Entrepreneur Costa shares secrets to success at Gallo

Modesto entrepreneur Dan Costa entered the restaurant industry pushed by what he calls the ultimate motivation — hunger.

At age 14, he came home to find the refrigerator empty. Costa said his mother told him there was no food or money. She then told him he would have to find a job that would help feed the family.

He found one washing dishes at a hotel restaurant, hoping it would pay half in money and half in food. The manager cut him a break, paying him $1.50 an hour and sending him home with baked lasagna.

"You have to know how deep is that motivation," Costa told an audience of several hundred Wednesday evening. "You have to judge your motivation; and be honest about it."

Costa, who has created several Modesto-based businesses, shared his secrets to success at a special presentation to hundreds at the Gallo Center for the Arts.

Proceeds from the event went to support an effort by Costa and his family, who recently donated $1 million to the Gallo Center, to expand access to the arts for underserved children.

Costa's speech, "My Ten Principles of Success," focused on the strategies he used to create and build his businesses. He started by saying there are no failures, just experiences and the ability to learn from mistakes.

"Learn, though, about what happened to make you fail," Costa said. "If you keep making the same mistakes, then you're just stupid and maybe business isn't the thing for you."

Another key to success is identifying the market's needs, such as when Costa saw an opening for the Velvet Grill & Creamery, which grew to a chain of 29 eateries.

Costa said he couldn't get to Swensen's, an ice cream parlor in Modesto's Roseburg Square, before it closed after he got off work. He also noticed it served sandwiches, but only in the winter — it made enough money selling ice cream in the spring and summer that there was no need to serve sandwiches.

So he launched his own ice cream and sandwich chain. "The creamery was a knock-off of Swensen's," Costa said. "We overdelivered. The serv- ice was excellent."

Another important factor in his success was building a solid business foundation based on the principle of "first cost," which means cutting out the middleman and making or buying products directly from the manufacturer.

Later, he built Mallard's restaurant and created a line of pasta and other food products, and Mallard's Inn, now a Courtyard by Marriott.

He said the bank advised him not to start the 10,000- square-foot restaurant on the southeast corner of McHenry and Briggsmore avenues, but he wasn't swayed.

"Have confidence in yourself," Costa said. "If it's in your gut that it's going to work, then do it."

He said Mallard's was one of the top 25 individually owned restaurants in the country after the first year. "We made so much money, we couldn't even count it," he said.

Costa built up many of his ventures, including Velvet Creamery and Mallard's, only to sell them and move on to something else — another key to his success, being ready to get out at the right time.

He bought Modesto-based outdoor clothing company Royal Robbins Inc., then later sold it, keeping a small portion called 5.11 Tactical that made uniforms, clothing and other gear for law enforcement agencies.

He found that the demand from law enforcement agencies for functional gear had grown dramatically after supplying the FBI Academy with 5.11 pants, which had plenty of pockets and were great for tactical training.

Costa also learned that 5.11 Tactical was no longer just the name of a company. It was a brand that would be placed on all types of law enforcement gear, including boots, socks and watches.

"5.11 is a cult," Costa said. "People want to wear the 5.11 brand."

Costa sold the company, but continues to work as its chief executive officer and retains a 20 percent interest.

"There is a tremendous sacrifice you have to give to make it in business," Costa said. "I'm not worried where my next dollar is coming from, but I can tell you I'm not going back to washing dishes."

Bee staff writer Rosalio Ahumada can be reached at or 578-2394.