Podcast Summary: Making It with Jon Davids | Episode 158 - “It Started In My Apartment, And We Grew It To $5B+” | Adam Miller, Cornerstone on Demand

Release Date: December 17, 2024

In Episode 158 of "Making It with Jon Davids," entrepreneur and investor Jon Davids sits down with Adam Miller, often hailed as the godfather of the Los Angeles tech scene. The conversation delves deep into Miller's journey from founding Cornerstone On Demand in a modest New York City apartment to growing the company into a $5 billion enterprise. Additionally, Miller shares his current philanthropic endeavors aimed at tackling some of the world's most pressing challenges, including homelessness, gun violence, and climate change.

1. The Genesis of Cornerstone On Demand

Starting from Scratch in New York City

Adam Miller recounts the humble beginnings of Cornerstone On Demand, which he initially named Cyber U. Back in late 1999, Miller and his team operated out of a one-bedroom apartment in Manhattan’s Murray Hill area. Their primary tool was a whiteboard and a compelling vision: leveraging the burgeoning Internet to provide education, particularly for adults who lacked access due to financial constraints, location, or inflexible schedules.

"We were going to focus on adults who, even though they have more money and more flexibility, actually have the least access to education." [02:36]

Early Vision and Market Focus

Miller emphasized that their initial focus was on professional development, offering a variety of online classes at a time when online education was a novel concept. He highlighted the lack of precedent in the industry, noting that when onboarding new employees, none had ever taken an online class, a stark contrast to the ubiquity of e-learning today.

"Over the course of 20 years, this went from a crazy idea that people would actually use the Internet to something that had become so commonplace." [03:48]

2. Pivoting to Enterprise Clients

Challenges of the Dot-Com Bubble

The onset of the dot-com bust posed significant challenges for Cornerstone On Demand. Initially targeting consumers, Miller realized that securing customers in a declining market was untenable. This realization led to a strategic pivot towards small businesses and, eventually, large enterprises.

"We had to make our first pivot and we realized we're not going to be able to sell to consumers. We had these web developers we'd created product over the web to. We'd created basically a website for people to go and find the classes." [06:52]

Securing Major Clients

Contrary to their initial target of small businesses, Cornerstone secured seven-figure deals with major enterprises like Solomon Smith Barney, Aon, and Washington Mutual. These early victories not only validated their pivot but also set the stage for rapid growth.

"Our very first deals were seven-figure deals." [11:18]

3. Navigating Market Turbulence

Surviving the Dot-Com Bust and 9/11

The early 2000s were tumultuous, with the dot-com bust and the September 11 attacks presenting existential threats to Cornerstone. Many advised Miller to downsize drastically, but he chose to persevere, believing in the potential of their secured deals. This resilience paid off as the company successfully closed large contracts despite the economic downturn.

"We were terrible at sales and yet our very first clients were huge enterprises." [11:21]

Building a Disciplined, Scrappy Company Culture

Lacking abundant venture capital, Cornerstone adopted a disciplined approach to growth. They focused on employee retention and operational efficiency, fostering a loyal workforce committed to the company's mission.

"We were really scrappy. We were really good at conserving money." [15:41]

4. The IPO Journey

Raising Capital Amidst Economic Downturns

In 2009, during the aftermath of the financial crash, Cornerstone faced skepticism from venture capitalists. Despite the challenging environment, Miller successfully raised $20 million from Bessemer Venture Partners, ensuring the company's continued growth without diluting operational focus.

"We were one of the first deals that got funded and that helped us keep growing the business." [19:00]

Successful Public Offering

Cornerstone went public in 2011, timing their IPO strategically. Despite a week marked by global crises, including a tsunami in Japan, Miller decided to proceed, resulting in a successful launch on St. Patrick's Day. This move positioned Cornerstone as a leader in the competitive learning management system market.

"We ended up successfully pricing. We priced it at $13 a share and ended up opening at $18 a share." [22:02]

5. Shaping the Los Angeles Tech Ecosystem

Early Contributions to LA's Tech Scene

As one of the pioneering tech companies in Los Angeles, Cornerstone On Demand played a pivotal role in shaping the local tech ecosystem. Miller and his team established accelerators, venture funds, and hosted events like the LA Tech Summit to foster community and innovation.

"We helped shape it because early on we knew that we were one of the first tech companies." [28:39]

Sustaining Talent and Investment in LA

Miller highlights the transformation of LA into a top-tier tech hub, thanks in part to initiatives that retain local talent and attract investments from established venture capital firms. Publications like Dot LA further amplified the city's burgeoning tech narrative.

