Hi, it's Bob Saffian.

You've been hearing me as the host of Rapid Response in this feed for a few years now.

Well, I'm excited to share that Rapid Response has expanded into its own feed. We're releasing shows twice a week, focusing on the urgent issues that business leaders are dealing with in real time. While some rapid response episodes appear on Masters of Scale, many of our best are only available every week in the rapid response feed. To make sure you catch it all, search for rapid response wherever you get your podcast and subscribe.

See you on the other side. In 2005, the company had a your death experience. I had hired a boutique investment bank in LA, got called into a meeting with them, and I went to the office, and the main guy there says, Adam, you know what? It hasn't worked out as planned, and we're not going to be able to do this anymore. And I thought, Oh, shit. We are screwed.

This was back when Adam Miller was CEO of Cornerstone. That's the educational technology company he founded in 1999. They had already weathered one dot-com burst. Now, after years of growth, they were running out of money, again.

I got one of our existing investors to put up some money, but he said, It'll How can we do it if we raise a million dollars? And then I went to every single person we knew. I had raised 350,000. I was 150 short, and then I got 50, and then I was 100 short, and I just could not get the last 100.

The gravity of the situation really hit Adam when he got a call from his co founder and CFO, Perry Wallek.

Perry said, It's over. We're done. Payroll is due tomorrow, and we miss payroll. And I'm like, Oh, crap. And I was sitting at lunch. I was totally depressed. My friends were like, What is wrong with you? I told them, and they were like, How badly do you need this money? I'm like, I really need the money. And they said, All right, you can call this guy, but only call him if you really need the money. You have no other alternative. These guys had a little bit of a gambling problem. I call him up, and he has me come to his office. This was a Midtown Manhattan one-room office. He wasn't at a company. This was definitively not a bank. This guy was a loan shark. He didn't give a crap about the company, but he was asking all these questions about me. He said, Yeah, Hey, you know what? I think you're good for it.

We often talk about investing in the person, but this was really- This is what's different. This is a different version of investing in the person. Is this guy going to head out of town, or is he going to show back up and do I have to break his kneecap I get what I need.

I go to this guy, sign the deal. It was the highest interest rate you would ever pay on money. He wires the money. We paid payroll, and then three days later, we paid the guy back.

Adam Miller never had to borrow money from a loan shark again. This wasn't the only time his company faced a near-death experience. It took a lot of scrappy solutions to build Cornerstone into a multi billion dollar business. Adam's story is a masterclass on how it's not only survive, but to scale in the face of near disaster. He shows that persistence, combined with calculated risk-taking, builds a resilient business that can the myriad unexpected challenges every company inevitably faces.

You got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home.

Can you believe it? It's such an idiot. Then you go back to, This is totally going to be amazing. There are so many easy ways. I have no idea what to do.

Sorry, we made a mistake.

But you have to time it right.

Oups.

Working out a three-bed apartment.

Stuff that just seems absolutely nutball.

Ten years later, we're like, Well, that's just how you do it.

We haven't made just how you do it. This is Masters of Scale. We'll start the show in a moment after a word from our premier brand partner, Capital One Business.

I woke up in the middle of the night because I had this nightmare that We were front-page news that we've done the stupidest mistake of our life by making this pivot.

That's Aparna Saren, Chief Marketing Officer for Capital One business. She's recalling a moment from her previous position at Capital One when she was heading up a team designing a new business card.

We had just made the decision to go all in and sunset the prior version of the product, which was honestly the cash cow for our business. When we made that decision within a senior leadership meeting, as someone who had been on the journey to build this out for five plus years, it was really exciting. But by the time the weekend hit, I started to feel the responsibility and the pressure. We are taking this big bet on something that I've built.

Perhaps you've been there. You've made a pivotal decision, and then panic sets in. How would Aparna calm her butterflies and steer her team through this pivot? We'll find out later in the show. It's all part of the Refocus Playbook, a special series where Capital One business highlights stories of business owners and leaders using one of Reed's theories of entrepreneurship. Today's Playbook Insight, have multiple plan Bs.

