Mike Hoffman – From Strength Coach to Vending Entrepreneur: Mike’s Journey to Passive Income

SUMMARY

In this podcast episode, Kyle Knowles had the pleasure of speaking with Mike Hoffman, an inspiring entrepreneur who has transitioned from a corporate career to building a successful vending business. Mike’s journey began in rural Iowa, where his father’s entrepreneurial spirit influenced him, and he even ran a lemonade stand as a child. After graduating from the University of Kansas with a degree in exercise science, he entered the world of collegiate strength conditioning, working long hours and realizing the need for financial freedom.

Mike’s first taste of entrepreneurship came when he purchased a rental property as a strength conditioning coach in St. Louis. This experience sparked his interest in real estate investing. Still, it wasn’t until he moved to Silicon Valley to work for Sparta Science that he truly immersed himself in the startup culture. During his time there, he learned valuable lessons about accountability, transparency, and the importance of having a clear vision for success.

The conversation took an interesting turn when Mike shared how his experiences traveling for work during the COVID-19 pandemic led him to discover the potential of the vending machine business. After witnessing the high margins on vending machine products in airports, he decided to take the plunge and install his first combo vending machine at an apartment complex near the University of Oregon. With minimal investment and a commitment to learning, Mike quickly saw success, generating significant profits from his initial machine.

As we delved deeper into his entrepreneurial journey, Mike discussed the importance of having a solid support system, including a good CPA and legal counsel, to navigate the complexities of running a business. He also emphasized the value of understanding tax advantages as an entrepreneur, which can significantly impact one’s take-home pay.

Throughout the episode, Mike shared insights on scaling his vending business, the importance of community among fellow entrepreneurs, and his passion for helping others start their vending routes through his website, Vendingpreneurs.com. He also touched on his broader vision of creating passive income streams, which he believes is essential for achieving financial freedom and spending more time with family.

Listeners will find this episode not only informative but also motivational, as Mike’s story exemplifies the power of perseverance, adaptability, and entrepreneurial spirit. Whether you’re considering starting your own business or looking for ways to create passive income, Mike’s journey offers valuable lessons and inspiration for anyone on the entrepreneurial path.

MIKE’S WEBSITES

Modern Amenities

Vendingpreneurs

RECOMMENDED BOOK

Traction: Get a Grip on Your Business by Gino Wickman

TIME STAMPS

00:00:00 – Introduction and Background
Welcome to the show, Mike. Discussion about Mike’s background and entrepreneurial journey.

00:02:00 – Early Signs of Entrepreneurship
Mike reflects on his childhood experiences, including his lemonade stand and his father’s influence as a small business owner.

00:03:02 – Education and Early Career
Mike shares his journey through college at the University of Kansas, studying exercise science, and his first job as a strength conditioning coach.

00:04:06 – First Taste of Entrepreneurship
Mike discusses how he entered real estate investing while working long hours in collegiate athletics.

00:04:43 – Transition to Silicon Valley
Mike talks about moving to Menlo Park, California, to work for Sparta Science and the unique living situation he experienced.

00:05:48 – Experiences at Sparta Science
Mike describes his role at Sparta Science, working with professional sports teams and the insights he gained.

00:07:28 – Measuring Athlete Performance
Discussion on the technology used at Sparta Science to measure athletes’ performance and health metrics.

00:09:32 – Lessons from Professional Teams
Mike shares key takeaways from working with successful sports organizations, particularly the All Blacks.

00:11:49 – Startup Life and Culture
Mike reflects on the dynamic and challenging environment of startup life and the importance of adaptability.

00:13:38 – Education vs. Real-World Experience
Mike discusses the limitations of his MBA in preparing him for the realities of entrepreneurship.

00:15:27 – The Value of Networking
Mike emphasizes the importance of connecting with entrepreneurs and learning from their experiences.

00:17:29 – Implementing EOS in Business
Mike explains the Entrepreneurial Operating System (EOS) and its benefits for business management.

00:22:50 – Quarterly Rocks and Focus
Discussion on the concept of quarterly rocks and how it helps prioritize tasks and maintain focus.

00:26:13 – Transition to Full-Time Entrepreneurship
Mike shares his journey of leaving the corporate world to pursue vending entrepreneurship full-time.

00:26:32 – Inspiration from Vending Machines
Mike recounts the moment he realized the potential of vending machines during his travels.

00:32:30- First Vending Machine Success
Mike describes the success of his first vending machine and the profits it generated.

00:36:42 – Scaling the Vending Business
Mike discusses his plans to scale his vending business and the strategies he employed.

00:40:33 – Understanding Tax Advantages
Mike shares insights on the tax benefits of being an entrepreneur and how it differs from a W-2 job.

00:46:36 – Building a Community of Vendingpreneurs
Mike talks about creating a supportive community for aspiring vending entrepreneurs.

00:49:50 – Websites and Resources
Mike provides information on his websites and where to find him online.

00:50:46 – Advice for Aspiring Entrepreneurs
Mike offers advice for those looking to start their journey into passive income and entrepreneurship.

Kyle Knowles: Hello there. Welcome to the Maker-Manager-Money podcast, a podcast about entrepreneurs, solopreneurs, founders, business owners, and business partnerships, from startups to stay-ups, to inspire entrepreneurs to keep going and future entrepreneurs to just start. My name is Kyle Knowles, and today’s guest is Mike Hoffman, founder of Modern Amenities and creator of the Vendingpreneur Community. Mike’s journey from strength coach to Silicon Valley executive to successful entrepreneur is a masterclass in recognizing opportunity and taking calculated risks. After spending nearly a decade helping professional sports teams and military organizations optimize human performance, Mike spotted an opportunity in the vending machine industry during his frequent business travels. What started as a single vending machine installed near a college campus grew into a thriving business empire. Now, through his Vendingpreneur community, he helps others achieve financial freedom by building their own passive income streams. From his early days as a strength coach in the Midwest to his time in Silicon Valley and ultimately becoming known as Mr. Passive, Mike’s story demonstrates how combining careful observation with decisive action can lead to entrepreneurial success. His practical approach to building passive income streams while working a full-time job shows that anyone can start their entrepreneurial journey – they just need to take that first step. Welcome to the show, Mike. Where are you calling from?

