HOW TO START UP AFTER 50

Pedego is tak­ing prof­itable ad­van­tage of two con­verg­ing trends: ag­ing cus­tomers look­ing for an eas­ier bike ride and ag­ing founders who want a sec­ond (or third or fourth) act

Inc. (USA) - - FRONT PAGE - By leigh BuChaNaN Pho­to­graphs by Michael Friberg

OVER THE decades he spent in law en­force­ment, Frank Mus­cato talked to lots of his fel­low cops about start­ing a busi­ness. Es­cap­ing into en­trepreneur­ship is a com­mon day­dream in the pro­fes­sion, he says, when “the things that hap­pen to you and the things that you see catch up to you.” Still, Mus­cato never thought he’d ac­tu­ally launch some­thing. So he is both sur­prised and tick­led to find him­self, at age 74, the owner of an elec­tric-bi­cy­cle store.

In Septem­ber, Mus­cato spent $70,000 to open a Bloomington, In­di­ana, lo­ca­tion for the com­pany that makes the bikes, Pedego. On the sec­ond day of the an­nual Pedego deal­ers meet­ing in early De­cem­ber, he is among a throng of store own­ers— al­most all in their 50s, 60s, and 70s—tour­ing the com­pany’s blocky, white new head­quar­ters in Foun­tain Val­ley, Cal­i­for­nia. It is 8 a.m., and al­ready Mus­cato has been on the phone to his elec­tri­cian back in In­di­ana, dis­cussing up­grades in­spired by pre­sen­ta­tions from other deal­ers the pre­vi­ous day.

“We’ve got to put new light­ing in. I’ve got some new ideas on pre­sent­ing the bikes on the floor, hang­ing one in the win­dow,” says Mus­cato, who wears shorts, tube socks, and his glasses on a cord around his neck. “Last night, I had trou­ble sleep­ing, think­ing about all the things we could do.”

Pedego, a $15 mil­lion com­pany, is the na­tion’s lead­ing brand of elec­tric bike, ac­cord­ing to Nav­i­gant Re­search. (Elec­tric bi­cy­cles, which can be pow­ered by a mo­tor or ped­aled, are a $15.7 bil­lion global mar­ket, which is grow­ing fast.) Pri­mar­ily a de­signer and man­u­fac­turer, the com­pany, prof­itable since 2012, re­lies on in­de­pen­dently owned branded stores for 85 per­cent of its dis­tri­bu­tion. Cur­rently, it has close to 60 branded stores in the United States. All but a hand­ful were launched by peo­ple in their 50s and older, a de­mo­graphic that—not coin­ci­den­tally—also makes up Pedego’s pri­mary mar­ket.

The pub­lic ob­sesses over tech whiz kids in hood­ies. But a more dy­namic en­tre­pre­neur­ial species is the sil­ver fox. Among en­trepreneurs who start busi­nesses be­tween the ages of 20 and 64, al­most a quar­ter are 55 or older, com­pared with 15 per­cent in 1996, ac­cord­ing to the Kauff­man Foun­da­tion. The rate of en­trepreneur­ship has grown faster in this de­mo­graphic over the past 20 years than in any other. Boomers are liv­ing longer, stay­ing health­ier, and gain­ing more ex­pe­ri­ence and ed­u­ca­tion

than any pre­vi­ous gen­er­a­tion. A study by Mer­rill Lynch found that more than seven of 10 pre-re­tirees want to keep work­ing.

Gallup re­ports that 80 per­cent of Boomer star­tups are built as life­style choices meant to sup­ple­ment re­tire­ment in­come and keep the mind en­gaged. But some are far more am­bi­tious. Pedego, co-founded in 2008 by Don DiCostanzo and Terry Sherry when both were in their early 50s, is an un­usual hy­brid. It mar­ries the ex­pe­ri­ence of se­rial en­trepreneurs in their 50s— whose com­pa­nies have the high­est sur­vival rate of any age group, ac­cord­ing to Car­men Cotei and Joseph Farhat, finance pro­fes­sors at the Univer­sity of Hart­ford and Cen­tral Con­necti­cut State Univer­sity re­spec­tively—with the en­thu­si­asm of neo­phytes. The ma­jor­ity of those driv­ing Pedego’s three-year 154 per­cent growth are re­tired or semire­tired peo­ple start­ing busi­nesses for the first time. They en­coun­tered the bikes as con­sumers and came to cor­po­rate Pedego’s res­cue in the early days, when it was strug­gling for lack of dis­tri­bu­tion.