I'm Jeff Bermann, your host. Adam Miller founded Cornerstone OnDemand in 1999. The initial idea was to provide busy people with remote learning options that could further their careers. At First, they did that by mailing out disks that customers would load onto their computers. Netflix 1.0, but for education. Sounds like ancient history, right? But Cornerstone evolved alongside the internet as pretty much everyone got online. They became a global leader in on-demand education and training with huge clients such as Dell, Walgreens, and thousands more. Today, Cornerstone has roughly 125 million users across over 180 countries. After more than For two decades leading the company, Adam sold Cornerstone for $5.2 billion in 2021. He has since turned to philanthropy, focused on solutions to the world's most intractable problems, from gun safety to climate change. That work relates back to the problem solving roots of his company, Cornerstone. Let's return to the 1990s, when Adam Miller was a business school student and law student, with an idea to make adult education more accessible accessible through home computers.

Interestingly, adults have the least access to education because they often are working 9:00 to 5:00 or more, and training could be really expensive. A lot of people can't afford it. The original name of the company was CyberU. This is back in the day of cyber everything. The idea was really premised on leveraging the technology to help people learn things. It was self-paced, it was easy to access, and it wasn't expensive.

And you You started as a direct consumer business, right? You were doing a B2C company?

Cyberu was intended to be, at the time, what they call the mid-immediary. We're going to sit between the sellers of education, like universities, and the buyers of education who would be adults. The idea we came up with was using CD-ROMs to train adults at concepts that were difficult for adults to understand, like Wall Street.

Got you. So this is almost like the origins of Netflix, where it's like, We'll send you- Exactly.

This was pre-streaming, really pre-web. By '99, the consumer Internet had exploded, and there was a lot of opportunity out there. But bandwidth still was not very good. So I was watching what was happening with the cable modems and DSL and thought, I'll start the company when we're about two years away from full broadband in the home. That seemed to be the right time to start a company, get it going, build the business. And over a two-year period, you would have product that could be delivered over the end.

You're basically looking for the wave that's coming, and you want to catch that wave that's coming in. Exactly. Okay.

So I was I was working at an investment bank at the time, so I went to tell my boss that I was starting this company. I had seen that anybody who had left the firm was immediately escorted by security guards out of the building because investment banks have confidential information. And so they're very concerned about people having access to the information and taking it with them.

So it's like being perp walked, basically, out of the building.

The second you resigned. Yeah. So I'm fully prepared for it. And I go to my boss and I say, I'm leaving. Why are you leaving? I'm going to start a company. He says, Oh, we all I knew you were going to do that. How much time do you need and how much money are you trying to raise? Wow. I tell him, I probably need a couple of months to do the business plan, and I probably need a few hundred thousand dollars to get this going. He said, Okay, great. We'll give it to you.

Wow.

No security guard showed up. I never left the office. I wrote the business plan while finishing up work, and my initial capital came from everybody I worked for. Every single person in my chain of command invested in the company.

They invested personally.

This wasn't-Personally. And the analysts who worked for me all So put in 5,000 bucks.

Wow, that's quite a vote of confidence.

It was incredible, but it was very, very misleading for me because that start was so incredibly easy, and that was the end of it being easy.

Adam left A to Day office life to build his company. He had financial backing, but no staff working alongside him.

I was literally home alone in this one bedroom apartment, trying to get this company off the ground. I came up with this pattern where every day I would go to Staples and buy something. I'd usually only buy one thing. It made me feel like I was starting a company, like I was doing something business-related. You ever go into Staples? Sure. It's like a business store. I went there to buy business stuff. I didn't even know what I was supposed to be buying. It didn't matter. It didn't matter. It gave me purpose. It gave me something to do every day.

But it didn't take long for Adam to realize he needed more than a daily dose of Post-it notes and Binder clips to build his business. It was time to start hiring a team.

We were hiring predominantly for potential, not for experience, because nobody had experience doing B2B software, so we had to hire for potential. That, I think, served us very well. We had people that were able to scale with the company because they were curious. They kept learning. These were high potential people that were ambitious and willing to take chances and take feedback. We hired web developers to build a website. We hired a team of students from UCLA and USC who sat at these folding tables with folding chairs in this one bedroom office on Ocean Park, and they would surf the web looking for any online training that was out there. With the goal that we would tabulate and simplify the ability to search for online courses. That was the original consumer idea.

