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My dad taught me cashflow with a soda machine

1060 points by robfitz 15y ago

achristoffersen 15y ago
A beautiful story. I myself was raised by two academics in safe middle class public sector jobs their whole life. Only at my 30th year did I consider starting my own business. Looking back on friends who started on their own, I do not doubt that either being an entrepreneur is 1) in the bloodline (nature) and in the upbringing (nurture). I had a wonderful childhood - but I think I would have started my own business much earlier, had I had a father like yours. And it just goes to show, that valuable life lessons does not need to be boring chores and stern rants from the elderly. Thanks for an inspiring read.
wwdevries 15y ago
Brilliant story. This model is much better than giving allowance.
dsandrowitz 15y ago
Great story. I'm always looking for new ideas on how to teach these concepts to my own children and I love this approach. Now, I just need to find a good place for a vending machine...
- robfitz 15y ago
  I looked into this a bit (I wanted to take the same ideas and package them for elementary schools to teach to students). Vending machines are far from ideal, although they're still plausible if you have a friend who owns a car repair shop or something similar with a few steady workers plus customer traffic. If I was doing it today, I would take one of the single-serving coffee machines. Some of them have coin slots, pricing controls, and protected inventory. They're a bit expensive to buy individually (a couple grand) but might make sense to share the responsibilities and decisions among a class or a group of family friends. Because of the smaller footprint, also easy to add to a teacher's lounge, office, etc and it's possible the manufacturer would cut you a break for doing something so PR-able, especially if you turn it into a repeatable school program. Drop me a note if anyone decides to pursue something like this -- I'd be happy to help where I can: developing the curriculum, yelling at suppliers, or coming up with new lower-cost hardware.
  - patrickk 15y ago
    Good thinking on the coffee machine. A former housemate worked in a corner shop and mentioned that the coffee machine had the highest percentage markup of anything for sale there, in the order of 1000-1200% if memory serves me correctly.
  - joelhaus 15y ago
    My father leases/finances equipment and occasionally gets the used machines back after the term expires. Was thinking that a website positioning the vending machines as a great learning tool for kids would be an interesting way to sell them. Depending on the popularity, I imagine you might even be able to build some web applications that would help the kids manage and find locations for the machines (a sort of marketplace for machine owners and location owners). There's the possibility of upgrading the machines and even adding NFC support to older ones too. Am looking into how many machines I can get my hands on now...
    - joelhaus 15y ago
      It turns out that they don't lease vending machines, but he does have connections with manufacturers. Feel free to reach out if anyone is interested.
tagawa 15y ago
"I get the impression kids are a bit slippery in that regard." True. Come to think of it, I'm middle-aged and I'm still like that.
Hitchhiker 15y ago
The simplest lessons are often the most difficult to learn and internalize to the limit of it becoming second nature ( or intuition ). Brilliant dad. What a great story. Thank you kindly. Fathers are so, so, so important.. here's an interesting excerpt from the recent Steve Jobs bio : " It was important, his father said, to craft the backs of cabinets and fences properly, even though they were hidden. He loved doing things right. He even cared about the look of the parts you couldn’t see. "[1] Connect the above with the speech Johnny Ive gave at the recent memorial : " we shared a giddy excitement spending months and months on a part of a product that nobody would ever see, well not with their eyes. "[2] [1] - http://www.amazon.com/Steve-Jobs-Exclusive-Biography-ebook/dp/B005J3IEZQ/ http://www.amazon.com/Steve-Jobs-Exclusive-Biography-ebook/d... [2] - http://www.youtube.com/watch?v=nPUsuY8JZJI&t=2905 http://www.youtube.com/watch?v=nPUsuY8JZJI&t=2905
dimitar 15y ago
This is amazing. Usually parents try to teach kinds about mature life by making them do chores or get higher marks in school. And yet what do you learn this way? That life doesn't reward you for this no matter how many chores you do and how good marks you get.
camtarn 15y ago
Reminds me of a story of a similar family, posted on everything2.com a while ago after a long discussion of how to rip off soda machines by using coins stuck to fishing line or pouring salt water through them: http://everything2.com/user/Trilateral+Chairman/writeups/Ripping+off+soda+machines http://everything2.com/user/Trilateral+Chairman/writeups/Rip... Lots of life lessons there.
bgraves 15y ago
Rob - how old were you when this started and how long did this venture last?
- robfitz 15y ago
  I'd have to ask my mom to be totally sure, but I'd estimate I ran the machine for roughly 4 years beginning when I was 7 or 8.
  - bgraves 15y ago
    That's awesome. I have a 9 year old son right now (4 kids total ranging from ages 16 to 4 years old) and think this is a great story. Thanks for sharing!
    - deleted 15y ago
      [deleted]
Tyrannosaurs 15y ago
