers…

1st: Mother Russia

Russia is unwinding its $40Billion portfolio of USD in favor of the Yuan, Euro, and purchasing gold for the first time in history. (Could be pandering prior to Putin vs Biden meeting but they look to be taking action).

2nd: Conspiracies

As I said in this provocative thread where I got called a Q’Anon (always fun), I said wouldn’t it be wild if bitcoin was actually created by China to disrupt the USD as the international currency of choice. Although tongue in check, it’s worth a read...

Codie Sanchez 💥 @Codie_Sanchez

What if BTC was China's idea to destabilize the USD? 3 Years Ago I thought NO WAY USD wouldn't be reserve currency. China goes 🤣... watch this... - Create pandemic -> massive $ print - Populace no longer trusts USD - Pump an alternate fiat currency BTC Takeover complete

3rd: Coincidences

Interesting to note that China and Russia had publicly debated creating a supernational currency until ultimately dropping the idea in 2009. What is special about 2009? Oh I dunno, it’s the year Bitcoin was put into the world. Ain’t that a fun little coinkey-dink.

Here’s the most compelling argument for a situation I hope never happens.

*Remember, hope is NOT an investment strategy.

The US Defaulting On It’s Debt

First, if you take a walk through history, anytime a country has gone to 130% debt / GDP it has been a metaphorical point of no return.

Meaning NEARLY EVERY SINGLE TIME, the country has defaulted.

Storytime: Over the past 200 years

98% of nations that hit 130% defaulted on their debt (usually through inflation)

This is when economists scream, “What about Japan!” Japan is the only country in 200 years that hasn’t defaulted with this debt to GDP ratio.

BUT, Japan is a blue footy boobie. Ahem, it’s like super rare. It is a nation with a:

budget surplus (i.e. they run a net profitable biz)

internally funded (i.e. they buy their own goods as opposed to relying on other countries)
Net Int’l Investment Position (NIIP) of +70% of GDP (aka they save a lot, and can ask for their $ back from other countries i.e. all the USD they own)

Compared to the US, we are a nation with:

budget deficit & climbing (aka we're a company only Softbank would back w/ our current burn rate😶)

externally funded (we need other countries to buy from us)

NIIP of -65% of GDP (Yes, that is a NEGATIVE, while Japan is a +70, i.e. we aren't savers & can't call in debt from others)
all we have is a printing press
& people's trust

In Summary:

Over 200 years, 98% of countries with our debt to GDP ratio in history have defaulted on their debt…

We are the opposite of Japan
Japan got deflation
We will have inflation.

That’s all the sunshine I have for you today. I hope I’m wrong. But it’s better to be prepared for the worst instead of an ignorant ostrich.

So with that context….

#2 Let’s Bash Some Politicians

How to tell who is a terrible politician?

Anyone talking about who is not getting enough money from the government and should be getting more. No matter the righteousness of the issue at hand. Our country is under attack, from within.

Picture: A group of “doctors” surrounding a big formerly healthy human who is hooked up to a series of IV’s all siphoning out his blood to give to others.

One IV would be fine. Even two. But this poor guy has 20: subsidies, student loan payoffs, reparations, free healthcare, open borders, infrastructure, it’s both sides of the aisle. As his once pink face becomes pale, and his heart slows, the white coats are arguing over where to stick in the next needle.

“Neck!” “Hand!” “In between the toes!” They shriek.

They don’t want him to recover, they want every last drip to feed the beast of their reelection campaigns. Their short-term greed, creating a long-term execution.

#3 UNSEXY: Is Your Portfolio Ready for a Recession?

How’s this for a business model?

People are busier than ever.
They like to eat.
Largely on the go.
We solve that problem.
With mini grocery stores...

Wait, is that too simple? It’s not tokenized? Located on the cloud? Backed by Andreessen Horowitz. LAME.

Ok, except, it works.

In a world obsessed with the next hot thing, the newest lux gadget, God Damn digitized cats… I’ve been obsessing about something else. What happens when the world comes back to reality? At least for a minute or two as happens in economic pullbacks or recessions.

I woke up and realized a ridiculous amount of my net worth is focused on the future and things that go boom during bull markets. But what about busts?

#4 He Makes $10k A Month w/ Robots Dispensing Candy?

Mini Grocery Stores: The Vending Machine Play

Face in palm, a Memorial Day weekend road trip landed me at a Tennessee rest stop for a potty break. But it wasn’t the restroom that was the main attraction. One building labeled ‘vending’ had a line out the door. Inside the Cheetos were $1.50… and I spent $10 in 30 seconds without talking to a human. Got me thinking…

What’s the deal with vending machines? And should I own some?