Marketplace for education.

Marketplace for education, exactly. What today would be like Udemy or Corsaire. But back then, nothing like that existed.

As a pioneer in online education, Adam's company soon piqued the interest of AOL. This was the year 2000, and AOL was still the biggest fish in the Internet service provider pond. Imagine the clout of Google and Amazon combined. Aol invited Adam them to enter a competition. Cornerstone could become a partner in a new AOL learning center. It was an opportunity to reach millions of new customers, but there was a catch. If they won, Adam would have to pay AOL to seal the deal.

Our general counsel at the time, Steve Simon, and I were sitting in a room in San Francisco with a great view of the Bridge. We're in this big conference room, and the people from AOL came in the room threw down the contract, and said, We've been talking about this long enough. You have two hours to sign, and walked out of the room.

Wow.

Now, they had already been notorious for doing things like this, but it's one thing to hear about it. It's another thing to be in the room.

Especially when it could be the make or break for the company.

It was absolutely the make or break for the company. I remember pacing the room, looking at the Bridge, and I turned to Steve and I said, You You know what? This just doesn't feel right. What didn't feel right? It was too expensive, the way they were treating us, risking the entire company on this one deal. I thought, This is just not the right move. And we left. We never said goodbye to anybody because nobody was in the room. We don't know where they were. We just left. Two weeks after we walked out of that conference room, the internet bubble started crumble. And about a month later, it burst. And had we signed that deal, we definitely would have been out of business. That would have been the end of the company. So I remember we went to Big Deans, which is a bar on the beach by the Santa Monica Pier, and we sat there all day thinking about, Okay, what do we do now? The AOL deal was off the table, and we didn't really have any business customers at the time, and we didn't have any capital. We had the same A few hundred thousand dollars that we started with, but we were burning it, and there was very little money left.

So we started begging for money, and this was the beginning of seven years of begging for money. Friends, family, VCs, strategics, corporations, anybody that would meet with me. And so went back and forth, flying back and forth, maxing out credit cards, any way to get money. There were an enormous number of nos, and it does impact your confidence, right? If you're rejected over and over and over and over again.

While slogging through years of constantly seeking and failing to land investment, Adam found success on another front. He was building great relationships with a few very large organizations. They wanted a better way to train and develop their workforces. These weren't their paying customers yet, but they were providing invaluable insights as Adam's team refined its offerings.

These were the big banks, the big insurance companies. They would tell us something, and two weeks later, we had built it.

Here you go.

Here it is. We would go to these meetings in New York. I'd fly back to LA. I would draw on cocktail napkins what the screen should look like. I'd hand it to the developers, and they would build it.

I'm struck that your customers were really defining your product roadmap for you. They were handing it to you.

They were designing the product. We're thinking, we have 20 people, and they have 20,000, 50,000, 75,000 people. They're never going to buy from us. But actually, what started to happen after many months of doing this is we would go to these meetings and they would say, Wow, you guys really listen. And then they would start to say, We could really use this. And they would say, Can we get this? And we were terrible at sales. We didn't understand that they were literally saying that they would potentially buy it.

Please let us pay you for it.

I remember the first time somebody said, We're doing an RFP. Can you fill it out and come back to us? We had no idea what an RFP was. Request for a Proposal that a business will give to a different business to solicit products and services. We didn't understand how that work. There was no ChatGPT to ask. You had to figure it out yourself.

In 2001, Adam's business was gaining serious momentum. They brought eLearning and efficient HR management to the corporate world, attracting big name Fortune 500 clients, including Wall Street Banks.

We had developed this great pipeline of financial services firms on the East Coast, mostly in New York, that were going to be the turning point for our company, and then 9/11 happened. Our entire pipeline went away. I got frantic calls from our investors and advisors who were all in New York. They all said, You got to go into hibernation mode. Cut the staff. I mean, we had barely any staff. Cut the staff. You don't have enough money to keep going. You're going to go out of business. On September 14th, I watched The West Wing that night. The West Wing was this old show. Martin Sheen was the President. This was one of these shows where he had a huge decision to make. He was in a church trying to figure out what to do. And he made this big decision that went against what everybody had advised him to do.