Anyone else here think that kids should be allowed to spend their childhoods being, well, kids? A lot of people seem to spend their time as parents trying to teach the things they think their kids should know, but too often these seem to be things that kids need to know to fulfil their parents aspirations for them. Sure cash flow is a useful lesson (though one that I'd suggest could be taught more efficiently) but this feels a bit like a parent pushing someone down a particular line. Now I'm not saying that this is a bad story, and certainly not a bad parent, just that IMHO the absolute best bit of this story - by a country mile - is that it's something they did together, parent and child spending time with each other. If he learned about cash flow then that's great, but it's not nearly as great as him learning about his dad and his dad learning about him.
- jgrahamc 15y ago
  It depends what you mean by 'being kids'. My grandfather taught me quite a bit about electronics when I was young (how to solder, what the major components do, etc.) and I loved it. We also did woodwork together. With him I designed and built my own briefcase for taking my books to school in. For him these were things that I needed to know (he had been in the RAF as a wireless operator in the Second World War (http://en.wikipedia.org/wiki/Battle_of_the_Beams http://en.wikipedia.org/wiki/Battle_of_the_Beams) and so electronics was important and he'd grown up at a time when people made a lot of there own things). For me it was wonderful stuff to know about. And, as you point out, I spent a lot of time with my grandfather. My parents took me to events organized by the National Association for Gifted Children (http://en.wikipedia.org/wiki/National_Association_for_Gifted_Children http://en.wikipedia.org/wiki/National_Association_for_Gifted...) and also had me do various types of IQ testing. Some of those events involve my best memories of time spent with my father. Perhaps they were fulfulling some sort of wish for me, but I tend to think that they looked at me and realized that these were things that I was going to enjoy or needed. Those interactions with my father and grandfather really matter a lot.
  - Tyrannosaurs 15y ago
    By that I mean do stuff because it's fun and learn things because they're interesting and there to be learned rather than because doing them or learning them serves some aspirational purpose. I think what your grandfather did sounds ace but it sounds like you agree that the best bit was the time the two of you spent together and the knowledge imparted was secondary (even if it's gone on to be useful). Obviously things can fulfil both criteria and that's great, but I always think that the important thing is that it's fun and the minute it doesn't meet that criteria it should be changed. Kids spend enough time at school learning things they "need" to know. Let spare time be spare time. (As an aside my grandfather was a professional football player - while on the surface this sounds like ideal bonding material for a grandson he was big on the hard work element and spent too much time trying to get me to do repetitive drills...)
gallamine 15y ago
When I was 9 or 10 we'd go to Costco and purchase the big flats of large muffins. We'd sit around the dinner table and wrap them in cellophane and then send them with my dad to put in his office's kitchen. We sold those things for $50/each on the honor system and made a tidy profit. I hadn't thought of that in a while, but it definitely was a fun adventure.
- duncanj 15y ago
  dang, that's some markup!
  - zipdog 15y ago
    Indeed, even the US justice department only pays $16 ;) http://www.washingtontimes.com/news/2011/sep/20/taxpayers-foot-bill-justice-department-16-muffins/?page=all http://www.washingtontimes.com/news/2011/sep/20/taxpayers-fo...
- chadgeidel 15y ago
  LOL - I assume you meant $0.50 each?
  - gallamine 15y ago
    Whoops! Yes, $0.50!
zzygan 15y ago
Very interesting idea. I need to figure out a way to teach my kids about money and cashflow using something like this method. However, as cool as this story is, I swear I read it in one of Rich Dad Poor Dad books. Maybe this is the source of the books story. I'm not sure.
- robfitz 15y ago
  From my perspective, it doesn't make a huge difference whether the idea was independently discovered by my dad or inspired by something he read--what matters is the effect it had on me.
ttcbj 15y ago
Awesome and delightful!
DanielBMarkham 15y ago
My 11-year-old daughter for Christmas last year asked for a bubble-gum vending machine. She got the idea from hearing stories about a family member who had over a hundred machines placed at one time. I thought it was a great idea. She placed one machine, then another. Now she has four machines, but she has only placed 2 of them. Each machine makes about a buck a day gross, 70 cents or so net. I'm purposely not doing any of the stuff this guy's dad did -- charge for gas, insist on doing the math, etc. For now all she has to do is buy the inventory. Once a month or so to pick up the "haul." I think if you push these things then you lose track of the point. Right now it's something she enjoys -- who wouldn't want to take a trip each month and come back with tens of dollars? If we were to get into marketing, sales, cash flow, or any of that? I think it would turn it into a chore. After all, geesh, the kid is only 11. The only thing I've told her is that she has to save up if she wants another machine, and the more machines she has placed in good spots the more money she will make. Looking back over the previous year, I think this Christmas gift might turn out to be one of the best presents we've ever given. It has the potential to teach so many lessons. The coolest part is that it is all driven by motivation on her side -- she was the one asking for the machine, she is the one picking out the product, she is the one saving up for new machines, she is the one responsible for scouting out new locations and making the pitch to store owners, etc. If she pushes a lot, she could make some real cash. If not, then she knows more about how these things work. It's a win either way.
