Founded in 1999, Cornerstone OnDemand is one of the largest cloud computing companies in the world with over 22 million subscribers in 191 countries. The company, led by founder and CEO Adam Miller, provides talent management software to help companies train employees and identify who's earned a raise or promotion.
Cornerstone has played a key role in the LA tech ecosystem during the past decade. From their in-house accelerator to next week’s LA Tech Summit, they have created ways to give back to the community they helped create.
During his 16 years running the company from Cornerstone's Santa Monica office, Miller has witnessed the evolution of the LA tech ecosystem first-hand. We sat down with him to hear about his experience in LA tech and learn how he took a company from concept to IPO:
Cornerstone OnDemand is one of the earliest, most well-known companies in the LA tech scene. What was the original concept for the business and how did that change early on?
The very genesis of the idea was to leverage e-learning to improve access to education with the idea that the web would make it easier for people to learn new things. And the question for us at the time was, do you develop the content or distribute the content? We had decided, after watching the rise and the fall of the CD-ROM industry, that it was better to distribute than to develop, so we focused on building out a platform to distribute e-learning to adults. The initial idea was to aggregate all the online training that was out there and deliver it to adults who were either at home as individuals, a part of a small business, or part of a large corporation.
This was 15 years ago. Right after starting the company, the bubble burst. So we shifted our business to focus on the B2B side of things and started focusing on the large enterprise with the same idea that we’re going to take our e-learning content that we aggregated and deliver it to adults in large companies.
As soon as we started doing that, the companies that we were working with said, 'It’s nice that you’re doing this, but the reality is most of our training is still in the classroom, so if you’re going to help us move this online, you also have to help us with the training still in the classroom. And by the way, we do a lot of training on the job so you need to help us with catching that tacit knowledge that gets shared in a hallway or by the watercooler.’ Today, we talk about that as enterprise social networking.
And they would say things like, ‘We want to figure out who are the likely future leaders in the company so we can figure out who to give executive development training to.’ And that became the basis of our Succession Management. So really early on we were doing all these different elements of how to manage a person with the idea that if you understood how to holistically manage a person, you’d be able to more effectively train that person and develop them.
It sounds like you used a lot of your clients’ feedback to help guide the direction of the company.
I wouldn’t say a lot, I would say 100 percent. And it wasn’t just the early days, we still do this. We largely build our roadmap based on feedback from our clients. And what’s interesting about that is it seems obvious, but nobody does that — even though it is very intuitive that you would figure out what to build by asking the people you're selling to.
The result was that we ended up with a product and a platform that was very different from what anybody else in the space had. Everybody else was building siloed applications like a learning management system or a system to manage performance. It wasn’t until 2009 that people started to really ask for all of these things as one solution.
Early on, what we had was kind of confusing to the market because it wasn’t just one of those things. By the time we went public in 2011, we were a first mover because that is what the market wanted — a holistic solution. It was all the work that we had done with the clients early on that gave us a leg up and put us in a great position relative to everyone else.
The Cornerstone OnDemand team as of January 2015. What was the LA tech space like in when you started the company in 1999? How have you seen the ecosystem develop?
When I had started the company, the bubble had just burst and that generation of tech companies started to go away. There was no real tech in LA — the whole idea of the LA tech scene just didn’t exist. We put the company in Santa Monica not because there were a lot of companies in Santa Monica but it happened to be literally half way between where I was living and where my CFO was living.
It was very difficult to find tech talent. Developers were hard to come by, but it went far beyond developers — marketing people with experience in technology, sales people with experience in technology — really all of the roles that we might have were very difficult to fill across the board. Technology was not commonplace in LA in the early/mid 2000s, and we had to shift all of our hiring practices to hiring for potential instead of experience.
The other problem was that tech just wasn’t a popular thing to do. The general population would obviously go into entertainment or into real estate but nobody was going into technology. I like to say tech was not socially acceptable at the time.
It wasn’t until about 2012 that technology started to become a socially acceptable profession in Los Angeles. You started to see the rise of the incubators and a lot of startups forming. It wasn’t really until then that you started to really see the momentum in LA tech. You started to see a lot more funding coming here. You had the rise of software and tech companies outside of the Bay Area that were getting funded by the Bay Area VCs and doing quite well. That encouraged others to start companies and brought a significant rise in the amount of angel funding that was out there. So you saw a really big shift in the frequency and size of deals that were happening in the market.
Miller and other Cornerstone OnDemand Executives at the NASDAQ.
You went public in 2011 during a time when a few other big LA tech companies made the same move. Not all of them are doing very well. What lessons did you learn from your IPO and what words of warning would you have for growing private companies?
The key thing about being a public company is having predictable financials — being able to predict the future. So if you’re thinking about going public, you've go to test yourself. If you write down what you think you’re going to do at the end of a quarter, do you actually do that? How accurate are you in forecasting the future?
During the LA tech boom, how did you, as Cornerstone, aid the development of tech in the city?
We tried to help capitalize on this by doing a couple of things. At that point, we were already a public company and had already been successful, and we understood the importance of having a viable ecosystem. It helps with our hiring and branding, and so all of that ultimately helps us. We decided it was partially our responsibility to help drive that charge. And we did three things:
- Created an accelerator inside our office to help companies that had been incubated but weren’t quite ready for A or B round financing.
- Put our money where our mouths were and created an innovation fund. We put aside money off our balance sheet, which is quite sizable, to make direct investments into early-stage ventures.
- The third was the creation of the LA Tech Summit. This is not a Cornerstone event; it is really intended to promote the entire ecosystem. It was our belief that there were a lot of tech conferences in LA but there were no conferences about LA tech. We’re doing our third annual LA Tech Summit next week and we’ve seen a massive rise in the number of tech companies and the momentum of those companies in Los Angeles.
CardBox, represented by co-founders Rishi Roongta and Scott Hoyt, won 2014's Shark Tank competition.
What would the average entrepreneur or tech enthusiast gain from attending the LA Tech Summit?
First and foremost, one of the big issues in the LA tech scene was a lack of mentorship. There weren’t enough people who had been there and done that, so trying to understand that you’re part of a much bigger ecosystem where you can get help and support from others is critical to an entrepreneur being successful.
Being an entrepreneur is often a very lonely experience, and they should know that there are other people out there doing the same thing and helping. And what is relatively unique in LA is that the entrepreneurs are willing to help one another. There is a willingness to support one another because it is still relatively small and everybody benefits from the tech scene getting bigger in LA.
The second piece is making great introductions to investors, media, other entrepreneurs, and potential employees is really important at these events.
The third is that it is really important for an entrepreneur to benchmark themselves: ‘How are people being successful? What is success? What are lessons learned and what mistakes can I avoid?’