Mike Hoffman: Kyle fired up to be here. Currently, I am in Oregon.

Kyle Knowles: Well, thanks for being on the show. I wanted to, I’ve been wanting to talk to you for several weeks now after learning more and more about you, checking out your websites and things like that. But why don’t we just go ahead, go ahead and start by just talking about your entrepreneurial journey. You have such an extensive background before you became an entrepreneur. Let’s go ahead and start with when you were young, were there any signs that you were going to be an entrepreneur when you grew up?

Mike Hoffman: Yeah, that’s a great, great question, Kyle. So I think for me, you know, reflecting back on it, my dad was a small business owner, I grew up in rural Iowa in the Midwest, and He was an entrepreneur and I used to have like a little water slash lemonade stand at our little antique walk that had thousands of members in it. So, you know, it’s kind of back to like the Charlie Munger, Warren Buffett, you know, oh, the best DNA trait of an entrepreneur is if they had a lemonade stand as a kid. Once I heard Charlie and Warren talk about that one time, I was like, you know, I actually did do that when I was a kid. So maybe that was the first sign. I don’t know. But I think the big thing for me when I came out of college and started working the classic W-2 job is I realized like I’m very passionate about freedom. And so whether that’s freedom financially by having money work for you when you’re not working or Just the freedom of being your own boss. And so I think both of those are very relevant to any entrepreneur out there.

Kyle Knowles: Okay. So you had your lemonade stand and then I guess you graduated from high school and then what did you do after high school?

Mike Hoffman: Yeah, so I went to the University of Kansas and actually studied exercise science and from there I got into collegiate strength conditioning with athletes at a couple different universities and I kind of got my first taste of entrepreneurship outside of college when I was coaching in St. Louis. I was actually working as a strength conditioning coach, working like 80 hours a week. I was like, look, I gotta like make some money other ways. Cause this is, this is crazy during football season. So I, I bought my first rental and entered the, uh, uh, real estate investing space without knowing pretty much a thing about it other than I wanted to make, I knew the 1% rule. So you buy something for 70 grand; you better get 700 bucks a month in rent to make the numbers work. And that’s what I did.

Kyle Knowles: How did you learn the 1% rule then?

Mike Hoffman: I actually, my boss was telling me about it in college athletics and a rental they got. And St. Louis seemed like a market that had a lot of stable corporations, Anheuser-Busch, Purina, things like that, that always brought kind of tenants that wanted to rent. So that’s kind of how I got to know it.

Kyle Knowles: Okay. And what brought you to Kansas? I’m sorry, where did you grow up again?

Mike Hoffman: So I grew up in Iowa, and then I went to school in Kansas, and my first job out of college was in St. Louis.

Kyle Knowles: And why did you go to school in Kansas then?

Mike Hoffman: Yeah, cause I was very independent growing up. I was the youngest by, I was a mistake. My parents were, you know, I was definitely, there was a gap between me and my, my, my sister. And, uh, so all my siblings went to Iowa State, you and I, and I just kind of wanted to blaze my own path. And, uh, KU was, it was, we’re on the Western side of Iowa, so it was only a three hour drive from home. So it was kind of best of both worlds.

Kyle Knowles: Okay. And you got into, uh, athletics at, at KU or at least strength training.

Mike Hoffman: Yep, exactly. Exercise science, science.

Kyle Knowles: Okay. And then that you, you bought this rental right out of college. Is that correct?

Mike Hoffman: Yeah. When I, I, so my first job out of college was as a strength conditioning coach in St. Louis at a university there. And that’s when I got my first rental.

Kyle Knowles: Tell me about your career path to later becoming an entrepreneur then.

Mike Hoffman: Yeah. So when I was in St. Louis, I came across a, a CEO of a, of a sports science kind of tech company. Uh, we just stayed in touch. And then two years later, uh, he called me one day, he’s like, Hey, do you want to move out to Silicon Valley? And I was like, uh, Potentially, there’s nothing holding me, tying me down to the Midwest other than my family, which I can come visit anyway. you know, no kids, no wife, anything like that. So classic case of I moved out to Menlo Park, California. Our office was literally right across the street from Facebook headquarters. And I moved into a house with four other random roommates I met on Craigslist and three of them. One was a senior level person working their way up at Apple. One was a senior level person at Impossible Burger. I was like the classic house hacking with strangers story with a bunch of entrepreneurs kind of doing their own thing. And yeah, that’s when I really, you know, being in the valley, I mean, people are just so smart and the energy there to kind of change the world and reduce friction, no matter what it is. Concept really kind of accelerated my entrepreneurial spirit.

Kyle Knowles: Okay. And then how long did you work out of Menlo Park then?

Mike Hoffman: Yeah, I was there for five years. We left to go to Oregon right before COVID. So we’ve been up in Oregon since 2018. Okay.

Kyle Knowles: And then Menlo Park, what was the company called and what were you doing for them?

Mike Hoffman: Yeah, the company was called Sparta Science and I was working as a coach there at the facility. We did a ton of like, we had a, I guess you could call it almost a lab with a bunch of wearables and measuring forces and things like that on these athletes from Stanford and Cal and the pro teams in the Bay. And then I transitioned, we developed a software there And then I went out to pro teams and our military to train them on how to use our software. And that’s actually what led me into the whole vending entrepreneur path was traveling all over the world and just seeing these archaic vending machines in airports that I’d spend $5 on a water. And someone I know was buying that water for less than $1. And when I would buy that water, there was no human selling it to me. So I was like, man, this is a great business model. So yeah, kind of full circle.

Kyle Knowles: Okay. I want to come back to the, the vending machines and traveling around, but we’re in Menlo park for Sparta and you, what were some of the, the most interesting experiences working with the sports teams, uh, professional teams. I assume you’re working for a call or working with college teams as well.

Mike Hoffman: Yeah, everything in between. So everything from, you know, the SEC football teams to NFL, MLB, literally every pro, NBA, you could think of. And it was It was interesting seeing how all these organizations, I think I come back to what I learned from that is, is ultimately like culture and, and having clear the best organizations and the most successful ones had a very transparent KPIs on how everyone was impacting which direction, you know, the boat was rowing and how efficient they were moving.

