A.J. MacQuarrie Brings Healthy Options to Vending Machines
A.J. MacQuarrie, 28, KarmaBox Vending’s founder and CEO, has been building businesses since childhood in Stoughton, Mass. While at St. Francis Xavier University in Nova Scotia, he first thought up what would become KarmaBox after becoming frustrated by the campus’ meager vending-machine offerings.
KarmaBox is built around Karmatunity, a business opportunity model that empowers new entrepreneurs and helped quickly grow his company based on shared success.
MacQuarrie began the company out of his dorm room in 2010, and persevered through two appearances on “Dragon’s Den,” Canada’s version of “Shark Tank.” After professional and personal setbacks in 2015 MacQuarrie moved the company to San Diego, where the business took off.
Today KarmaBoxes are in more than 50 U.S. cities. A.J. is developing KarmaCloud Analytics, proprietary software that provides operators with real-time data suggestions on how to increase profits from their KarmaBox machines. He’s also working on an app that gives customers a loyalty program, coupons, nutrition information and a diet tracker.
MacQuarrie is also writing a book on entrepreneurship, “Pivot To Your First Million: How To Start A Business From Scratch.” His latest enterprise, LaunchPad Nation, is a startup bootcamp for entrepreneurs. He is a board member of the Greater San Diego Business Association and is developing an entrepreneurship program for high school students.
What were you doing before KarmaBox and what inspired the concept?
During my first year of college I did what a lot of students do, and put on a bunch of weight. I decided to do something about it, changed my eating habits, started regularly exercising, and became a spin instructor.
I got to school early the next year and one evening I was alone in my dorm room and when I wanted a snack, I realized that all the vending machines on campus were filled with junk food, not anything I was interested in eating anymore. A lightbulb went off. I thought “why aren’t there any healthy foods in vending machines”? And that gave birth to my business, which I called Urban Vendor. I did everything: Found locations, stocked and repaired the machines, made sales calls.
Appearing on “Dragons’ Den” in 2012 had a big impact on me. I was seeking $150,000 for 25 percent of the company to scale the business, but I didn’t get a deal.
Overall they liked the idea, and they said great things about us and convenient healthy vending, saying we were on trend, and complimenting us on our passion and purpose. We still use their quotes in our marketing materials.
Their critiques really got me thinking. With the business model I had at the time Urban Vendor wasn’t very scalable. And we had nothing that was proprietary. Today with KarmaBox we do, with our in-house location service, our trademarked brand and soon, with our new KarmaCloud software.
Without appearing on “Dragons’ Den” I don’t know where my business would be today. It gave me the confidence to go forward.
Explain some of the challenges associated with running a “healthy” vending machine company.
An obstacle we come across when we are searching for locations is that sometimes people’s perceptions of healthy vending is completely wrong. People think they already have a healthy vending machine on their premises, but when you go and look at what they’re selling you might find baked Cheetos and Dasani, and the rest is all junk food. That, my friends, is not healthy vending!
Recent federal, state and local mandates even prohibit junk food vending in schools. We are in many high schools, but because you are working with a government agency those placements can take a while to make their way through the decision-making process.
How do you source your operators and what is the average price range for the products in KarmaBox?
To attract operators we advertise nationally online, and use franchise portals and Google AdWords. We’ve tried radio but that didn’t produce much for us.
Products in KarmaBox range from $1.50 to $3. Remember, KarmaBoxes have healthier, heartier guilt-free snacks and beverages, and health care products. Items you’ll find in a KarmaBox include Kind Bars and Clif Bars, cashews, low-sodium jerky, veggie chips, protein bars, coconut water, Muscle Milk protein shakes, natural beeswax lip balm, sunscreen and so on.
KarmaBox machines are considered “eco-friendly.” Describe the environmental factors that make this a smart alternative for traditional vending machines.
Our most popular machine is made entirely in the U.S. and all of our machines use less electricity than the kinds most people are familiar with. A standard vending machine can use over $20 a month worth of electricity. KarmaBox machines use under $10 a month, and they are better sealed, which saves on the cost associated with refrigeration.
With our KarmaCloud software, every day our operators get reports on credit card sales, cash receipts and inventory from each of their machines. That creates a lot of efficiencies for our operators, who know before they get to the location what they need to bring or even if they need to stock that day.
That saves a lot of time driving to each machine without knowing whether the trip is needed. It’s especially convenient for some of our operators in metropolitan areas, like those in Vancouver, B.C., who plan to service their locations by bicycle.
You’ve turned KarmaBox into a “business opportunity.” Explain how someone can become an independent operator and what is required for the initial investment?
In a business opportunity, operators run their own business and own their equipment but use the branding and tools that we provide. There are no on-going franchise fees or royalties and they use our trademarked brand. Our operators come from all walks of life: retirees looking to start their own business, single parents, families, people looking for a side gig to supplement stagnant wages in their regular job, and so on.
All it takes is a little entrepreneurial spark. We guide all our operators in starting their own businesses from in-person training to guidance through all the business processes. With our proprietary location services, we find high traffic, high volume placements for our operators’ Karmaboxes. And we provide lifetime support.
There are several Karmatunity packages, which vary by number and size of machines, and the options selected for each machine. For instance, a Zen Starter of 10 machines would cost $73,000, while a Buddha Bundle is 20 machines. We also have A La Karma packages as low as $8,200 for two machines, which is a good option for someone who wants to get their own locations.
Where can MiLLENNiAL readers find a KarmaBox?
KarmaBoxes can be found in 53 cities across the U.S., and we’re expanding to Vancouver, British Columbia. You can find KarmaBoxes in schools and colleges, health and fitness clubs, hotels, community centers and businesses. More people are looking for healthy snack options, so you will find KarmaBoxes in places wherever people are looking for something other than soda or candy to munch on. We target high foot-traffic locations to maximize profitability for our operators.
Among the places you’ll find KarmaBox are high schools and colleges, Westin, Omni, Sheraton and Doubletree hotels, YMCAs, Boys and Girls Clubs and the Aveda Institute.
What can you tell us about LaunchPad Nation, your latest project?
LaunchPad Nation is a platform that helps aspiring entrepreneurs bring their business to market in 12 weeks. I created a startup bootcamp, where I guide people through each step of making their business a reality, from shifting their mindsets to sharpening their skillsets, to earning their first million. I can guarantee if they follow all my steps they’ll launch their business.
What’s the key step in transforming yourself from an aspiring entrepreneur to an actual business owner?
Most important is to shift your mindset. In order to start thinking like an entrepreneur and not like an employee you have to start thinking about why you want to be an entrepreneur and what motivates you, what’s your “why?”
It can’t just be money. You have to become self-aware of your motives, because when you dive right into it that rollercoaster ride as an entrepreneur is going to be unbearable if you don’t understand why you wanted to become one in the first place. It’s not easy, it’s not for the faint of heart. And know that your “why” is going to change, be aware of it and understand it.
For me, dropping out of college during my junior year may have been my biggest why, the biggest motivation to keep building my business. My next why was failing to get a deal on “Dragons’ Den,” and then I had to learn from that experience and prove people wrong.
The key is to know yourself, to understand your goals, and to push past the mental blocks that hold you back.
MiLLENNiAL is a lifestyle magazine profiling those who are shaping the world we experience. From business innovation and career strategy to sustainable health and cultural disruptors, MiLLENNiAL shines the light on the young change makers of the world.