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A taxing task led to a global business for Don DiCostanzo. Tired of peddling his bike uphill on Superior Avenue in Newport Beach for volunteer work and recreation, he knew there had to be an easier way. His solution? An electric bike.

The epiphany ultimately inspired him to create his own company, Irvine-based Pedego, with business partner Terry Sherry in 2008, to sell their own brand of electric bikes.

The first store opened in Huntington Beach in 2011, and now the company has close to 70 independently owned locations in 10 countries.

DiCostanzo was honored for his work at the Business Journal’s annual Excellence in Entrepreneurship awards luncheon on March 10 at Hotel Irvine (see profiles of the other award winners on pages 1, 10 and 13).

DiCostanzo, who has lived in Orange County on and off since 1975, first satiated his desire for an electric bike by buying seven of them. He lined them up in his garage, and friends and neighbors would ask where he got them. He owned an automotive chemical company at the time called Zak Products, which was based in Dallas, Texas, but decided to open an electric bike shop purely as a hobby.

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He opened Zclipse in 2007 in Newport Beach as a way to learn more about electric bikes, he said. The building shared a wall with the Crab Cooker restaurant. He soon got frustrated, he said, because even though he had a variety of suppliers, he couldn’t find any that were making electric bikes he considered stylish enough.

“There was a very limited number available. They were ugly, they didn’t have very much in color selection, and they were made of poor-quality components.”

Within a year he had learned a great deal about electric bike customers and their preferences, he said. The decision time for whether to create his own brand of bikes came in 2008 when his main supplier in San Diego refused to continue selling him parts because “they didn’t believe in electric bikes,” DiCostanzo said. They were purists.

DiCostanzo said he knew then that it was time to create a unique brand. He invited his friend Sherry to lunch and told him of the plans, and he was in. They brainstormed ideas on a napkin and came up with the company name. By December 2008, they had filed the papers to form Pedego. DiCostanzo put up the initial capital of $300,000 and retains the majority share, he said.

“In life, you have to find the right people to align with in terms of values,” DiCostanzo said about Sherry as he accepted his entrepreneurship award.

He aimed for the company to stand out in the electric bikes sector.

“We don’t think like the (traditional) bike business. The bike business is selling to the competitive world. We’re selling fun. They think about components. We don’t think about components. We think about colors, style and comfort. The bike industry has no regard for comfort.”

DiCostanzo said the most strategic thing he and Sherry did with Pedego was to let their dealers open their own branded Pedego stores.

“The dealers get to use our name in exchange for them being loyal to us,” he said. “We grant them exclusive territories.”

There are currently five Pedego stores in OC, and a sixth is scheduled to open in Rancho Santa Margarita in April. The newest U.S. store is in Boise, Idaho, which opened the weekend of March 12 and 13.

Pedego also has stores in Europe, including three in France. The company just signed a new distributor in France that plans to open 50 more stores in that country, DiCostanzo said. The European market is huge, he added. Of the 5 million bikes sold there last year, a fifth were electric, he said, compared to the U.S., where 12 million bikes were sold, 50,000 of which were electric.

Pedego is the No. 1 seller of electric bikes in the U.S. based on revenue, DiCostanzo said, reaching the milestone last year. The company’s 2015 revenue was just shy of $10 million, and he said he projects it will take in $15 million this year based on a combination of new stores and additional products.

Preassembly manufacturing is done in China, and final assembly takes place at a 14,000-square-foot facility in Irvine in order to maintain quality, DiCostanzo said. Pedego will move its entire post-assembly production to a new, 40,000-square-foot facility in Fountain Valley in mid-April.

Innovations Multiply

The company today has 10 models. New product lines already launched this year include a folding bike called the Latch and a fat-tire bike called The Trail Tracker IV.

The Latch was launched in February for riders to take and fold their bikes onto a bus, train, motor home, boat or private plane. The Trail Tracker IV was launched on March 9, with fat tires conducive to riding over sand, gravel and snow.

For reprint and licensing requests for this article, Contact Kim Lopez