Kyle Knowles: And what were you measuring with your Sparta software then?

Mike Hoffman: So we’re measuring a lot of things. So we, main thing was using force plates to measure forces and muscle imbalances of the athlete. So, um, you know, are they any muscle imbalances that need to be retrained or reprogrammed, um, from a neuromuscular component? And then we also, uh, factored in other wearable data. So whether they’re wearing like. fitness rings or fitness watches or even GPS sensors when they were playing their sport to give the whole picture of how their body was responding to loads that they were being put through.

Kyle Knowles: And what were some of the most successful teams that you were working with at the time?

Mike Hoffman: Oh man, you’re putting me on the spot.

Kyle Knowles: I think one of them- Were you working with Alabama or?

Mike Hoffman: There’s a lot of teams. I think probably the coolest organization I went and kind of watch them train and watch them practice with the All Blacks, like going to New Zealand and seeing those guys and just the culture, the, you know, this was before kind of all the shows and the books came out about the All Blacks. But yeah, it was just really impressive to see the accountability within that team, ranging all the way from, you know, the janitor in the building to the head coach.

Kyle Knowles: And what really differentiated them from other teams than just the culture? Was that the main thing?

Mike Hoffman: Yeah, I think if you’ve ever read the legacy book about the All Blacks, you know, there’s a lot of things like leave the jersey better than you got it. So, you know, leave it better than the person that handed it to you. You know, your legacy. I think the other thing is like sweep the sheds. There’s no one too good to pick up the trash, to clean the locker room after a game. Like, whether you’re the All-Star or you’re the Bench Warmer, you know, everyone the sum is greater than each individual part. And that was just fascinating. And it’s so obvious to see inside of that kind of culture.

Kyle Knowles: Wow. It sounds like it was a really exciting job. And how many years, you said you were doing that for about five years?

Mike Hoffman: Well, I was in the Bay for five. The last couple of years I worked remote. So I actually worked from Oregon. I think I was there 10 years or maybe nine years and then a consultant for a year or two. So yeah, it was, it was amazing. And we started, you know, with, uh, less than 10 employees and, and built it up. So it was the classic, every day was different. When you asked what I did there, it’s like, well, which year, you know, which day, cause there’s just so many hats you had to wear. And it was kind of my first glimpse into, both how to build a business, but also the kind of the Silicon Valley energy of doing that.

Kyle Knowles: Yeah, I think people don’t really appreciate a startup life unless they’ve lived it. And it’s, it’s, I’ve heard it described before as a theater troupe, you know, one day you can lead singing a solo in front of the crowd. And then the next week you could be pulling the curtains and not even on stage. So it’s, it’s just this thing where you’re constantly wearing different hats and having different opportunities to stretch and grow and do things that you’ve never done before.

Mike Hoffman: Absolutely. That’s a, I love that analogy. Yeah. Our, our founder always said it’s like a, it’s a boxing match and you’re just trying to survive the round, like just get through it. And that’s why actually behind me, I’m going to roll there. I have the man in the, in the arena quote, because, you know, people can say what they want, but until you’re actually in the arena doing it, you’re, you know, you can read every entrepreneur book you want, but until you’re doing payroll and trying to bring money in the door, like. There’s no, yeah, there’s no book that’s gonna teach you those experiences.

Kyle Knowles: Yeah. And so looking at your career, and we’re almost getting to what you’re doing now, but looking back at your career and thinking about what you learned at school at University of Kansas, and then what you learned from working in corporate and especially startup life, Was there anything that you learned in college that really helped you in your career?

Mike Hoffman: I mean, yeah, because the, you know, the startup I worked in and even coaching in college athletics, like, you know, the exercise science domain knowledge was very relevant when I was actually coaching in St. Louis. I got my MBA on the side because I was tired of learning about anatomy and circle mirrors anymore from undergrad. So I got my MBA. And I will say this, from my MBA, there was nothing from that that could prepare me for real world startup or entrepreneurial life. Like, I mean, you do all these use cases and you learn about insurance and P&Ls and all the fluffy forecasting, but until you’re actually in it, I mean, I tell people all the time when they ask me about getting an MBA, I’m like, you need to get a real world MBA.

Kyle Knowles: I agree with that. I think it’s really fascinating that you have an MBA because I’ve talked to a lot of entrepreneurs and very few have MBAs. And a lot of times I feel like an MBA prepares you to work for someone else more than it does prepare you to start a business or be your own business owner. What are your thoughts about that?

Mike Hoffman: Yeah, I think you’re accurate there with that assessment. I met my wife in the Bay when we were in Menlo Park and she was a coach at Stanford. And so I got to know some friends at Stanford’s MBA. And I think that’s a completely different MBA because those are a lot of founders and people that jump into corporate America or jump into startup life and then come back to school. I think if I would have done that, I would have known like what questions to ask, what I wanted to learn from my MBA versus, you know, going from undergrad right into an MBA. It was like very structured and I just didn’t have the real world experience.

Kyle Knowles: Yeah, I agree. I think there are different MBA programs that are more geared for entrepreneurs. I’ve been asking a lot of people with MBAs, how many business owners or entrepreneurs came and spoke to you during your MBA? Or how many of your teachers were entrepreneurs or business owners? So I’m going to ask you the same question. How many came and spoke to you during your MBA program?

Mike Hoffman: Yeah, not many. Not enough. No.

Kyle Knowles: Yeah, I’m getting answers from zero to maybe a couple came and spoke to us. So it’s a really fascinating. And I think Stanford, obviously there’s a lot of startups that have come out of Stanford, uh, including, you know, Yahoo and Google and big boys. So, um, so yeah, that’s a, that’s a different MBA program for sure.

Mike Hoffman: Yeah, same thing here with Oregon. I know we’re close with their business school staff and their MBA program. They do have guest speakers every Thursday, which I think it’s a great point you bring up, because we didn’t have that in St. Louis. And here at Oregon, they have every Thursday, it’s Nike, it’s the NFL, it’s whatever kind of exposure to give these students. And ultimately, that’s where you really kind of you’re going to learn more from talking to those people than out of the textbook.

