During the summer of 1972 I felt the need to make some money. The cash flow options available to a 9 year old in the 70’s were limited so I settled in on the idea of a lemonade stand. By the time my hyperactive imagination was done designing the ultimate lemonade stand, I was driven to make it real. The pitch to my mom went smoothly and with plans in hand, a few hours we were at the lumberyard buying the materials.
It was not an ordinary lemonade stand. I took pride that there had never been a lemonade stand quite like it. We made a nice cabinet with plywood, stained the wood, put varnish on it, installed shelves inside, added doors with hinges and handles and magnets so they would stay shut and installed wheels so I could roll the lemonade stand down the street. Thirty-five dollars and a week later, my siblings and I rolled the shiny new lemonade stand filled with Dixie cups and a pitcher of Minute Maid lemonade to the end of the street on the corner of Woodstock and Montecito in Rossmoor, California where there was much better traffic than in front of my house.
I remember that business was kind of slow; I sensed people were nervous buying lemonade off the street from a kid, so I went home and put on my Cub Scout uniform thinking that it would buy me some more credibility. The Cub Scout uniform did boost sales and I remember a nice lady stopped and gave me a $5 tip for a Dixie cup of lemonade. After a few days of underwhelming sales, I retired from the lemonade business, a little rattled that things didn’t go to plan, feeling a little guilty that I didn’t make enough money to cover the cost of the materials of making the lemonade stand.
It is a good thing that I can’t go back in time to talk the 9-year-old me out of this idea. Something about the combination of events and failure ignited an entrepreneurial drive for me to figure it out and get it right the next time. This was startup #1 and the story has become folklore in our home.
At the beginning of this summer, my nine-year old son Neal showed up with very elaborate plans to build the ultimate lemonade stand. He had hired his 16-year-old brother Sam to engineer the lemonade stand, promising Sam a commission on all future lemonade sales. As I viewed the plans, the 2017 model was much better designed than my 1972 lemonade stand. (The 2017 version was 10 times more expensive than the 1972 version.) There was no way I could say no to Neal.
So 45 years to the date of Startup #1, Neal and I went to the lumberyard to buy the materials to build his lemonade stand. Available for support if asked, I delighted as his idea came together. It morphed from a lemonade stand to a Lemonade business called Lemonati. Brother Paul A. Ahlstrom and sister Megan Ahlstrom jumped in to helped name the business and design a logo, Aunt Tamara Ahlstrom helped with paint color choices. Brother’s and dad helped build the stand. Sam Ahlstrom and Mom Jenny Myers Ahlstrom helped design flavors and paint the logo. Recipes and various flavors and product names were tested. A trip to a wholesale produce market with mom to buy 50 pounds of sugar and two crates of lemons ($52 a box!) and he was in business.
Taking over the downstairs kitchen, Neal owned every step of the production process. He precisely measured the ratio of cane sugar to water, brought it to a boil, cooled the syrup in the fridge then mixed it with fresh lemon juice, adding in purified reverse osmosis water that was then stored in glass bottles.
Unfortunately, I was out of town on launch day, but Jenny sent me pictures of his first day in business. He launched with three flavors 1) the John Lemon (strawberry puree mixed in with the lemonade 2) the Bermuda Triangle mango pure and strawberry puree mixed with lemonade 3) and The Lemonati, straight up lemonade over ice.
Neal offered his older brother Reed an “unpaid intern” position to help out with sales. They eventually ended up negotiating a 50/50 revenue split for Reed for helping with sales and a 5% commission to Sam for his help engineering and building the stand.
The first day of sales Lemonati Inc brought in $120. I was back in town for day two which started a good conversation about the cost of goods sold, gross margin, cost of labor and other things every 9 year old should know. I asked him who his customers were. He said, “It was strange Dad, all of my customers were women. They took pictures and all said the same thing, ‘how adorable.’ We only had one man customer.”
The third day he was on the phone, recruiting employees to sell lemonade with him. After many unsuccessful recruiting attempts he decided to go it alone. After doing the math on profits on the third day and realizing how much he had to pay for lemons, cups and sugar to make the lemonade, I overheard a very sad call to his mother. Mom: “How did you do today Neal?” Neal: “Ok. We sold $60, but the high cost of lemons are killing my gross margins.” Neal: “My cost of goods is $1 a glass. Mom: “Can you raise your prices?” Neal: “No mom, the market just won’t bear it. I tried selling for $1.75 and but I actually sold more when I lowered it $1.50 a glass. I will have to make more on tips.”
A few days later, with the help of his aunt Michelle Elton Ahlstrom, he took his act on the road and took Lemonati Inc to the Parade of Homes by his cousin Byron’s home. I came home from work and the look on his face was sheer exhaustion. Me: How did it go today? Neal: I can’t talk about it. Me: What happened? Neal: I worked over 5 hours today, I had to pay mom $40 for the cost of materials, $15 to JT and $15 to Byron, some to Reed and 5% to Sam and after all that work I only made $15. All the money I make goes to other people. I can’t afford all the employees.
Conversation with Neal on lessons learned so far:
Dad: Who is your target customer? A: Ladies that drive nice cars.
Dad: Why do your customers buy your product? Neal: They say it tastes really good. Some people get a second glass. They all say the same thing “your stand is adorable” and they take pictures to put on Instagram.
Dad: What is the best flavor? Neal: The Bermuda Triangle. At first it has a strawberry lemon taste and then it has a good mango after taste.
Dad: What are you doing with the money you make? Neal: Pay my tithing and I guess save for my mission.
Dad: What have you learned that you didn’t know before? Neal: I make more sales when there are two people in the lemonade stand. If I have more than two people then all my money goes to pay them. Tips are great!