The Many Lives of a Wall Street Angel

Lessin and Klein, who still serves as one of Wit's chief strategists, are opening that treasury of opportunity to virtually everyone who has money to invest. They are offering Wit's membership, which has grown to more than 7,000 since Lessin took over, increasing at the rate of 30% a month, the unprecedented chance to buy shares in IPOs managed by major investment banks. Eventually, they will offer larger blocks of IPO shares to individual investors through online retail brokers (which can in turn offer shares to their own customers) on a first-come, first-served basis. Since April, Lessin has offered his own membership small chunks of 25 different IPOs -- offerings underwritten by some of the biggest names in investment banking.

Under Lessin, Wit Capital has begun to build a solid track record: 64 employees, $11 million in capital, and participation in 25 public stock offerings since the spring. Although it was hard- pressed to get even a few thousand shares of an IPO six months ago, Wit Capital now occasionally acquires stock for its membership in blocks of 50,000 to 100,000 shares. It has been cut in on deals put together by such big houses as Hambrecht & Quist, Morgan Stanley, and Merrill Lynch. (The sales come with a prohibition against "flipping" within 60 days -- that is, selling the stock quickly after its initial rise in value.)

Wit uses an electronic brokerage and trading system designed by a former chief technologist for the New York Stock Exchange. Meanwhile, under Lessin's new leadership, Wit has attracted some of the biggest names in business. Ronald Readmond, 55, formerly vice chairman of Charles Schwab & Co., is president and chief operating officer. For other key roles, Lessin has also brought in Ed Fleischman, 66, former SEC commissioner; Gilbert Maurer, 70, former COO for the Hearst Corp.; and Edward Mathias, 55, of the Carlyle Group. Lessin calls it the best board of directors in the world.

That roster of heavy hitters means everything to Lessin. It shows how deeply Lessin respects the old economy -- and how much representatives of the old economy respect him. His strategy is multifaceted: Wit Capital will give the average investor a chance to participate in the most lucrative and promising opportunities on Wall Street; at the same time, Lessin and his investors will represent the new economy as ambassadors -- in effect, teaching the old economy the new language of business. He will build a bridge between the old economy and the new.

And Lessin aspires to take his concept even further: He wants to make Wit the premier "e-manager" for IPOs -- a completely new concept in investment banking. If he succeeds, Wit Capital will stand at the taproot of new stock offerings, serving as a partner in the underwriting process and giving its membership, as well as individual investors, a much larger share of the pie. And he aims to make these services available exclusively through the Internet. By leveraging the Web's instantaneous and user-friendly channels of communication, Lessin seeks to create a full-service, online investment bank that will make traditional IPOs and private venture-equity offerings available to his membership as they hit the market.

Although Lessin refuses to talk about such plans, for fear of violating SEC rules that forbid disclosing information about an IPO during the "quiet period" before the offering, the Wall Street Journal reported in August that Wit Capital would perform its first sale of stock this fall, when it serves as the e-manager for the IPO of EarthWeb Inc. Wit will offer large blocks of stock to online-brokerage customers of Quick & Reilly Inc. and Suretrade Inc., which are both units of Fleet Financial Group.

This deal, the first of several that are under way, positions Wit Capital as the online comanager of a $34.5 million IPO. Both Quick & Reilly and Suretrade have signed multi-year agreements with Wit to create "e-syndicates." These syndicates, comprising of electronic brokerage firms and their customers, will buy and sell shares of IPOs managed by Wit. If the ambitious plan works, it will mark the beginning of Wit's future, and it will introduce an entirely new way to trade stock.

With a recession in Asia, the imminent economic collapse in Russia, and signs of a bear market in the United States, it seems like a strange time to be optimistic about the market. Lessin remains bullish. The best way to think about the economy, he believes, is to take the longest view possible. Stocks aren't for flipping. Day-traders don't rule the future. Anyone who wants to make money must be willing to hold what they buy for a long time. Lessin isn't interested in the quick kill. He has his eye on posterity.