Cliff Schertz decided that Mexico was a better spot than India to locate his software start-up. Here's how he got it going in record time.
SOUTH OF THE BORDER: Mexico has been making investments in knowledge workers and software engineers since the early 90s in an attempt to give the country a competitive advantage over India and China.
If you think starting a business in three weeks, let alone doing it in another country, is impossible, then you haven’t met Tiempo Development CEO Cliff Schertz, an Arizona-based entrepreneur, who somehow managed to pull it off.
It all started around 2005, when Schertz was still running his software company, Camisa Technologies, out of Tempe, Ariz., and outsourcing development to India. Like so many other entrepreneurs, Schertz turned to India because it was the obvious choice for getting high quality, low cost software built. It worked well in theory, but the past few years had revealed that the logistics of crossing an ocean to build products for clients was not easy.
Schertz was looking for another way when he attended a conference by the Arizona Technology Council. The focus of the conference was Mexico.
"They were trying to get people in Arizona to realize they could do software development just south of the border, instead of across an ocean," Schertz remembers.
He listened to representatives from Mexican universities, software organizations, and economic developers talk about the investment Mexico has been making in knowledge workers and software engineers since the early 90s. It’s an attempt, they said, to give the country a competitive advantage over India and China.
Schertz was intrigued, but it wasn’t until a full year later that he decided to go check the country’s progress out himself. It was February 2006, and Schertz had just landed a $250,000 contract for a very specialized type of software; he had three weeks to get his developers trained on the project. The idea of opening a development facility in Mexico and pulling out of India had been lingering in the back of Schertz’s mind for while. This new project, he thought, could be a fresh starting point, so he decided to take a trip south. There was only one problem: Schertz didn’t speak Spanish.
"I grabbed my mother-in-law, and said, 'Pack your bags. I need an interpreter,'" Schertz says.
Together, they traveled to Hermosillo, Mexico and met with members of the government, including Juan Cardero, secretary of the economy for the state of Sonora. He arranged meetings with universities, real estate agents, and lawyers to see if it would be possible for Schertz to set up a company on such short notice.
"They all said they didn't think anyone had done it before," Schertz says, "but they were willing to try."
It was a busy three weeks, but Cardero did everything he could to get Schertz’s business up and running. He found Schertz office space, computers, phones, resumes for qualified software engineers, and a classroom at a local university where Schertz could hold training sessions.
But it wasn’t all that simple; Schertz faced the same steep learning curve every entrepreneur, who tries to open a foreign outpost faces. For starters, employment law is vastly different in Mexico. When a person is terminated, the company is required to give them three months' severance, even if the employee has been working less than three months. Interviewing wisely, therefore, is crucial, since laying employees off can get expensive. Invoices must also be delivered on paper, and because the mail system is less reliable, payments must be either picked up or delivered in person.
"You can’t use your U.S. way of thinking in Mexico," Schertz says. "There are certain things we take for granted, but there are things they take for granted, too."
By the time the three weeks were through, Schertz had hired four engineers and was ready to start training them. He registered the company, which is based in Tempe, under the name Tiempo Development. Months later, the government offered Schertz a $50,000 grant to hire more engineers, and so Schertz did, upping his employee count to 12.
Tiempo grew quickly, enabling Schertz to sell Camisa in July 2007. This year, the company came in at No. 342 on our Inc. 500 list, growing 975 percent over the last three years. Customers, Schertz said, seemed to really prefer getting their software built closer to home. "Being right next door makes a big difference in our ability to deliver software to our clients quickly," he says.
What Schertz is most proud of, however, is the impact his company has had on the local economy. Tiempo is now home to 125 employees, almost all of them based in Mexico, and their salaries, Schertz says, are about four times the industry norm. "This is the first company I've had that has cool social ramifications," Schertz says. "Our biggest problem is finding enough parking spaces for all our people. That’s a good problem to have."