School Spirit Vending—A Profitable Niche That Gives Back To The Schools

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, www.thelandgeek.com and today's guest is actually our first of his kind. And I'm really excited to go a little bit deeper into this niche and the passive income potential of it. But I'd be remiss if I didn't properly introduce my co host. You know him, you love him. He is the Automation Master from landmodo.com scotttodd.net, and most importantly, if you're not automating your Craigslist and your Facebook postings, posting domination.com TheLandgeek Scott Todd, how are you?

Mark?

I'm great.

How are you?

I'm great, I'm great. What do you know about School Spirit Vending?

Well, I know that I give my money, my kids money at school and they love to spend it in the vending machine. So like beyond that I don't know anything else about like vending machines or anything beyond that. So I'm excited to hear learn, learn more about it.

Yeah, you know it's funny because like when I take my daughter to dance, the first thing she wants to do is go to the freaking vending machine.

Right.

And so let's learn more about vending machines from Matt Miller. If you don't know who Matt Miller is, he spent the first nine years of his career as an Air Force pilot before entering the corporate world to work at both Abbott Laboratories and Velasis. Now he was a top performer both companies. But his long term desire was to start a business and be his own boss and a good friend. One day mentions to him that gumball machines that he and his young daughters owned and talked about that. In that conversation we got a 10 year business quest that resulted in the creation and substant growth of School Spirit Vending. Over the years, Matt's diligent effort and entrepreneurial expertise has brought School Spirit Vending to the cutting edge of both the vending and school fundraising industry by combining these two ventures into one. Like a Blue ocean strategy. Today, School Spirit Vending's hassle free fundraising program is helping schools across the country raise money in its own way. This is like the Tom's shoes of vending machines. Like you feel good about it and you make money. Matt Miller, how are you?

I'm doing awesome. Mark and Scott, thanks for having me on man. This is cool. I didn't get the memo though that I was supposed to have a white background. You get, you guys didn't you guys didn't fill me in in advance. I apologize.

It's our fault. But, you know, we just like to look at you. We're not. This isn't going to be video.

Just, I mean, like, we're also wearing black shirts. What happened?

I've always. I've always kind of looked at the direction of the crowd and gone the other way. So I guess this is no different.

Yeah, I mean, tell us the conversation that you had with your wife when you said, hey, honey, I'm gonna quit my job or. Or I'm gonna invest in vending machines.

Well, I mean, we were in such a bad place financially at the time, guys, that there was no talk of me quitting my job. And because we were hurting so bad, she was game for anything, you know? Of course, Air force pilot, ad executive, vending operator. I mean, isn't that the natural progression for most folks? So I don't see how she would give me grief, but.

No, exactly. It seems like a perfect fit, Matt.

We were hurting, man. And I had read Robert Kiyosaki's book, rich dad, poor dad, and bought into his whole idea of passive income and making money while you sleep. So I was trying to figure that out, and when my buddy mentioned gumball machines, since I couldn't even afford my own house, let alone rental properties or anything like that, like Kiyosaki talks about. So vending one gumball at a time to start with was my way of slowly working my way out of the rat race. And it was a long road, but it finally happened, and, you know, pretty pumped about it today.

Yeah, I mean, I always see, like, you know, if I'm reading, like, Business Week and I'm looking at the classifieds, always like. Like that little, like, blurb in the back, you know, own vending machines, you know, vending machine territory or something like that. And I'm always just kind of, you know, I roll my eyes and I just glaze over it. So let's. Let's. Let's take my skeptical hat off, Matt, and walk me through the business model of vending machine investing. And when I say me, I really mean the royal me, Scott and I.

Vending, or what we're doing with our franchise, or a little bit of both. Both. Okay, so basic vending. It's real simple. You know, you buy a vending machine, you find a location that will allow you to put it there, and that machine produces income day in and day in and day out without you having to be there. It enabled me to be a busy Professional in the advertising space, a father of three, husband active in my church, et cetera, and slowly but surely put together an income on the side that allowed me to scale at whatever pace I wanted to, to where eventually the pace got and the size got big enough to where I was able to walk away from my full time career. Now along the way, 07 and 08 hit and the market tanked and there weren't as many people frequenting my regular vending locations, which were restaurants and nail salons and that type of thing in and around the Houston area where we lived at the time. And that's where the whole idea of school fundraising came about. Because I had a number of kids knocking on my door selling me stuff for the local school. I didn't know the kids, so they were going knocking, you know, on strangers doors to raise money. And having kids of comparable age, it kind of made me uncomfortable. So I was like, man, is there a way I can, I can do business in the schools where the kids are five days a week, nine months out of the year and potentially get some kids off the street. So the whole idea of custom stickers, sticker machines in the school was born then. In fact, October 10 years ago was when we placed our very first machine and have now been doing what we do with school spirit vending for a decade.