"We're keeping the talent here, we're keeping the companies here." [30:05]

6. Transitioning to Philanthropy: One Planet One P.org

Defining Act Two

Post-Cornerstone, Adam Miller redirected his focus towards philanthropy and addressing global challenges. He and his wife founded One Planet One P.org, a foundation dedicated to solving intractable problems such as homelessness, gun violence, and climate change through innovative and pragmatic approaches.

"Act 2 for me has always been about giving back to the community." [36:47]

Addressing Homelessness in Los Angeles

Recognizing the complexity of homelessness in LA, Miller's organization, Better Angels, adopts a comprehensive strategy encompassing prevention, services and shelter, affordable housing, and technology enhancement for outreach workers. Their approach emphasizes private sector solutions, advocating for efficient and scalable models over traditional government-led initiatives.

"There’s no silver bullet. It has to be a comprehensive solution." [41:27]

7. Applying Entrepreneurial Skills to Social Challenges

Leveraging Business Acumen for Philanthropy

Miller translates his entrepreneurial experience to philanthropy by treating social issues with the same rigor and strategic thinking as business challenges. This includes creating scalable solutions, fostering innovation, and ensuring operational efficiency to maximize impact.

"We treat it like a high growth hypergrowth startup, leveraging innovation and pragmatism." [40:01]

Establishing Groundswell

In collaboration with Team Rubicon’s CEO, Miller co-founded Groundswell, which aims to democratize philanthropy. By enabling corporations to set up private foundations for their employees, Groundswell fosters a culture of micro-donations and sustained community support.

"Groundswell is like the Robin Hood of charity, enabling employees to not only save but also give back." [39:34]

8. Overcoming Challenges in Philanthropic Ventures

Navigating Resistance from Government and Bureaucracies

While Miller’s initiatives have been well-received by the nonprofit sector, he acknowledges challenges in engaging with governmental bodies. Bureaucratic inertia and resistance to disruptive change pose hurdles in implementing innovative solutions.

"They don’t love the idea of a disruptor coming and messing up their day job." [45:52]

Ensuring Holistic and Sustainable Solutions

Miller emphasizes the importance of comprehensive strategies in tackling multifaceted issues like homelessness. By addressing various interconnected factors, his organization aims to create lasting and meaningful change.

"We’re focusing on five pillars: Prevention, services and shelter, affordable housing, technology, and more." [43:06]

9. Final Reflections and Future Directions

Balancing Work and Personal Life

Despite his extensive involvement in entrepreneurial and philanthropic endeavors, Miller strives to maintain a balance between work, family, and personal time, ensuring sustainability in his high-impact pursuits.

"I try to leave some time for friends, family, and fun." [46:30]

Continuing the Mission

Adam Miller remains committed to leveraging his expertise and resources to drive positive change, underscoring the significance of passion, persistence, perseverance, and persuasion in achieving impactful outcomes.

"To be a successful entrepreneur, you need to have passion, persistence, perseverance, and be persuasive." [27:42]

Key Takeaways

• Vision and Persistence: Adam Miller’s journey underscores the importance of a clear vision and unwavering persistence, especially when navigating early-stage challenges and market uncertainties.

• Strategic Pivoting: The ability to pivot strategically, as Cornerstone did from consumer to enterprise clients, can be pivotal in ensuring a company’s survival and growth.

• Building Ecosystems: Active participation in building and nurturing a local tech ecosystem can have lasting impacts, as evidenced by Miller’s contributions to LA’s tech landscape.

• Entrepreneurial Philanthropy: Translating business acumen to philanthropic efforts can lead to innovative and scalable solutions for complex social issues.

• Comprehensive Problem-Solving: Tackling multifaceted problems like homelessness requires holistic and multifaceted approaches, integrating prevention, services, housing, and technology.

Notable Quotes:

• "We decided to focus on adults who... have the least access to education." — Adam Miller [02:36]

• "Over the course of 20 years, this went from a crazy idea... to something that had become so commonplace." — Adam Miller [03:48]

• "Our very first deals were seven-figure deals." — Adam Miller [11:18]

• "We were really scrappy. We were really good at conserving money." — Adam Miller [15:41]

• "We were one of the first deals that got funded and that helped us keep growing the business." — Adam Miller [19:00]

• "Act 2 for me has always been about giving back to the community." — Adam Miller [36:47]

• "We treat it like a high growth hypergrowth startup, leveraging innovation and pragmatism." — Adam Miller [40:01]

• "To be a successful entrepreneur, you need to have passion, persistence, perseverance, and be persuasive." — Adam Miller [27:42]

For more insights and to follow Adam Miller’s ongoing philanthropic and entrepreneurial ventures, visit One Planet One P.org and 1P Ventures.