A lot of people know Hagerty for its collectible car and boat insurance, but it’s fast becoming one of the largest communities for car enthusiasts in the world. CEO McKeel Hagerty joins Alex & Bryan to talk about his favorite rides, why driving will never die, and what events are still out there for car lovers during quarantine. Plus, hear what he really thinks about autonomous vehicles.

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Episode Transcript

Alex Roy

Hey everyone. This is No Parking. The podcast that cuts through the hype around self-driving technology and artificial intelligence. I’m Alex Roy. 

I’ve been a car guy my whole life and one of my favorite things to do on weekends is drive my dad’s old Porsche. Now he bought it in 1987 and sold it cause my mom got upset and I bought it back when he passed away. And to me, this is like a family heirloom and I vowed I would give it to my daughter someday, she’s only two, so she could enjoy it.

When I first heard that self-driving cars were coming, I thought to myself, ‘Cool. Why shouldn’t we use technology to make our streets safer?’ But then I heard this tech evangelist narrative about how self-driving cars were going to wipe out human driving and maybe even car ownership itself. So I thought to myself, ‘Why can’t we have some kind of middle ground? Like why can’t we have safety and freedom?’ So I registered the domain for the Human Driving Association and I put up a website and I got thousands of signups from people who are really, truly scared about losing their cars. And so I thought, you know, let’s get some press and let’s pitch to raise money from people who get it and see if we can’t get people behind us. Today’s guest is one of the most interesting people I met during those adventures, and I thought it’d be fascinating to bring him together with the founder of a self-driving car company who actually does love cars. 

Today my co-host, Bryan Salesky, and I are joined by McKeel Hagerty, the CEO of Hagerty Insurance, best known as the world’s largest insurer of collectible cars and boats. But more interesting, they have also broadened into media and events. And Hagerty’s, I think they have now the largest community of car enthusiasts in the world. Now a lot of companies try to say they’re a lifestyle brand because they sell jackets on their website, but there actually is a Hagerty lifestyle. And we’re going to talk a little bit about that today. So Hagerty is one of the most important voices, not only on the importance of preserving historic vehicles, but on how car culture will survive and thrive in the future. McKeel, thanks so much for joining us today.

McKeel Hagerty

Thank you, Alex. What a great introduction. Nice to see you and hear your voice. And hello, Bryan.

Bryan Salesky

Nice to meet you, McKeel.

Alex Roy

So McKeel, I think we have to start the show with this really great presentation you gave at the Petersen Museum a few years ago, which I recommend everybody check out on YouTube. And you open the presentation with a wonderful story about being at a conference and you’re checking out virtual reality headsets and looking at the future of transportation. And then you have an interaction with someone which I think had quite an effect on you. Could you tell us that story? And kind of, how did that guide your thinking?

McKeel Hagerty

Happy to. It’s kind of a funny one. And it was the spring of 2017 and I was in Vancouver at a big CEO conference. I’ve been a member of YPO for a long time and in fact I was global chairman of YPO, so getting to meet a lot of interesting people and going to hear a lot of cool stuff. But I was not familiar with the speaker and someone just told me, ‘Hey, you’re going to want to actually go from backstage out front and watch this. You’re going to be blown away.’ So I sat down at my spot and watched this speaker give quite a presentation on the future of the world, the future of cities specifically in an autonomous vehicle world. And this guy is a gifted presenter, a Walt Disney-esque sort of visionary and talked all about the benefits, both from an environmental standpoint, from an economic standpoint, from a city urban planning design standpoint. And then we did something that really was unusual. And in fact, we set a Guinness Book of World Records record, which is we got 1,750 CEOs all simultaneously with virtual reality goggles on, and this presenter took us through a virtual drive, ride if you will, in the back seat of, or we have been in the front seat, I guess, of some sort of autonomous vehicle driving through the future of a city. So it’s as much about thinking about cities and how we live as it was about the vehicles themselves. But it was stunning.

McKeel Hagerty

And in fact, about an hour later, I came up and actually presented him with his verified Guinness Book Record of the largest number of people simultaneously watching a virtual reality presentation. But this guy just blew my mind and I thought, ‘Hey, wait a minute. I’m a car guy. He’s kind of into cars. Well I ought to go meet him.’ And so I went backstage and I handed him my YPO Chairman card. And said, ‘Nice to meet you. Congratulations.’ I said, ‘Hey. Wow, that was an incredible presentation. But let me show you what I do for a living.’ And I handed him my Hagerty Business card. And he looked at it and he looked me square in the eye and without flinching just said, ‘I am so sorry. I’m going to put you out of business.’ And then he literally grabs my elbow and like leans forward a little bit and glares at me and says, ‘No, seriously. You have to find something else to do. I’m going to put you out of business. Everything that you think about the car world is going away. Those cars are gone.

That was… And I’m usually pretty quick on my feet. I like to think I’m quick on my feet. I usually have some witty retort or whatever, but I’m just thinking like what a jerk. And you know, he was… He really is… But he was such a good speaker. And then he gives me this whole thing. And I really didn’t know what to do. At the time, ironically, one of the next speakers up, and it was in the green room and I had to go meet, was the then CEO of Ford, Mark Fields. So I went backstage, and Mark had been a customer of ours for a long time and I knew him, and I’m like, ‘You wouldn’t believe what this guy just told me.’ And this dude over here and who’s got a big crowd around him. He said, ‘McKeel, it’s all hype. The car’s getting electrified first. And then it’s going to get easier to drive and more safe. Our world, the part of it that we don’t like, isn’t going away. But you got to listen for this.’.

Bryan Salesky

Wow, good for Mark. I can’t believe Mark said that, at that time period.

McKeel Hagerty

Right. 2017. Now he wasn’t there that much longer, as we know. This just rattled me. I went home and I… You know how like you have the rude comments somebody makes to you in a bar somewhere and it just sticks with you and you can’t…

Alex Roy

All the time.