I know the episode he's talking about, and it does have one of the greatest pep talks you've ever heard, where one of the President's oldest friends convinces him not to shy away from hard problems. Sales. Adam was inspired. He still believed fiercely in Cornerstone's mission. Even if the world had been turned upside down, he refused to give up.

On the 15th, I walked into the office and I said, We're hiring. I thought, Look, there's only two scenarios here. There's a scenario where the world comes to an end. These markets don't come back. We're not going to win any of these deals. We're not going to go out of business.

No matter what, whether we hibernate or not.

Whether we hibernate or not. Yeah. Or actually, we're going to close some of these deals. If we don't have the staff, we're not going to be able to perform on the deals, and they'll fire us and we'll go out of business. I'd rather go out of business trying than not trying.

Let's burn the boats. We're going to do this. We're going ahead.

We had four deals that we were working on at the time that were all close to Signature. We ended up closing three of those deals.

Adam's decision to hire during crises, defying the urge to hibernate, paid off. Coming up, I talk with Adam about surviving market crashes, IPOs, and pandemics, plus the recurring dream he could not shake.

We'll be back in a moment after a word from our premier brand partner, Capital One Business.

There was panic that set in that because I didn't want to let people down.

We're back with Aparna Seran of Capital One business. She was recalling the time she woke up in a cold sweat, terrified that the new product she had been working on might fail. So the next morning, she sat down and wrote an email.

Sunday morning, and I said, You know what? I'm going to just share this with my peers. It was very emotional. It was a cry for help.

Aparna realized that if the new product didn't take off, she needed a plan B, preferably Basically, multiple plan Bs.

I'm inviting them to be the thought partners so that we are mitigating as much risk as possible, and we have contingency plans in place as we make this move. You'd write something like this, and your heart is pounding, should I send this? It was a super vulnerable moment for me. But then I was like, I'm going to just send this. What's the worst that will happen? It can't be worse than being on the front page of the newspaper.

She held her breath and hit send. What happened next would surprise even her. We'll hear about that later in the show. It's all part of Capital One Businesses Spotlight on Business Leaders, following Reed's Refocused Playbook.

Welcome back to Masters of Scale. We're exploring the story of how Adam Miller built Cornerstone into a multi-billion dollar business. You can find this full interview and more at the Masters of Scale YouTube channel. By 2005, Adam was taking a slow and steady approach to scale.

We were doing 60% growth a year, so every two years, you're almost tripling.

Pretty good.

It was pretty good. But we were growing very linearly at first because we couldn't forward invest. We had no capital. So the business became very efficient. We were essentially operating a break even from the very beginning. We basically were building the company off of sales. So every time we sold, we'd hire another person. Every deal we did, we'd hire more people.

If the revenue became working capital, why did you end up raising venture?

We were able to continue to build the business simply by hiring where we absolutely had to hire. But it was also inefficient. We knew we could grow faster, we knew we could sell more, and ultimately, we were in an arms race with some pretty big companies. We needed the money, not to mention the corporate viability issue that we had perpetually. We had no capital. Our balance sheet was terrible. We finally raised venture capital. Bessemer led the round, Byron Dieter led the round. It was his first true cloud deal, and we ultimately became his first unicorn.

Fueled by that infusion of money, things started to scale in a huge way. Six-figure deals became seven-figure deals. Adam kept costs in check. Retention of clients was high. Everything was moving up and to the right. But then, in the spring of 2008- Bear Stearns goes under.

Yeah. And then a little bit after that, Lehman Brothers goes down and you have the financial crisis.

It looks like the world's ending again.

It looks like the world's going to end. Now, we still had capital, so we weren't running out of money, but we had a board meeting. At the board meeting, we go over our projections or forecast, and they're like, No, do you understand what's going on with the world? We want to see a financial forecast assuming zero sales. We're like, What are you talking about? We're selling every day. They said, We don't care. We want worst-case scenario, assume zero sales.

Responsible board inquiry.

So we have another board meeting a few days later, and they say, Okay, this is the forecast we want to use. You're running out of money. We said, We're not running out of money.

We're doing fine. But if the world's ending, we are.

