And enjoy?

That’s the approach McKeel Hagerty, CEO of Hagerty Inc., took. When Hagerty was a teenager, his parents started an insurance company in their basement that specialized in insuring wooden boats. While specialty insurance sounds as “niche” as you can get, the family business was built on the idea of slowly expanding geographically while leveraging specialization to focus on its customers.

“Like many family companies, even as a kid you work in it,” Hagerty says. “I realized early on that heavy-duty customer focus was what really differentiated us.”

While in graduate school, Hagerty decided to take a break and spend what he thought would be a couple of years working in the family business. But then he never left.

He had used lawn-mowing money to plant an apple orchard that helped him buy his first car, a 1967 Porsche 911S he found behind a nearby barn that he then restored with his dad. A lifelong love of classic cars was born.

And so was a business idea.

“Car people love their cars,” Hagerty says, “They’re kind of a unique tribe, and there are a lot of them out there, and they have needs that are different than the rest of the car world. I figured if we could act more like a car club, like a community for them, the insurance stuff would take care of itself.”

Rather than spreading horizontally into “normal” car insurance, or home insurance, Hagerty focuses solely on insuring classic and collectible cars. That approach was reinforced the few times the company tried small horizontal expansions. Their Net Promoter Score in classic/collectible car insurance was 82, approximately double the industry average. Its NPS score in other areas was in the 40s.

“If you try to put a 42 NPS experience in an 82 NPS company, it’s like organ rejection,” he says. “That’s one of our criteria for when we go into something. Not is it a good idea, but can it be done well. And if it can be done well, then I like our chances, because we’re all about executing.”

“Specialization” is also a somewhat misleading word; last year $3.4 billion in collector automobiles were sold in North America through online and in-person auctions alone. Hagerty estimates auction sales account for 10 to 20 percent of collectible car sales, implying the total market is worth around $30 billion. And according to internal research, over 60 million Americans consider themselves “car enthusiasts,” owning over 40 million collectible vehicles with a combined value of roughly $1 trillion.

Which means there are a lot of collectible cars to insure. But servicing customers first means attracting customers.

“If you want to be a leader in a category, you need to have a real stake in the intellectual high ground. We started on the valuation side: data is so rich now, especialy as we’ve grown, and the opportunity to create a data-based resource was big. On the media side, we decided there’s still a place for high-quality content, and the results prove that thesis: our magazine (Hagerty Driver’s Club) is the second-highest circulation car magazine of any kind in the world.”

Hagerty has also expanded — still within the collectible car insurance field — into events. While that doesn’t sound “core,” it actually fits. Whether at major car shows, club car shows, or car and coffee events, car people gather. While not a major revenue driver, events help build community.

Those three pillars — valuation, media, and events — help build customer loyalty and referrals through service and relevance. “Building a business that way is a long, patient process,” Hagerty says, “but once you get the snowball rolling downhill, it’s worth it.”

The numbers prove the premise. Hagerty revenues increased by 26 percent in 2020, 24 percent in 2021, and in 2022 were up 28 percent at $787 million.

That doesn’t mean Hagerty, as a business, doesn’t face challenges. A generational shift has occurred in terms of car interest; the company’s goal is to create on-ramps to car culture. A consistent growth rate of 18 to 20 percent per year is also a challenge in terms of infrastructure; this year alone Hagerty expects to add 250,000 additional members. Partly that growth is due to the fact Hagerty partners with conventional insurance companies.

If your core business is insurance, there’s always an incumbent insurer who already has that business. Gaining clients means taking clients.

“What I realized is that we should partner with those companies,” Hagerty says, “and help them.That was a big unlock. Our first parnter was Allstate, and they knew they couldn’t serve this tiny segment of their customers well, but they didn’t want to lose the whole account. Rather than compete, we partnered: you don’t know this as well as we do, you’ll struggle with value, you’ll struggle with claims… so let us help you serve them.”

“We decided we would do this one thing really well, to be the crown prince of Lichtenstein,” he laughs.

“It just turns out that Lichtenstein is a lot bigger than we thought.”