The Many Lives of a Wall Street Angel

"I was in the hospital for two months. The stroke didn't affect my mind. But when I came out, I had to learn to walk all over again," he says. "My one-year-old daughter and I were in a race to see who would learn how to walk first. I still can't close my eyes and touch my nose at the same time. Since the stroke, I have developed a deep sense of perishability. When you come close to death, you start thinking more about what you want to leave behind. I have a broader vision of things than I did before."

Over the past 15 months, Lessin has invested millions of dollars of his own money in almost 50 Internet-leveraged startups, making him New York's -- and arguably the East Coast's -- leading "angel" investor. He has been known to invest hundreds of thousands of dollars and as much as $1 million in a startup. In all but two of his investments, he has seen his stake multiply by three to four times. Across the board, these companies are raising money at higher valuations than they did when he first invested in them.

His investment strategy is guided by a broad vision of where both the economy and the society are headed, a vision that he outlines in a book titled The Middle Chapters (Smith Barney, 1997). In the book, he offers sweeping observations about the shift from the old economy to the new economy. It is, in a way, a personal manifesto, a justification of where Lessin has gone in his own life and how he's gotten there. He explains that the economy is caught between two worlds -- the formative past and the unknown future. The "middle chapters" that are now unfolding, he argues, are both troubling and full of hope.

Lessin asserts that the U.S. economy now has the potential to generate more wealth than it has in any time in its history. More great corporations will be formed in the next decade than have been formed in any previous 10-year span. In this transitional period, he argues, entirely new pockets of wealth will be generated -- in record time -- by virtue of three revolutionary forces: an increasing reliance on the Internet for industry and commerce; the death of inflation and the dawn of price stability; and the astounding growth potential of new ventures.

In Lessin's view, the world has entered a fertile zone of instability. As the old economic and social order dies, a new one is being born. Within the next year -- at most, within the next two years -- a window of opportunity will open wide and then shut forever. That's how long it will take for companies to stake their claim on the Web -- to establish domain names and to invent ways to take advantage of the exploding potential for communication and commerce. A handful of people will lay the groundwork for a new structure of business and society, which will be based primarily on the Internet and the World Wide Web.

The argument behind this vision goes like this: Space is unlimited in the virtual world. Anybody can build a Web site, and almost everybody will. But the majority of significant uses for cyberspace will be established in the next year or two, mostly in the form of new or refurbished brand names. Brand names and their URLs will become the source and foundation of everything of value in American industry. Commercial organizations will live or die on the basis of a few consonants and vowels, a few syllables -- a circled W, a swoosh, an apple. These symbols will become the primary thing that we know about an organization: In fact, organizational life will be built around a CEO, a core competency, and a brand with its own domain on the Web. Most of the rest you will be able to contract out.

Ten years from now, the existing world of retail sales -- all the storefronts on Fifth Avenue, all the boutiques on Rodeo Drive, all the little shops on Main Street or in suburban malls -- will be rendered redundant by Internet-based commerce. Sure, the signage may stay, but the exoskeleton of business, the anchored world of fixed assets, will be going virtual. If you're a CEO, you won't want to own a retail store. You'll outsource the tangible functions that require depreciating and hard-to-liquidate assets -- the bricks and mortar, the tool and die, the assembly and shipping facilities. You'll own almost nothing except equity in your name and reputation. Find your niche in this new economic order during the next year and you, along with your heirs, will be set for life. Miss out, and you will struggle to catch up, forever.

Talk about pressure. No wonder Lessin, Wall Street's new free-agent financier, gets no more than four hours of sleep per night.