Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos may be present.
Rob McNealy – RobMcNealy.com 0:01
Hey folks Rob McNealy here. And today we are talking to the CEO of CoinFlip ATM is named Daniel Polotsky. Daniel, how are you today?
Daniel Polotsky – CoinFlip 0:10
I’m doing great. Thank you so much for having me really quite
Rob McNealy – RobMcNealy.com 0:14
well I’m really glad you have time to come on on the show. I know it’s been really hard to like with your schedule my schedule lately to connect so I’m glad we’re finally able to do it. But I think that’s a lot you know, due to the fact that you guys are growing kind of like weeds right now. out there. So let’s just jump into that. So tell me a little bit about what is CoinFlip ATM.
Daniel Polotsky – CoinFlip 0:36
I mean CoinFlip is I like to say the world’s largest Bitcoin ATM network by volume. We have close to 800 Bitcoin ATM locations we’re growing at you know, we’re trying to put down 20 to 25 ATMs per week. You know, we’re trying to hopefully move into other region like we’re all already in almost all 50 states. There’s a few left to go on. We want to maybe even make it out to like you know other countries as well like more in the distant future and you know we’re kind of also just trying to be an easy way for people to obtain Bitcoin like the easiest possible way you know to get in get out, get your Bitcoin convenient can speak to somebody 24 seven you know kind of like the old fashioned way you know, it’s like very hard to like even like companies like Uber these days, you know, like they don’t have 24 seven customer service where you can like call someone and they can like pick up. So we try to have that we try to make we understand that Bitcoin is hard to understand for a lot of people and we want to make it as easy and friendly as possible. So that’s what we’re about to do. We’re trying to get Bitcoin as many hands as possible. And we also have like, other options do that now to like we do credit cards online, and we also have coin flip preferred, which we recently launched, which is like a wire transfer service, and you get the Bitcoin same day you get to talk to a person in real life and like we’re just really about all about that experience to try to make Bitcoin as friendly as possible.
Rob McNealy – RobMcNealy.com 2:07
So when did you guys launch the company?
Daniel Polotsky – CoinFlip 2:10
On the company’s launched in 2015? Um, so we probably been around Yeah. So five years.
Rob McNealy – RobMcNealy.com 2:19
Did you guys bootstrap or do you guys get investors?
Daniel Polotsky – CoinFlip 2:22
Yeah, I’ve never we’ve never gotten any outside funding. It’s been pretty crazy. So like, Yeah, I don’t know. I didn’t expect that to be the case. But that is how it worked out. Like you know, that obviously was a popular service. I kind of like you know, the beginning you know, just kind of like put down one ATM and then you know, once it made some money, you know, I like put down another like, I didn’t like, swing for the fences immediately. I want to make sure it was something that works. Because like, you know, I’m like, I am like, you know, like a dreamer or whatever, like entrepreneur, but I’m also like, kind of risk averse, even though like, obviously do take risks, but like, you know, it I want to I want to hit singles rather than homeruns put it that way.
Rob McNealy – RobMcNealy.com 3:04
Well, I think that you actually just illustrated something that’s real important about entrepreneurs and I’m an entrepreneur, I’ve been around entrepreneurs for a long time, is that I think there’s this like misinformation out there, right? everybody’s like, Oh, I could never be an entrepreneur because of the risks. And I’m just like, you know, I think you got a backwards I personally think that employees actually have more risk than entrepreneurs do. And it’s kind of I think they got a backwards because when you’re an entrepreneur, right, you will, you really are kind of risk adverse, but what that means is least as far as I see it, is that you’re going out and you’re going to take very determined well thought out risks, not haphazard ones, whereas in and you have all the information whereas I think a lot of like employees, you know, they don’t know what condition the companies in they don’t No, you know if they’re gonna get laid off tomorrow, because we’re patient, right? And me, I think that’s way more risky because you don’t know because then your boss is let’s be honest, right? You know, if you’re going to go under the bosses are going to tell you like last thing
Daniel Polotsky – CoinFlip 4:19
Because they want you to give a family whatever what have you, you need to like, adapt quick like it’s not it’s not a you know, yeah,
Rob McNealy – RobMcNealy.com 4:27
It’s not and and I’ve been an entrepreneur for a long time and and it’s funny because like I’m like people like oh, you must have so much risk and I’m like, it’s not about being risky, right? It’s about yes, we do take risks, but they’re incredibly calculated risks.