Kyle Knowles: What are some of the things that you learned from your startup experience with Sparta? Starting up and being employee number whatever and then growing it over almost 10 years.

Mike Hoffman: Yeah, so that’s a loaded question. I think the first thing was just having systems that provided accountability and transparency across departments. We were very big on OKRs, Objectives and Key Results, and starting at the top at, OK, what’s our North Star metric? Is it recurring revenue? Is it yada yada? Is it customer retention? Whatever it may be, and then working backwards on every department’s metrics that contributed to that North Star and then all the way down to the employees in each of those departments. We were able, I mean, engineers, because I was more on the business development side, engineers could go look at my KPIs around revenue and I could go into their OKRs and see where we were with the product roadmap. all the kind of the measuring of that just created a healthy transparency and Then you can see where things are falling and that’s why I’m I’m big into OKRs like the EOS system with the scorecard something we implement with our our company here just because it’s so creates so much alignment and That’s one of the things I learned from being at Sparta. I think the second thing is just professional persistence. When you’re a startup, you don’t have the case studies, the ROIs. You got to almost fake it till you make it, so to speak, with regards to people are going to buy from people. Building those relationships and one of our company values here that I learned from Sparta is being professionally persistent. You know, don’t just wait for things to happen. You got to make them happen. And I know we were chatting earlier about Elon Musk, but a lot of the companies he’s founded, he’s not waiting for the government or someone else. He’s just kind of, I’m going all in on how to figure out this problem.

Kyle Knowles: I was really late to the party on EOS, but there’s a lot of people that don’t know what it is. Can you describe it and just give a brief overview of what EOS is?

Mike Hoffman: Yeah, so EOS is just an entrepreneur operating system. If you haven’t read the book Traction, I highly recommend that book. The best part is all of kind of the freebies they give with regards to building that out. So at the simplest level, when you start a business, the first exercise is creating your vision. And I think the first thing is What are you going to be in 10 years? Because we’re so like narrow minded. I want to do X as an entrepreneur. But in reality, like take a step back and you think like you read Shoe Dog by Phil Knight. And, you know, sure, he got he started with track shoes, but look at Nike now. And like, so what’s your 10 year vision? then work backwards, what’s your three-year goal? And then I think the most powerful thing with EOS, well, two things. The first thing is, okay, you got your three-year goal, your one-year goal, your quarterly rocks, but what’s your issues list to hit those rocks? And every meeting, every advisor or whatever needs to focus on how to get after those issues. Because I think most people want to kind of run from their issues, even if intuitively, they know they’re there. And then the scorecard is just such a valuable thing for the entire company to see. So when you build out a business, and even if it’s you as the only employee, like the scorecard can really help you prioritize, okay, where are the kind of the leading KPIs? If revenue is a lagging KPI, what are the leading KPIs to show like, okay, we’re not going to have to overreact because surprise, revenue didn’t hit their targets or whatever that may be.

Kyle Knowles: Yeah, I love it. Traction is such a great book and I think so many businesses would benefit from it. I know, you know, they market to small and medium businesses a lot of the times, but even having worked in corporate, EOS would be awesome to answer a lot of questions and help guide, you know, at least teams, if not companies in the corporate world as well.

Mike Hoffman: Yeah, so Kyle, one of my friends back to the Sparta days, we were texting this morning, actually, and he is a coach for an SEC football team. And he sent me a leadership book to read. And the first thing I said he should read is Traction. And I was like, I know it’s labeled as a business book, but this will help. He manages a ton of coaches on his football team. And you’ll build a scorecard out that’ll make management so much easier.

Kyle Knowles: Oh, yeah. And I love the concept of the quarterly rocks. Do you want to talk about that a little bit and how you apply that to your business?

Mike Hoffman: Yeah, so quarterly rocks really kind of drive everything, you know, everyone. It’s very easy to get distracted as an entrepreneur because you got people throwing things at you. Check this out. Check that out. Have you thought about this? Have you thought about that? And that’s been my hardest thing as an entrepreneur is we’ve really scaled with the vending stuff is like learning how to say no. And that’s probably the biggest value I’ve gotten from the quarterly rocks is like, okay, here’s our focus points for this quarter. If whatever I’m being asked to do doesn’t align with that, like it’s not personal, but I only have so many hours in the day. So I got to pass on that thing that’s not a rock that ultimately is going to drive where we want to go as a company.

Kyle Knowles: It reminds me a lot of uh, agile software development, have a sprint. And anytime these requests come in from, say you’re building something for customers and they have all these requests come in, you’re not working on those because you’re working on this sprint and you’ve tabled those and put them on a product backlog. And, and then you can evaluate when you’re done with your sprint or like with quarterly rocks, when you’re done with that quarter, you can look at all these other requests that came in and then prioritize and establish new quarterly rocks.

Mike Hoffman: Yeah, and that’s a great. So we did a ton of the agile methodology with our engineers and Menlo Park, and that is a great analogy because what you’ll realize is when you put all those what I would consider distractions right now on the back burner or on the wait list, so to speak, for your rocks. When you get done with that quarter, you’ll realize all those things aren’t actually a priority anyway. So like, you know, why get distracted by this UI feature from one request that over time you realize isn’t even a priority anyway. So that’s why I love like, you know, back to the quarterly rocks. It’s like, okay, yeah, I’ll get to that. And let’s say January after this quarter and you’ll realize if you focus on your rocks, like all those other things will just happen to take care of themselves.

Kyle Knowles: Yeah, it won’t be as urgent come January, you might find five other things that are way more urgent than that one thing. But maybe a customer thought it was a big deal at the time, and they were making a bunch of noise about it. But if you park exactly, well, then it’s not that big of a deal anymore. So, yeah, I’m really, really a big fan of EOS. And, you know, I had a podcast guest named Brian Franco on who helps companies get ready to exit, owners ready to exit, establish generational wealth. And in order to get companies ready to exit, they’ve got to have their processes in place. They’ve got everything buttoned up so it’s easier for them to sell the company and someone else to come in and take over. And he’s a big proponent of, and he has EOS implementers and consultants come in and help these companies establish EOS. because then they can have their SOPs and everything buttoned up and they have a vision. They have all these kinds of things that makes it easier for them to sell the company and the owner to let go of the reins and hand it over to someone else.