McKeel Hagerty

All the time. Right? You and I probably both have some rude comments said about us. But I went back to my team and I’m like, ‘You know what bugged me about this? It wasn’t the substance of what he said. It’s that I don’t think our story was ready.’ Our story and what we think really the future of driving is, and the long-term future of automobiles that are human-driven. We may believe they’re there, but we’re not telling the story right. And it made me realize that, wait a minute, that the whole story of transportation and different ways of thinking about transportation, how people get around and how they live, it’s been filled with products and cars and cool things that we like, but it’s also been filled with stories. And this is just another set of stories that were emerging. And it, frankly, I mean, it just pissed me off, at first, that I didn’t have a response. I felt the guy was a jerk. And it really made us rethink what the purpose of our whole business was and what we’re all about. So now, for almost these three years, have been living with this very, very strong purpose to be the company that helps to save driving and car culture for future generations.

Bryan Salesky

I think it’s safe to say we don’t agree with the take that person had on autonomous driving or the future of mobility. I think your talk at the Petersen actually helps set the stage and people should view it on YouTube. We could probably provide a link to it. You do a good job of really describing car culture, which is something that, if you haven’t been part of it and don’t understand it, sometimes it can be a little bit difficult to explain. I think you did a really nice job of explaining it, and you summarize… You’re leading up to this through the whole talk, but you led the audience toward the fact that it comes down to spending time with people you enjoy spending time with and going through wide open spaces. And that this is actually like a novel… To say it that way is a bit of a novel thing, but it’s real. And it’s something we probably don’t do enough about. And I don’t know that we’re going to have that same level of enjoyment in an autonomous vehicle. That’s me personally saying this, as someone who’s dedicated his life to building it.

McKeel Hagerty

I don’t want to save the long commute. I want to save driving.

Bryan Salesky

It’s about driving when you want to, not when you don’t want to. Right?

McKeel Hagerty

That’s right. Well, I can’t imagine… You know, I was thinking about Tail of the Dragon, the great road down near Knoxville and down into that incredible 11 miles of one corner after another. You think of Highway 1. Or you think of Route 66. Or we have this great road in Northern Michigan, where I live, M 22. It’s like I don’t want to be driven around by, you know, a robotic car. I want to have my hands on the wheel. If I lived in LA and I had a long commute on the 405 or the 10 or whatever, I’d be perfectly happy sitting in the back of something, you know, on a tablet doing work or talking on the phone undistracted. To me, it’s two different activities that have been conflated in this discussion and forgetting the fact that, especially in the United States, we do have a lot of wide open spaces, and there are a lot of highways and roads specifically built for the purpose of driving for pleasure.

They weren’t built… I mean, in the cases of a lot of these roads. You know, there are huge tracks of Highway 1, when you get up in the middle of California, there are no homes on them, there are no roads on and off them. It’s meant for driving. Not just to pull off and take pictures. I see something different. And you know, what I tried to share in that talk, and I really appreciate your praise about it and please share the link if it’s valuable, is this idea that we love our new stuff and we love what the new stuff can bring to us. Like Alex talked about it, anything we can do to make the roads safer. But sometimes we love things not because they’re new. We love things because they bring other meaning and they actually have meaning. That are different than: Is it the most efficient? Is it the latest greatest? Is it whatever it is? And I’m sorta more fascinated by some of the technologies that aren’t the newest and the most modern or the most convenient or the most efficient.

Bryan Salesky

Well its just amazing how many products are having a revival. Like all of a sudden it’s cool to listen to vinyl again. You know, I wonder if it will ever be cool to have a flip phone again for some reason.

Alex Roy

It is cool. I have one, I just don’t use it.

Bryan Salesky

Come on. Really?

Alex Roy

No, it’s my dad’s. I have it on the shelf. It’s like…

Bryan Salesky

For what?

Alex Roy

Just look at. The tactile feeling of flipping it open, the way it clicks when it reaches the final detent, feels like quality.

Bryan Salesky

There’s something beautiful about the mechanical nature of it. Did you have a Motorola RAZR back in the day?

McKeel Hagerty

Oh yeah.

Bryan Salesky

The real thin one. Yeah. I loved that thing.

McKeel Hagerty

I was a texting machine on that when it came out. But I, you know, Alex, you and I talked about it, my Macintosh vinyl setup, it’s not the top, top everything, but to me it was a way to enjoy and slow down. Because one of the things when you go from not listening to vinyl anymore, to back to listening to vinyl is, a side of an album doesn’t last forever. You have to get up and do something. That measure of having to do that. I mean, I keep everything electronic in my life. I’m a very electronically… All my records, all my notes, I take notes diligently, but I’m a note taker too. And I like the feel of nice paper and the feel of nice pens. My joke, I think that I might’ve said it in the Petersen talk, is that there are a lot of people that enjoy brewing beer. I’ve just not had a lot of good home-brewed beer. I know there’s probably some, but it’s not…

Bryan Salesky

I’ve not either.

McKeel Hagerty

It’s the act of brewing the beer.

Bryan Salesky

It’s sometimes the process, not necessarily the result.

Alex Roy

Isn’t that the definition of ritual? Like the result doesn’t matter? Like one does a thing for its inherent… It has inherent value. There’s no end goal.

McKeel Hagerty

That’s, for me, the act of driving. And in fact, sometimes it’s the act of driving a slow car, not a fast car. Cause I have some fast cars and some that are terrifying. But sometimes it’s the act of driving a slow car, just kind of thoughtfully, in the moment, with presence, oftentimes with somebody I like spending some time with. And it’s just awesome.

Bryan Salesky

So one of the other things you brought up was actually the concept about, going back to car culture for a minute, that vehicles, what are considered to be antique or older vehicles, vintage vehicles, there’s a certain emotion passion that they communicate through their design. And something that was really interesting to me… We were doing some sort of media then and the Ford and the Volkswagen CEOs were there with me, and they get peppered with all sorts of questions from the media that aren’t even necessarily about the announcement at hand, just stuff about their business. And what was really interesting is somebody asked the Volkswagen CEO, they said, ‘Are we at risk of all vehicles looking the same in the future?’ Basically, is the character getting programmed out of the car? And I don’t think he or anybody really believes that that’s actually happening purposefully, but it was very similar to what you were describing, which is that how vehicles are designed today or in the future is very different than how they used to be designed. I’m just curious if you want to expand on that a little bit.