Daniel Polotsky – CoinFlip 4:43
And they’re short, you know, like, you don’t have to, like, you don’t have to buy, you know, like, you don’t have to nessus like, for example, in my case, you don’t have to, but you don’t have to necessarily raise $3 million and buy 200 machines only to find out it doesn’t work. Like you know, just like put down one machine Find out this is kind of like not really going anywhere. No one’s really picking up on it, maybe like, stick it out for a bit, obviously don’t quit right away, but like, on a small scale doesn’t work, then you haven’t thrown away, you know, millions of dollars, which I guess is easier in today’s society because there’s like a lot of venture funding available and what have you, but still.
Rob McNealy – RobMcNealy.com 5:21
Oh, well, well, you know that I don’t understand it. Because, you know, I’m old. So I mean, I’m almost 50 now. And I’ve been a self sufficient..
Daniel Polotsky – CoinFlip 5:30
I thought you were 40.
Rob McNealy – RobMcNealy.com 5:32
I’m 48. I just turned 48 a couple of months ago. Yeah. Thanks. It’s, it’s crazy. Yeah, I got married 20 years for kids. So I’m all fart. But I’ve been a self sufficient entrepreneur for 15 years, meaning that I’ve been able to fully make a living as an entrepreneur for 15 years. But I’ve been an entrepreneur probably for 10 years past that, you know, like who are you try something and fail and I find like the same way right you test and I always call doing it. diligence, where I like I as I’m a serial entrepreneur, so it’s like, I get ideas all the time. And I think you probably are like that too. Because most entrepreneurs I know, the longer they’re an entrepreneur, the more ideas and business ideas pop in their head. And I found the hard part is picking the right ones route that there is an idea but that you got to choose and you got to go through…
Daniel Polotsky – CoinFlip 6:23
You gotta follow through with what you’re gonna do.
Rob McNealy – RobMcNealy.com 6:24
Yeah, and that’s what you’re gonna execute on. And to me, it’s like, you know, I’ve looked at probably, of all the things that I’ve done, I’ve probably times that by five gone through, like what I call a diligence process where I’m seriously interested in a business or an idea and I start exploring it and they start look, delving into the market and I had this happen, actually, just before we did started. OCC and TUSC. Our little crypto project is I had this idea in the space. It was like a gig economy kind of thing. And I went down for six months researching the market looking at all the attempts that had failed. And before that, you know, people tried to go into it. And I eventually even I was really excited about it. And I had a team where we went to the point where we’re starting to put a team together. And at the very last minute, I told the guys that go, we shouldn’t do it. Like, yeah. And it was a good idea. Like, don’t get me wrong, the idea was sound, but the markets weren’t there. And, and there was some, you know, we found 12 failures in that space that Ted tried to go in that space and failed 12. And I said, Okay, it’s one thing to find one or two, that’s not bad, necessarily. But when you find 12, then you start looking and then you go, Okay, why didn’t then you start trying to answer because why did they fail? And you can’t be arrogant about it. It’s like, okay, because you got to assume that at least some of these people are pretty smart. And like, you know, their diligence too. And ultimately just figured out there wasn’t enough market for that idea. And we had to pull the plug. And so I think sometimes like, what you’re saying is that you got to take these calculated risks. So why ATMs? What got you into that? Did you have a background in finance or ATMs prior to that?