Of course, later-in-life en­trepreneur­ship has its draw­backs. Just as DiCostanzo and Sherry have built their bikes to ac­com­mo­date older bod­ies, they have also built Pedego to ac­com­mo­date skill deficits— chiefly in technology and so­cial me­dia—among some of their deal­ers. And the busi­ness model in­ten­tion­ally min­i­mizes risk for a de­mo­graphic that has more money but also less time to make up losses.

Still, the founders say they never had a sec­ond thought about trust­ing their fortunes to the AARP crowd. Pedego store own­ers “are more ma­ture and, I think, more ra­tio­nal” than younger busi­ness own­ers, says CEO DiCostanzo, an elec­tric-ve­hi­cle zealot who is on his third Tesla. “Think about the de­ci­sions you make at 55 com­pared with when you were 25. They’re prob­a­bly bet­ter de­ci­sions.”

DiCostanzo notes that he and Sherry, now in their 60s, are tack­ling the most am­bi­tious en­tre­pre­neur­ial ven­ture of their lives, one they be­lieve can hit $100 mil­lion in five years. “I have more en­ergy now than 20 years ago,” he says. “We don’t think of the deal­ers as old be­cause we don’t think of our­selves as old.” IN 2006, DICOSTANZO, clos­ing in on 50, lived at the top of a hill. The beach was at the bot­tom. Bik­ing home from surf and sand, his legs re­belled. So he bought an elec­tric bike on­line and then seven more from dif­fer­ent man­u­fac­tur­ers. DiCostanzo liked what they did (helped him up that hill), but he didn’t like the bikes. Mostly for kicks, he opened an elec­tricve­hi­cle store in New­port Beach in 2007.

The store was just a side gig. Back then, DiCostanzo was en­joy­ing new life as an en­tre­pre­neur after 25 years work­ing for a man­u­fac­turer of au­to­mo­tive chem­i­cals. In 2004, he launched a mag­a­zine for the ser­vice de­part­ments of auto deal­ers and re­cruited Sherry—who was feel­ing rest­less after a long ca­reer in the mort­gage in­dus­try—as his part­ner. The two have been best friends since 1975, when they locked horns over the pres­i­dency of the Phi Kappa Tau pledge class at Cal State Fuller­ton.

DiCostanzo and Sherry ran the mag­a­zine for a while (they still own it) and then, in 2007, moved on to the next thing: mak­ing cus­tomiza­tion kits for Toy­ota trucks. The busi­ness fal­tered in the wake of the Great Re­ces­sion, and the two turned their at­ten­tion to DiCostanzo’s “hobby” busi­ness: elec­tric bikes.

Al­most all of DiCostanzo’s cus­tomers were Boomers or older, many re­turn­ing to two wheels for the first time in decades. The spirit was will­ing, the flesh, per­haps, not so much. Elec­tric bikes acted as psy­chic train­ing wheels. “A lot

Allan Lat, Ran­cho Santa Mar­garita, Calif.

AUTO SALES

Pam Marini, Danville, Calif.

HEALTH CARE EX­EC­U­TIVE

Aaron May­nard, Myrtle Beach, S.C.

COLONEL, U.S. AIR FORCE (RET.)

Frank Mus­cato, Bloomington, Ind.

DE­TEC­TIVE

Sandy Kinslow, Aurora, Colo.

REAL ES­TATE AGENT

THE BEST IS YET TO COME

Pedego co-founder Don DiCostanzo pre­dicts the com­pany will hit $100 mil­lion in sales in five years, just as he and his busi­ness part­ner hit the age when most Amer­i­cans re­tire.

GEAR­ING UP Terry Sherry, Pedego co-founder, had al­ready had a long ca­reer when he and DiCostanzo de­cided to start launch­ing com­pa­nies to­gether.

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