Profile Of An Entrepreneur: Adam Miller, Founder of Cornerstone
I want to tell a story about an entrepreneur, and in the process tell you the story of an industry: the industry of online learning.
It All Started in 1998
The Netscape Browser was launched in 1994, and within four years (1998) a cottage industry of online learning had begun. Internet bandwidth was spotty, video was difficult and expensive, and most of the content was built with Flash, which required complex programming. But the potential was there, and lots of us saw it coming.
In fact, John Chambers, the CEO of Cisco, famously proclaimed that “e-learning is going to make email look like a rounding error.” So Cisco, one of the internet darlings, developed their own “reusable learning architecture” to help push the industry forward.
I was working at a startup at the time (Arista Knowledge Systems, long gone) and we were building an online learning platform of our own. As we ran out of money and the 2000 crash started, we wound up selling the company to DigitalThink, which was a publicly-traded online learning company in San Francisco. I led product management and marketing there for about a year, and was later laid off.
Meanwhile, down in Los Angeles, an entrepreneur named Adam Miller was working with his friends Steven Seymour and Perry Wallack to also enter the space. So Adam and I essentially grew up in this business in parallel.
How E-Learning Really Started
E-Learning was a very big deal. While most companies weren’t very good at building content, there was a lot of money thrown at the space. When I left DigitalThink and started working as an analyst, my first few years were dedicated entirely to helping companies figure this out. (Here is our 2003 website.)
Why was it so hot?
The answer was simple: we had a major recession in 2000 and 2001, followed by the 9/11 disaster. Companies stopped travel and extraneous spending, so online learning was the best way to save money (sound eerily familiar?).
As companies rushed to put training online, they realized they needed a platform to put it into. This was the birth of the LMS or Learning Management System. Companies had “training management systems” to schedule classrooms, but they didn’t have systems for online content. So Adam and his team focused in this area.
The leader in the early days was Saba, a fast-growing software company located in Redwood City. Saba was founded by a hard-working Oracle engineer (Bobby Yazdani), and they focused on building the most robust, scalable management platform for enterprise learning management. In fact, I’d say Saba invented the real “enterprise LMS” market.
I studied Saba during my time at Arista, and we believed the product was elegantly designed but over-engineered. We were partially right and partially wrong. It turned out Saba’s complex architecture for training administration, compliance processing, e-commerce (in Saba courses were called “products”), and reporting was badly needed. So Saba won over many large clients, and the company became the market leader.
As Saba grew the company acquired the #1 provider of virtual classroom technology (Centra) and continued to build out content management, reporting, and analytics. I actually worked as a contract product manager during my first few years as an analyst (helping build Saba Analytics) and got to know the product. It was very rich in functionality, highly configurable, and very complex.
Enter Cornerstone And Many Others
It’s important to realize that the online learning market is massive.
Companies spend more than $250 billion on corporate training, and every year new technology moves more of it online. As the chart below shows, every time a new technology enters our consumer life, someone starts figuring out how to use it for learning. So platform vendors like Saba and Cornerstone have to constantly keep up. (It’s not a market for the faint of heart.)
When Adam Miller and Cornerstone entered the market (around 1999), there were vendors like Saba, Docent, Click2Learn, Pathlore, Learn.com, and others already in place. Each had a slightly different product set (Saba was for big enterprises; Docent was for channel and sales training; Click2Learn was for content developers; Learn.com was for smaller companies), forcing Cornerstone to “pick its space.”
Cornerstone (originally called CyberU) was conceived as a content company, so Adam, Steven, and his team focused on the content experience first, then later built out enterprise features. Saba and the vendors had been selling licensed software products, so Cornerstone differentiated itself by naming itself CornerstoneOndemand – promoting the fact that CSOD was “built for the internet.” (A position which Workday has used for years.)
The first time I met with Adam (at a trade show in the mid-2000s) he showed me how the functionality was quite advanced, and he told me how frustrated he was that all these competitors were “overselling what they had to offer.” I told him that this was true and that his real problem was not the product, but rather the need to focus heavily on sales and marketing. He listened to me carefully and within a few months hired Julie Norquist Roy to head marketing and then later Dave Carter (ex-ADP, now president of SmartRecruiters) to lead sales.
Things began to take off: Cornerstone started doing bigger deals. (Read about Adam’s sales and marketing transformation here.)
