A maverick is an un-branded range cow or steer. It is also the name used for sports teams at Minnesota State University — Mankato. That’s where the Cringely Startup Tour stopped recently to visit Maverick Software Consulting and find out where’s the beef. This Maverick (the consulting company) has come up with an amazing business model for software consulting services — one that employs American programmers yet meets or beats the cost of using programmers in India or China. But it is much more than just a price-competitive service: Maverick Software Consulting also gives prospective technical employers a newer and better way to directly recruit good programmers.
Maverick was founded by Martin Hebig and Chuck Sherwood, both former Mankato students. As computer science students in the 1990s, both men worked part time for a partnership between IBM and the University. Mankato provided office space on campus and hired students to work for IBM testing the then-new OS/400 operating system. The students gained real work experience while IBM got its testing done for less money.
It was a good program that ran for several years, but then the faculty sponsor retired and with him went those IBM jobs.
“I always thought it was a great idea, ” Hebig recalled during our visit. “I wanted to figure out a way to get something like that rolling again. I had been seeing more and more companies sending work offshore when the idea came to me: why couldn’t we set up an office close to the University, hire students, train them and have the students do the same work that was being sent offshore? We could price the work about the same or a little cheaper, students would be in the same time zone and the company could hire the students when they graduate.
“I contacted one of my clients I had worked with as an independent consultant and they liked the idea. We worked out the details and opened our first office at Minnesota State University – Mankato. Four years later Maverick has a total of four offices (the other are the University of Minnesota, University of Wisconsin – Madison, and Iowa State University) and 74 student employees.”
This isn’t rocket science. The students are testing software, recording bugs, and doing middleware development mainly for a single client — Thomson Reuters. Reuters, in turn, has gone on to hire as full time employees more than 90 percent of the Maverick student consultants as they graduate.
Each consultant works approximately 20 hours per week during the academic year and 40 hours per week in the summer making $10-13 per hour. That amounts to an average 3000-hour tryout over two years for the would-be Reuters programmers. No wonder the company hires so many of them, because with that much exposure Reuters truly knows what it is getting.
Maverick isn’t hugely profitable but it is profitable… and has been since its first week of operation. Required capital has been minimal. Turnover is minimal, too, because these are often the best-paying student jobs on campus.
It’s a model Maverick hopes it can bootstrap across the nation, eventually having an office at every school with 150 or more CS majors, generating with a single manager nearly $1 million in annual revenue per office.
That‘s several hundred potential offices and a lot of pizza.
So how do you protect this great lifestyle business? With yet another refreshing business idea — honesty.
“We understand that any company could try and do what we are doing, ” Hebig continued. “Because of this we have transparent finances with our clients. They know everything about our business (cost for office space, cost for T1 lines, cost for students and the margins that we make, etc.) We show them that we aren’t making a ton of money doing this and that it would be difficult to do it much cheaper. Plus, we bring our experience, training and automated process that makes us very efficient at what we do. ”
While Maverick looks only marginally profitable on paper, the business has no debt, is completely bootstrapped, is keeping dozens — eventually hundreds — of jobs in America. And if they can scale the business the way they think they can there’s nothing that says the founders won’t soon be paying themselves a bootload of money while remaining mavericks — unbranded.