Bright Idea: From sustainable building to cannabis grow facility construction, Keen is seeing green
Call it what you want: hard work, dumb luck, the greatest called shot in recent Traverse City business history. No matter how you look at it, the story of Keen Technical Solutions is a fascinating one, full of big gambles, surprising left turns and evolution fast enough to keep up with the changing trends of a rapidly shifting industry.
For Tim Pulliam and Stephen Morse, who co-founded the company together back in the late 2000s, one of the secrets to Keen’s success is that they never defined specifically what the business was going to be.
Loosely, the foundational pitch was about bringing energy efficiency and sustainability to commercial and industrial clients. Over the years, that pitch has led to a lot of different services: LED lighting, HVAC improvements, building envelope construction, solar power, advanced control systems, and combined heat and power, to name a few.
As Morse recalls, the roots for Keen were planted around 2005 when he was teaching at Northwestern Michigan College (NMC) and coordinating skilled trades instruction spanning HVAC, construction technology, solar energy and more.
Introduced to Pulliam by a mutual acquaintance, Morse saw a kindred spirit who cared about the same technologies and energy trends that he did. The problem? Their passion, it seemed, was ahead of its time.
“Early on, we were teaching all those people about an industry that we were so excited to be part of: efficiency, sustainability, renewable energy,” Pulliam said. “All these people were coming in to be re-trained in these things at the college. And then we’d send them off, and there were no jobs for them to do. Because the industry just wasn’t behind (these trends). Everyone knew that it was a good idea to be thinking that way (about energy efficiency), but nobody was really selling those jobs.”
Eventually, Pulliam and Morse came to what was at the time the only logical conclusion: If they wanted a company in northern Michigan to offer jobs involving the types of skills and technologies they were teaching, they needed to be the ones to start that business.
In 2008, they filed the paperwork and Keen Technical Solutions was born. Morse took on the CEO role; Pulliam serves as president.
Fourteen years later, Keen Technical Solutions has served clients in 40 different states and, according to Morse, “produced over $150 million in energy savings”– enough, he says, based on EPA equivalents, to provide “all the electrical power for all the homes in the Traverse City limits for 20 years.”
Those numbers might lead to the assumption that Keen was a runaway success from day one, but the early years were rocky. Though Morse and Pulliam had been circling the idea of a company like Keen for several years, when they finally pulled the trigger, the timing was bad. The Great Recession was in its fledgling stages; potential industrial and commercial clients were suddenly tightening their belts and preparing for a long winter.
So Morse and Pulliam held onto their jobs at NMC and kept Keen going as a side hustle, saving money on office space by making Bubba’s their unofficial digs.
“We had them put in Wi-Fi for us so that we could meet people there,” Morse laughed.
For Keen, 2008 and 2009 were about staying afloat. One of the company’s first gigs, Pulliam recalls, was changing out 248 toilets at a Marriott hotel in Ann Arbor for high-efficiency alternatives. Other projects involved energy-efficient lighting installations, laundry machines, plumbing systems and HVAC.
Most of the jobs were small, with modest contract dollar values. Keen was, in Morse’s words, “doing anything we could to survive.”
Then, eventually, the two co-founders concluded it was time to stop hedging their bets.
“We decided in 2010 to finally just go for it,” Morse said. “We were thinking, ‘The market’s at a low, so we’ve got a lot of people we know out of work right now.’ And we offered everyone a job. We hired about 30 people and said, ‘We can’t pay you anything, but if you close a deal, you can make some money.’”
Soon, Keen “had 30-40 people running all over the state and talking to different manufacturers,” trying to sell the idea of investments in energy efficiency. But with the economy still in recovery mode, the business needed a new strategy to sell would-be clients expensive services they assumed they couldn’t afford.
“We knew we needed to develop a pitch that let people do the things that we knew they should be doing,” Pulliam said. “We heard so often, ‘It’s a good idea, but it’s not in the budget this year.’ Everybody wanted to hear about these new technologies, and this more efficient equipment, and these new strategies for reducing their impact, but nobody knew how to sell it to anybody.”
The solution Morse and Pulliam hit upon was simple but risky. Since clients weren’t willing to take on the upfront expense, Keen would go in and install energy efficient technologies on a no-money-down basis. The idea was that, as the client reaped energy savings by having more efficient, sustainable equipment, KEEN would get half of that dollar savings to pay for the project.
“We’d tell clients, ‘You’re going to pay for this project with your energy savings,’” Morse said. “’We’re going to save you $10,000 a month, and we’re going to take $5,000 of that to pay for this project.’”
The strategy, Pulliam says, got Keen’s “foot in the door.” More clients started saying yes. Contract sizes started to grow. In 2012, Keen landed at 60 on the Inc. 5000, which tracks the fastest-growing companies in the United States.
The company also scored its first huge project that year: A $900,000 contract with Cadillac Casting Inc. that allowed Pulliam and Morse to finally buy themselves a headquarters. That building, which Keen renovated and expanded, sits at 158 E. Front St. and is the home to Brasserie Amie – and soon, a second-floor indoor/outdoor beer garden.