- pitt1980 15y ago
  just curious, where did your daughter place her vending machine? who worked out the logistics of where it could be placed?
- robfitz 15y ago
  I didn't really mention timescales, but in my case he added the various complications gradually over about 4 years. It was never something I sat down and "learned". Whenever I started to drift away via boredom, a fun new twist would mysteriously appear. Love what you're doing w/ the gum machines -- think it's an amazing approach.
- Cushman 15y ago
  The epitome of small-scale, early-stage funding. Good investment ;)
jmj4 15y ago
Empowering people to figure stuff out on their own is the best way to teach. My Dad handed me the reins to out a small stock account with my own, my siblings and some of his money when I was 11. Man, can that motivate you to learn. I'd read 20 investing books by the time I got into high school. And fundamentally the most important thing it taught me was how to think about money. And its was so effortless on his part. On a similar note, Warren Buffet made around $50,000 by the time he graduated high school by owning several vending machines, among other things.
steve8918 15y ago
I had a huge smile on my face while reading this. This has got to be one of the best stories I've read in a while, and a fantastic idea if I ever have kids. I love it. Especially the idea that the dad would slowly start introducing charges to the kid. It's actually a brilliant idea, and more real-world than giving a kid chores and allowance.
koalemos 15y ago
this is great- good thing your dad didn't pick up a slot machine, you could've ended up in politics :)
deleted 15y ago
[deleted]
prawn 15y ago
Brings to mind two ideas. Could a parent do all of this without actually renting a machine? Not ideal and a bit of a white lie, but would remove that cost. A father/mother could come home each night or report back at the end of the week. A bit like playing lemonade stand by proxy. Could a simple app assist a parent in doing this and getting imaginative/realistic situations to keep the child interested? Or even a service renting physical vending machines specifically for parents and children to try this?
- alttag 15y ago
  ... Because lying to your kids is a good idea? From OP, part of the joy was using the key to open the machine and get a drink when others were watching. Removing the tangibility of the project (and the heavy lifting——are you teaching your kids that you'll buy and move their inventory?) seems like it might not be the best approach.
  - prawn 15y ago
    I acknowledged that it wasn't ideal and was merely wondering if it might be an option for those without the means or imagination to arrange an actual vending machine themselves.
- gus_massa 15y ago
  If the machine is not real, you don't get the real consecuences of your actions, like: "Suddenly I couldn’t afford to make re-stocking trips every week, grape soda was cut for an extra column of Coca-Cola. I lost some niche customers." Is this a good idea?
kingkilr 15y ago
I can't say my parents had lessons this cool, but I did spend some of my time in my teenage years working at my cousins' vending machine warehouse, doing various tasks: counting the take (and filling out the spreadsheet), filing refill slips for the drivers, putting new inventory in the right place, trips to purchase new inventory, and even refilling a machine once. It's a pretty interesting business, and it's interesting to me to see how one can scale up the "levels of responsibility".
dave167811 15y ago
Now I see the downside of having a socialist father.
bomatson 15y ago
I love this story. Awesome awesome I made plush South Park characters and sold them to my mom's fitness/spinning clients. Learned a lot about pricing, investing, selling, creating at 10. Highly encouraged to give children opportunities like this and not just have them do soccer
- wanorris 15y ago
  Of course, there are many worse things to spend your time on as a kid than a combination of physical exercise and teamwork. Do you see something wrong with playing soccer? Or was the key word in that sentence the "just"?
  - bomatson 15y ago
    key word was 'just'. I played soccer and it was great, my point was to diversify opportunities so kids can learn on their own what motivates them
wastedbrains 15y ago
That is a great story. Shorter and simpler after mowing the lawn one dad. I told my dad I wanted to invest in stocks. He thought this was a great opportunity to teach me about money. So he loaned me money to invest in the stock market. Help me pick and buy stocks, track their values. Eventually to sell them and pay back the loan keeping profits for myself... The only real issue was it was the start of tech bubble and I was a computer nerd. I bought all tech stocks which soared, my older brother buy shoe companies and the like... I nearly tripled my investment while my brother lost 30ish% of his. Not sure it was quite as real world learning opportunity as he was hoping.
- fennecfoxen 15y ago
