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How an unlikely trio in Detroit grew into the 4th fastest-growing inner city business in the country
If you told college freshman Alex Riley that he would one day open a staffing company, he probably would have laughed. Alex, who graduated from the University of Michigan in 2011, studied mathematics and engineering and spent his summers working for a friend’s construction company. Opening a business that specializes in recruiting, training and retaining workers wasn’t even close to being on his radar.
Fast forward to 2016, and Alex is now one of three co-founders of MeritHall, a business with more than $5 million in annual revenue and that was named the 4th fastest-growing inner city business in the country by ICIC and Fortune Magazine, the Chevron Dorothy A Terrell Community Impact Award Winner, and #165 on the Inc. 5000 list.
Like most entrepreneurs, the path that led to the launch and eventual success of MeritHall is paved with a mix of determination and circumstance. In the summer of 2010, Alex and his friend Patrick Beal worked on a residential remodeling job for the Detroit Housing Commission, which involved renovating 36 homes throughout the city. It was no easy task; most of the homes were uninhabitable and the renovations required highly skilled and specialized workers.
Individuals with the right qualifications proved difficult to come by. They asked friends and family for referrals. They tried using staffing agencies. Nothing seemed to produce the team of qualified workers needed. There had to be a better solution, they thought.
Alex took this thought back to school with him in the fall. He became intent on creating an online marketplace to connect construction companies with laborers that met requirements for specific jobs. “It was going to be like LinkedIn, but more automated and for people who were a little less tech-savvy,” he said. Alex pitched the idea to Paul Kaser, a friend and classmate who was in Germany developing reinsurance policies at the time. Paul took the bait.
It was an unlikely trio: Alex with a freshly minted math and engineering degree, Patrick a student of finance, and Paul, who was majoring in economics and German. Nobody had staffing experience, but all had worked in construction and were determined not to fail. Still, the online platform proved more complicated than expected and its development phase was slowing down the team. So, they pivoted. Instead, they opened a brick and mortar space in downtown Detroit where their new company, MeritHall, would provide staffing support for construction and landscape contractors.
The decision to open a business in downtown Detroit was no coincidence. At the time many who looked at Detroit saw deterioration, but Alex and his friends saw opportunity. Rents were low and entrepreneurs were encouraged to try new ideas. Whereas more established entrepreneurial enclaves like Chicago, Los Angeles and New York presented a crowded marketplace, Detroit offered somewhat of a clean slate. They jumped at the opportunity to be a part of Detroit’s revival.
MeritHall’s new office sat at an intersection where 30 minutes or more might pass before anyone would walk by. There were other challenges (like nowhere nearby to grab lunch!), but the friends were in it for the long haul. Their determination paid off, and the MeritHall co-founders realized early on that Detroit’s shortage of skilled laborers was really just a myth.
“Everyone always complained about the lack of skilled laborers, or would say that Detroit residents don’t want to work, but we’ve actually found the opposite,” Alex said.
This realization helped MeritHall evolve one step further. In addition to staffing support, the company also launched training programs to bridge the skills gaps that did exist. For instance, in 2012 MeritHall began offering asbestos abatement training because they saw how many job opportunities were available in the trade, and how few local residents had the necessary licensing. By offering the training, MeritHall gave Detroit workers an opportunity to move from entry-level positions into higher-skilled and better paying opportunities. Eventually, Merit Hall would spin off its workforce development arm into a new company, Detroit Training Center, overseen by Patrick.
The two companies – MeritHall and Detroit Training Center – now operate independently. But they share common ownership and continue to work closely together to tackle the gaps in skill sets at both ends: by upskilling local residents and then connecting employers with talent in the city. MeritHall has also recently expanded its services to provide local contractors with more expansive “resource management”. People are one resource, but in addition to finding, training and placing skilled workers on local jobs, MeritHall now helps contractors find equipment and materials.
“We solve problems that a typical contractor encounters on a daily basis. You perform the work on the job, and we’ll make sure you’re supported properly,” said Alex, who sometimes jokes that MeritHall is the only staffing company in the world that brokers road salt.