Driving ahead with McKeel Hagerty

June 14--Editor's note: This article was published in Grand Traverse Business magazine's Spring 2018 issue. For more stories from the magazine, click here to read GT Business in its entirety online.

TRAVERSE CITY -- Hagerty officially came into being three decades ago as an insurer of wooden boats. Today it insures classic metal -- cars, that is.

"It was first incorporated in 1984, so I was a teenager." said McKeel Hagerty, who became president of the company in 1997.

The company grew hand-in-hand with Traverse City. Both are doing business on a much larger scale than they were in the '90s.

Hagerty became a pillar of Traverse City's business scene, attracting hundreds of tech workers and other employees to northern Michigan. It has been a moving force behind Traverse City's development as a center of tech-based commerce. The company -- which now occupies a massive campus on Cass Street just south of the Boardman River, plus additional downtown office space -- has helped fuel a boom in local commercial development.

The company employs 940 people, including 720 in Traverse City. That business scale probably wasn't even remotely in the minds of McKeel's mother and father when they launched the business 30 years ago.

"It was a business my parents dreamed of, and they started it after selling their primary insurance agencies due to the recession in the late 1970s and early '80s," said McKeel Hagerty. "The economy up here was terrible."

"They had kind of a single vision in mind, which was: 'How do we do a business that we actually like, how do we do a business that is stable in an economic downturn, and something that over a period of time would have a sort of staying power.' So the idea was, one, it's got to be national. The second thing is that his idea was to go into personal lines, rather than commercial lines."

Conventional wisdom suggests that sellers of insurance gravitate toward commercial accounts, because the individual premiums -- and profit -- are larger. But the recession had shown that depending on a small number of large insurance accounts could put a company into a precarious position. So they instead decided to base their new operation on a large number of small accounts.

"My dad's view was that if you got enough of them, it kind of snowballed into a huge one," said Hagerty. "It just creates a real stable business platform."

In the beginning, the whole family pitched in. McKeel earned his insurance license at age 16. Also from the beginning, the business was about relationships.

"Our biggest clients became like family," Hagerty said. "We just kind of knew them. We were kind of like more friends of theirs at boat shows than like insurance people. And they were happy to pay their $200 premium to us because it didn't cost much."

The company grew. But the world of wooden boats has limitations, and it was the company's 1990s expansion into the galaxy of collector automobiles that allowed Hagerty to blossom.

"It was our boat customers who originally came to my sisters and I and said, 'Why don't you go into the car business?'" McKeel Hagerty said. "We were like, 'Sure, hey, why not. Let's give it a go.'"

"My sisters and I -- well, one was 14, mom and dad were full time, I was in school, and my older sister was an attorney -- we decided to go into the car insurance business almost purely just because we knew boat customers who also had cars."

The new road was rocky at first.

"So we did it. It was a total disaster," said Hagerty. "Car insurance is much more regulated. We just kind of fought our way through it like only a family business would do it. No one would stick around long enough to do what we did unless you were just stubborn enough to do it."

McKeel pursued an academic career before he returned home to Traverse City to eventually take the top leadership spot in the family business.

He studied English and philosophy as an undergrad, attended seminary for three years and earned a masters degree in theology. He then started a doctoral program en route to becoming an academic.

"That was absolutely the plan."

But the plan changed.

"My wife was pregnant, and the job market for being a philosophy professor was zero in the '90s. It was just the worst environment ever to become an academic," Hagerty said.

"The business was starting to scale, my dad had retired, my mom was running it, it was getting more complex and she needed help. I dropped out of my PhD program and moved back in 1995, and became president in '97, and the rest is history."

The academic training didn't go to waste.

"I learned more about leadership in that seminary than I could have, probably, in a business school," he said. "In the end, church life -- especially in the traditional church like the Russian Orthodox Church -- it's all about leadership."

"If you study any of those fields (philosophy or theology), you become a very critical leader. You tend to be very astute at not just the words on the page, but the subtext and the context around which things are written."

His college studies allowed him to develop a more inclusive overview of business and where business fits into culture.

"A lot of the lessons that I have drawn into the very modern business that we have here, is that it's more about human messages and storytelling than it is about the financial picture of the business."

His academia-inspired vision of leadership formed his philosophy of business from the start.

"I sort of realized the whole time I saw a bigger business than anyone else did," he said. "That's when I started getting interested in figuring out the real learning was going to be 'out there,' learning at businesses that were doing things ... like we were, but just doing it at scale."

His most useful strength as a leader?

"I guess I'm able to connect the dots in a lot areas that a lot people don't see connections to," he said. "Because of that kind of background that I have, I'm not afraid to create a bigger narrative than just, 'Hey. We're Hagerty. We sell collector car insurance.'"

"I mean, yes, we do. We sell a lot more of it than anyone else.

"But it's about telling a bigger story. It's a bigger story about the success of business having an impact on the world, an impact on the people that work within the business, and it's about, in our case -- because our customers all own these things because they want to -- it's about having fun."

"It's a for-profit business, there's no doubt about it -- but what we do is, we connect this awesome group of learning leaders, as I think of us, to this idea of people out there having fun. I think it's a set of connections that most people wouldn't have seen."

Hagerty said customers come first, but so do workers. A company needs to accommodate the needs of both, he said.

"When you're willing to invest in your employees and their growth and their development and their happiness, they're really number one," he said.

"Businesses have to realize that people are going to bring their life problems into the office. The best businesses that I see around the world know that, and they make huge allowances for it. And it's not just in times of crisis ... it's just normal stuff. For a business to successfully employ millennials for the long haul, you've got to connect them to purpose and you've got to let them be themselves. That doesn't mean they don't have to be professional."

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