  I think the stock market is a lousy way to teach kids about investing. In fact, I'm not even convinced that interest-bearing accounts are of much use to kids. The time value of money is significant to a kid. Consider a kid with, say, $500 from babysitting or lawn-mowing. This could buy the kid, say, a really nice bicycle (+ helmet, lock, rack, basket, chain lubricant, etc. Assume they're old enough that they won't outgrow it for a while.) Alternatively, the kid could wait a year and expect to have an extra $20 (given the 4% annualized inflation-adjusted return on the market - what, you're investing, right? not gambling? then you get 4%. :P) Which would you choose: about $20, or a year with a bicycle? Opportunity cost! And the $20 will just about cover the commission on trading. Ouch. Transaction fees. The reason that the stock market is attractive to adults is that we generally have an adequate supply of Things that we need to make use of our time. There isn't another object we can spend $500 that will make that sort of an impact on our lives. Diminishing returns! (Also, we have tens of thousands of dollars, so we can invest without being slaughtered with fees.)
yonasb 15y ago
Great example of why entrepreneurs don't need an MBA:)
Hyena 15y ago
How did the $0.55 price turn out? Did you keep it?
aklemm 15y ago
This is great. By the time I was 9 or 10, I was frustrated that for all my playing with tools, reading, tinkering, etc., none of it was towards a practical goal. Finding a way to give kids real-life responsibilities in such an engaging way is awesome. I wonder if script kiddies, for example, lean towards the nefarious because there are no industrious outlets nor mentors for them to work with.
- someone13 15y ago
  Regarding your comment about script kiddies - absolutely. So many of them have no legitimate outlet for their curiosity and skill that they end up "learning to hack" because they think it's cool. It's a really sad thing, and something I wish there was a solution for...
amuhtar 15y ago
Great Story. I think one thing I am realizing with my little daughter is that kids - even at 1.5 years old - are curious and resourceful. My job as a parent is not to make her happy... but to help equip her to fullfil her purpose and passions to the fullest - that's when she'll be happiest. That's perhaps why my parents stopped giving us an allowance early on. My dad loves woodworking, and I remember at 5 years old, taking scraps, nailing parts together to make a very crude looking airplane and actually sold (yes, someone actually bought it) it to raise money for something - can't remember what it was. But I do remember the work, I remember getting paid, and I remember the satisfaction and fulfillment in a happy customer (even if he did buy it out of compassion). If I wanted a toy (birthday/Christmas aside), I had to work for it (not the regular chores). It encouraged me to think... be creative... buy low, sell high. Robert Kiyosaki had similar experiences as a kid in his book "Rich Dad, Poor Dad". - As an aside the Cashflow game is really good and although it may be expensive, it is totally worth it. There is a kids version too. I did the lemonade... I tried selling baseball cards... As I got older, so grew the ideas. In highschool video games were expensive. I started reviewing them through a couple of companies (now owned by IGN) and got my games for free to review them and write an HTML review page. In university (ah, the advent of eBay), I started going to garage sales/thrift stores/pawn shops and buying selective items. I'd clean and test the items, put them up for sale. All my "toys" (games, computer parts, my Metcal Station, DVDs, etc) were bought through the sale of items on eBay. Of course, this is all besides running a Computer Consulting/VAR company, creating applications, websites, and study/work. Ah, the good old days. Forgive me for rambling... I got caught in the nostalgia.
alexholehouse 15y ago
Great story. I did a similar thing with Pokemon cards - I lived in one school region but actually attended school in another, so had access to two markets. I kept track of inconsistencies in demand and used it to my advantage, taking a plentiful card type from one area to the other and vice versa. Being a kid is serious biznuz! Reminds me of Barry Silbert (of Second Market)'s introduction to trading - http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2699 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2699
DanBC 15y ago
I'm curious if this kind of youthful money making is still possible. It tends to be much rarer in the UK anyway, but I'm pretty sure there are a gajillion petty bureaucracies that would stop it - working age laws; minimum wage laws; tax / benefit laws; insurance; health and safety; etc etc etc. But, see also "The inexplicable war on lemonade stands" which is also happening in the US. (http://www.forbes.com/sites/erikkain/2011/08/03/the-inexplicable-war-on-lemonade-stands/ http://www.forbes.com/sites/erikkain/2011/08/03/the-inexplic...)
RJaswa 15y ago
Thanks for writing this article. I really enjoyed it. When I was growing up, I was terrible with cash management. My parents continuously subsidized my various entrepreneurial endeavors (building and selling skateboard ramps, selling people's stuff on eBay, manual labor...). So, I grew up really excited about the upside potential of entrepreneurship, but learned little about what it takes to manage the extraordinarily limited resources that you have when you are building businesses in the real world. Now I help invest in and build companies and work on projects of my own. Learning the trade offs between pricing/volume, technology/cost, etc., is so valuable and I'm only starting to understand them deeply now. I think I'll do something like this when I have kids, whenever that may be....
zoey564 15y ago
Great story Rob. Your Dad was an amazing person. He taught not only the 8 year old boy but the 20 something girl the same principles. He was truly an amazing man and I miss him every day.

