It is summer. I scream, you scream, we all scream for ice cream.
Last week my neighbor gave me some chocolate chip cookies and mentioned in ing that she used them to make “chipwiches.” Oh, really?
Let’s go back to the summer of 1982. I was living in Los Angeles and working at a savings and loan making crazy wrap-around mortgage loans to over-leveraged apartment syndicators who were doing private placement deals with huge tax benefits, all of which depended on rents increasing — forever.
Oh, and did I mention that in 1983, the United States entered what is euphemistically called a recession?
At the same time, there was a wild man in New York City, Richard LaMotta, distant cousin to the boxer, Jake LaMotta.
Richard LaMotta was a Brooklyn-born hustler and promoter. At Brooklyn College, he started a record label that featured the music created by the students in music class 101. Called on the carpet, he negotiated with the college and RCA and BMG Music and actually got a two-record album that sold 50,000 copies. Then, while working nights at CBS, he earned a law degree. Next, he invested in a small ice cream parlor in New Jersey.
Like every good story, whether in the garage or in the basement of his father’s house, he figured it out. Chipwich.
On May 1, 1982, LaMotta launched 60 street-cart vendors, each wearing pith helmets and khakis onto the streets of Manhattan and began selling his 4.5-ounce concoction — two chocolate chip cookies with vanilla ice cream in the middle — for $1 each.
Two hours later, all 25,000 Chipwiches were sold out. All of a sudden, LaMotta was everywhere, the New York Times, Wall Street Journal, etc. LaMotta and his partner Sam Metzger were going to go big.
At around that same time, my savings and loan blew up, got taken over by the Feds and some of the management went to jail. Me, I took the fifth or the sixth, dodged a bullet and became unemployed, but I was ready to continue my entrepreneurial journey — to New York City to buy the West Coast franchise for Chipwich. Which is exactly what I did.
LaMotta was larger than life. The pitch deck convinced me that after going public and putting carts around the world, the only remaining question would be what color the interior of my private jet should be. OK, just tell me where to sign.
I raised some money, acquired carts, refrigerated trucks, rented a warehouse, built a walk-in freezer and within six months, I was on the streets of Los Angeles– and in the newspaper. We were hot stuff.
Herewith some thoughts:
What did you know about ice cream? Nothing. What did you know about the fact that ice cream needs to stay refrigerated? Nothing. What did you know about permits. Hey, we don’t need no stinkin’ permits. And lastly, what did you know about gross margin and cost of goods? Not enough.
In 1984, LaMotta and Chipwich filed for Chapter 11 protection, but he was relentless. He would go on to raise money and battle the dogs of war until 2002, when he finally sold the company to a Canadian distributor. By then, more than a billion Chipwiches had been sold by 3,700 vendors in 36 markets. LaMotta was a true entrepreneur.
But in early 1984, it became clear to me that I had a problem; I was not making any money. But there is always a vanilla lining if you look. The last thing the boys in New York needed, while they tried to stay out of court or jail, was a noisy, disgruntled franchisee — and oh by the way, did you guys ever really get a license to sell that franchise? You know, it’s considered a security.
I explained my point of view, they suggested pounding sand, then we did the classic my lawyer is bigger than your lawyer, and finally they gave us back all our money, and we gave them back some broken carts and a few pallets of 6-month- old ice cream.
Sure, LaMotta and his gang were a little slippery, but to tell the truth, for six months in Los Angeles, I had a blast. It’s true, people do scream for ice cream.
Rule No. 771: That’s the way the cookie crumbles.
Senturia is a serial entrepreneur who invests in early stage technology companies. Please email ideas to Neil at [email protected].