Daniel Polotsky – CoinFlip 8:09
I do have a background like not like crazy but like I do have a background in finance I would say when I was in college, you know at various internships at like, you know, big financial firms like Morgan Stanley, or Joe Brian Citadel, but then I was also like, you know, I really like Bitcoin as well. That’s kind of like what got me into the whole thing like the rabbit hole, you know, I found Bitcoin I was like, I want to buy some Bitcoin and I actually used to buy the first ever Bitcoin it was in like, 20 2014 I think, yes. 2014 so it was like, 2014 I was trying to buy the Bitcoin and I went, like, back in the day, it was really annoying to like, use like Coinbase I mean, no, it’s still kind of it’s like, you know, getting on boarded for the first time and whatever. Like, it’s still kind of a nightmare like back then it was like, you know, really, really not smooth to get bitcoins honestly I want the easiest way possible so I went to the Bitcoin ATM first ever one in Chicago I didn’t like the features like I didn’t like the bill acceptor It was kind of annoying like it didn’t spit a lot of bills back like the money came back took a while to get the Bitcoin the fees were like crazy I think they’re really over 10% whatever so 1213 maybe even 14 I forgot but they’re really high so I went on local bitcoins calm and I met up with somebody in person to trade had that feature back then. So I just like that. So I bought my Bitcoin but then like, I started thinking of like, you know, the ATM versus like meeting up with someone and how like the ATM is way safer, and how it’s way more scalable. You know, like, it’s a, it’s not like you meeting up with someone you know, and then like having risk of getting shot or whatever it is or like, you know, meeting up or like $20,000 or whatever having to take orders or people having to do it like that’s not very scalable, so you need the ATMs to be put down. So that’s why I’m like, I could probably like even though that ATM that I use specifically was the best, like, I could probably improve on the model, which is also like a good example of like, you know, like you don’t have to necessarily reinvent the wheel like I I knew about these ATM so I liked the concept of them I liked what they were doing it just wasn’t being executed properly but there clearly was a demand because you know, I was especially because I was a customer you know, like I was buying Bitcoin that was someone there have to be some other people like me right? It’s not it’s probably not like complete fluke
Rob McNealy – RobMcNealy.com 10:39
How long did it take you to get from like the idea to do this to like getting a working prototype? What was that kind of process to like, you know, yeah, you manufacturing themselves or you licensing the manufacturing out to somebody else or buying from somebody else? How did they How did you get started with that piece of it?
Daniel Polotsky – CoinFlip 10:54
Yeah, of course. I mean, we just you know, I put down some money for floats, obviously, because we need some float for the Bitcoin. And then we start doing research on like regulations because you know, like, at the time there was like a bunch of there’s like the first ever like case of like, you know, somebody going to jail for whatever for like not being a registered Bitcoin MSP or like violating like MSB, you know, AML KYC regulations. So I’m like, you know, I just don’t know, I want to do things by the book. So I started researching regulations, there was no laws against it. I wrote a letter to the state regulator in Illinois, got the green lights, and you know, like, there’s nothing like you don’t have to register as like a money transmitter. I register with fincen everyone, every, you know, company dealing with big one at the time had to do there was like a mandate out. So I did register with fincen as a money service business, I developed an AML KYC policy and then I started looking for the best ATM. So I was just like, you know, just try and try out different models like not, um, you know, there’s a go to one store, you know, try this One, look online. Yeah, what’s the price this what the features are for this one, and then eventually I settled on general bytes. So general bytes was the best company at the time. So we have like a very close working relationship with general bytes. And we still use their ATMs today. You know, we also try to like, you know, have our own like version of the software that we add on. So it’s like, it’s dope. I think it’s been a great relationship. And I think we’ve done great things together.
Rob McNealy – RobMcNealy.com 12:28
So, are Coinflip ATMs for crypto transactions only, or do you do normal credit card, debit card type or withdrawals as well?