1060 points by robfitz 15y ago

A beautiful story. I myself was raised by two academics in safe middle class public sector jobs their whole life. Only at my 30th year did I consider starting my own business. Looking back on friends who started on their own, I do not doubt that either being an entrepreneur is 1) in the bloodline (nature) and in the upbringing (nurture). I had a wonderful childhood - but I think I would have started my own business much earlier, had I had a father like yours. And it just goes to show, that valuable life lessons does not need to be boring chores and stern rants from the elderly. Thanks for an inspiring read.

wwdevries 15y ago

Brilliant story. This model is much better than giving allowance.

dsandrowitz 15y ago

Great story. I'm always looking for new ideas on how to teach these concepts to my own children and I love this approach. Now, I just need to find a good place for a vending machine...

robfitz 15y ago
I looked into this a bit (I wanted to take the same ideas and package them for elementary schools to teach to students). Vending machines are far from ideal, although they're still plausible if you have a friend who owns a car repair shop or something similar with a few steady workers plus customer traffic. If I was doing it today, I would take one of the single-serving coffee machines. Some of them have coin slots, pricing controls, and protected inventory. They're a bit expensive to buy individually (a couple grand) but might make sense to share the responsibilities and decisions among a class or a group of family friends. Because of the smaller footprint, also easy to add to a teacher's lounge, office, etc and it's possible the manufacturer would cut you a break for doing something so PR-able, especially if you turn it into a repeatable school program. Drop me a note if anyone decides to pursue something like this -- I'd be happy to help where I can: developing the curriculum, yelling at suppliers, or coming up with new lower-cost hardware.
- patrickk 15y ago
  Good thinking on the coffee machine. A former housemate worked in a corner shop and mentioned that the coffee machine had the highest percentage markup of anything for sale there, in the order of 1000-1200% if memory serves me correctly.
- joelhaus 15y ago
  My father leases/finances equipment and occasionally gets the used machines back after the term expires. Was thinking that a website positioning the vending machines as a great learning tool for kids would be an interesting way to sell them. Depending on the popularity, I imagine you might even be able to build some web applications that would help the kids manage and find locations for the machines (a sort of marketplace for machine owners and location owners). There's the possibility of upgrading the machines and even adding NFC support to older ones too. Am looking into how many machines I can get my hands on now...
  - joelhaus 15y ago
    It turns out that they don't lease vending machines, but he does have connections with manufacturers. Feel free to reach out if anyone is interested.

tagawa 15y ago

"I get the impression kids are a bit slippery in that regard." True. Come to think of it, I'm middle-aged and I'm still like that.

Hitchhiker 15y ago

The simplest lessons are often the most difficult to learn and internalize to the limit of it becoming second nature ( or intuition ). Brilliant dad. What a great story. Thank you kindly. Fathers are so, so, so important.. here's an interesting excerpt from the recent Steve Jobs bio : " It was important, his father said, to craft the backs of cabinets and fences properly, even though they were hidden. He loved doing things right. He even cared about the look of the parts you couldn’t see. "[1] Connect the above with the speech Johnny Ive gave at the recent memorial : " we shared a giddy excitement spending months and months on a part of a product that nobody would ever see, well not with their eyes. "[2] [1] - http://www.amazon.com/Steve-Jobs-Exclusive-Biography-ebook/dp/B005J3IEZQ/ http://www.amazon.com/Steve-Jobs-Exclusive-Biography-ebook/d... [2] - http://www.youtube.com/watch?v=nPUsuY8JZJI&t=2905 http://www.youtube.com/watch?v=nPUsuY8JZJI&t=2905

dimitar 15y ago

This is amazing. Usually parents try to teach kinds about mature life by making them do chores or get higher marks in school. And yet what do you learn this way? That life doesn't reward you for this no matter how many chores you do and how good marks you get.

camtarn 15y ago

Reminds me of a story of a similar family, posted on everything2.com a while ago after a long discussion of how to rip off soda machines by using coins stuck to fishing line or pouring salt water through them: http://everything2.com/user/Trilateral+Chairman/writeups/Ripping+off+soda+machines http://everything2.com/user/Trilateral+Chairman/writeups/Rip... Lots of life lessons there.

bgraves 15y ago

Rob - how old were you when this started and how long did this venture last?

robfitz 15y ago
I'd have to ask my mom to be totally sure, but I'd estimate I ran the machine for roughly 4 years beginning when I was 7 or 8.
- bgraves 15y ago
  That's awesome. I have a 9 year old son right now (4 kids total ranging from ages 16 to 4 years old) and think this is a great story. Thanks for sharing!
  - deleted 15y ago
    [deleted]

