In 1991, Michael Holthouse made a bold career move. Just 33 years old, he was already an executive at Hewlett-Packard. But Holthouse has an irrepressible entrepreneurial drive, and he chafed at the limitations of corporate life. He decided to leave his executive position, with its impressive salary and considerable prestige. He wanted to strike out on his own.
With an initial investment of $20,000, he launched Paranet, a Houston-based computer network services firm. His goal: to reach $100 million in revenues within five years. By all accounts, it was an outrageous target.
Holthouse threw himself into the work. The company took off, growing from one employee to 1,400. And Holthouse did indeed surpass the $100 million mark, albeit one year after his five-year deadline. In 1997, Sprint bought the firm for $375 million.
“My mom convinced me very early in life—rightly or wrongly—that there was nothing I couldn’t do,” Holthouse says. “It’s a matter of deciding what it is you want and then getting after it.”
So it comes as no surprise that Holthouse has lofty ambitions for his philanthropic efforts—especially his latest, Lemonade Day, which helps kids set up and operate their own lemonade stands. On a predetermined day, thousands and thousands of kids would open and own their first small businesses. His expectations for the project are breathtakingly ambitious.
“I see a revitalization of America through a simple little lemonade stand,” says Holthouse. Actually, he doesn’t see just one lemonade stand—he sees one million of them, all on the same day, in 100 cities, from coast to coast.
It may sound crazy, but those who know Holthouse wouldn’t advise betting against him.
“You can tell Michael ‘no,’ but he’ll just figure out a way to do it,” says Cindy Ferguson, vice president of programs for the YMCA of Greater Houston, a Lemonade Day partner. “There is no obstacle in his thinking. He gets an idea and works it.”
Holthouse attributes much of his success to his goal orientation. He spends the first day of every year laying out goals for every aspect of his life—his work, finances, health, marriage, family, and so on. Then he reviews his progress monthly and quarterly. “I get down to business with laser-like focus,” he says.
After selling Paranet, he turned that focus in a new direction. “I made the decision that I was going to spend the rest of my life helping at-risk kids,” he says. He went on a “learning journey” across the country and around the world, trying to understand the root causes of poverty. He decided that life skills and entrepreneurship are the “key for breaking through, especially in high-poverty communities.”
“The Plan Poured Out”
In 1999, he created the Holthouse Foundation for Kids to help at-risk children acquire the skills and habits they need to become successful adults. In 2002, after the collapse of its sponsor, he provided $1 million to the Enron Boys & Girls Club. He and his wife, Lisa, later founded Prepared 4 Life, a nonprofit organization that started by offering after-school programs for at-risk middle-school children in Houston.
Then, three years ago, his daughter, who was 10 years old at the time, had a friend sleep over. “She woke up at about six in the morning,” Holthouse recalls, “and she comes bounding in and jumps on top of me and says, ‘Daddy, Daddy, I want to do a lemonade stand!’”
He agreed to help, and managed to squeeze in some business lessons. They discussed marketing and the importance of a good location; at the end of the day he taught the girls about balance sheets and asked them to repay their “investor” for supplies. “It turned into this amazing day of learning,” Holthouse says.
Not long afterward, he met with the general manager of a local television station to discuss partnering on some after-school programs. “I had a flash of divine inspiration, I think,” Holthouse explains. “For the next five minutes, the whole plan poured out of my mouth.”
The idea was to give kids an engaging workbook that would guide them through the process of setting up a stand. An adult mentor would help walk each child through the process, but would be asked to leave most of the problem-solving to the kids. Then, once all the children took the time to outline their plans and ready their businesses, they would all open their stands on the same day.
The program, Holthouse decided, would be called Lemonade Day. It would teach young kids the nuts and bolts of entrepreneurial startups: setting goals, planning for success, securing a loan, choosing locations, procuring supplies, making their product, and turning a profit. “Behind it all,” Holthouse adds, “it’s a great time for the kids.”
Just Add Sugar
When Lemonade Day arrives, the kids execute their plans. As an incentive, they get to keep whatever profits they earn. It’s a lesson in entrepreneurship that many of them will never forget. “Since they keep the money, they care,” Holthouse points out. “The average kid who builds a lemonade stand walks away with over $200 in his pocket. For a lot of these kids, that’s a real A-ha! moment.”
One enterprising young man set up shop on the ninth hole of Houston’s most exclusive golf course. “This kid is selling fresh-squeezed lemonade at $10 a glass, and he sold out,” Holthouse says. “He has to get on the phone to his siblings to make more lemonade because he underestimated demand.”
Or take the girl who wanted to buy a new dress for her fifth-grade graduation. She was two years behind her peers in school, both of her parents were in prison, and she suffered from very low self-esteem. Though she initially didn’t think she could do it, her school counselor convinced her to participate in Lemonade Day, serving as her investor and mentor.