Daniel Polotsky – CoinFlip 12:36
Well, there’s no reason to really do like debit and credit cards, I don’t think because why would anybody ever drive to use that when they could just do it online, right. So we do actually accept credit and debit cards on our website. We try to keep the fees really competitive as well. And I think you get Bitcoin in the hour, so it’s kind of cool. simplex. So we have that option but on the ATM itself for now, it’s just, it’s just cash. We do so 10 different cryptocurrencies.
Rob McNealy – RobMcNealy.com 13:11
Very cool. So, you know, I know a lot of people that have gotten into like vending type industries and typically with that kind of industry, the hard part is finding a good spot, right? Where do you place the units? And what has been your strategy for placing units around the country?
Daniel Polotsky – CoinFlip 13:29
Well, I have a sales background, as well as like a financial background. So I was like a salesperson for vector marketing. I sold knives door to door for Cutco.
Rob McNealy – RobMcNealy.com 13:39
I have a Cutco knife, a Fisherman’s solution.
Daniel Polotsky – CoinFlip 13:43
It’s great. It’s great. Right? It’s a great product so I was very down to push it. I think I sold like $40,000 of knives during that summer. And then I also salesperson, the I finish like 42nd in the country. And then there was like a another time there was like Uber when They were just getting started. I mean, they weren’t just getting started, it was like 2014 2015. Like they were definitely around. But they wanted more college people to get involved. So in college, I was just like, hired to onboard people. So just like, you know, post in Facebook groups, like do all this other like guerilla marketing, get people to sign up for Uber. And so I finished like, think first in the Midwest for that campaign. So I was like, always into sales. You know, I liked sales. So I kind of use my experience, like, how to sell from like, you know, what my managers have previously taught me and I kind of like, molded that my approach to talking to stores. And I don’t think it’s like, obviously, it’s hard. The first one’s always gonna be the hardest one, but like, you make 500 calls a day or whatever, like 100 calls a day. Like eventually there will be somebody who’s down to accept money every month and foot traffic free, you know, free marketing for you know, square foot of space.
Rob McNealy – RobMcNealy.com 14:58
So how are they managed? Somebody has to go put money in, pull money out. How do you handle that?
Daniel Polotsky – CoinFlip 15:06
We have a whole operations department like a whole cash logistics armored operations department that always keeps track of where our cash is. We work with obviously the biggest armored car carriers in the country. And we also have like some smaller ones as well. So we have a whole network of people that pick up the cache and take it to our different vaults across the country. So it’s a whole, like logistical operation now.
Rob McNealy – RobMcNealy.com 15:29
So the question is, you know, I’ve talked to other people who have tried to do the crypto ATM kind of business and they’re either struggling in there I know of a couple of you probably do too, that you know, never got off the ground or, you know, going out of business. What’s what are you doing differently? That’s making you guys more successful you think?
Daniel Polotsky – CoinFlip 15:48
Um, we are working incredibly hard. I think that we’re all a bit younger, so we’re maybe a little bit more forward thinking. We never got any outside funding, so we’re just super efficient and everything we do. So, you know, we’ve been able to like bootstrap. So we have that mindset. So we have like, we don’t really have any, as much fat as maybe some of these other companies. You know, we charge the lowest fees, we just try to do the right thing every day. And we hire incredibly talented people. You know, I just don’t have a lot of my friends from past life for like people I know from like working environments that I know are talented, either from school, from Northwestern, from Deerfield, from other networking events, whatever it is, but like people I know that will do a good job. And I think we’ve been able to bring them in because they like, respect with what we’re doing.
Rob McNealy – RobMcNealy.com 16:36
So what do you look for in a location? Say, when you’re placing one? What kind of requirements do you have for like, say, if you know, a store owner, for instance, what would you want to be like? Do you have like a minimum amount of volume they have to do a month or how does that look?
