Now they are saying he wants $50 million.
http://www.cnbc.com/2016/05/11/the-...adline|headline|story&par=yahoo&doc=103627867
http://www.cnbc.com/2016/05/11/the-...adline|headline|story&par=yahoo&doc=103627867
1. the $30M never existed
2. this kid and/or his handlers are bonkers
Someone stupid. A small percentage of that would pay for a top flight education anywhere, and he'd still have plenty of bread left to be able to do whatever he's passionate about. I'm assuming that would include something other than building vending machines.
It would be unfortunate if he's holding out for a higher offer that could never materialize.
I can't knock the game. Look at what candy crush got paid. Almost 6 billion. BILLION.
"We noticed that it would cost too much to pay people minimum wage to sit at tournaments for six hours," he said. Then the vending machine idea struck.
But it's a very limited marketplace - once you've sold them to Six Flags you won't be selling to those locations again. So very growth in the Six Flags marketplace. So of that $500,000 gross revenue, how much is profit? 50%? The cost of manufacturing a machine like that is surely pretty high, especially the initial run.
A general rule is that a company like this is worth 5x EBITDA, which is basically net income. This formula doesn't work until the company is better established of course, but let's assume that net income would need to be $6M in a year or two. That's NET income, even if the machines plus other overhead (wages, sales cost, etc.) "only" cost $1K per unit and they are sold for $5K, the gross revenue would need to be $7.5M, or 1,500 units - per year. So a sale of 100 units to Six Flags is a great start, but they have to have at least one of those big sales per month. And that 5x EBITDA rule assumes flat or steady growth....like I said, once you sell to the big targets, you can't easily sell to them again. Plus my theoretical profit margin of 80% is EXTREMELY optimistic, it's more likely closer to 20% than 80%.
Furthermore, what's the market for this device? Amusement park chains like Six Flags are a great market because a single sale is many units. Retail establishments (Walmart, grocery stores, drug stores, etc.) are not a market because they already sell that merchandise inside. Baseball parks, as mentioned, are another good market but there aren't that many with a central location - they are usually owned by municipalities so making 100 individual municipal sales will be much more expensive than one Six Flags sale. IMO the primary market would be somewhere like Six Flags where the customer would rather fill their gift shops with trinkets than first aid equipment and would rather sell it (increasing profits) than give it out for free. There is much less incentive for municipalities (and state parks, federal parks, etc.) to purchase them because they would be a cost center not an increased profit center.
I have a great idea for a vending machine that sells household cleaning products. Never know when you might wake up at 3AM and want to clean the shower and toilet. And find that you're totally out of Scrubbing Bubbles and Bowl Cleaner.
These people gravitate toward each other. Those who come up with worthless ideas, and those who pay millions of dollars for those ideas.
Don't they provide you a 2 cent band aid for free after paying $80 dollars for 1 day entrance and $5 for water.
After reading this, I know for certain that his parents are idiots.Now they are saying he wants $50 million.
http://www.cnbc.com/2016/05/11/the-...adline|headline|story&par=yahoo&doc=103627867
Well he has a patent so you can't just develop your own.
What the fuck? I'm pretty sure I could buy an OTR vending machine and stock it with this stuff right? I mean the Japanese have taken vending to the next level already.