Mike Hoffman: Yeah, absolutely. That’s brilliant. I love that.

Kyle Knowles: Okay, so we’ve talked about your career, you’re in corporate, you moved to Portland, you’re working remote with Sparta. And then what happens? I guess this is COVID. Something happens during COVID and makes you decide to maybe leave the corporate world.

Mike Hoffman: Yeah, so moved to Oregon, and I think it was four, five years ago now, maybe. Yeah, a little over four years ago, because it’s when I found out my wife was pregnant. And, you know, working for Sparta, I was on the road three weeks out of the month. And by that time, we had transitioned and scaled so rapidly at Sparta that the government and the military became its own kind of separate vertical that I oversaw. And so I was during COVID, you know, the Pentagon was still open. And so I was in D.C. three weeks out of the month and getting from Oregon to D.C. isn’t the easiest path. So long story short, I was in airports a lot. I had a lot of flight delays. And I remember one time I was in Denver’s airport. I believe our flight got canceled. But at the time it was just delayed And so I was like 11 p.m. All the Hudson bookstores all the restaurants were closed and I went up to a vending machine And I saw this machine. I was like, this is fascinating There’s a bottle of water that I know costs less than a dollar at the store and I’m about to pay $5 for it and I didn’t even blink I was like I need this bottle of water and it spits out of water. And I knew someone who was sleeping at 11 p.m. while I was at the airport was literally making 400% margins off of me. And that’s when I was like, I want to figure this out because this is convenience and people will pay for convenience.

Kyle Knowles: Okay. And so you flew home. Yeah, I from Washington, D.C. And what did you do when you got home?

Mike Hoffman: Yeah, I flew home and I went to a apartment complex that was right next to campus at the University of Oregon here in Eugene. And I walked in there and I was like, hey, do your residents literally? I don’t even keep in my car. I don’t even know where to find a vending machine. I don’t even like I have no background in any of this. So I went into the lobby of this apartment complex. I was like, man, it’s one building. Everyone goes through this main entrance. Like foot traffic seems really high. College kids, blah, blah, blah. I went in and I was like, Hey, do you guys have any like vending machines? They’re like, no. And actually because of COVID, we can’t provide free refreshments and free snacks in the lobby for liability purposes of like, I guess they used to have bowls of like, free bags of chips that people could grab their Doritos on their way back from class. So the manager’s like, can you put together a proposal of a machine? And I was like, uh, sure. And she started asking me all these questions, like, does it need wifi? And what kind of outlet do you need? Like, is it a one 10 volt or, you know, your normal outlet, or do you need like an RV plug outlet? And I was like, I’ll get back to you on depending on which machine we go with and keep in mind, I don’t know which machine to go with at the time. So I leave that meeting, I go, there’s this thing called Dr. Google, where I just go ask like machine manufacturers for vending. I most of them were in China. I came across a machine manufacturer that’s very reputable now, I know, but I came across a company out of Iowa and I was like, oh my gosh, like, okay, so all Midwesterners can trust Midwesterners. So sure enough, Clive, Iowa, I called them up. They’re like, hey, yeah, there’s this, you should do a combo machine. They’re like, it’s going to cost 5,500 bucks. We recommend you finance it. And I was like, oh, tell me more. They’re like, What happens is you take that $5,500, just like you’re going to a car dealership, we’re going to spread it out over 60 months. So my payment at the time with interest rates was $112. And your first $112 payment isn’t due until 90 days after the machine is installed. So you’re going to have 90 days of sales before your first $112 payment kicks in for 60 months and then you own the machine. Well, that machine I put in that apartment complex self-taught myself on everything. They had a tutorial of YouTube videos on how to get a machine through a doorway, how to open the doors with the keys, how to unwrap it off of a pallet, like how to set the prices, how to stock a candy bar in the motors, like everything you could think of. And I was just literally just have my pods in like this, playing these videos on repeat while I taught myself how to do it. That machine literally, first one combo machine started to doing like $600 and within 90 days, I was doing 900 bucks. Our margins were 60 percent with that machine. One location, I was like, this is 500 bucks a month profit. This is more than my rental is doing, and I did no money down. Why wouldn’t I do more of these? That’s what started my entrepreneurial path towards being a vending route specialist, I guess, or something.

Kyle Knowles: Okay. So you install this first one. You’re still working full time. You’re just doing this on the side. Okay.

Mike Hoffman: And then. I’d spend an hour a week stalking that thing. And I’d spend an hour a week ordering product from like Amazon, Costco. Oh, there’s no Sam’s clubs here. So those were kind of the two main suppliers at the time.

Kyle Knowles: So two hours a week you’re spending on it.

Mike Hoffman: Two hours max. I mean, that includes like drive time to the properties. I mean, Yeah, I would literally probably go by that property once, once a week. And, uh, uh, just look on my phone and be like, oh, you know, I’d be flying back from DC. I’m like, oh, I need to go restock it tomorrow with, you know, 10 protein shakes, five Celsius, eight, throw them all in a bucket and, uh, head over there on my way to the grocery store or whenever I was going to be out and about and, uh, knock it out.

Kyle Knowles: So you had a machine, a combo machine. My understanding is the combo machine has cold drinks and then it has other goods like candy bars and things like that, correct?

Mike Hoffman: Yeah. You’re basically hedging your bets because you don’t know if it’s a good location and how much revenue the location will do.

Kyle Knowles: And so you put in a combo machine to see, you know, this might be a drink location compared to snacks location or what was the idea of why did he recommend you do a combo machine in that location?

Mike Hoffman: Yeah, it’s not necessarily more like drinks versus snacks. It’s more rather than have to put a drink and a snack. And now you’re in, you know, 10 to 12 grand of capital up front or, you know, finance capital to buy two machines. Exactly. Because you have to buy two. So you’re better off just hedging your bets if it’s a location. Now, looking back on it, now I know enough about, okay, there’s X many people live in there. There’s one building versus garden style with 10 buildings. So like, you know, we’ve kind of built out this Zillow’s estimate for vending revenue now where we know, okay, here’s what we recommend. It justifies two, three, or a combo machine.