Out Flanking The Competition
As the market grew, the number of competitors increased. Saba had gone public and was continuing to grow, flooding and the with flashy entrepreneurs. One company in particular I liked was called Learn.com. It was founded by an ex-private wealth advisor and his brash marketing and sales turned them into a $100m player (then acquired by Taleo, which was later acquired by Oracle). But the most interesting company of all was an east-coast company (different breed from Santa Monica) called Plateau.
Plateau was founded by Paul Sparta, a serious entrepreneur who built a product that could “out-Saba Saba.” And he did just that. Plateau was a cleaner, more elegant system than Saba and he nailed the market for pharmaceutical and financial regulatory training. PeopleSoft tried to copy them but could never get it together, so Plateau became the leader and was eventually acquired by SuccessFactors (and then later SAP).
Adam was very savvy about these trends and one of his big gambles was to move from “e-learning” to what I call “talent-driven learning,” essentially adding a module for talent management. I wrote the original Cornerstone research paper on this topic, and I felt like we were sticking our necks out. It ended up paying off well and Cornerstone took the lead. Saba had also built a performance management product, but it was over-engineered and the Cornerstone “learning and talent” platform started to take the lead. Cornerstone went from one of the leading LMS companies to the first-ever LMS company to sell integrated performance management.
Behind all this effort, Adam was calling the shots. He was driving the product strategy, making sure the company closed big deals, and hiring a strong management team. I was always amazed at analyst meetings how the Cornerstone team seemed more integrated, aligned, and committed than almost any other vendor I met. The company hired Vincent Belliveau to run Europe (one of the best sales and marketing execs I’ve come across), they went public in 2011, and the company started to pull into the lead.
Entrepreneurship: It’s A Brutal But Exciting Game
Now let me talk a little about Adam Miller the entrepreneur because in many ways Cornerstone is a manifestation of his personal strengths and ambition. (My father was an entrepreneur, so I grew up in this lifestyle.)
For those of you who’ve been a CEO or started a company, you know that it’s probably the most challenging thing in the world (a tiny bit less challenging than being a parent, but close).
You have to understand the market, have a vision for a successful strategy, hire great people, and drive or cajole people to move in the direction you believe will work. And every day there’s a competitor, surprise, or some disaster to get in your way. You have to remain calm, think clearly through a lot of uncertainty, and be very good at ruthlessly deciding what “not” to do.
In the case of online learning, Adam faced a lot of difficult barriers. Not only was Saba well established, but companies like Plateau, Click2Learn (which had merged with Docent and Pathlore to become SumTotal), PeopleSoft (who tried to build an LMS – Heidi Spirgi who worked on this is now leading marketing at CSOD), and Oracle (who now owns Learn.com and has a built many LMS products of their own) were all well along.
And wanna-be’s were always jumping in. Cisco made a feeble stab at it; Google built some prototypes; IBM built an LMS (IBM used Saba internally but also developed their own), and vendors like Kenexa (now absorbed by IBM), and most other HR software companies were building something. And I’m not even mentioning ADP, SuccessFactors, and eventually SAP and Workday.
Adam understood all these changes, and he was able to pivot and adapt in amazing ways. Early on the company partnered with ADP, which let Cornerstone grow fast. Later they acquired Evolv (to advance their analytics) and built out a new technology stack to scale. When Workday entered the market, Cornerstone became their best friend. And during all this time the company kept building out more features and hiring better and better salespeople to help the company grow.
What most vendors find out is that Learning Management software is incredibly complex. I often believe that there are more lines of code in the LMS than most of the rest of the HR suite. (Workday is now learning this the hard way.) Not only are there a myriad of business rules to automate, but you have to manage content, develop assessments, manage user pathways, and deal with e-commerce, customer training workflows, and … well it goes on and on.
Adam Miller understood all this. He was not only the CEO of the company, he deeply understands the product (Adam was the “chief product officer”) and he understands product-market fit.
The Next Act: The Whirlwind of Talent Management
As the talent management market grew, Adam drove the company toward feature expansion. Cornerstone built out its recruiting product, advanced its analytics engine and reporting, and continued to add features in other areas. By building everything itself (most competitors were buying other companies), CSOD had the benefit of “the only organically built integrated suite.” And this story helped the company grow.