All right, I love it. Todd, you want to put on your Andrew Warner hat?

Well, so. So this isn't your typical, like, vending machine. Like, you know, I'm thinking of like, you know, sodas and snacks. This is not what your business is about.

Right.

It looks like you're more geared towards like school mascot stickers and, you know, educational games that people can buy from the vending machine. And it looks like that money goes to the school. But now is this stuff that is like, are these vending machines only placed at schools or are they placed at, like, businesses?

They could be placed anywhere. Up to this point in time, most of our focus is in the schools themselves. But yeah, I mean, any restaurant, any grocery store you go by, et cetera, you're going to see machines similar to ours. What makes what we do unique is that we have custom machines for the location. We put custom product in those machines in the form of spirit stickers. We're doing something that nobody else in the vending industry is doing, is we're making it that school's product and that school's machine and instead of just throwing a machine in a location.

Okay, so then to be a little skeptical and to kind of look at this from a different set of eyes. Like, why would I do this through a franchise and not necessarily like go and get the machines on my own, source them, and then kind of just duplicate it. What's, what's the value of the franchise here?

Well, number one, there are very few suppliers out there anymore that provide sticker machines. Number two, the economies of scale allow us to source product for our machines, the custom and otherwise at a much cheaper price than somebody can go out and do on their own program. To where schools have the ability to where our franchisees, before they even see the product that's available for them to put in their machines. Majority of them, we have already tested and proven that the kids will buy it.

Okay.

Of course, there's a whole community. We've got 105 franchisees that we support and work with. And so people have the opportunity of the benefit of learning from the combined experience of those hundred plus franchisees and a decade worth of business that we've done. We're in 2,500 schools. We've raised approaching $5 million for education in the last decade. We can help people go from point A to point B much more quickly instead of them trying to figure it all out.

Yeah, I mean, you know, you can always make more money, but you can't get more time. So if you can shorten the learning curve and avoid the headaches and the mistakes, I can see why that's a great value proposition. So, Matt, can we dig a little deeper into the numbers?

Sure.

So if you want to buy a vending machine, do you buy one? Vending machines. Do you buy a portfolio of vending machines? How do you recommend getting started? And then what is the typical day to day, you know, effort of running it look like? And then what is your typical roi?

So we don't have anything to do with the machines themselves. And that was actually an intentional decision by me at the very beginning because you mentioned those little classified ads that you've seen and everybody has seen on Craigslist or in their local Trader Joe's paper or the newspaper or whatever. Most of those companies are what you call biz ops and they make their money by selling exorbitantly priced equipment on the front end and then making promises to folks about what performance can look like that in most cases are not true with our business. I have nothing to do with the machines. I don't make a penny from the machines. I put you in contact with the supplier that we've been working with for going on 13 years now. And you work directly with them. You purchase the equipment at the normal market price. For equipment that's similar, we make all of our money on the sale of stickers because that's where our franchisees make their money. And so the better they do, the better we do as a franchise. So it's a win win all around. And it keeps US focused 100% of the time on the profitability of our franchisees and continuing to do what we do better and more profitably for them. So they order whatever equipment they want. Every school has typically one machine. As far as, you know, margins are concerned. Most of our operators see margins between 38 and 42% for every item vended. Those margins are actually in many cases better than what somebody could get on their own out in the industry because of the program that we've set up, because of the relationships we have with the schools, and because of the cost of goods, that is significantly cheaper because we represent so many locations around the country.

So then, like, that margin that you just gave, is that like minus your franchise fee or is your franchise fee wrapped up into the cost of goods?

That's minus all the expenses.

So, so, like, ballpark, I could sell a vin for like 50 cents, and I'm probably gonna earn, let's say 20 cents.

20 to 21 and a half cents, typically is what somebody's gonna make from that.

Okay. And then, you know, and then like, like the machine, like, obviously the machine has to, like, be depreciated or amortized over time.

Right.

Like, you know, because I'm gonna make this capital investment of the machine. So is the margin that you gave kind of net of that investment or.

That doesn't take into account any of that at all?

Okay.

All right. To be honest, I'm not a numbers guy. That's way above my pay grade. That's why I hire accountants to do what I need to have done on that end. But that's just the basic bare bones numbers.

Okay, so I buy stickers for.

Or.

The product for, like, let's say 30 cents. Does that include the money to the school, too?

Yeah, those margins include money to school profit. Yeah, that's the true profit.

