As an early stage venture capital investor and a business owner, one of my favorite things to do is speak to entrepreneurs. I love their energy, their passion and their willingness to make mistakes and surmount obstacles. Ask almost any successful person what they learned along the way and they will usually point to the obstacles and difficulties they overcame. This trait is often described as grit and it is what I look for in any leader.
But more and more, I also look for something else: the ability to love what you do.
Now, granted, love isn’t typically on the minds of the entrepreneurs I talk to. They are focused on product development, revenue models, marketing, not running out of cash, etc. The angel and venture-backed startup model is all about growing a business fast then selling it. The actual product is the business itself and the customers are the investors and eventually the new owners. Then the entrepreneur starts another business and does this over again. Shampoo, rinse, repeat.
But my hope is that somewhere along the way, one of the companies they create will grab hold of their heart and they’re going to find themselves wanting to stick around long-term. Dare I say, they’ll want to enter into a “relationship.”
When it happens, how do they develop this company into something bigger and long-lasting?
I have some experience in that department. My company, after all, was a startup once, too, operating out of the basement of my family’s home where our pool table used to be. Today, it’s an international market leader with 1,200 employees, double-digit annual growth and amazing prospects for even more future growth.
“First, we found a niche that was ripe for something new …”
Looking back, I think three steps made all the difference.
First, we found a niche that was ripe for something new. My parents, who ran and later sold a local insurance agency, were seeking just such a niche in the early 1980s. They ultimately found it, as so many do, in their hobby. They loved wooden boats (think Chris-Craft, Century, Lyman, etc.) but couldn’t find insurance for them. (Wooden boats filled with gasoline are not exactly an insurance underwriter’s dream.)
So, they created it.
It turned out to be a stroke of genius. It wasn’t long before they were the national leader in insurance for wooden boats. That led to insuring what we now call enthusiast vehicles but back then were called classic cars. And that led to Hagerty becoming the company that it is today.
My advice to entrepreneurs: Make sure the niche you pick is small enough for you to take on with your available resources. Master it. Then expand from there.
Second, we built a powerful brand. As we were developing ours at Hagerty, we started with “twinkle in the eye” advertising to give us a certain cache and help us stand out. (For instance, one our ads featured a $23,000 tuna melt. Long story. Another featured a man talking about his fondness for cougars, both the car and human variety.)
But an experience I had at Nike headquarters helped broaden and deepen what our brand really stands for. During a meeting with the head of marketing, he told a story about an email that the CEO had sent around about a high school kid named Jason McElwain.
If you don’t recognize the name, you’ll certainly remember the video. In 2006, Jason, who is autistic, was the manager of his high school basketball team in Greece, New York. He loved basketball and had tried out repeatedly for the team but never made it. During the last few minutes of the last game of the 2006 season, Jason’s coach let him play, and the crowd went nuts. He missed his first shot but thereafter found his stroke, and ended up scoring 20 points. There wasn’t a dry eye in the gym, and Jason was mobbed.
The CEO’s email said something to the effect of: “I don’t care that he’s not a Nike-sponsored athlete. I don’t care that he wasn’t wearing the Nike logo, THIS is what we’re about – the spirit of sports – and we’re going to build the whole company around it.”
“We started with ‘twinkle in the eye’ advertising to give us a certain cache …”
That was an “a-ha” moment for me. I suddenly realized that I didn’t have to have celebrity spokespeople to successfully brand my company. I just needed to tap into emotions that already exist. And, guess what? People love cars.
So, we focused everything we do around cars. Cars, of course, are fun and evoke emotions. But they’re also central to American life. They are part of us and our personal histories. We realized that tapping into that deep well of emotion that people have for cars made our brand about something greater. Which is why, rather than talk about insurance, we talk about the joy of cars, period.
Our job, as we see it, is to help people get the most out of theirs. We provide them with tools to understand how much their collectible is worth, a world-class car magazine, cool videos (the Hagerty YouTube channel has about 850,000 subscribers), outstanding social media posts and forums, a way to rent cool classic and modern cars online (DriveShare) and much more.
In the past year, we’ve even doubled-down on our brand by making it our company’s mission to protect, preserve and celebrate driving in the coming age of driverless cars.
In short, we’ve found our “story” and our emotional bond with people. And that’s what I recommend entrepreneurs do, too.
“When an entrepreneur asks, ‘When should I start thinking about my company’s culture,’ my answer is ‘Day One’ …”
Third, we developed our company culture. When a young entrepreneur asks me, “When should I start thinking about my company’s culture,” my answer is “The best day was the day you formed the entity and the second-best day is today.”
Culture is that important. If there’s anything I’ve learned about business, it’s not just about how we treat the customer. It’s also about how we treat each other, and about how we learn and grow together. More and more, the best companies are about teams and that can only come from an active effort to build a collaborative and growth-oriented culture. Company culture is an operating system in a sense – a strong one will pay enormous dividends.
So, there are the three lessons I give to entrepreneurs who dream of scaling a business beyond the start-and-flip stage: Dominate a niche; build a brand based on existing human emotions; and focus early and often on your culture.
Get those things right and the sky is the limit.
McKeel Hagerty is CEO of The Hagerty Group, founder and co-owner of Grand Ventures, which invests in entrepreneurs building world-changing technology companies, and the former Chairman of the Board for YPO, the premier leadership organization of chief executives.