McKeel Hagerty

Yeah. I mean, if you think about the great automotive designs through history, as they were also trying to solve for mechanical problems or engineering problems, they had real designers, with a real sense of brand, who were trying to make things beautiful and not just outside the car, but inside the car. They were listening to the music of their day and the fabrics they used would remind you of different places that you might sit or you might live. I mean, there was a whole, I’m not a psychologist, but a whole gestalt about what they were bringing to their designs and what it meant. So if you look at some of the really cool cars from the fifties, and they had this sort of futurist view, and the way they were designed, they were meant to look kind of space aged. And they were about as far from space aged as you could possibly get. But it was trying to show hope and it was trying to show beauty in a way, or they were trying to be very, very smooth.

I happen to love cars from the thirties. I love cars from all eras. But I particularly love big, full classic cars, because there were so many things about them that were designed just not for any utilitarian purpose at all. It was maybe meant to convey wealth or meant to convey some other thing. I have a 1937 Packard 12 Convertible Sedan that is, you know… If you’ve ever been around a Packard from that generation, the fact that the engine is nearly silent when it’s running, not a lot of torque, doesn’t matter because the point is to convey this effortless movement. And the idea was for the owner of a car like that… And it’s not a Duesenberg, this was actually a little bit of a sportier car. This was meant to convey this idea of effortless movement and just beauty of this effortless movement and the way the fender lines work and all the different pieces to it. I was sitting in a 1941 Cadillac, driving it just last week actually, up here and the dashboard in that car, just the way that the gauges were designed to convey this sense of mechanical mastery. Remember, 1941 Cadillac, we were just about to get into war and they were so proud of the way they engineered the things into this car and the way the fender lines worked. So yeah, there was just a different sort of beauty and everything wasn’t meant to be utilitarian. I think some of the modern supercars, contemporary, today, modern supercars are truly beautiful. I truly think they are. But if you kind of squint your eyes, like they’re all starting to be shaped almost identically. Probably from like a wind tunnel, if you were to just scrub all the rough edges off of them, I bet they’re all within a pretty close mean.

Bryan Salesky

Yeah. If you combine all of the crash requirements with the aerodynamic requirements with all the other things that we’re trying to do around weight in fuel economy and just goes on and on and on. Right? It does start to push the designers in a direction where there’s only so many solutions, kind of, that meet all those attributes. And that’s why they start to look a lot the same. I think one of the things though that’s a misnomer, is that just because all those things are important doesn’t mean that the consumer though doesn’t care, doesn’t care about the design. And I think the other part is, even if they’re hailing a vehicle instead of owning a vehicle, I still think there is a large population of consumers out there who actually do care to some degree what they are climbing into.

Now, it may be a little bit different than before. You pointed out it was, for some people, it was maybe important to show off wealth. Right? And that was a cultural thing at the time. Right? I think now maybe it’s less about that, but it could be more about: Do you trust it? Do I feel that it’s safe? Do I feel like it’s going to take care of me and my family? Is it easy to get in and out of? There’s a bunch of attributes. Product design evolves, but I don’t think it ever gets to a point where it’s somehow irrelevant.

McKeel Hagerty

Of course. Well, I’ll give you an example. Also before the pandemic, I happened to be at another conference in Moscow and then St. Petersburg and had a chance to visit the Carriage Museum there at the Kremlin. Some of the most opulent, crazy horse drawn carriages, you could ever imagine. I mean, gilded things beyond imagination. And I had seen pictures of some of these or seen elaborate horse-drawn carriages in England and in other places, but nothing, nothing even remotely close to those on display there. And I was kinda thinking to myself, as I was walking around, and someone was asking, ‘Well, what do you think about this McKeel?’ And I’m like, honestly, in an electric vehicle world and an electric vehicle world around cities, if you really wanted to show your wealth off, you’d start making stuff to look more like this again. Because, you know, four electric motors or two electric motors or whatever it is you had to do and a great source of power. If you really wanted to show off that you were rich, that’s the way to do it.

And by the way, you wouldn’t be worried about speeds and things like this, because you’re sort of envisioning being around a city, especially around a city center, you don’t need to worry about speeds or even that much weather in a lot of ways. So when people say, ‘Are you worried about the future?’ I’m like, ‘I’m worried about the imaginations of future designers.’ Because if you really wanted to show off that you were special, or if you think of a Westworld season three version of one of these cars that picks you up, why not really make it fancy? I mean, if you’re going to make it interesting, make it interesting. Don’t just make it look like the same jelly bean that just drove by you. I mean, I do think modern car design has gotten pretty plain. And the only reason you can tell some of them apart is just the badge on the side of it.

Alex Roy

So I’m curious, McKeel, have you actually ever ridden in a self-driving car?

McKeel Hagerty

Actually, one of the experiences I had kind of early was, I was on kind of an advisory board for awhile that was connected with Stanford’s early experiments with self-driving vehicles. Remember they had the Audi TT?

Alex Roy

Yup.

McKeel Hagerty

And I was able to kind of experience that car firsthand. So this was like way before anything that you’d even see today. And obviously I’ve had some of the, you know, I guess if you could describe it, I call it heavy-driver-assisted-modes in a Tesla or something like that, of course. Nearly died in one of those early on. Which is why when people said, ‘Oh my gosh, autonomous vehicles are coming!’ I’m like, have you ridden in one of those things? Like it’s not ready for primetime. I mean, it might be ready for Fifth Avenue or, like very limited things. And maybe they’ve just gotten an awful lot better. But I was not, I was actually scared to death in a Tesla. And I think Tesla’s an amazing car company. I’m proud of what they’re doing.