Tyrannosaurs 15y ago

Anyone else here think that kids should be allowed to spend their childhoods being, well, kids? A lot of people seem to spend their time as parents trying to teach the things they think their kids should know, but too often these seem to be things that kids need to know to fulfil their parents aspirations for them. Sure cash flow is a useful lesson (though one that I'd suggest could be taught more efficiently) but this feels a bit like a parent pushing someone down a particular line. Now I'm not saying that this is a bad story, and certainly not a bad parent, just that IMHO the absolute best bit of this story - by a country mile - is that it's something they did together, parent and child spending time with each other. If he learned about cash flow then that's great, but it's not nearly as great as him learning about his dad and his dad learning about him.

jgrahamc 15y ago
It depends what you mean by 'being kids'. My grandfather taught me quite a bit about electronics when I was young (how to solder, what the major components do, etc.) and I loved it. We also did woodwork together. With him I designed and built my own briefcase for taking my books to school in. For him these were things that I needed to know (he had been in the RAF as a wireless operator in the Second World War (http://en.wikipedia.org/wiki/Battle_of_the_Beams http://en.wikipedia.org/wiki/Battle_of_the_Beams) and so electronics was important and he'd grown up at a time when people made a lot of there own things). For me it was wonderful stuff to know about. And, as you point out, I spent a lot of time with my grandfather. My parents took me to events organized by the National Association for Gifted Children (http://en.wikipedia.org/wiki/National_Association_for_Gifted_Children http://en.wikipedia.org/wiki/National_Association_for_Gifted...) and also had me do various types of IQ testing. Some of those events involve my best memories of time spent with my father. Perhaps they were fulfulling some sort of wish for me, but I tend to think that they looked at me and realized that these were things that I was going to enjoy or needed. Those interactions with my father and grandfather really matter a lot.
- Tyrannosaurs 15y ago
  By that I mean do stuff because it's fun and learn things because they're interesting and there to be learned rather than because doing them or learning them serves some aspirational purpose. I think what your grandfather did sounds ace but it sounds like you agree that the best bit was the time the two of you spent together and the knowledge imparted was secondary (even if it's gone on to be useful). Obviously things can fulfil both criteria and that's great, but I always think that the important thing is that it's fun and the minute it doesn't meet that criteria it should be changed. Kids spend enough time at school learning things they "need" to know. Let spare time be spare time. (As an aside my grandfather was a professional football player - while on the surface this sounds like ideal bonding material for a grandson he was big on the hard work element and spent too much time trying to get me to do repetitive drills...)

gallamine 15y ago

When I was 9 or 10 we'd go to Costco and purchase the big flats of large muffins. We'd sit around the dinner table and wrap them in cellophane and then send them with my dad to put in his office's kitchen. We sold those things for $50/each on the honor system and made a tidy profit. I hadn't thought of that in a while, but it definitely was a fun adventure.

duncanj 15y ago
dang, that's some markup!
- zipdog 15y ago
  Indeed, even the US justice department only pays $16 ;) http://www.washingtontimes.com/news/2011/sep/20/taxpayers-foot-bill-justice-department-16-muffins/?page=all http://www.washingtontimes.com/news/2011/sep/20/taxpayers-fo...
chadgeidel 15y ago
LOL - I assume you meant $0.50 each?
- gallamine 15y ago
  Whoops! Yes, $0.50!

zzygan 15y ago

Very interesting idea. I need to figure out a way to teach my kids about money and cashflow using something like this method. However, as cool as this story is, I swear I read it in one of Rich Dad Poor Dad books. Maybe this is the source of the books story. I'm not sure.

robfitz 15y ago
From my perspective, it doesn't make a huge difference whether the idea was independently discovered by my dad or inspired by something he read--what matters is the effect it had on me.

ttcbj 15y ago

Awesome and delightful!

DanielBMarkham 15y ago

My 11-year-old daughter for Christmas last year asked for a bubble-gum vending machine. She got the idea from hearing stories about a family member who had over a hundred machines placed at one time. I thought it was a great idea. She placed one machine, then another. Now she has four machines, but she has only placed 2 of them. Each machine makes about a buck a day gross, 70 cents or so net. I'm purposely not doing any of the stuff this guy's dad did -- charge for gas, insist on doing the math, etc. For now all she has to do is buy the inventory. Once a month or so to pick up the "haul." I think if you push these things then you lose track of the point. Right now it's something she enjoys -- who wouldn't want to take a trip each month and come back with tens of dollars? If we were to get into marketing, sales, cash flow, or any of that? I think it would turn it into a chore. After all, geesh, the kid is only 11. The only thing I've told her is that she has to save up if she wants another machine, and the more machines she has placed in good spots the more money she will make. Looking back over the previous year, I think this Christmas gift might turn out to be one of the best presents we've ever given. It has the potential to teach so many lessons. The coolest part is that it is all driven by motivation on her side -- she was the one asking for the machine, she is the one picking out the product, she is the one saving up for new machines, she is the one responsible for scouting out new locations and making the pitch to store owners, etc. If she pushes a lot, she could make some real cash. If not, then she knows more about how these things work. It's a win either way.