Okay. All right, great. That's awesome.

That's crazy. Those are some serious margins. And then as far as loading the machine, managing the machine, getting the money out of the machine, who does that?

The franchisees do that. They own their own equipment, they buy their own product for the machine and can decide what products to put in, what not to put in, etc. Though we give them access to anything you can think of as far as product availability and they've got a place where they can go to purchase all that product. But developing relationships in the schools, you know, the actual servicing of the equipment, all that stuff is up to them. Now here's the beautiful thing about what we do. I had 75 schools myself before I walked away from my full time advertising career. I was working at the time about five days a month to make an income that was in excess by several times what my full time career income was. So, you know, when you talk passive income, when you talk lifestyle, which in my definition is control over time and money, our program is something that people can do on a time commitment on the side of what they do in their career if they like, and then over time build this thing up over here that gives them options down road. We've got some franchisees on our team, all they want to do is have a secondary income and that's it. But we've got others that see this as a way to get free and to be able to do other things in their life that they would really rather be doing if they had the money coming in that didn't demand all of their time. And so we have complete flexibility. Every franchisee has their own wants, dreams, goals and desires. We just provide the knowledge, the platform and the community for them to learn from. And then they kind of make this be whatever they want. I've got one couple as an example. They've been with us for years. They used this to take a trip to Europe every year. They used it to pay for their daughter's college education and they just used it to pay for her wedding last October. And he works full time in the average or in the insurance world, loves what he does, has no plans of doing anything else. But this is something that the two of them can do on the side. She, she volunteers in the classroom for a private school and it's a perfect fit for them because they pays a month that they work in and out of the schools that they're in and then the rest of the month they do what they want.

So, so like what would it cost me to get, get started, like franchise etc? I mean what, what type of investment am I looking to make in there?

Shiny object syndrome? Scott Todd, I think you got a customer.

I'm running the numbers here. I'm trying to understand the whole picture because I am a numbers guy, right? Like I gotta know the numbers.

So yeah, yeah.

By the way, we're gonna end this Podcast and we're gonna stop investing in raw land and go deep depending.

Well, you can do both if you want.

Depends on the numbers. Right. Because I gotta. I have to figure in, like, I have another thing, which is I gotta hire somebody to go do this.

Yeah, we have to automate it.

Can we.

Yeah. Can we deliver products?

I can't do this from the boat that I want to be on.

Right.

You know, like, I can't do it. Well, to give you an idea, we.

Need to do this overseas.

Upwork.

Vas.

There you go. To give you an idea, I have not serviced my own schools, and going on six years, I've got route people that have done that. The quarters keep getting deposited, the checks keep coming in, and I have not set foot in any of my schools for six years. Now, I didn't do that initially. I didn't do that initially because I was the. The one that got out and got the ball rolling, developed the relationships, et cetera. But after a while, I was able to pass that off to somebody else for sure. Getting back to your question about the startup cost. First off, to put it in perspective, the average franchise in the US today is about 150 grand, right? That was 100,000 reasons why I didn't have a typical franchise. Our startup cost is right around 12. Excuse me, right around $19,700. About half of that is equipment, product. You know, the franchise fee itself is only 10,600 of that. That gets you a protected territory of 200 schools. It gets you, of course, all the support, etcetera, needed in perpetuity. Essentially, it gets them a $2,000 mentorship, which is six months with one of the veterans on our team, part of which they're required to come and spend a few days in your territory, helping you go out and begin to spread the word and learn the ropes. That's one of the reasons why we've had the success that we've had, is we're not just telling people how to do what we do, we're showing them. And then we've got somebody that is there always, you know, for the first six months to answer questions, to help solve problems. And because they've been there, done that, got the T shirt for years, you know, they're a sounding board and have been a huge resource for our new folks. It's about $3,600 worth of product and, you know, marketing materials and all that kind of stuff as the basis for getting started. And then the equipment for the first five schools is right around $3,500 or so. So all that comprises that 19,700 for folks.

Okay. All right, so machine's about $700 for future schools.

Yeah. Plus shipping.

Okay, that's not bad.

Not bad.

Okay. So clearly the bank either loves you or hates you. Bringing all these quarters.

Depends on the bank. That's actually one of the biggest steps when folks get started. As part of our initial training, we talk through, I write bank because some of them look at your cross site as you walk in with 50 pound bags of quarters. Some of them welcome it gladly, some of them don't. So there does require normally a little bit of shopping around to banks and credit unions in the area once somebody gets started. But once that's figured out, you know, it's, it's just one of those things that we do on a monthly basis.

It just happens. Awesome. That's awesome.

