Age, youth partner in retiree startups

‘Legacy’ partnerships allow old and young to pool their strengths

New York TimesSeptember 14, 2013 

Michael Lowe was bored with retirement.

He was doing yoga five times a week and reading voraciously after leaving the workforce in 2008. He had enjoyed a three-decade legal career, most of it as a corporate lawyer for Verizon. His wife, Melissa Kroning, 61, registrar of the Smithsonian American Art Museum, was still working full time, so globe-trotting was out.

“I was just kind of hanging around the house,” Lowe said. “I decided I might as well try something else.”

Luckily, Lowe, 64, had a good rapport with his son-in-law, John Uselton, 40, a fellow enthusiast of home brewing, wine collecting and spirits – with whom he found he could start a business. Their mutual passion for craft distilling eventually grew into New Columbia Distillers, the first microdistillery in Washington. In October, it rolled out the first bottling of its small-batch Green Hat gin from an old warehouse holding their 15-foot solid copper still.

The rise of senior entrepreneurs such as Lowe has been well-documented. But startups like the one Lowe and Uselton began are a new twist in the trend, and a variant of traditional family businesses: “legacy” partnerships. The partnerships are started at or near the older partner’s retirement from a lifelong career, so two generations bring complementary assets to a new business. The assets are typically capital and experience from the older partner, and energy, technical expertise or online marketing skills from the younger.

“Many seniors are creating legacy businesses alongside a younger member of their family,” said Elizabeth Isele, co-founder of Senior Entrepreneurship Works, a nonprofit that helps workers older than 50 start businesses. “It’s a winning formula for both generations.”

While there are no statistics to document these new generational pairings, the trend appears to be gathering momentum in the current economy.

“Two unfortunate aspects of the ongoing jobs crisis may be driving the launch of new businesses by senior parents and younger members of their family,” said John Dearie, a co-author of “Where the Jobs Are: Entrepreneurship and the Soul of the American Economy.” “First, nearly half of recent college graduates have been unable to find work, and half of those with jobs report that the jobs they found don’t require the degrees they earned. Second, while the unemployment rate among older Americans is lower than for younger Americans, government statistics show that once older Americans lose their jobs, they tend to be unemployed for far longer, as finding new work is much more difficult. Given those realities, one can easily see how those two demographics might team up as entrepreneurs.”

In some demographic groups, too, multigenerational startups are leading the way, Isele said. For example, Hispanic entrepreneurs are creating more legacy businesses than any other demographic, according to Yanira Cruz, head of the National Hispanic Council on Aging.

“The economic downturn hit this population very hard,” Cruz said.

The result has been family members working together to create small retail businesses like florist shops, restaurants and other businesses in the food industry, and service businesses like cleaning companies.

“The culture has a lot to do with that approach,” she said. “We’re raised to take care of our elders, and a commitment to care for one another has been projected onto starting a business.”

Each partner’s strengths

The No. 1 rule is having a clear idea of what each partner brings to the table.

“We use a lot of what we learned in our backgrounds,” Uselton said.

He and Lowe share operating the still and developing recipes. Having worked as a beer buyer for a liquor store and a waiter at a top-tier Dupont Circle restaurant, Obelisk, before plunging into the distilling business, Uselton had a broad network of contacts in the restaurant and beverage business in the area. And his gregarious nature paid off at tastings arranged at local businesses, which were pivotal in spurring interest in the pair’s artisanal gin.

Lowe handles the financial books and the regulatory compliance issues. He was a regulatory lawyer, after all. The partners had to get legislation passed through the District of Columbia City Council to permit them to sell the gin at the distillery and host tastings.

One more thing that balances their duties: “I am a skinny little old guy. I can’t do a lot of the physical stuff,” Lowe said. “John can lift the big hoses, cases and bags of grain. There’s a lot of physical labor involved.”

With both men working 60-hour weeks, Lowe figures that he has invested close to $1 million of his and his wife’s savings in the business. But, he says, with $300,000 in revenue projected this year, he has already begun to repay it.

Two months ago, Uselton took his first modest paycheck home to his wife, Elizabeth. She “was very excited, to say the least,” Uselton said.

Which raises a question: Are legacy small businesses another form of helicopter parenting, or nepotism?

Lowe dismisses that idea, insisting that both men came up with the idea of the distillery.

“And it seemed like it might give John a leg up, but it was up to him to decide voluntarily if he thought it was a good move,” he said. “It was a fair amount of risk for him to give up his day job and put all of his energy into this. It’s nice to think that I will probably do this for eight or 10 years, but it should be able to continue, and John can carry on.”

Carrying a ‘sense of idealism’

Another mutual advantage for senior and junior entrepreneurs can be a moral purpose, Isele said.

“People at this age really want to create a business that has some kind of social impact on their community, if not the world. And often the younger workers carry the same sense of idealism on their sleeves.”

When Nancy Burkhart, 69, graduated in 1966 from UCLA with a degree in anthropology, she “wanted to save the world,” she recalled. And today, with the help of her daughter Jessica Arellano, 36, she feels as if she is doing that in her own way. The two own and operate Earth Safe Finishes, a nontoxic paint and finishes company based in Moorpark, Calif., they founded in 2007.

The impetus for the business was Burkhart’s divorce. “Jessica helped me find my way,” she said.

Burkhart was not a neophyte. She had owned three companies that developed and manufactured paints and varnishes for the craft industry. But she was determined to create paints and varnishes with fewer toxins – a goal shared by Arellano, who graduated from the college of natural resources at Berkeley. She also had expertise in nontoxic technology.

What makes everything tick?

“We know each other’s strengths and weaknesses, and fill in the gaps accordingly,” Arellano said. “My mother knows I do not really like phone conversations. She loves them. She does not like paperwork. I don’t mind it.

“I think that not all parent-child relationships would work for startups unless each person is able to cover what the other lacks.”

What is most important?

“Mutual respect,” Burkhart said. “You have to step away from that parent-child relationship. It has to be the business relationship.”

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