Bryan Salesky

The innovation there is impressive. I think turning customers into test drivers is maybe not the best strategy in our view.

McKeel Hagerty

Hey, we are the product. In the digital world, we are all the product. Right? My experience in some of the other platforms is fairly limited and I look forward to riding in it more, because I know it’s part of our future and I’d like to understand it better.

Alex Roy

Bryan, can you arrange that please for our friend?

Bryan Salesky

We can arrange that. Yeah. We’re not bringing it to Traverse City, but if you want to come down to Detroit or to Pittsburgh, we’d be happy to host you.

McKeel Hagerty

With the weather we’re about to have up here, I would not want to be in a…

Bryan Salesky

It is a good place for some snow testing. That is for sure. Yeah. Lots of lake effect, I assume.

Alex Roy

I’m curious McKeel, because I actually have no idea. I’ve never asked anyone this question before, because I didn’t know if anyone could possibly answer it. Maybe you. What was driver education? What did that look like in 1915 or 1920?

McKeel Hagerty

Well, it’s interesting. I remember talking to… Cause I have a 1915 Model T, which is somewhat similar to, I guess my great grandfathers. And I remember asking my grandmother what driver’s education was like. I actually asked her. And they actually took the train in from this little town into Traverse City, which is also a small town, and he bought his Model T. And they literally just showed him how to start it, where gas went, where he put water in, and that was driver’s education. They shared with him how it ran. They did not show him how to drive. And my grandmother said that it was kind of at a period of time where not only was he a terrifying driver, there really weren’t a lot of rules. And so he would just, if it was faster to go around the inside of the corner on one side of the road, that’s the way he went. And when you think about some of the really horrific early probably fatalities and injuries, it was just, that was the problem back then. So virtually no education. And I can tell you, when you drive… I actually decided as an experiment, and I think it was 2018, I drove that 1915 Model T for an entire month as my daily driver. And it’s a crank start, so it’s a hand start car. You have to center yourself before you do that every day. Let me just say that you don’t just like run in and jump in if you’re in a hurry. You have to…

Bryan Salesky

My grandfather told me this story, when he was in Ireland, they were, I guess, considered middle-class and they were wealthy enough to have a car. And the cool thing to do on the weekend was to take a trip, but it didn’t happen every weekend. And I remember asking why. And he said, “Oh, well, because basically his father would say, ‘Hey, let’s go take a road trip if you can get it started.'” So they would go out and crank it and crank it and crank it. And if it was kind of like winning the lottery, if it started up and then they’d go take a trip.

McKeel Hagerty

They are interesting. We have a very early Motor Launch. My parents were into wooden boats and that had an electric crank start originally from 1906, and then it was re-powered in 1915. And I swear, my dad almost had a heart attack a couple of times trying to get it going. So we electrified it. We actually put in an electric motor.

Bryan Salesky

Was this a Chris-Craft by chance?

McKeel Hagerty

No. It’s an early, early Motor Launch. Just kind of a one-off thing. But we have a couple of Chris-Crafts. I grew up water skiing behind a 1954 Chris-Craft that I still own.

Bryan Salesky

Those are beautiful boats. They really are. They’re just gorgeous. I know they’re under new management now, but they still, even to this day, the new ones are just… They really sparkle.

McKeel Hagerty

Elegant. Really elegant.

Alex Roy

So I’m curious about the, I guess, where Hagerty is going as a brand because I’ve been a customer for a long time and I’ve been getting the magazine forever. But I’ve also subscribed to pretty much every magazine about cars that exists and read all the websites. It wasn’t apparent to me at least two, three years ago, that car culture grasped that technology was coming and that things were going to change. And I certainly didn’t see any of the old school magazines coalesced in your communities around the lifestyle. Again, they were just selling t-shirts and jackets. You bought several events in recent years and had began gluing together, actual real world pieces with the brand. Can you talk about that strategy? When that started and why?

McKeel Hagerty

Well, thank you. Thank you for noticing. I know you’re very astute at this Alex. You know, you’d be hard pressed to find a… I don’t like calling the vintage car world a hobby, I think that undersells it. So just call it an activity, a pastime. If you were to take anything that anybody uses as a sort of pastime, an activity of interest, there are really only two large categories that had their own big embedded media that went with them. Obviously sports in general, particularly professional sports, but also amateur sports, especially stick and ball sports in places like the United States. But the other was automotive almost from the beginning. Motor sport. And then, other car magazines that were primarily kind of the counterpoint point counterpoint to the manufacturers to have things to talk about. And so, we have a rich tradition, particularly in the United States and in the UK of automotive magazines just being part of our lives, right? It’s the way people bought things. It’s the way they got interested in them.

I found it very interesting at the advent of the internet age, of the connected digital age, everybody made the first assumption that the internet is just going to immediately take over all of automotive media. And what happened actually couldn’t have been further from the truth. There an interloper and that interloper was cable television. I mean, yes, there were websites and companies created websites and they tried to do things, but it was like brochureware. It really wasn’t media in a lot of ways. And so what happened is cable television became the big hot property and you had Speedvision early on. And then you had other networks, cable, television networks kind of getting into the space. What happened is a lot of the old properties, I think because the business model, particularly in the United States was this weird combination of being very advertising driven and then the price of subscriptions were just kind plummeting really down to where they became immaterial. When you could get two or three years of a magazine for less than $10, and they’d probably send you a hat and a toolbox and a flashlight and a tire gauge at the same time. So what that tells you is that those are failing business models. They are business models that are failing, and that are very, very difficult to sustain. And you just have to look at a financial crisis and now a pandemic and its financial crisis to see how that can negatively affect this great, rich automotive media tradition.

