Hey, You, How About Some Lemonade?

Are you in the market for some lemonade? It only costs 50 cents.

Or maybe you’re in the market for a four bedroom colonial? I’ll give you a mortgage rate 1% lower than my nearest competitor.

It only costs some of your home’s future appreciation, if any.

I’m offering the future of housing finance that will responsibly help millions of first-time homebuyers make the rational and economical transition to the American Dream.

Impressed yet? Temper your expectations: I’d only give myself a one-in-four chance of success.

I am writing this light-hearted article to tell you a little more about the not so typical story of this 21-year-old and how I reached the very difficult decision to take time off from school. In case you are facing any big decisions in your life, I hope the latter might be useful to you. At the very least, please get some good laughs at my expense.

So, let’s get to it.

Hey, would you like lemonade?

My entrepreneurial pursuits began as a six-year-old selling ice-cold lemonade in Ocean Beach, Fire Island atop my Radio Flyer Wagon. Every weekend, day in and day out, Adam (my identical twin brother) and I sat at the same street corner, which was conveniently located next to my favorite bakery that served round-the-clock crumb cake and cookies. We told, cajoled, and convinced complete strangers that their Fire Island experience would simply be incomplete without a glass of our 50-cent lemonade. Our marketing strategy was inseparable from our marketing campaigns: no one ever had just 50 cents, so they threw us a dollar and rarely had the heart to ask for change. After all, who could resist the picture of two chubby, baby-faced, meatball-esque identical twins peddling their ice-cold product?

Over the next five years, my brother and I diversified our lemonade stand to include “handpicked” seashells and iced tea (can you guess how much we sold it for?). By the time we were eleven, our identities had become inseparable. Some knew us as “Twin Titans of Lemonade,” others just as “the twins.” All of this would suddenly change when a man is his late 20s offered us twenty bucks not for our ice cold beverage, but to haul his luggage to his home on our Radio Flyer Wagon Stand.

At that moment, my brother and I turned to each other. The trip to his rental house on Bayberry Street would only take 20 minutes, 40 cups of lemonade at sticker price.

Our lemonade stand would never be the same.

Hey, would you like some help with your luggage?

After that trip, my brother and I knew we had bigger fish to fry working the docks and helping renters transport luggage to their beach homes. Our services were particularly compelling since there were no cars or formal transportation on this beach island. We bought business cards and commandeered a second wagon as Wagon Express, the name of our company, became an institution unto itself in this tiny beach town. To this day, I remember my father sitting us down on a bench overlooking the most perfect sunset over the Long Island Sound telling us that in business, like in life, “our word is our bond.” It seems like we were pretty good listeners:

Call these guys, and they’ll pick up boxes, groceries and whatever else you have at the Ferry. It’s run by two young brothers, Ben and Adam, who started the business on their own…I have to say, they are possibly the most courteous, most professional people I’ve dealt with. These guys could teach a course on customer service, they’re really that good. You should try them out just to see what I’m talking about.” -Rex M. 5/5 Stars (Yelp, 8/22/2010)

My brother and I would meet the ferry nearly every day offering our services to passengers. Our pricing schedule was always the same: tips. Word spread thanks to customers like Rex, and we started an appointment book. We would later expand to helping people with freight goods and making strategic partnerships with local real estate offices and grocers who shipped their goods to the island. Later, we bought a small boat, and every Sunday we began delivering papers to nearby islands who didn’t have direct access to a market. When we were lucky, our father woke up with us at 6:00 AM Sunday morning and joined us for the boat ride. My brother and I worked so hard that our feet would often be bleeding at the end of the day. On August 1, 2012, Wagon Express was featured in the the Wall Street Journal.

Another “Bright Idea”

My father always insisted that we invest our money so it could “work for us.” When we were thirteen we had a bunch of cash sitting in a small green plastic container in our father’s sock drawer. So, Adam and I gave all of it to my father to purchase stock in Citigroup (Citibank). We bought our first batch at $3.18 because “it looked cheap” relative to the $50 stock price before the Great Recession.

At the ripe old age of fourteen, we had yet another “bright idea.” Adam and I had heard about options (think highly-leveraged stock purchases) from a friend; that fall we bought $6000 of $12.50 call options on Bank of America. We watched our position nearly double in value and promptly torpedo in the wake of the unraveling European Banking Crisis. Adam and I were distraught as we saw nearly two summers of earnings get wiped away. That being said, the lessons we learned from that feeling of losing our hard earned money are invaluable.

Reeling from a whale of a loss, Adam and I stopped speculating and started executing strategies. In one particular strategy, we focused on arbitrage opportunities in what are called “Hard-To-Borrow” securities. “Hard-to-borrow” securities are securities that investors pay a big premium to short or bet against. Adam and I took advantages of this premium using a sophisticated option strategy. We collected spread premium or, as we called it, “Premio Sausage” (in honor of our favorite Italian hot dog stand in front of a local Home Depot) from investors who paid us for the rights to bet against (short) the stock; Adam and I were then able to hedge our position such that we wouldn’t have any exposure to the stock price. We traded big money with our $30,000 account: we would place trades that were worth hundreds of thousands of dollars in value. We made small amounts of money on these trades relative to the trade size, $300-$2500, but this was enough to pay for all the gas and repairs from our “new” 1995 17’ Boston Whaler Outrage. Adam and I were renowned for placing these trades during health class at Syosset Public High School.

OptionsXpress, our broker, called us one day. The man from compliance started the conversation with “this line is being recorded” and promptly told us this type of trading activity is not allowed. So, that was the end of that chapter.

College in the Berkshires

I was lucky enough to attend Williams College where I studied Spanish. There, I met some of the most remarkable individuals of my short life, including students, professors, and college employees. I came up with my core idea for my startup — allowing homeowners to sell future appreciation on their home (call options) — as I was studying for my Microeconomics final during my freshman year. I decided to put the idea on the back burner since I didn’t have any application for the concept: why would a homeowner/homebuyer need or want this proposition? That is, until I began reading scholarly works from leading academics in the field last summer. Eventually I found an angle in housing affordability, particularly for first-time homebuyers. By the end of last summer, I had assembled a team of senior advisors (former Investment Bankers, a former director at Freddie Mac, and a remarkable economist from NYU) . Things were looking good: I had my idea, my youthful ambition, and a great network of people who could help me along the way. However, I still found myself oscillating between going back to school or giving my venture a shot. It was the most difficult decision of my life.

Decision Day

One morning with a cup of coffee in my hand sitting in my favorite diner, I made the clear-minded decision that this experience is worthwhile — not just the outcome. I decided that I would define my success from the learning and personal development that would ensue by embarking on something of this nature, not simply the success of the business or lack thereof. Pursuing this opportunity was at worst a vehicle of personal growth and at best something that could also help individuals and families responsibly attain the American Dream. The idea of a family being forced to pay more in rent than they would had they purchased a home is repugnant.

For anyone contemplating their own major crossroad, I implore you to “begin with the end in mind” (Dr. Stephen Covey’s Seven Habits of Highly Effective People) when you are in the midst of making an important life decision, be it taking time off from school, switching careers, traveling the world, etc. If you were on your deathbed, looking back on what you have done, at what might have been, what decision would your older self have recommended? This exercise has repeatedly helped me transcend distracting emotions surrounding decisions of consequence.

Now, hell or highwater, I have accepted my choice; even though my business’s success is far from a sure bet, I am confident that I already won. It’s been a hell of a ride, and the rest is icing on top.

Godspeed,

Benjamin