The construction and energy industries have continued to evolve since 2012, and so has Keen. These days, Morse, Pulliam and their team aren’t just installing energy-efficient lighting or air purification systems – though, the latter saw a huge surge of popularity in 2020, due to COVID-19.
Rather, in the past few years, Keen has expanded into the construction management field, which entails a much bigger-picture approach than the company had in its early chapters.
Still, even as things change, Pulliam says the key to the business remains the same: Convincing prospective clients to think more about potential savings than about upfront price – and making them see that “the most expensive thing they could do is let us walk back out the door.”
In the old days, Keen adopted a gimmick of sorts to send that message: a ticker, connected to the would-be client’s electric panel, that would track the real-time energy savings they would have achieved with Keen’s proposed services. Working now as construction managers, Keen have even more opportunity to shape the perception of energy investments from a project’s outset.
“In the conventional construction process, usually you get a design, that design goes out and gets budgeted, and the owner decides if that budget works or not,” Pulliam said. “If the budget doesn’t work, then the architect goes back to all the subcategories and trades and says, ‘Well, we’ve got to work on this budget.’ And then things get cut out.”
Taking on a construction management role, Pulliam explains, gives Keen a seat at the table as those decisions are made – and gives the company a crucial opportunity to educate clients and change minds.
“We built this business around data of savings and cash flow,” Pulliam continued, “So when we apply that to a project and we start budgeting things upfront, if we realize a budget needs to be changed, we can bring (the client) multiple options and say, ‘Well, this can save you this much money right now. But over the lifecycle of the project, that decision is going to cost you this much money.’ Because clients, when you’re building new facilities for them, they usually end up having to base their cuts off how much money a cut saves. And what we want to be able to show them is how much that cut costs.”
So far, that strategy is working: when the TCBN sat down with Morse and Pulliam in late May, Keen had been closing one building project a week for five weeks straight.
The company’s contract sizes have grown quite a bit, too. Early on, Keen was pulling down $50,000-$100,000 projects. Now, Morse says the business is playing in the big leagues, regularly landing projects worth $5 to $10 million. Even with COVID-19 shutting down jobsites, Keen ended 2020 up 25% and is on track to double its sales in 2021.
Industry and general energy trends are also changing the nature of the work Keen does. In the past, Morse says industrial manufacturing, auto dealerships and cold storage clients have been the bread and butter for Keen. Currently Pulliam says the big thing is building indoor farming facilities for cannabis cultivation.
Because marijuana is still illegal at the federal level, commerce across state lines is prohibited even for companies based in states (like Michigan) where cannabis is legal for medical and recreational use. As a result, Michigan can’t rely on cannabis exports grown in other climates in the way it relies on other states for, say, fresh fruit during the winter months.
That conundrum is leading to a jump in investments for cannabis cultivation infrastructure, especially indoor growing facilities. Since cannabis cultivation and indoor growing are both energy intensive processes to begin with, Pulliam says Keen’s background in both building industrial facilities and implementing energy efficiency technologies has made the business a strong candidate for helping marijuana companies build out the industry.
A few years ago, Keen did its first cannabis-related facility. In 2021, Pulliam tallies the count at “probably a dozen cannabis facilities” in the works, which “could be half or more of our revenue this year.”
Other future trends will continue to change the game. Pulliam sees the cannabis industry’s investments and innovations in indoor farming spilling over into the broader agriculture industry, offering opportunities to “decentralize” food production and diversify the supply chain.
He also expects the growing adoption of smart technologies – and the resulting expansion of the “Internet of Things” – could write a new rulebook for energy efficiency, by allowing everything from cars to buildings to the power grid to communicate with one another and make AI-driven decisions about energy usage in real time.
Morse, meanwhile, predicts decentralization of the power grid in general. Solar installations and other renewable investments are already playing into that equation, but Morse says Keen is also working with clients to implement energy storage solutions on their premises. Those systems would allow clients to buy power during the night, save money by paying off-peak rates and then have their own power source to rely on during the day.
When asked how Keen Technical Solutions has the fluidity to touch so many different aspects of construction, energy, and sustainability – and to evolve so quickly, as trends change – Morse and Pulliam both agree on the answer: their employees.
“The team came to us very organically,” Pulliam said. “Most of them were not brought on at a specific time when we needed help, or for a specific role that needed to be fulfilled.”
As the company evolved, Pulliam says, either the “employees evolved because we were changing and they found a place to fit in, or if the company changed because of them.”
“But I think it’s probably more that the company evolved to fit the skillset of the different talent that we brought in,” he said. “The reason everyone is doing a really good job at doing what they’re doing is because we didn’t tell them what they had to do. And we didn’t tell them what Keen had to do, either.”
“We never, ever put it in our mind that we can’t do something,” Morse added. “And everyone who shows up to work here, they believe that exact same thing.”