And I guess I had kind of watched this happening. Kind of like a slow motion car wreck, sorry for the analogy. And I realized that if I want to do what I want to do, like really save driving, it’s going to take millions of people. It’s going to take millions of eyeballs and millions of engaged people, still doing cool, fun stuff, but they had to engage with a brand that was really focused on trying to go out there and save driving and car culture for future generations. So I knew we would have to create our own media properties, in the form of magazines, in the form of whatever is sort of cost appropriate, digital and video properties that we could get going out there. So we’ve had a magazine for a number of years. I think now from an audited circ standpoint, I think we may be the second highest circulation car magazine of any car magazine in the world now. Hagerty Driver’s Club. All you’ve got to do sign up to be a member and get it. And we are pretty, bullish on it. We’ll probably be launching two to three more titles within the next two years, just in different categories. We’ve now kind of reached a point where you can’t just keep giving it to more people. You’ve got to start segmenting it differently.

The events go with it too. I mean, events are an important part of our world. At Hagerty, we activate or sponsor about 25… Non-COVID year, so this is all non-2020. We activate usually about between 2,500 and 3,000 car events around the world now. So we’ll have team member there doing stuff. And I love car events. I’ve been going to them all my life. But they’re all really financially challenged. Even the big auto shows, as you’ve seen, so many changes happening around big auto shows. Some of them getting canceled, some probably permanently. The smaller events that people may think are large. They’re really small because they’re either run by volunteers or just don’t make a lot of money. I realized like, oh my god, the very way that I need to get my messaging out is all based on failed business models or business models, maybe not fail, but seriously challenged. And so I knew we would have to create the rails to get the message out in a lot of ways. And I’m not saying you can’t just Google somebody’s blog or whatever, but that doesn’t count as a media property really, in and of itself, to me. And so that was a big strategy around it, which is gotta have a big mouthpiece. You want to create a big message, gotta have a big mouthpiece. And so no one was going to give us one and you couldn’t advertise your way there because it was, again, challenged or failing. You know, think of the number of big car magazines that are just kind of a shadow of themselves.

Bryan Salesky

I was going to say, it’s so interesting that you’re increasing the number of properties you’re putting into print. And so many others are getting rid of the print because the subscription model is just totally failed. And I guess what you’re saying as well, you’re basically funding this with a much different business model, which is insurance.

McKeel Hagerty

More of an ecosystem. They’re going to have opportunities to go to events. Some will be free. Some will be user pay.

Bryan Salesky

It’s a lifestyle brand. It’s a whole set of tools that you need to really maximize your enjoyment from owning an automobile.

McKeel Hagerty

Bingo. Yeah, that’s exactly right. Build a whole ecosystem that people can pay to play as they want to pay. But you can’t just all of a sudden start lowering your prices to the floor and hope for the best, because that’s what happened in automotive media world.

Bryan Salesky

The other thing you said, that’s also interesting to me, is the insurance space, you said there’s really going to be two models that will develop. One is it’s something that you buy, which is what it is today. But then it’s also gonna come in the form of a warranty. Tell us about those two models and sorta which one’s appropriate for which use case.

McKeel Hagerty

Yeah. So if you think about a car today, a non-autonomous car, when you go to insure that car, that insurance covers the car and it covers you. Okay. The driver. Like a big part of it, you know, the physical damage portion of the policy covers the car and the car. And that happens whether you run into something or whether it burns up in your garage somehow randomly. Because your house insurance policy won’t cover the car in the garage if the house burns down. Some people make that mistake. The liability coverage on that policy covers you hurting somebody else, or you damaging somebody else’s property. Pretty simple. Right?

So what do you do in a future where some of that liability shifts to the programmers programming the algorithms that are gonna maybe keep us safe, but aren’t going to keep us perfectly safe? Nope. Not a chance. Cannot keep us perfectly safe in any condition. And so where does the liability shift? It’s going to shift back to the manufacturer. Right now, today, a manufacturer or the programmer, whatever, however far you go back. And so, I think ultimately what you’ll get in a future world is… You know, right now when Alex insures his Porsche, it’s insuring him and his activity. It’s the car and his activity in it. In the future, you’re gonna end up with some sort of hybrid coverage where you may still have to buy a little bit, if you put your hands on the wheel, and to cover your car, your investment in the car, your purchase price minus depreciation. But in the future, the manufacturers and / or programmers, really whatever that ecosystem looks like, they’re going to have to have coverage for the choices that they make and the code. And that’s going to look more like a warranty. It’s going to be built into the purchase price of your car, most likely. And it’s going to have to be offered through the manufacturers. It’s kind of the only way.

And so when people who have been… Back to my example back in Vancouver, where the guy said, ‘I’m putting you out of business and, by the way, insurance companies are going out of business.’ I’d be like, ‘Hold on, champion.’ You know, for one thing we have a long way before that ultimate scenario could ever happen. Decades and decades and decades. It’s going to be a hybrid model for a long period of time. And just like I’m sure you’re finding, Bryan and Alex, you’ve seen as you’ve looked at at the automotive world for a long time, it’s very similar in the insurance world. If there is one thing that is scary is, if you’re a mouse dancing with elephants, is be careful dancing with elephants when they’re scared. And you’ve got a lot of scared elephants out there. And they have ways of stomping on mice, even if they’re mice with really good ideas. So the big auto manufacturers are not going to just go away and hand it all the Tesla and the handful of disruptors, they’re going to be part of the mix. Some of them are. And same thing with the insurance companies. They’re going to be in the mix. They’re just going to have to change what they sell.

Bryan Salesky

Yeah. I mean, in a highly automated world where the first applications will be fleets, the insurance will be business to business. You’re not going to be necessarily selling to the rider. Right?

McKeel Hagerty

Yeah. The weird thing about the insurance world, and I do not want to bore anybody on your cool podcast here with insurance. There’s this weird, sharp, bright line between insurance sold to individual people and insurance sold to businesses. It’s almost like two different things altogether. That’s going to get blended together in the future. It will have to.

Alex Roy

McKeel, the concept of a hybrid insurance model is predicated on, in the future, after a phase where we’ve got robotaxi fleets, privately owned vehicles that have steering wheels and an optional autonomous mode. So it sounds to me, based everything I’ve read of yours and watched that you can’t wait for that to happen.