But there was something else going on too. Online learning and talent software looks great during the demo, but it doesn’t always get used. So Adam and his team decided to focus on customer success, and they pivoted in a direction competitors didn’t understand. They built out a customer success and consulting team.
Leveraging his strengths in leadership, Adam hired Kirsten Helvey (I believe she was running service delivery). Kristen understood this well and then hired Frank Riccardi (another executive I worked with at DigitalThink) and they built out the Client Success Framework and focused on all the gritty issues of “how do you help companies implement talent management.” And this helped the company grow again.
While the market became even more competitive, what I think Adam did exceptionally well was to position CSOD as the “specialist leader” in integrated talent management. Other vendors were buying up companies, creating what we always called the “Frankenstein Model” of software. CSOD was an end-to-end internally developed system, and while it wasn’t as functionally deep as Saba or Plateau, it was easy to use and easy to sell.
Another innovative idea was the introduction of Cornerstone HR. As Workday become more prevalent, customers started to ask “why do I need Cornerstone if Workday is kind of close?” Adam and Vincent decided to do an “end-around.” They built a payroll and ERP integration layer and started to position Cornerstone as the “HR System of Record” that consolidates lots of disparate HR systems. While not all companies want this solution, it’s far cheaper and much more reasonable for companies in Europe and highly fragmented businesses. This is the type of entrepreneurial thinking that always kept Cornerstone on the edge.
The company went public, continued to grow, and expanded its footprint around the world. Adam hired senior sales leaders in all major geographies, he built an entire range of resellers and partners, and evolved into a mature global enterprise software company.
Adam Miller Continues To Lead
While all this growth continued and Adam stayed very busy (including dealing with the 2008 recession), I was always amazed that he had time to talk with me.
I’d mention that there’s a big market for something new, he would carefully listen, and then a few months later he’d show me a prototype and a marketing plan. For a guy running a multi-hundred million dollar company with thousands of employees, I was pretty impressed. Few entrepreneurs can scale this way.
Most CEO/Entrepreneurs flame out at some point. Most start as product leaders (Elon Musk, Steve Jobs), and then at some point bring in other leaders. In my case, I never wanted to build a huge company so we kept our company self-funded and then sold to Deloitte once I had around 100 employees. In Adam Miller’s case, his ability to scale was impressive.
Many of Cornerstone’s competitors (Saba, Plateau, and others) had product-centric leaders, but they tended to fall down in sales, marketing, or hiring the right team. Succeeding as an entrepreneur is a bit like schitzophrenia: you wake up one day worried about deals, the next day worried about competitors, and the next day worried about the product. You have to be able to synthesize all three of these problems in your head at the same time – Adam was able to pull this off.
One of the most pivotal changes in Cornerstone’s life was the birth and growth of Workday. Workday, founded by many of the smartest people from PeopleSoft, knew how to build everything Cornerstone had done. But they decided to put learning off for a while. Adam could see them coming so he became their “most-preferred” partner for LMS. For many years I think Cornerstone’s growth was directly tied to Workday.
Adam knew this partnership would eventually end, but he was savvy enough to understand that growth was the goal, and once Cornerstone got a customer it was hard for them to switch.
Fast Forward to Saba
Many things have happened in the ensuing years, including the disruptive growth in the LXP market (which has stymied Cornerstone a bit). But perhaps the most important next step (which led to the Saba deal) was Adam’s realization that “profit” was now the goal.
As most of you know, when companies grow quickly the market values growth over profit. Investors pay high multiples for a fast-growing company, expecting that over time they will “dominate” a market and profits will come later. Well as the LMS and talent market got crowded (and slowed down), Cornerstone’s investors started to tell Adam that they just wouldn’t value the company as a growth company anymore, and he had to start making money.
So once again Adam started a new strategy: a new focus on recurring revenue growth at ever increasing profit. It turned out that the Customer Success Framework, while a great strategy to make customers happy, was diluting the profits of recurring revenue. So several years ago the company shut down its services business and hired consultants to “clean up the operation” to become more efficient. In one of my meetings with Adam he laughed and told me “we don’t even consolidate our hotel rooms or airplane and travel expenses. We can save a lot of money around here.” That was a new part of our conversation, and once again I saw how agile his mind could be.
