It’s crunch time. Your out-of-state employer just announced the division you lead will be shut down in a matter of days. You have a family to support and a mortgage to pay. What do you do? After all, you had helped design a software product that is being used in some of the top health plan companies in the country. You feel the need to keep them up and running, and you know in your heart you can sign on more customers.
So, do you try to convince the company that is shutting your division down to hire you back as a consultant? Or do you try to convince your largest customer to keep the company afloat through a transition that makes you president? But wait, will the employees stay on board through that risky process?
Dan Maynard has been in this situation and made these decisions. Twice.
“My first business in the 1990s was formed out of a group of people losing jobs,” Maynard said. “With the shutdown of the company after an acquisition, five people started a business by consulting back to the company which laid everyone off.”
Maynard is currently president and chief executive officer of Waukesha-based Connecture Inc. He has taken the same product through four different companies to achieve what Connecture is today.
He did not set out to become an entrepreneur, but it all started with the first company downsizing in 1996.
Maynard and his colleagues formed Computing Concepts Inc. (CCISoft) in 1996 as a consulting business to keep their jobs and their product while attempting to sell it on their own in the marketplace.
Maynard and his team were developing InsureConnect, a Web-based software application designed to improve efficiency for health plan companies by offering sales automation, quoting, rating, enrollment and installation, underwriting, policy administration and renewal.
After steady growth, that company was acquired by Boston-based benefits administrator Workscape Inc. in 1999 and branded as the iSolutions division. By 2001, the iSolutions division was losing $250,000 per month, and Maynard received the news that the division would be eliminated.
Maynard was managing about 40 employees in the Waukesha office and did not want their years of research and development to go to waste.
To save their jobs, he needed to create a new company, sign on an existing client and acquire the iSolutions assets from Workscape within a matter of days.
The Workscape board meeting to make the decision was supposed to happen on Sept. 11, 2001, in New York City, but was canceled because of the terrorist attacks. As the company contacted and accounted for all of its New York City-based employees over the next few weeks, Maynard was trying to save his team.
He persuaded one of his largest clients to continue on with him in the new company, called Riverwood Solutions.
“Conventry Health Care agreed to prepay to keep us in business and agreed to fund our checking account to offer job creation and payroll,” Maynard said.
Because Workscape was no longer interested in spending money on InsureConnect, Maynard was also able to acquire the assets of the iSolutions division and move forward with the same product.
“I approached the employees with the termination letter from Workscape in one hand and an offer letter from Riverwood Solutions in the other,” Maynard said. “I did not lose one employee. For the most part, employees love the fact that we took control of the company.”
Maynard stabilized Riverwood Solutions and made the company profitable through a re-branding effort. Once health plan companies understood the application and what it would allow them to do, they were sold on it, he said.
Riverwood Solutions generated profits of $1,000 in its first quarter, which was actually an accomplishment for the group that was accustomed to losing $250,000 per month. Over the next couple of years, Riverwood Solutions grew from 38 employees to 50 employees. When Maynard sold the company to its competitor, Connecture, in 2004, Riverwood had revenue of $4.5 million and profits of $800,000.
Maynard sold Riverwood to Atlanta-based Connecture, because where Riverwood lacked capital and a strong administrative team, Connecture had it. Where Connecture lacked research and development and innovation, Riverwood had it.
The acquisition was complete as of July 2004, and Maynard took over as president and chief executive officer in October. When Maynard took the reins of the company, Connecture had $15 million in revenue, but had multi-million dollar net losses.
“I had cash flow positives by Dec. 1,” Maynard said. “There was a leadership in place that could take advantage of the market position and solidified that company around one product, one message, one brand.”
Since the beginning of 2005, Connecture has increased its revenue by 55 percent and is approaching $30 million in revenue with 200 employees.
Connecture continues to grow in customer base and revenue with a change in focus from serving 10 of the top 20 health plan companies to marketing to the 500 broader, middle-tier companies.
Most of the original Riverwood employees are still with Connecture today, Maynard said. He attributes that to being able to grow with a small company in its beginning stages and a dedication to the innovative software being developed. But those employees also had to trust Maynard and believe in his entrepreneurial skills to take the risk of losing two jobs within a few months.
“The big thing is that this is an entrepreneurial company so people feel like they are part of it in a much stronger sense,” Maynard said. “This is a high-tech profession, and anyone could get another job at anytime. We instilled a belief in the company.”
Now with offices in Waukesha and Atlanta, the company culture has changed from everyone knowing Maynard well and speaking with him on a daily basis to some not having met him at all. It is the brand that is important to the continued growth of the firm, he said.
With software development, employees understand that they are part of the lifeblood of the company, Maynard said.
“Revenue growth is from your contribution to the innovative software,” he said.
Connecture Inc.
Address: N17 W24222 Riverwood Drive, Waukesha
Industry: Software development
Leadership: Dan Maynard, president and chief executive officer
Employees: 200
Revenue: About $30 million
Web site: www.connecture.com
Vital Factors:
• When your business is changing, earn the trust of your employees to have faith in the evolving mission.
• Know your limits. Share responsibilities and know when to ask someone else to take over.
• Understand what customers are asking for and what they are going to ask.
• After mastering one niche market, penetrate another.