She began the day timidly, hoping that people would stop at her stand; as they did, she grew more confident. Within a few hours, she was enthusiastically marketing her lemonade. She earned more than $100, enough to buy a new dress and shoes and have her hair done. More importantly, according to her counselor, the boost she got from that success pushed her to enroll in a special school that helps kids catch up to grade level. “We really believe that Lemonade Day has changed the trajectory of her life,” says Julie Eberly, executive director of Prepared 4 Life.
Lemonade Day participants unleash their creativity in an effort to attract customers. There are Barbie lemonade stands, Transformer lemonade stands, Hawaiian-themed lemonade stands. Kids wear costumes and construct elaborate decorations. They use their grandmother’s secret recipe or market their stand as eco-friendly.
Many kids gain a new appreciation for entrepreneurship, too. “There’s always one kid who put the stand together,” says Holthouse. “At the last minute, they invite one or two friends to help them run the stand. At the end of the day, the friends want to divide up the money equally. But the first kid—the entrepreneur—will say, ‘Wait a minute. I started this company. I put in the extra work.’ It is unreal to see them intuitively grasp these ideas about ownership and employment.”
The YMCA’s Ferguson points to another benefit: The day brings kids and adults together for a constructive project. And some of the adults report that they’ve had a learning experience of their own, thanks to the workbook they receive to help guide kids through the planning process.
“It makes the adult look like Warren Buffett,” Holthouse says. “We have gotten call after call from parents saying, ‘I was doing this with my child and these questions were really good. I started applying them to my landscape business and my sales have doubled.’”
Afterward, the kids are encouraged to donate a portion of their profits to charity. This year, the children who participated in Lemonade Day gave a staggering $500,000 to the charities of their choice. One group banded together to buy a generator for a village in Africa. “It’s an amazing experience for these kids,” Holthouse says. “They learn that they can help others too, regardless of how poor they themselves are.“
Recipe for Growth
“Our goal over the next five years,” Holthouse explains, “is to take Lemonade Day to 100 cities across America and do 1,000,000 lemonade stands in a single day. Now, if we do that, we will have sparked entrepreneurship in a way that I do not think has been done to scale anywhere.”
In 2007, the program’s first year, Holthouse predicted there would be 2,000 stands in Houston on Lemonade Day. “Everyone looked at him and said, ‘You’re crazy,’” recalls Eberly. But when the day came, there were 2,600 stands, with several kids working at each. This year, there were more than 27,000 stands in Houston alone—plus thousands more in Austin, Bryan–College Station, and Richmond, Indiana, where Holthouse grew up. In his hometown, about half the children participated.
Holthouse, of course, has experience with successfully managing rapid growth. He’s a serial entrepreneur, after all. And he’s applying the lessons he learned at Paranet to Lemonade Day, especially the lessons about scaling an organization quickly.
“In six years, we went from one [Paranet] office in Houston to 27 offices around the country,” he says. “We set up every single city like its own franchise.” In each new branch, the company would find a sales manager and a technical officer, and then allow them to operate as though they were entrepreneurs running their own businesses. “It empowers people to make good decisions,” Holthouse says.
A similar replication strategy has worked thus far for Lemonade Day. “We go into a city and find an entrepreneur who has a passion for giving back to kids, and we help them build a team,” says Holthouse. “When Lemonade Day comes true in Chicago, it’s going to be people from Chicago who have made it happen.” The sponsors in each city receive all of the Lemonade Day materials, and they lead the effort. “We become a support organization to help them serve more kids,” he explains.
Holthouse recently hired 11 MBA students to scout for leaders in new cities who can serve as partners. They’re using Twitter, Facebook, blogs, and websites to get out the word about Lemonade Day. In 2010, the program will expand to 10 new cities, including Minneapolis, Los Angeles, Denver, Chicago, Atlanta, Indianapolis, San Francisco, San Antonio, Dallas, and Washington, D.C.
Another key element of the program’s success is finding partners. Lemonade Day works hard to engage the entire community. “We get everybody involved,” says Holthouse. “Public schools, private schools, charter schools, home schools, PTAs, neighborhood associations, churches, faith-based organizations, after-school organizations, libraries—we want them all to participate.”
The entrepreneurial nature of the program helps draw partners from the business community. “One of the things I have found is that most of the senior managers of companies today had some type of childhood experience with business—babysitting, lawn mowing, or lemonade stands,” says John Sheptor, CEO of Imperial Sugar, the title sponsor of the event in Houston. Holthouse has had similar experiences. “When I’m in rooms with Fortune 1,000 CEOs,” he notes, “and I ask how many people had lemonade stands, every single person raises a hand.”
“Lemonade Day is really when the light switch comes on for many of the kids,” says Sheptor. “They begin to understand business for the first time. That experience can’t be taught.”
“It won’t solve all the world’s problems,” says Holthouse, “but it will get kids excited about starting their own business—and 20 years from now, the impact will be amazing.”
Denise Kersten Wills is features editor of Washingtonian.