They said, You need to go raise money. You're telling me, I have to go do it from other VC firms Even though you guys could invest? And they said, Yes. I said, Explain to me how that makes sense. They said, You're our best performing portfolio company, so you're the only one that could raise money from other people. We need to save our money for the other companies. I'm like, All right, now I know why people don't like VC sometimes. You might remember this, Sequoia had put out this very famous brief. It was one of these early social media posts that went viral talking about what to do in a downturn.

Winter is coming.

Winter is coming, how to manage a recession. It was, Cut your people, prepare for the worst, take action early. Do it in full. Don't do it piecemeal.

If you weren't in the business world then, you may not appreciate how dire everything felt during the crash in 2008. Sequoia, one of the biggest and best known venture capital firms in the world, was not alone in warning that the sky was falling. That viral brief Adam mentioned from Sequoia was called RIP Good Times. You can find it online, and we're linking to it in the show notes. It is full of ominous predictions and gruesome bar graphs. There's literally a slide that just says, Death Spiral, and has a skull and cross bones on it. This is the mood of the market when Adam is being told by his board that he has to go raise more money. So who is he supposed to go ask for that money? If you can believe it, Sequoia, the very firm that is proclaiming, Winter isn't coming. It's already here.

And I thought, Well, they're definitely going to cancel the meeting. And the meeting never got canceled. I went to the meeting and I said, Why are we even having this meeting? You just put out this manifesto about how to cut everything. Why would you possibly invest right now? They said, In our experience, the best companies grow in good times and bad.

Sequoia was right, and it was a critical learning experience for Adam.

We ended up growing 60% that year, and we never used a dollar of the money.

But you had it.

But we had it.

If the first job of CEO is make sure you don't run out of money. You had a board that was really protecting you there and believing in you, notwithstanding they're not investing in that moment.

It proved the point, raise money when you can, not when you need it. Yeah.

Take us through going public, and then what happens from there.

I had always wanted to go public because when I was a kid, my dad taught me how to read the stock charts. Back then, it was in the newspaper.

This is the breakfast table in Jersey with dad looking at the newspaper. In Jersey, working.

And he would teach me how to invest and how the stock market worked. I always wanted a four-letter symbol on the Nasdaq because Microsoft and all the other companies that were on the Nasdaq all had four letters. That was always my dream. When the time came to be able to take the company public, I was super excited. This It was a dream that was about to be fulfilled. But we were in a race at the time. There had already been a couple of public companies in our space. We were on the smaller side of those four, and I knew that only one of them was going to be able to go public, and the rest of them would probably get acquired or merged. I also believe that you had to have a top-tier offering. So you needed a top bank. And we got Goldman Sachs to lead the round, to lead the CEO, and we ended up going public in March of 2011.

Adam finally got his four stock exchange letters, C-S-O-D. A lifelong dream checked off the bucket list. After going public, Cornerstone OnDemand expanded into the HR space. They broke into the public sector selling to federal and local governments, schools, and hospitals. All the while, Adam approached his own job as CEO, just like a Cornerstone client. He was constantly trying to learn new things.

I didn't stop learning after grad school. I kept going. I kept reading. I kept trying to learn from people. Even after we were a public company, you get to go to these conferences with other public company CEOs, and I would be taking extensive notes. Sometimes the bankers would come up to me and say, Adam, you're the only one taking notes. But I was really paying my attention to what was going on, trying to learn from my peers, trying to learn from experts that were out there, always thinking about how can we do better.

By 2017, Adam started to have a recurring dream, one that might sound familiar to any world-weary CEOs out there. It was a dream about his own retirement party.

I would get on stage. We would have my favorite band come out and play.

Which is?

Ac/dc.

Okay.

I would do a guitar solo. Now, keep in mind, I don't know how to play guitar.

It doesn't matter. It was a dream. You figure stuff out.

I would play a solo with Angus, drop the mic and leave. And that was it. I was done. I was thinking about this dream that kept happening over and over again. I started to also believe, I'm 20 years in. If I'm ever going to do anything Anything else, 20 years is going to be the right time to step off. I realized, 2020, I was going to be done. And for my swan song, I thought, I'm going to show that We have truly dominated the industry by acquiring our biggest competitor. Our biggest competitor was a company called Saba Software. But this was yet another example of really bad timing. We announced an all-cash deal where we had taken a lot of debt to make an acquisition. Pre-market, when the market opens, COVID hit Wall Street. This was February of 2020. And literally, we opened way down because overnight, Wall Street had become obsessed with financial viability and how much leverage a company had, specifically Specifically, what was their debt to equity ratio?