McKeel Hagerty

It’s going to be absolutely awesome. Especially if they’re all electric with a lot of juice. Because if there’s anything that I’ve learned, and Alex, you may have a different view of it, but I think torque is what makes fast cars fun. Right? And there is no better way to get torque out of cars than electric motors. So now you don’t get noise in the same way, but you get a lot of torque. So I think that’s going to be the world long into the future. You know, my number one hope and my thinking is, is when the geniuses like Bryan, who are going to design our future, is to make sure that you remember that there are other things on the road other than robotaxi fleets. Because there are going to be vintage cars that don’t stop as well. There are going to be bicyclists who do stupid things. They’re going to be pedestrians who are out there, who also can do dumb things. And how many times do you see somebody of a certain generation just not look both ways when they’re crossing the street? And imagine what that’s going to be like in the world of nearly silent electric cars. That’s going to be interesting.

Alex Roy

There are a lot of media stories suggesting that young people do not want driver’s licenses. And there are some metrics attached to that that I don’t find entirely convincing. And recently a counter story suggested that the reason they’re not getting licenses is because they’ve been priced out of fun cars and cool cars. You have research on this. Can you talk to us about what you’ve found?

McKeel Hagerty

Of course. Well, the data was definitely undeniable that young people are getting their driver’s licenses, the data from the last 10 to 12 years, have suggested that they’ve been getting their driver’s licenses later. And if they live in cities, in many cases, not at all. Because if you live in a big city, which is where, by the way, until COVID-year young people go to find themselves. Right? It used to be that you’d go find yourself, I don’t know, maybe at a zen monastery, which is what I would have done, my generation. Now young people go to cities to find themselves. Well, you go to New York out of wherever, you don’t need a driver’s license. I get it. Think about when this data was collected. It was collected during the period of years immediately following the financial crisis of ’08 and ’09. And young people were coming out of college or coming into their college age in a period of time when they couldn’t get work, everything was more expensive and certainly cars were becoming prohibitively expensive. Purchasing the car, gasoline maybe was or wasn’t expensive, parking, if you lived anywhere that you had to pay for parking, insurance. So we priced them out. And so it was an expensive convenience that they had to avoid in the same way that many of them were living away from home or in some cases having to move back into the home that they grew up in. And I get it, you can joke about it, which people do, and probably everybody has a little bit, but it’s just the truth. So what’s interesting is you fast forward now, 10-12 years later, and those same people are no longer 22, they’re 32-33, and again, COVID-adjusted, making real money, doing things. They’re driving. And I’ve heard the same jokes. It’s like, ‘Oh, these were the generations that their mom and dad drove them to soccer practice and they just thought, I guess their mom and dad would drive him to work every day too.’ That’s a nice, convenient joke to say, but I think it’s primarily economic. I really do. Or that urbanization trends that maybe reversing itself.

Alex Roy

If you look at things like the RADwood, which I guess I’d call it the Greenwich Concours for modern classics. I guess that’s the…

McKeel Hagerty

It’s 80’s. Its definitely 80’s. These are my peeps, right? Like this is my generation back when I had hair.

Alex Roy

Ours too. And so RADwood has grown enormously. Is that the future of car enthusiasts? Are those people, Hagerty people?

McKeel Hagerty

I think what happens is purists reject the next generation of cars as you’re sort of moving through. I remember when I was first getting involved in the car world professionally, it was most fun to make fun of cars from the 1970s. Because, after 1972, they had no power, they were in what were considered kind of ugly colors, they just weren’t, many of them, very good looking. And then you get up to a more modern era, and I’m removing the RADwood 80’s-era stuff and early 90’s-era stuff, suddenly the 70s became kind of cool. It was as much about the 70’s as anything. And the browns and the oranges and the golds and all those color cars became interesting. Right? They’ve become this hipster revival car. Maybe the Burt Reynolds Trans-Am not withstanding. I mean, that just stands all on its own for what it is as a unique vehicle from the 1970s. By the 1980s, fast forward, manufacturing volumes were going up like this. And it was also the period of time when cars from the coasts were making their way, very United States focused… Suddenly Toyota Supras and things like this, weren’t just something that you’d see in LA. You were seeing them all over the place. And they were sporty cars, they were pretty reliable for their day and yes, they maybe had plastic that fell off of them all over the place. Some of those great import cars. But I think it took an event like RADwood to suddenly give permission for people from that generation to say, ‘Oh, you mean that car was cool? Yeah. I always thought it was cool. I just didn’t think it was as cool as something else.’ And no, you don’t have to buy a Ferrari or you don’t have to buy a Shelby GT 500 to be cool. Those cars are cool too. But RADwood just made them cool for that crowd.

Alex Roy

The thing I love about RADwood is people are not only suddenly getting into these cars that were not expensive new, and they’re not expensive now, but they’re showing up in the outfits of the year of the car, and they’re playing music of the year of the car. And now it starts to become something about… It’s about the people much more than the car. And the relationship the people to the car. That’s the lifestyle thing that is now becoming real that that I love so much.

McKeel Hagerty

Hey, there is nothing like a Ford Probe with some Whitesnake bling.

Bryan Salesky

I think that was high school. I think that was high school, Alex.

Alex Roy

Does that mean that 15 years from now or 20 years from now that the autonomous vehicles that are coming in the next few years will become classics and there’ll be a market for those?