That's awesome. So what's the, what's the toughest part about the business? Like every business has something that like, you know, just sucks. Like in our, in our business, I think, Scott, you'd say like the toughest part for people starting is getting the list.

Yeah.

I think like for what we do, it's getting your brain around the fact of not just getting the list, but then the fact that somebody's going to give away an asset for pennies on the dollar. That's the hardest thing. It's a mental thing.

Yeah, yeah. How about for you, Matt?

I mean, I would say the hardest part is just the first few months. Everybody that has joined our team over the last 10 years, aside from me and one of the other guys that was with me at the very beginning, have no background in vending whatsoever. And most of them have no background working with the schools. So it's learning vending and it's working. It's learning to work in and out of the school environment. You know, in most areas, they've never heard of us before. So there's an initial paradigm shift because we're walking into a school and essentially offering them free money and no other fundraising company has ever done that before. So initially they're like, okay, so what's the catch here? But once they work through that and folks get a few early adopter schools that are ready to raise their hand and say, this makes too much sense, let's do it, then things get easier and easier as time's on to where after a while they end up having schools call them out of the blue saying, hey, we heard from so and so. That's your program. We want it type thing. I probably get two email, two to three emails a day that are prospective schools from our franchisees around the country that want to be, to be part of what we do, that we then forward to the franchisee in their area to get them set up.

I love it. I love it. Scott. Todd, I was a little skeptical at first. Now I think we're gonna have to start a little vending machine llc.

Well, you know, I think it's interesting. I think if, you know, here's the thing. Mark is, you know, and rich dad, poor dad does a great job of talking about this in his book. The reality of any business is that where there's a system in place, right? Like, or if you can build a system, then it's, it's fantastic. What makes real estate so interesting for a lot of people, especially like homes, is that a home is a complex system, right? I mean, it's, it's really not that hard. You got some pipes for the, for the, for the plumbing, you got some electrical coming in. But it's, it's a, it's a home system. It's a system that runs and so it just creates money. And I think the fact that you could literally deploy these vending machines to, to schools, I mean, like, I'm, obviously, this is something that's like really probably popular with elementary school students. You know, the fact that there's this vending machine there that, you know, like they get school stickers or I'm looking at your website, like little games that they could play because, you know, come on, who wants to do and pay attention in school when you can play a game, right? Like, that's kind of cool thing. So I could see the, the revenue stream and the system that's built around it to generate this, the ongoing income. Matt, like just a follow up question though. Like you told me I had 200 protected schools, right? So obviously you're gonna look at this area and say, okay, well we're gonna give Scott this particular, like county or this geographic area, and I start going to these schools. Then like, what is my success rate as I'm going to these things? Because clearly they all can't say yes.

Well, a lot, to be honest, Scott, depends on time. I mean, I've got some districts that I'm in where I have close to 100% pension in the schools. But that happened over several years, right. You know, as more and more familiarity occurs, as we do more and more good by the schools, they talk and we're able to leverage, you Know, relationships, testimonials, you know, that type of thing to get deeper and deeper and deeper into the schools in our area. And every once in a while you come across a school where it doesn't matter what you say, the administrator just is not going to have any part of what we do. And we get that, that's the same in anything. But those administrators also are not there forever and eventually they're going to leave and eventually we'll get there. You know, we went in Texas initially in the Houston, San Antonio and Dallas Fort Worth areas primarily to 10 years ago, no one having any clue who we were to where. Today a large percentage of the schools in Texas have our program and it's because we've been here consistently. We've got I think 15 franchisees in the state. Every single one of them is out on a regular basis promoting what we do to the schools in their area. You know, we've transitioned to utilizing social media, you know, Facebook and all those kind of things to develop relationships and promote what we're doing. On top of the old fashioned ways of promoting with door to door and trade shows and postcards and that type of thing, emails. But we have evolved and it's easier and easier today than it ever was for us to get the word out. And because our value proposition to the schools is literally we're going to write you a check every month that you don't have to do anything for. And we're not requiring any volunteers to do what we do. That's music to the ears of most of the, most of these schools because money and volunteers are the two resources that they're always short of.

I mean, but I'm looking at this and I'm thinking like, I mean you keep talking about the schools and going to the schools, but like I know like down the street from my house is a pizza place, right? Like it's, it's probably very, I don't go there on Fridays, but I'm sure it's very popular on Fridays with like the, you know, the kids from these particular schools or some of these schools. I mean, I could just take this, this machine and put it into the pizza place because surely they want to support the local school, right? You know, and so there's kids that come into this restaurant. Is there anything prohibiting you from doing that?

No, no.

I mean that seems like a no brainer. Like find some of these pizza places.