Enter... Quinn J Miller, the Willy Wonka of the robotic machines game, who we found on the Twittersphere. Q makes upwards of $10k/month operating vending machines, and has only been in the game a little over 10 months.

Fast stats: Currently Quinn has….

27 vending machines
65% profit
Works on it 20 hours per week
$15k monthly rev
$600 startup cost

Quinn started the business after a chat with one of his mentors who sold his grouping of 100’s of vending machines to a private equity firms for a nice big fact 8 figure check.

Quinn was like, “So you find a spot, negotiate w/ the building owner, buy a machine for $500-3k, fill it with a couple $100 worth of product, throw it on an app and it breaks even 30-60 days later?

Mentor goes: “Yup.”

Quinn: “Hmmm, and if I rinse and repeat I can sell my portfolio to PE? LFG.”

BIG PICTURE: Dispensing Cash

First, it turns out vending is big business. It’s a $30.3 billion market, expected to grow at a CAGR of 9.4%. Quite a few companies make billions in the space (always a good sign)…

For instance, Milacron is a large name in the space and was actually acquired for $2Billion even with a pretty hefty debt on its balance sheet.

Framework: Market + Cashflow + Built in Acquirers

Quinn’s 6 Step Process

Find a location (high volume)
Buy the machine on Craigslist
Buy a CC reader
Fourth get someone to move it to your location
Buy fillers in bulk from Costco and stock
Add tech to track it all, and a route to fill it

The Highlights:

#1 Location

Quinn starts with lower-income apartment complexes, motels, and hotels, calls them up, and gets their location for his vending machine...in exchange for him doing ALL of the work.

Your location needs to have a centralized access point and be highly visible for foot traffic. The more people = more sales. The ideal location is to place your machine right next to the elevators which is called a BLD location (breakfast, lunch & dinner).

How do I get the spot?

Pick a niche and vet some locations. Just like you would real estate, except a new kind. He attributes his volume of locations to his stellar sales skills. Call them up and talk to the low man on the totem pole first to get all the info you need. Next, pitch the decision-maker with a presentation on how vending machines as a value add to any office or location but are expensive and difficult to manage one off making them not profitable enough to run yourself.

Vending Hotspots:

Hospitals

Jails (eek to that distribution)
Lower-income apartments
Hotels/motels
Factories
Urgent care

Or these 55 other locales:

Joseph Poole @BrosephPoole

I made a list of 55 places to sell vending machine locations: Sleeping: Motels Apartment Complexes Upper Management Hotels Campsites (uppity) Hotels Student: Student Housing Universities Skate Parks Recreational Facilities BYU OIT High School

#2 The C’s: Card Readers, Costco & Cool Tech

An easy one to start, is to add a Credit Card reader for innovation as you can keep track of purchases in real-time on your computer. Note to self...payments stop coming in, the machine is probs broken.

Here is his dashboard, all the details on all the funyuns.

To keep it stupid simple he buys from Costco in bulk and upcharges anywhere from 50-65%. His most popular items with the highest margin? Coca-Cola.

#3 But, How Much Time Do I Need to Commit?

No such thing as a free lunch. While it’s not a 4 hour work week without an operator, it is a 20 hour work week. 7 hours pre-packing

10 hrs filling
3 hrs computer work
Monday, Tuesday, Friday cold calling for new locations.
Also, any adjustments/repairs (not much repair).

#4 Takes Money to Make $

Quinn bought his first machine for $500 on Craigslist. But these bad boys can go for anywhere from $300-$3k. Since they’re your largest cost, getting a deal on them can substantially change your COC.

Cost Breakdown:

For the best producing machine he has it’ll do $1000+ a month with $250-400 in COGS.

Not too shabby.

BUY DON’T BUILD

Here’s where I differ from Quinn. I like letting other people do the hard work. I’d rather buy one for 2-3x profit and start with a business that cashflows $10-20k a month rather than build it.

Fun fact: the industry was down double digits in 2020 due to Covid-19. So now might be an interesting time to BUY up some old vending machine locations because the total sales are probably down YOY but will IMHO rebound.

Link to a bunch: here.

CONS:

Tough business to scale: Someone has to literally go around filling all the machines and fixing those that have any issues.
Not a ton of profit per machine: So you need scale in order to hire operators for this, unless you go up market into more expensive product.

To combat that I might think about: exploring healthy vending options with higher costs and bigger average purchase price like these here. Or ya know, these guys are dispensing weed while college students go straight naughty with a Sex&Go vending machine.