It didn't matter that you were in a business that should thrive in a pandemic, but it didn't matter.

It did not matter. We got crushed that day. Then I became convinced that we needed to prep for what could happen with a pandemic. I did this three-day test at the beginning of March. We were going to shut the office down worldwide for three days just to see what would happen. Did people need monitors? Did people get locked out of their accounts? The whole management team thought I was crazy. What are you doing? You're closing the office for three days. We had offices in 25 countries, and we did it. Wednesday, there were some issues, and on Thursday, we fixed those issues. On Friday, everybody was still home. And on Sunday, there was a government announced work from home order.

I think we're going to call this episode, The World Might be Ending, The Cornerstone Isn't, something like that. Exactly. This is every single time.

Every time.

As the world shut down and more and more companies shifted toward remote work, Adam's EdTech products were ready to serve new customers. And amid the chaos of the early pandemic, Adam, who had navigated crises in 1999, 2001, and 2008, found his most significant success yet. Cornerstone acquired Saba software in April 2020. Then in 2021, he decided to sell the company for more than 5.2 $2 billion. The only disappointing news? Well, ACDC did not play his retirement party.

Our tagline was Educating the World. When we started the company, that was completely absurd. But When I sold the company, we had delivered 2 billion courses. So we did educate the world.

It's an incredible journey. When you reflect on it, what's the biggest takeaway for you?

Perseverance. You got to persevere. If you're passionate about something and really believe in it, it's not always going to be easy. When we went public, it looked like we were an overnight success, but we had been at it for many, many, many years. But the other piece of that is you better really be passionate about what you're doing because it's not all going to be good days, and you got to remember why you're there.

Thanks for being here.

Thank you for having me.

From a lonely entrepreneur whose daily highlight was a trip to Staples to the CEO of a multibillion dollar business, Adam Miller scaled his company by making decisive moves and bucking conventional wisdom in cornerstone's existential moments. Whether Whether it was a dot com crash, a country shaken by a terrorist attack, or a global financial crisis, Adam faced some of the most dire external challenges a CEO could imagine encountering. His story shows that sometimes you have to throw out your best laid plans and make bold counterintuitive pivots to scale. I'm Jeff Bermann. Thank you for listening.

And now, a final word from our brand partner, Capital One Business.

Throughout the day, text messages and emails kept pouring in. Whatever you need, just let us know.

We're back one more time with Aparna Seren of Capital One Business. She was telling us about a Sunday morning email. She fired off in a moment of panic. Minutes later, her inbox was overflowing, and the support she found wasn't just emotional, it was practical.

We talked about detailed contingency plans, and we created our go-to-market strategy. Before we are in full rollout mode, we had stage gates so that we could test and quickly learn and iterate. Within a matter of six months, as we were rolling things out channel by channel, Those stage gates would allow us to pivot if we saw something that we didn't like.

That day, Aparna learned a lesson that stayed with her. Having multiple plan Bs doesn't just expand your options. It gives you new opportunities.

The best way to pivot is actually open doors for thoughtful conversations because humility in knowing that you actually don't know everything, as well as the empathy in knowing that disruption is always drastic and abrupt. Helped, helps you go through that pivot with other people in a very different way.

Capital One business is proud to support entrepreneurs and leaders working to scale their impact from Fortune 500s to first-time business owners. For more resources to help drive your business forward, visit capitalone. Com/businesshub. That's capitalone. Com/businesshub.

Masters of Scale is a wait, what, original. Our executive producer is Yves Trou. Our senior producer and resident West Wing expert is Trisha Bobita. The production team includes Tucker Lagursky, Masha Makhtunina, and Brandon Klein. Special thanks to Juliet Louini, who produced this episode. Our senior talent executive Live is Stephanie Stern. Mixing and Mastering by Erin Bastinelli and Brian Pew. Original Music by Ryan Halde. Our head of podcasts is Lietal Molad. Visit mastersofscale. Com to find the transcript for this episode and to subscribe to our email newsletter.