McKeel Hagerty

I’m sure. I’m certain of it. Think about it right now, maybe not full autonomous, but would you buy a Model S and just kind of put it out there and say like, ‘Hey, I think a Model S Tesla belongs next to a 7 Series BMW, or maybe an AMG Mercedes, similar price point. Right? Like in that range. You kind of have to sit there and say, every AMG 55, I’m not talking even about the supercharged motor. You could sit there and go, ‘Wow, that is one heck of a car for 28 grand or 19 grand or whatever they are today. It’s a Mercedes-Benz. The doors go clunk, and they’re kind of quick. Right? I think you have a little bit of a history in the AMG…

Alex Roy

Well, my condition of having a collectible like that would be that I have access to the manuals. Like what I would want, Bryan, I don’t know if you can even speculate as to the feasibility of this, is being able to 25-30 years from now, if I could buy a collectible autonomous vehicle, I would want to have it… I want to be able to service it myself if it could operate in a very limited area, like say my neighborhood.

McKeel Hagerty

Well, let me offer an example. So Gordon Murray, the famous designer of the McLaren F1. Right? I don’t know if there’s a bigger guru of a certain era of, many people consider the greatest modern supercar ever built. The McLaren F1. And I had this interaction with him where I asked him about the future collectability of the F1, which was kind of collectible and highly sought after from the day they first rolled off the line. But he said their mission early on was to build a car that 60 years, for whatever reason, he said 60 years in the future, long after we’re gone, that a typical restorer could work on the car using typical tools. And so what his criteria was, and I’m just saying, couldn’t use exotic materials, couldn’t use something that’s not easily fabricated and couldn’t have complicated electronics. So here’s where he went wrong. Okay. The one exotic material that’s in the McLaren F1 is it’s this weird gold foil windshield thing that defrosts. Okay. So that nobody’s going to know what to do with 60 years in the future. He used very little injection-molded plastic because his fear was the only way to make injected-molded plastic parts was tooling, which is expensive and when the tooling is used up, it’s gone. Well, what have we come up with since then? 3D printing. So you’re gonna be able to 3D print any part. So problem solved. And then complicated electronics. Cause he went on and on at that point, he said, ‘Think of some of these cars these days.’ Now this was 10 years ago. And he says, ‘Think of some of these cars. The transmission computer. And it would cost $2 million to program.’ I’m like, ‘No, it wouldn’t Gordon. Like a twelve-year-old could probably download some emulator off of an FTP site right now and have that thing functioning perfectly and maybe better than you could program it the day it came off the line.’ So, we think about the future through our lens today. But think about it, everything he was concerned about has been solved by a technological means, for what it’s worth.

Alex Roy

People are very, very innovative. Everyone that says, ‘Oh, automation is going to replace people.’ And yet people always seem to find a way.

McKeel Hagerty

They find a way. You know, I’m interested in a project. I have a high-school-aged daughter, and, she wants to somehow explore maybe somehow in the future doing something with the business. And I said, ‘Well, okay, what are your concerns? What do you think about it? You’ve grown up around some pretty epic cars, so you’re not going to start there, young lady. I’m sorry, we’re going to have to start with something simpler.’ And clearly she said, ‘My generation is becoming much more environmentally conscious. So I want to think about that as an aspect of it. And then just, are they going to find certain cars cool?’ And we just started noodling around with the idea of maybe picking a cool vintage car and buying one of the, pretty much off the shelf, electrification packages. Just to see like, ‘Okay. So if I took this car that some of your friends might not find it cool now for certain reasons, but what if we put an electric drive kit in it. Would that make it more palatable?’ And so it’s just fun to have those conversations. And people are pretty clever with this stuff. It’s not just Neil Young and LincVolt, after all. It’s Bryan. And he’s going to change our world for us. He’s going to change my mind.

Bryan Salesky

It used to be considered sacrilege to put an air conditioner in your classic car. Okay. In fact, there’s some folks that will… Restores who will refuse to do it or almost outright refuse. What you’re talking about is even more incredible, which is replacing the entire drive train with an electric skateboard. That’s interesting.

McKeel Hagerty

Well, they actually have these cassettes that connect right to the transmission.

Bryan Salesky

That they do.

McKeel Hagerty

You can replace the, behind the seats are some batteries, up by the gas tank are some batteries. In a Volkswagen, for example. My view of that is this. I kind of look at the schools of thought around vintage cars two ways. There’s classical music and there’s jazz. Okay. So classical music is that you restore and preserve things according to a standard, right? You learn and you train and you study. You’re preserving a standard of some sort of history that’s kind of known and generally has been repeatable over time. Modified cars are like jazz. There’s improvisation, there’s fun in it, usually there’s some sort of performance, ego-driven. Right? You know, like showmanship associated with it. And so just call it. That’s the difference between the traditional muscle car scene and the hot rodding scene. Like just two different worlds. Jazz. Classical music.

So we have a long history of re-powering cars and putting bare motors in them, souping up the motors, doing all sorts of stuff. So what’s the difference if somebody puts in an electric drive system? I get it. I don’t want to see an autonomous Aston Martin DB4. But you know that group over in the UK that was doing a DB5 cassette kit that you could just plop in. Probably the range was terrible. Doesn’t matter. Most people don’t need much range. And you put the beautiful straight six on an engine stand next to it in the garage so you can admire its beauty. I don’t find that… If that’s what it takes to get the next generation to do stuff.

Bryan Salesky

Yeah. So be it. Right? So be it. Hagerty released its fourth annual bull market list of enthusiast collector vehicles that are poised to increase significantly in value over the next year. I could not help but to notice that the thing that was up in my bedroom wall, for sure, when I was growing up and that was the most beautiful car in the world, to me anyway, was the Ferrari Testarossa. That thing was, I mean, everybody. Every kid was talking about that car. I mean, everybody. It was just something that’s like impregnated in my brain, that vehicle. I see now it has made it onto the list.

Alex Roy

And it’s only $108,000. What are you crazy?

Bryan Salesky

Only. And I can tell you if I were to ever get one, I sure am not putting an electric skateboard in it, McKeel.

McKeel Hagerty

Don’t need to.

Bryan Salesky

No.