Kyle Knowles: Okay. So you’re, you’re getting excited. Uh, well, well, the other thing I want to ask you then, so you’re getting some kind of alert. So it had to come to some kind of sensors in there and it says, you know, Snickers are out or something to that effect when it’s.

Mike Hoffman: Yeah. You have an app on your phone that tracks all the inventory, whether they use cash or card, it’s tracking the sales.

Kyle Knowles: So it’s connected to Wi-Fi there in the building. Is that the way? Cell tower. A cell tower. Okay. So it’s got basically a cell phone.

Mike Hoffman: A SIM card. Yep.

Kyle Knowles: Yeah. Okay. And so those first 90 days, you know, you’ve no money out of your pocket waiting for the first payment or first invoice for your payment. What’s going on in your head the first 90 days as you start seeing the numbers come in?

Mike Hoffman: We need to scale this. Absolutely. I mean, you’re waking up and looking at your phone, you’re rolling over in your bed at 5 a.m. and you’re like, wow, I had 15 students last night when I was sleeping. I did $90 in sales last night. And then in your head, you’re like, shoot, if I get to $270 a day in sales, that’s a $100,000 salary. And so you’re just like trying to parlay like each machine’s its own dividend and you’re trying to Now just stack locations.

Kyle Knowles: So when that first invoice came, how your first payment was due 90 days after you installed, had you already decided to buy another one? Have you, uh, had you found another location or what was the timing of your next install?

Mike Hoffman: Yeah, that’s a good question. I think I had asked for an intro to one of their sister properties. So I had started those conversations. I don’t want to say I had already, I mean, getting locations isn’t a, you know, it’s not like a Cause you’re also waiting on the machine to get delivered and the manufacturing timelines and stuff. So I was in the process of like finding more locations for sure, but I didn’t have another machine doing sales within 90 days of the first one.

Kyle Knowles: But you, how long did it take you to go? I’m going to buy another one or find another location for another one.

Mike Hoffman: Oh yeah. Within the first month I was like, there is something to this for sure.

Kyle Knowles: Wow. Okay. So how many months after, or how many years after you installed your first combo vending machine, did you decide that you were going to do this full time?

Mike Hoffman: Probably two years. And I, it was definitely, it could have been a lot quicker than that. I, Again, being in DC three weeks out of the month kind of limited how much lead gen outreach and things I could do to scale the route. But, you know, it’s kind of like a perfect storm of I just slowly built it to a point where I was like, okay, now I can make the leap. You know, it’s kind of like the classic, you’re building your new entrepreneur adventure during five to nine while you still work your nine to five. And so that’s kind of exactly what I did.

Kyle Knowles: Okay. But were you trying to match your salary?

Mike Hoffman: Yeah. Yeah. Yeah. Match my salary. Get, you know, when I found out my wife was pregnant, I knew I didn’t want to be on the road all the time and wanted to be a present father. And so all those, all those kinds of factors came into play for sure.

Kyle Knowles: Wow. It’s really exciting to think about your mindset during those couple of years as you saw the potential of this and the ability to scale and had the courage to finally take the leap. What was it specifically? Was there a specific day that you were going for, a specific dollar amount, or was it the birth of your second child? I can’t remember if it was your first child or second child that was on the way.

Mike Hoffman: Yeah, there wasn’t a, I mean, the dollar amount, definitely we wanted to continue our lifestyle without having to really sacrifice. So, you know, dollar amount of like being able to match the W-2 to salary. But I think to take that even a step further, one thing I didn’t realize, which is wild when, you know, you go to an MBA program and spend 200 grand or whatever it was, and they don’t teach you this, but like, I didn’t even understand the tax advantages of being an entrepreneur. And so like, initially I was like, okay, well I need to make this much money and then taxes are going to take this much out. And my take home pay, like where, when you run it through your LLC and you set your salary and all the tax advantages of, you know, going to Costco to get all that product for your vending machines, well, what’s the car you drove? What’s the gas you use? What’s like, All those things I didn’t even think about until literally my first meeting with my CPA. He’s like, did you go to the coffee shop on your way to stock machines? I was like, yeah. He’s like, did you drink your coffee while you were stocking your machines? I’m like, yeah. He’s like, where’s that coffee shop receipt at? And I’m like, I don’t know. Where should it be? He’s like, right here as a deduction. Wow.

Kyle Knowles: Yeah, I, my brother-in-laws have a drywall company and I just, I see them just constantly, you know, writing things off and, and buying new trucks and all these. So if you, if you were to ask like, okay, say someone’s a wantrepreneur and thinks they’ve got to make, say, say, say right now they make $200,000 a year, let’s say. How much would you guesstimate that they would need to make because of write-offs and things like that, that you can do to become an entrepreneur? It wouldn’t be 200,000, right? It would be less than that. And what would you- Way less than that.

Mike Hoffman: I would say, um, my kind of rule of thumb is you should make 60% of your current salary. Okay. So if you’re making 200K as W2, you should feel comfortable being able to leave with 120K from your new venture as an entrepreneur.

Kyle Knowles: Wow. And then for someone making a hundred thousand, that’s 60,000. And then it just goes from there. So.

Mike Hoffman: Oh yeah. That’s what, that’s what exactly what I did. I was, that’s yeah. My take home pay, literally it was just, it’s, and they don’t teach you that. That’s the thing Kyle that blew my mind is like, all the other things. And now when I was making, let’s say over six figures as a W-2 employee, now I’m making basically my take-home pay after federal taxes. Well, now because my take-home pay is so low from like the federal government view, like now I’m getting refunds and like, you know, it’s just all the tax and all the Exactly all the kind of the I mean literally I didn’t even know like okay if you have a home office the Wi-Fi Do you use your Wi-Fi to do this podcast like all the kind of? businessy type things that and granted their deductions I get it it’s not a one one equals one, but I There’s a reason why people when you’re a consultant The first thing I told people is like you need to set up an LLC and that they need to pay you At your LLC not at you as a 1099 employee. Yeah, I

Kyle Knowles: And how did you, how did you start learning about these things? You know, when you made the jump and, and left corporate, what were there any books or, uh, any classes or anything you took to, to understand how to take advantage of these tax advantages?