pitt1980 15y ago
just curious, where did your daughter place her vending machine? who worked out the logistics of where it could be placed?
robfitz 15y ago
I didn't really mention timescales, but in my case he added the various complications gradually over about 4 years. It was never something I sat down and "learned". Whenever I started to drift away via boredom, a fun new twist would mysteriously appear. Love what you're doing w/ the gum machines -- think it's an amazing approach.
Cushman 15y ago
The epitome of small-scale, early-stage funding. Good investment ;)

jmj4 15y ago

Empowering people to figure stuff out on their own is the best way to teach. My Dad handed me the reins to out a small stock account with my own, my siblings and some of his money when I was 11. Man, can that motivate you to learn. I'd read 20 investing books by the time I got into high school. And fundamentally the most important thing it taught me was how to think about money. And its was so effortless on his part. On a similar note, Warren Buffet made around $50,000 by the time he graduated high school by owning several vending machines, among other things.

steve8918 15y ago

I had a huge smile on my face while reading this. This has got to be one of the best stories I've read in a while, and a fantastic idea if I ever have kids. I love it. Especially the idea that the dad would slowly start introducing charges to the kid. It's actually a brilliant idea, and more real-world than giving a kid chores and allowance.

koalemos 15y ago

this is great- good thing your dad didn't pick up a slot machine, you could've ended up in politics :)

deleted 15y ago

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prawn 15y ago

Brings to mind two ideas. Could a parent do all of this without actually renting a machine? Not ideal and a bit of a white lie, but would remove that cost. A father/mother could come home each night or report back at the end of the week. A bit like playing lemonade stand by proxy. Could a simple app assist a parent in doing this and getting imaginative/realistic situations to keep the child interested? Or even a service renting physical vending machines specifically for parents and children to try this?

alttag 15y ago
... Because lying to your kids is a good idea? From OP, part of the joy was using the key to open the machine and get a drink when others were watching. Removing the tangibility of the project (and the heavy lifting——are you teaching your kids that you'll buy and move their inventory?) seems like it might not be the best approach.
- prawn 15y ago
  I acknowledged that it wasn't ideal and was merely wondering if it might be an option for those without the means or imagination to arrange an actual vending machine themselves.
gus_massa 15y ago
If the machine is not real, you don't get the real consecuences of your actions, like: "Suddenly I couldn’t afford to make re-stocking trips every week, grape soda was cut for an extra column of Coca-Cola. I lost some niche customers." Is this a good idea?

kingkilr 15y ago

I can't say my parents had lessons this cool, but I did spend some of my time in my teenage years working at my cousins' vending machine warehouse, doing various tasks: counting the take (and filling out the spreadsheet), filing refill slips for the drivers, putting new inventory in the right place, trips to purchase new inventory, and even refilling a machine once. It's a pretty interesting business, and it's interesting to me to see how one can scale up the "levels of responsibility".

dave167811 15y ago

Now I see the downside of having a socialist father.

bomatson 15y ago

I love this story. Awesome awesome I made plush South Park characters and sold them to my mom's fitness/spinning clients. Learned a lot about pricing, investing, selling, creating at 10. Highly encouraged to give children opportunities like this and not just have them do soccer

wanorris 15y ago
Of course, there are many worse things to spend your time on as a kid than a combination of physical exercise and teamwork. Do you see something wrong with playing soccer? Or was the key word in that sentence the "just"?
- bomatson 15y ago
  key word was 'just'. I played soccer and it was great, my point was to diversify opportunities so kids can learn on their own what motivates them

wastedbrains 15y ago

That is a great story. Shorter and simpler after mowing the lawn one dad. I told my dad I wanted to invest in stocks. He thought this was a great opportunity to teach me about money. So he loaned me money to invest in the stock market. Help me pick and buy stocks, track their values. Eventually to sell them and pay back the loan keeping profits for myself... The only real issue was it was the start of tech bubble and I was a computer nerd. I bought all tech stocks which soared, my older brother buy shoe companies and the like... I nearly tripled my investment while my brother lost 30ish% of his. Not sure it was quite as real world learning opportunity as he was hoping.