McKeel Hagerty

Don’t need to. That’s right. Now, it’s really fun how this list comes together every year. So this is a really combined effort. So Alex, you talked about all the different parts of the Hagerty world. We have, in addition to our media and content, we have this whole valuation and market insights team. They’re really a bunch of data scientists, and really car experts way beyond me. And they get together and they look at a bunch of different sources of data, a bunch of different things, trends that they’re seeing out in the market. And they put this list together of things that are just really rapidly rising in interest in different parts of the automotive world. And we don’t price limit the bull market list. So this isn’t meant to be about million dollar cars. We do have a pretty expensive car, two pretty expensive cars on the list this year with the Ford GT and that brief limited run back in the day. Obviously I think has gotten a huge lift of interest after the Ford versus Ferrari movie. The Lexus LFA, which, for those of us who are fans of Lexus, I was kinda wondering why it was under-appreciated and now they’re totally being appreciated. Yeah. The Ferrari Testarossa is on here. I think the most interesting couple of trends though, are the more vintage off-road style vehicles. You have a Land Cruiser. There’s a Jeep on here. And then ultimately the Volkswagen van. The Westfalia, in that case. I had an ’89 Syncro, which was the four-wheel drive Volkswagen van, which was the quirkiest vehicle I’ve ever owned in my whole life.

Bryan Salesky

Did you ever make use of the four-wheel drive feature in the Syncro?

McKeel Hagerty

I drove it. It was my grad school car in Boston. And because of that forward driving position, you could parallel park that thing like crazy, and then go and try to go camping and freeze to death in it on the weekend. So it was really a lot of fun.

Alex Roy

The LFA, you’re valuing the car at well over half a million dollars. And then this VW van, again, you’re valuing it somewhere in the $30-$40,000 range. But if you polled a group of children and you put those two things side by side, the kids would tell you that VW van is worth a million dollars.

McKeel Hagerty

Course.

Alex Roy

So where does this LFA value come from? And the VW value come from? I thought you were a data-driven company. I saw your presentation that you have come up with a super secret sauce algorithm to crunch all the data on all the VINs in America or the world, I guess, to figure this out. How were these two things data-driven? These values?

McKeel Hagerty

Clearly we’re not polling school children. I mean, by your question. We’re not polling school children to see what they think they’re worth. No, this is actual market data. So these are the values we’re seeing from a transaction side. But what’s not behind the number of, in terms of the dollar, is the volume interest. So what the bull market does and why we created this list is it’s not just, ‘Oh. Hey, here’s a car and it went up in value.’ It’s that the volume of inquiries of people either trying to insure them, trying to buy them or looking at values in our value databases or that we’re seeing for sale otherwise with asking prices that then we asked for. So just by order of magnitude, in our insurance and membership world that’s in North America, just under about 2 million vehicles. So we see a lot of transactional volume flow through people buying, people selling. And we collect all of that data. And it’s absolutely fascinating. So yeah. Pretty wild that the LFA has now appreciated that much. Which makes it very, very rare because, for those who follow Japanese performance cars, while there is a greater interest in them, there are very few that have ever really pierced up into the six figure, multiple six figure value. So pretty remarkable. And the Volkswagen van, this is the camping scene, right? I mean, this is all about… I don’t know if you’ve had any friends or talk to anybody who’s gone to try to buy a camper or a trailer this year, but COVID has been great for the camping world.

Bryan Salesky

Yeah. In fact, I know someone who’s on the board of one of those companies and they were trying to figure out last year this time, how to offload this part of the company where they just weren’t selling. They didn’t know what to do. And now they can’t keep up with the demand. They can’t make them fast enough.

McKeel Hagerty

They’re sold out. I mean they’re just sold out. Waitlisted. Certain models and all sorts of… Crazy.

Alex Roy

McKeel, have you, since you have gone down the path, I guess, of verticalizing automotive lifestyle and expanding into events and media, have you heard from the guy from that conference who said he was going to put you out of business?

McKeel Hagerty

Yeah. I did. I ran into him a couple of times. Well, I think Bryan, you might’ve had some experience with the same individual. Here was… There was one little side part of the story that I didn’t share earlier. And that was, two weeks after that first time he told me he was putting me out of business, the company sold for $15 billion to Intel. So yes, it was Mobileye and the founder’s name was Ziv Amiram. He’s one of these inventor genius types. He’s also obviously a wealthy business guy. But he does a lot of work in vision technology. In fact, the last time I saw him, they were developing a pair of glasses that were wired to a computer case that helps visually disabled or visually impaired people be able to actually read. Cause it would translate and it could recognize people and do facial recognition. So full props to him for… He’s an inventor genius type. But he admits maybe he was over-inflating his story about the instantaneous destruction of any car with a steering wheel, that he was certain would happen by 2021.

Alex Roy

I thought you were going to say that you heard from your staff that he had tried to insure his new collection of classic cars with Hagerty.

McKeel Hagerty

Ferrari GTO or whatever. Just my luck.

Alex Roy

Well, McKeel Hagerty is the CEO of Hagerty. Thank you so much for joining us today. It was absolutely terrific.

McKeel Hagerty

Really my pleasure gentlemen. You know, you’re both doing really cool stuff in the automotive world. The future is going to be so exciting, both for autonomous vehicles and for driver cars. And the more autonomous vehicles we can have that takes congestion out of cities, is going to leave more room for me out in the countryside. And that’s all I care about. So I can go out and drive and enjoy myself. Wide open spaces. That’s right, Bryan.

Bryan Salesky

Very good. Thank you McKeel.

McKeel Hagerty

Thanks so much guys.

Alex Roy

Well, that was awesome. I love talking to McKeel Hagerty. Such a fascinating guy. If you dug today’s episode, please hit us up on Twitter @NoParkingPod. Of course I’m everywhere on social media, but especially Twitter @AlexRoy144. Please share No Parking with a friend. Like us. Subscribe. Give us a good review wherever you listen to your favorite podcasts. This show is managed by the Civic Entertainment Group and our producer is the awesome Megan Harris. 

And of course my friend, Bryan Salesky is the CEO and founder of Argo AI. 

Until next time I’m Alex Roy, and this is the No Parking podcast.