Over the last few years, Adam has been dogged with the LXP market, which more or less caught him by surprise. I told him this was a real threat but he thought it was an easy product to build, so they just “launched” an LXP for free. Customers didn’t really grab hold of it (the LXP players are turning into full-fledged learning platforms now), so Adam took notice. Right before the Saba deal, I spent a day with their team and they have a vision for something quite new and creative (leveraging the acquisition of Clustree).
But along comes Saba and Adam once again pivoted to the future. Saba, which had been merged with Halogen (leader in mid-market talent software in Canada), Lumesse (recruitment and learning content in Europe), and dozens of other companies, had become a profitable, PE-backed company and had re-engineered Saba Cloud so companies were starting to like it. Phil Saunders (the new CEO of Cornerstone) had effectively cleaned up Saba’s expense structure and focused the company on “user experience” at its core.
Bobby Yazdani, the founder of Saba, was a brilliant engineer and marketing executive – but always thought about “database and system first” and “user experience second.” So Saba was elegant to administer but hard to use. The new versions of Saba started to become easier to use, more reliable, more intelligent, and customers decided to renew. And thanks to Phil’s hard work on the business itself, Saba was making money.
Adam saw an opportunity.
His vision to become the world’s biggest and bestest company in learning could actually be realized. Let’s buy Saba.
I was fast asleep in Europe when it was announced, and I remember waking up in the middle of the night and writing an article about “the Innovator buying the Pioneer.” And that’s what essentially happened.
This is what successful entrepreneurs do. They see the future and they act on opportunity.
While the idea of Cornerstone acquiring Saba may sound odd to some, I immediately saw what Adam was doing. Now, as the biggest company in learning technology, he had the financial strength, engineering team, and market reach to really lead the market. Yes, there are a lot of product issues to address, but now Cornerstone could act like Oracle or SAP – do big things and lead the market in a new direction.
Adam Miller Decides To Move On?
Which leads us to where we are. Cornerstone (plus Saba) is now the largest corporate learning technology company, with the biggest L&D development team in the world. The company has more than 50 million users, 7,000 clients, and a deep reach through North America, Canada, Europe, and Asia.
Adam has decided to change roles and co-lead the board. As the product leader from the beginning, Adam wants to focus on the future of the product as Phil Saunders (the ex-CEO of Saba) now runs the company. With a solid and deep bench of managerial talent, this leaves Cornerstone in a position to exploit its leadership position and do what leaders do: Lead.
From Adam’s standpoint, this is the ultimate dream of an entrepreneur. He co-founded the company, grew it in a hot and competitive market, took the company public, and turned it into the largest player in its space. His drive, charisma, intelligence, and leadership has paid off.
But the job for Cornerstone is not over. As the leader in the market, Cornerstone now has a big new responsibility. Market leaders have to “lead.” This means CSOD needs to paint a vision of the future, and then execute on this vision well. Adam’s work is not quite over.
From my perspective, I am left with three thoughts about what’s next.
First, I’m bullish on Cornerstone. Yes, the LMS market is old – but the market is real, it’s big, and it’s not going away. Companies desperately need a back-office ERP system to manage training, and neither Workday, Oracle, or ADP really have an enterprise solution that competes with Cornerstone. The company is losing some of its clients (renewal rates have dropped), but I know that Phil is laser-focused on making the LMS easier to use than ever. And I don’t’ believe Adam will step away completely.
Second, this is an opportunity for Cornerstone to lead. This market, which is big and fragmented (it’s one of the biggest “red oceans” I’ve ever seen), is very confusing to buyers. L&D leaders are perplexed by all the options, so many would like a safe, market leader to help. Can Cornerstone put Workday and others on the defensive? Phil and Adam have another chapter ahead.
Third, Cornerstone’s content strategy has yet to play out. The content market is huge: much larger than the learning technology market. Today CSOD has a fairly tactical “reselling” strategy toward content. While that model isn’t bad, it doesn’t add a lot of value. I think the company will do some interesting things here, and the Saba acquisition will help.
Personally, I want to thank Adam Miller for all he has done. He has quietly led this enormous market, created careers for thousands of people, and he is always willing to listen. He’s a role model for entrepreneurs throughout the industry.
I don’t think we’ve seen the last of Adam Miller yet – I’m sure there’s another chapter to come. I for one will be watching what he does next.