Mike Hoffman: There wasn’t an exact book that jumps off the front of my brain right now. I mean, I was, I was always kind of. Following like Cody Sanchez and like some of these people on on Twitter that kind of push the envelope when it comes to like boring business and entrepreneurship and really trying to help people. So that was really kind of what opened my eyes. And then, you know, I think. as you start to become an entrepreneur, there’s like that triangle of trust. And one of those people in your triangle of trust as an entrepreneur needs to be a CPA. And I was really lucky to come across a CPA that did a great job like dumbing down things and ultimately helping maximize some of those efficiencies when it comes to being an entrepreneur.

Kyle Knowles: Awesome. So yeah, having a good CPA, what are the other two points of that triangle of trust then?

Mike Hoffman: Well, I didn’t have one for the longest time, but as we’ve really scaled our company, I think having good, uh, general counsel, like having a good lawyer in your, your back pocket that you trust just to bounce some ideas off of, of like, you know, not what can’t, what can’t I do, but how can we make it happen type of thing. And then, you know, for me, like my wife’s a big, influence with our triangle just because everything related to the entrepreneur side of things definitely impacts the family. So making sure we’re all in sync as a triangle.

Kyle Knowles: And so is your wife helping you with the business or does she do something different?

Mike Hoffman: She does something different. She’s actually she just made the jump last last month, Kyle, into being an entrepreneur. And yeah, so she’s kind of she was an entrepreneur for a couple of years and she just made the leap last month. In fact, I think she just got her first paycheck from a customer yesterday. So like you need to take a screenshot of that, a bunch of firsts.

Kyle Knowles: That’s awesome. Is she doing consulting or is she selling a product? What does she do?

Mike Hoffman: She’s selling a service, yeah. She’s kind of built an offer around, you know, you think Alex Formosi and the $100 million offer just kind of around mentoring young adults that come out of athletics and either don’t have a job or looking for a job or they just kind of miss that culture of being part of a team like they had in college. So she’s trying to really build that community of kind of thriving, uh, young professionals, uh, with athletes.

Kyle Knowles: Yeah, that’s a, that’s a big market because not everyone makes it to the pros, as you know, and, and there are a lot of, uh, you know, really driven athletes, male and female that just go out there and hustle, hustle, hustle. And then when, when the team’s gone and the games, they don’t have any games on the calendar coming up, that’s a, that’s a tough transition for sure.

Mike Hoffman: Well, that’s what, you know, back to your question earlier, when you asked, like, what were the signs of being an entrepreneur as you grow up? I come back to there’s, there’s two kind of camps. You got the, the lemonade stand camp of like understanding, you know, buy this water for 30 cents, sell it for a dollar as a teenager. But then you also have those that played sports and there’s something real about athlete DNA. I know when we were at Sparta, we had a rule that you know, our preference was always to hire athletes because they kind of knew how to be efficient, work long hours, they were team players, like all the kind of the traits, you know, so you kind of think back to that athlete DNA.

Kyle Knowles: It’s so true. And one of my favorite things that anyone’s ever said my whole career was when we were dealing with a difficult person and, and this person said, I guess she didn’t play team sports. And that really just hit me. I was like, cause I was always playing team sports. And so yeah, it’s awesome to have athletes at a company that played team sports because they understand that, you know, everyone has a different job to do and we need to work together. So, well, okay. So Mike, we’re almost coming to the end of our time together. Tell me about what happened after this initial, whoo, okay, two years later, you decided to leave, leave corporate world, you left Sparta. And what happened from there the past couple of years? What have you been up to?

Mike Hoffman: Yeah, so there’s been a lot. There’s, you know, trying to scale this vending route as as big as we can get it. So, you know, as a classic entrepreneur, you know, the first thing was like landing your first location and figuring it all out. And then I was like, OK, how do we do this? 10x, like the whole scaling and operational side of that. So, um, been building that. And then one of the things that was interesting is I had a friend from my time in the Bay that was like, Hey, I just moved to San Diego. Can you help me build a vending route here? And I was like, oh, that’s really interesting. And like my background as a coach is, you know, coaching, teaching, whatever you want to call it. So that’s really kind of parlayed into helping people build vending routes wherever they live, teaching them best practices, helping them kind of be efficient as they go down this what I call vendingpreneur path of taking the leap. So I’ve kind of been doing both of those things in parallel.

Kyle Knowles: Okay. And I know you have a couple of websites and one of them is Mr. Passive, your big proponent of passive income. And how did you come up with the name? And tell me about mrpassive.com.

Mike Hoffman: Yeah. I don’t know how I came up with Mr. Passive. Maybe it was a joke that someone gave me when I was talking about, you know, back during COVID, I was doing a little bit of everything. I had like an Amazon FBA store during that kind of the peak of e-comm stores I had. Bitcoin mining, I still do some of that. And so I think my thing is I like to build something and then figure out ways to delegate and ultimately automate the process. And so, you know, making things as passive as possible, because to me, the most important currency is time. And so, you know, that’s where I just come back to leverage. And at the end of the day, I want to spend more time with my family. I want to live as long as I can. Like, and so to do those things, um, just building these income streams that kind of run on their own.

Kyle Knowles: Okay. And you have vendingpreneurs.com as well, which, uh, seems to me as, as kind of a community around vending and, and, uh, you’re doing some consulting with people that want to get into the vending machine business. Is that correct?

Mike Hoffman: Yeah, so we have we have a very very, very devoted community of vendingpreneurs that just love to share best practices. And it’s a very, uh, I’m very proud of the culture we have in there where we’re all trying to help each other, um, scare scale vending routes. And we all have the same goals. Like we want to be our own bosses. We want to, um, build our college or our kids college funds or build our travel funds or whatever. So yeah, that’s where we help people build vending routes.

Kyle Knowles: Okay. And then your main business as far as the vending business, what is the website for that?

Mike Hoffman: Amenities, right? Yeah, modern-amenities.com.

Kyle Knowles: Modern-amenities.com. So people can find you at those three websites. Is there anywhere else they can find you on Twitter or Instagram or what are your handles anywhere else?