It's just the challenge is that a lot of those businesses, they are a for profit business and if they have vending equipment there. The reason why it's there, it's because it's another income stream for them. So many of them don't want to share in that. And to be honest, just between you and me, I know nobody else is listening. Just Mark, when you've got. When you've got a school with 600 kids in it that are there five days a week, nine months out of the year, compared to a pizza place that might have 30 kids come into it on a daily basis. Yeah, there's a big difference in the numbers. Let me just.

Got it. Gotcha, gotcha. I'm with you.

Okay.

All right.

Interesting. It's time now to put you on the spot, Matt, and ask you for.

Your tip of the week.

A website resource, you know, a book, anything actionable where the art of passive income listeners can go right now, improve their businesses, improve their lives. Your mentorship has been phenomenal. And, you know, my heart's beating a little faster thinking about this, but we're gonna ask you for one more tip.

What do you got, man? Well, as far as a book right now, one that I'm deep in the middle of is Russell Brunson's Dot com Secrets.

Okay?

If your listeners have not. Have not read that and they do anything online at all, I would encourage them to pick that up. Of course, they can also pick up the ebook that I wrote. It's called Live youe dreams, the top 10 reasons why you need to own a vending business. And it encapsulates the last 13 years of my world in vending and gives them a reason why vending might be a good addition to what they're already doing and the benefits of it. And they can go to ssvbusiness.com bestpassiveincome to download that for free.

All right, fantastic. Scott. Todd, what's your tip of the week?

Mark, check out this Chrome, this. This Chrome extension. And it's called Meeting Bird. Okay. Have you heard about Meeting Bird?

I have not. Let me check it out. So, Meeting Bird.

Meeting Bird. Chrome extension. So you can go to meetingbird.com chrome and what it does is it pulls in your Google Calendar, which I use, and I know you do, right? And it pulls it into the. Into your Gmail account right there. So you can. Don't even have to leave the screens to look at your. You don't have to change apps, nothing. It's all right there within the web version, which I now favor the web version over, like a client, an email client, simply because of the fact that I can just shut it down and ignore it.

So, you know, for somebody like me, that shouldn't be checking email very much, should I not?

Well, then you're in trouble.

I'm in trouble. I'm not gonna get it. I can see why. It'd be great.

Don't. Don't get it. You don't get it. I'm gonna get it.

You should get it.

Our listeners who like that, they can tolerate email, they should get it too.

Yeah. Matt, One of the greatest things ever was Scott pushed me to delete mail from my phone. So it forces me to check mail only when I'm in front of my computer. And life has been very different ever since.

Yeah, I'd love to do that, man, but I've just got. I've got too much pulling at me, so. But someday.

Someday. Someday.

Yeah. Speaking of Chrome extensions, are you guys familiar with Streak? S T R E A K?

Yes.

Love Streak, man. Google Streak. It's another Chrome extension, streak.com, it's a CRM system that ties right in with your. With your Gmail. And it's been a game changer for us for sure. Allows you to schedule email, allows you to track email, allows you to set up sales pipelines, that type of thing. And that's been a huge, huge for us too.

Yeah, it's phenomenal for follow up with your customers. And then my tip of the week is learn more about school spirit vending@ss svbusiness.com passive income. Is that right, Matt?

Well, yeah. Best passive income.

Oh, best passive income. I'm sorry, best passive income SSVbusiness.com best passive income and learn more there. So, Matt Miller, are we good?

Yeah, man. I mean, I've got a course that I just launched too, if you don't mind me just bringing it up. Sure, folks, folks can go if they just want to learn about vending and have no desire to look into a franchise or any of that stuff. They just want to learn the basics of vending. They can go to vending secrets.net and if they use the coupon code best passive income, they can get the course for 97 bucks and learn a whole new way to make money utilizing vending as a supplement.

All right, that's really generous. I love it. Fantastic. It will have links to all that in our show notes. Scott. Todd, are we good, Mark?

We're great.

All right, well, I want to thank all the listeners and I want to remind you the only way we're going to get the quality of guests like a Matt Miller is if you do us three little favors. You got to subscribe, you've got a rate, and you've got to review the podcast. Send us a screenshot of your review to support@thelandgeek.com, we're going to send you for free the $97 passive income launch Kit. So please do that. It really helps us. And also, just a reminder, today's podcast is sponsored by GeekPay IO, the only set it and forget it financial CRM in the world. You can always make more money, but you can't get more time. Automate getting your money collected, GeekPay IO, and then learn more just at thelandgeek. Com. All right, well, I want to thank everyone and let freedom ring ring. All right, thanks everybody.

Thanks, guys. Thank you.