Daniel Polotsky – CoinFlip 16:51
No, I mean, we are like, the machines do well, pretty much everywhere. I mean, obviously there’ll always be some locations that are worse. Some that are better, but there’s always a demand for them. We’re just mainly looking for, you know, someplace with good parking someplace with good security or a gas station someplace, you know, easily accessible. We look for gas stations, liquor stores, convenience stores, some smaller restaurants. So any place that people are comfortable going to can go and have good security and people can access you know, as often as possible. That’s the spot I’m going for. We also pay anyone who does want to find locations for us, we pay them, we pay them upfront and a residual based on the amount that the machine does. So that’s always an option.
Rob McNealy – RobMcNealy.com 17:44
We need to talk off the air. Yeah, we got an idea. But I think that’s it’s really interesting. And I think that the one of the things is on and off ramps are really hard, especially in the United States right now. And it’s It sucks right now you know and I look at it from being inside the industry to is like you know trying to do things legally in the US is hard I mean it really is yeah and people don’t understand the amount of regulation involved with you know trying to do things the right way you know kind of thing and it’s been pretty nuts so where do you think the the future crypto is gonna be? Do you think it’s Bitcoin Do you think other all coins are going to be leading the way defy I you don’t have I don’t have to hold you to the certainty. I’m just curious. I like to talk to other people and see what they’re what they’re seeing is going on because you’re dealing with real customers. You’re dealing with real people every day and that’s why I think you probably have some unique insights there.
Daniel Polotsky – CoinFlip 18:43
Yeah, on the retail side, Bitcoin is king. By far. I can tell you that lunch for sure. So as of now, I think that Bitcoin has a very bright future ahead of it. Just simply be mean not simply because but a lot partly because of its first mover advantage, I think a lot of these other cool ideas from these other networks, they can kind of like layer on top of like, you know, there’s like whatever the lightning network to make it quicker. So I think that Bitcoin for the foreseeable future, you know, I think will be the king I think it’s kind of like the most slow changing, you know, kind of like most resistant to censorship, most decentralized coin right now, and I don’t see that changing anytime soon. That being said, Nothing is forever. So it’s got to be the only thing that’s the caveat is it’s got to be like 10 times better than Bitcoin. Like, it can’t just be something that’s like, you know, 1.1 times better or like, you know, like, just slightly faster slightly. This has to be something that like people really want to, like, switch their infrastructure over to, you know, like, there’s kind of like that network effect like, you see it all the time in businesses to like they all use Windows computers, and they all use Microsoft, and they always Excel and That’s what they use year after year after year, even if it’s not necessarily the best product out there, but that’s how it’s been. That’s how it is. Slowly they change.
Rob McNealy – RobMcNealy.com 20:12
It’s like VHS and beta, right? I always tell people that it’s not the the best product that wins. But generally the best marketed product that wins typically in some of those battles, and, you know, it’s just the way it is, unfortunately, I always tell people, and I get a lot of crap for this. But I say that, you know, the winning grip does whatever winning means, but probably in the future, the most popular kryptos will be the best marketed kryptos going forward. The ones that solve, you know, I call I i dotted this or coined this term, saying closing that last mile of crypto adoption, you know, the ones have figured out how to stimulate the actual demand on the consumer end, and I think whatever those projects are going to be the ones that rise to the top Eventually, the speculation can’t drive everything forever. Eventually. There’s got to be Be a customer involved.
Daniel Polotsky – CoinFlip 21:02
100%
Rob McNealy – RobMcNealy.com 21:02
That’s how I see it. So, Daniel well Cool, well Daniel, where can people find out more about CoinFlip?
Daniel Polotsky – CoinFlip 21:10
I just go to our website CoinFlip.tech. There are plenty of opportunities on there you know, you can use our coin flip preferred service get Bitcoin in the same day you can refer other people to this service. You can refer people to rates yams, you can help sell ATMs for us, you know, we have countless ways to engage the community to work together and you know, make money doing it and helping everyone get Bitcoin. So that’s why
Rob McNealy – RobMcNealy.com 21:35
Daniel, thank you so much for coming on the show today. I really appreciate your time.
Daniel Polotsky – CoinFlip 21:39
I appreciate your time.