Mike Hoffman: Yeah, Instagram, Twitter, you know, Twitter, I think it’s like, uh, Mr. Passive is my handle. I mean, I’m on all the, if you Google Mr. Passive or Mr. Passive vending on any of the social media platforms, Instagram, Twitter, YouTube, that’s where I’m, I’m very, very open book about all of the things. Cause I got the Mark Cuban mentality of patents are overrated and, the hardworking and persistent will just rise to the top. So I got no secrets.

Kyle Knowles: Okay. I love it. What would your advice be to a entrepreneur who wants to get into passive income? What, what kind of advice would you give them?

Mike Hoffman: You know, Kyle, I think this is why I’m so excited about what you’re building is You got to start somewhere and you got to just kind of go down that path of whatever interests you because not all of it’s going to start out passive like you got to go through the growing pains to make it passive and You just got to start in something you believe in. Like, do you believe in Bitcoin? Then maybe Bitcoin mining is a path for you. Do you believe in, like when you travel, do you always stay at an Airbnb over instead of a hotel? Well, if so, maybe, maybe you go down like the Airbnb or Airbnb arbitrage path, you know, like at the end of the day, I think you can make anything passive by building systems where it will run itself, but you got to get to that point. But As an entrepreneur, you gotta find something that is close to you because, I mean, you know it and I know it. There’s valleys of death during the entrepreneur time. It’s a lonely road in certain times. And so you gotta find something that you’re passionate about to kind of get through those lulls. Because it is, like you said, with the theater analogy, it’s not all sunshine and rainbows.

Kyle Knowles: For sure. And do you see a lot of people that are in the corporate world? Do you see any kind of trends with people in the corporate world deciding to do side hustles or go out and go at it on their own?

Mike Hoffman: All the time. We, I think our vending printer community, I don’t know how many are in there now, but I mean, we have all kinds of corporate world. The great thing about vending is like you can stock the machines on your own time. So whether you stock them at 5am or 8pm or Saturday or Wednesday, it doesn’t matter as long as you do it, whatever it is once a week and they get done. Like, so I, I’m a huge, uh, But then again, I haven’t been through a recession or anything like that. So I think there’s more and more content out there of different ideas. And I think more and more people are willing to take the risk without, you know, leaving their corporate America job first. Like I think if you can head your bets and try to test something out while you’re in corporate America, even better.

Kyle Knowles: I appreciate that advice. I just have a couple more questions for you and then a lightning round of questions for you and we can wrap up here. So you’ve experienced some diverse transitions from athletics to corporate, to entrepreneurship. Was there any major setback in your life that really helped kind of mold who you are and push you forward and give you the grit to be the entrepreneur that you are?

Mike Hoffman: That’s a really. Really good question. I don’t think there was a setback per se. I think my parents really. I don’t know if it was the Midwest values or or what have you, but we just had to earn everything we were. We were given as kids and to the point like even when I went to KU that was out of state. So like I had to, you know, I had to work two jobs while going to college because my dad made it very clear like it was your choice to go to Kansas and not I was so it falls on you.

Kyle Knowles: Because you had out of state tuition and all that.

Mike Hoffman: Exactly. Exactly.

Kyle Knowles: Yeah. Okay. All right. Here’s the lightning round of questions. If you’re ready for them. Let’s do it. Are you a musician? No. Do you enjoy music?

Mike Hoffman: I love music.

Kyle Knowles: What’s your favorite music type of music?

Mike Hoffman: Oh, it totally depends on what the environment is. I’m a huge believer that music can help dictate your mood. So, um, if I’m in focus work, I love a lot of like beta focusy type music. If I’m driving down the street with my windows down, I love some country and everything in between.

Kyle Knowles: Okay. Favorite candy bar.

Mike Hoffman: Oh man. I don’t know, I haven’t had a candy bar in a long time, which is hilarious, because I have a bunch of vending snacks on the other side of this wall. But I would probably say maybe Peanut M&M’s. It’s not a candy bar, but kind of.

Kyle Knowles: Yeah, I get it. So adjacent to that would be what’s the most popular candy bar that sells out consistently in a vending machine?

Mike Hoffman: Reese’s.

Kyle Knowles: Reese’s, okay. I would think Snickers or Peanut M&M’s, but Reese’s, that’s the ticket, huh?

Mike Hoffman: Snickers is up there. Peanut M&M’s is definitely up there, but Snickers is kind of, you know, they’re not really big bars and Snickers prices have climbed. So I think people, you know, the old school people love the Diet Coke and the Snickers, but the new school is more of the Celsius and big bag of gummy worms or something.

Kyle Knowles: Okay. Favorite musical artist?

Mike Hoffman: Back to the mood thing. I’d probably say Luke Bryan.

Kyle Knowles: Favorite cereal?

Mike Hoffman: Magic Spin.

Kyle Knowles: I don’t even know what that is.

Mike Hoffman: So it’s a cereal that’s come out in the last couple years. It’s very high protein, low carb, and Um, it’s kind of like the old school puffs, but, uh, more nutritional, um, value for you.

Kyle Knowles: Protein and things like that. Did you say magic spoon?

Mike Hoffman: Magic spoon. Yep. So like for our kids and stuff, it’s like kind of like chocolate puffs or the Reese’s puffs from back in the day, but now they’ve kind of changed the, probably doesn’t, doesn’t, definitely doesn’t taste as good, but it’s supposed to be healthier.

Kyle Knowles: Okay. Mac or PC? Uh, Mac. Google or Microsoft? Google. Dogs or cats?

Mike Hoffman: Dogs, for sure.

Kyle Knowles: Phantom or Les Mis?

Mike Hoffman: Phantom.

Kyle Knowles: All right. Well, Mike, it’s been such a pleasure talking to you today. And I think everything you’ve talked about, you’ve kind of outlined kind of how you went into entrepreneurship. And I think it’s going to inspire so many people to think of ideas like vending machines that they might not think of, so they could start some passive income. And I know you have some downloads and things like that on your websites. talking about different passive income opportunities. But I really appreciate you taking the time to meet with me today and share your entrepreneurial journey.

Mike Hoffman: Kyle, thanks for the time. Thank you for having me on and all the questions. And more importantly, thanks for everything you do. And I’m super passionate about what you’re all about. And yeah, thanks again.

Kyle Knowles: Thank you.