fennecfoxen 15y ago
I think the stock market is a lousy way to teach kids about investing. In fact, I'm not even convinced that interest-bearing accounts are of much use to kids. The time value of money is significant to a kid. Consider a kid with, say, $500 from babysitting or lawn-mowing. This could buy the kid, say, a really nice bicycle (+ helmet, lock, rack, basket, chain lubricant, etc. Assume they're old enough that they won't outgrow it for a while.) Alternatively, the kid could wait a year and expect to have an extra $20 (given the 4% annualized inflation-adjusted return on the market - what, you're investing, right? not gambling? then you get 4%. :P) Which would you choose: about $20, or a year with a bicycle? Opportunity cost! And the $20 will just about cover the commission on trading. Ouch. Transaction fees. The reason that the stock market is attractive to adults is that we generally have an adequate supply of Things that we need to make use of our time. There isn't another object we can spend $500 that will make that sort of an impact on our lives. Diminishing returns! (Also, we have tens of thousands of dollars, so we can invest without being slaughtered with fees.)

yonasb 15y ago

Great example of why entrepreneurs don't need an MBA:)

Hyena 15y ago

How did the $0.55 price turn out? Did you keep it?

aklemm 15y ago

This is great. By the time I was 9 or 10, I was frustrated that for all my playing with tools, reading, tinkering, etc., none of it was towards a practical goal. Finding a way to give kids real-life responsibilities in such an engaging way is awesome. I wonder if script kiddies, for example, lean towards the nefarious because there are no industrious outlets nor mentors for them to work with.

someone13 15y ago
Regarding your comment about script kiddies - absolutely. So many of them have no legitimate outlet for their curiosity and skill that they end up "learning to hack" because they think it's cool. It's a really sad thing, and something I wish there was a solution for...

amuhtar 15y ago

Great Story. I think one thing I am realizing with my little daughter is that kids - even at 1.5 years old - are curious and resourceful. My job as a parent is not to make her happy... but to help equip her to fullfil her purpose and passions to the fullest - that's when she'll be happiest. That's perhaps why my parents stopped giving us an allowance early on. My dad loves woodworking, and I remember at 5 years old, taking scraps, nailing parts together to make a very crude looking airplane and actually sold (yes, someone actually bought it) it to raise money for something - can't remember what it was. But I do remember the work, I remember getting paid, and I remember the satisfaction and fulfillment in a happy customer (even if he did buy it out of compassion). If I wanted a toy (birthday/Christmas aside), I had to work for it (not the regular chores). It encouraged me to think... be creative... buy low, sell high. Robert Kiyosaki had similar experiences as a kid in his book "Rich Dad, Poor Dad". - As an aside the Cashflow game is really good and although it may be expensive, it is totally worth it. There is a kids version too. I did the lemonade... I tried selling baseball cards... As I got older, so grew the ideas. In highschool video games were expensive. I started reviewing them through a couple of companies (now owned by IGN) and got my games for free to review them and write an HTML review page. In university (ah, the advent of eBay), I started going to garage sales/thrift stores/pawn shops and buying selective items. I'd clean and test the items, put them up for sale. All my "toys" (games, computer parts, my Metcal Station, DVDs, etc) were bought through the sale of items on eBay. Of course, this is all besides running a Computer Consulting/VAR company, creating applications, websites, and study/work. Ah, the good old days. Forgive me for rambling... I got caught in the nostalgia.

alexholehouse 15y ago

Great story. I did a similar thing with Pokemon cards - I lived in one school region but actually attended school in another, so had access to two markets. I kept track of inconsistencies in demand and used it to my advantage, taking a plentiful card type from one area to the other and vice versa. Being a kid is serious biznuz! Reminds me of Barry Silbert (of Second Market)'s introduction to trading - http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2699 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2699

DanBC 15y ago

I'm curious if this kind of youthful money making is still possible. It tends to be much rarer in the UK anyway, but I'm pretty sure there are a gajillion petty bureaucracies that would stop it - working age laws; minimum wage laws; tax / benefit laws; insurance; health and safety; etc etc etc. But, see also "The inexplicable war on lemonade stands" which is also happening in the US. (http://www.forbes.com/sites/erikkain/2011/08/03/the-inexplicable-war-on-lemonade-stands/ http://www.forbes.com/sites/erikkain/2011/08/03/the-inexplic...)

RJaswa 15y ago

Thanks for writing this article. I really enjoyed it. When I was growing up, I was terrible with cash management. My parents continuously subsidized my various entrepreneurial endeavors (building and selling skateboard ramps, selling people's stuff on eBay, manual labor...). So, I grew up really excited about the upside potential of entrepreneurship, but learned little about what it takes to manage the extraordinarily limited resources that you have when you are building businesses in the real world. Now I help invest in and build companies and work on projects of my own. Learning the trade offs between pricing/volume, technology/cost, etc., is so valuable and I'm only starting to understand them deeply now. I think I'll do something like this when I have kids, whenever that may be....

zoey564 15y ago

Great story Rob. Your Dad was an amazing person. He taught not only the 8 year old boy but the 20 something girl the same principles. He was truly an amazing man and I miss him every day.