Hung Jury Prompted Law Partners to Go into the Pizza Biz
Larry Flax and Rick Rosenfield met in the ’70s as federal prosecutors and eventually started up their own law practice.
But the two decided to shed their lawyerly past in 1985 after a “grueling trial” that ended in a hung jury, the Wall Street Journal reports in a Q&A profiling the duo’s transition from practicing law to serving up pizzas.
The two used the capital from their law practice and set up a limited partnership with 22 family and friends to launch what is now California Pizza Kitchen, a publicly traded company with 250 restaurants in 33 states and nine countries.
When it came time to grow, Rosenfield told the WSJ that the two men converted their limited partners into shareholders. “Every time we needed money, we sent a letter to the shareholder base,” Rosenfield said. “By 1992, we had grown to 300 shareholders and $55 million in revenues.”
Not all of their company’s growth went smoothly. Rosenfield explained how when Pepsi became involved, the duo made a classic small business mistake and grew too fast.
But Flax offered this advice to entrepreneurs: Be optimistic. He said, “Bad times create openings of doors. A lot of people might think this is a terrible time, but it’s not. There is a lot of money out there for good ideas. Real estate is cheaper, and there are more people looking for work. These are times when optimists can really take advantage. Now is the time to strike.”
