Cornerstone OnDemand's Adam Miller on building a successful company in the midst of catastrophe
From scribbling wireframes on cocktail napkins to making payroll with help from a loan shark, Adam Miller talks about the realities of starting up.
We don’t know if Adam Miller has ever taken a personality test, but I know he would score high on grit. His ability to persevere despite all odds is both remarkable and crucial—it’s why time and time again his business succeeded where others faltered, failed, or went un-funded.
The setbacks Cornerstone OnDemand overcame in its early days are nearly Greek tragicomic in scale. Often, they seemed to coincide with the company’s biggest moments—like a literal nuclear meltdown coinciding with their IPO.
Adam Miller joined us on the Cloud Giants podcast to recount how he went from his first job stocking shelves at the A&P to founding a literal bedroom startup that turned into a multi-billion dollar public company. Adam talks about self-financing the old school way and what it was like to be an early SaaS pioneer explaining to Fortune 500 IT teams that no, the files were not in the computer—they would be delivered over the internet.
Adam leaves us with counterintuitive parting advice: Do chase that passion. But do it with balance.
- Build your enterprise product based on what prospective customers tell you they need.
- Customer financing (a.k.a. revenue) is often the best form of financing.
- Good entrepreneurs need to have the three Ps: passion, persistence, and persuasiveness.
- You can start a company anywhere.
For Adam it all began as a love of technology and a belief in the power of education. Though he was an investment banker with plenty of opportunity within the corporate world, he felt that the internet would transform the way people learned and wanted to launch a startup to help.
“The question at the time was, ‘Who do we build it for?’” says Adam. “Kids already had school. Young adults had college or university. But adults didn’t really have access to continuing education though they very much needed it.”
Universities had begun to produce online classes, but they were difficult to find. So Adam founded “CyberU.” He set about to help adults learn, whether at home or at work. It was a lofty goal and only looking back was it clear that it’d be another 20 years before they fully succeeded.
One of the first things Adam did was move the company from New York to Los Angeles. “On a rainy day in Manhattan I couldn’t get a cab and wondered, ‘You can start a company anywhere. Why am I here?’” He shipped his things out to sunny Santa Monica for balance, access to talent, and to join California’s internet 1.0 revolution.
At first, the business was simple. His web developers built a website and they hired students from UCLA and USC to surf the web and enter whatever training was available into a database. “You have to understand this was pre-Google,” says Adam. “Discovery wasn’t easy, and we helped make information available.” Soon they had a real product and a team of 10. Things were looking good. Then the internet bubble burst.
By March of 2000 their dream of selling to consumers was derailed and they shifted their focus to businesses. “My co-founder had a two-bedroom apartment in New York and so we’d fly back and forth every two weeks talking to businesses in Manhattan, building something for them,” says Adam. “We were very bad at sales back then. We didn’t understand buying signals or the fact that a small company can actually sell to a big company.”
Adam viewed the business-to-business play as an eddy along their product path, but they let the financial firms introduce them to their HR teams. “They’d tell us what they wanted. They’d say, ‘All this training is great but we need to ensure sales people aren’t taking tech classes and engineers aren’t taking sales classes.’ So we built that feature.” Adam would fly back to LA, drawing wireframes on cocktail napkins on the airplane, and hand it to the developers.
“Business clients started to say, ‘We could really use this,’” says Adam. “And I thought, ‘Of course you could. You designed it. But you’re never going to buy from us. We’re too small.” But the clients were persistent. “Eventually we woke up and realized there was a real opportunity.”
Adam and his team lined up a great pipeline of potential clients—mostly financial services firms in the Northeast. Then on the morning of September 11, 2001 terrorists struck downtown New York.
When two airplanes struck the World Trade Center, Adam knew their entire sales pipeline was effectively gone. “On September 12, I was told by my management team, by every investor, to cut the business. That there was no way we were going to make it through,” he says. “‘You have very little capital,’ they told me. ‘Cut the staff to the minimum number of people.’”
But by Adam’s reckoning, they already had very few people. Any smaller and they wouldn’t be able to deliver on the one deal they did close. Adam surprised everyone by announcing that they were hiring. “We ended up closing three of the four deals we were working on,” says Adam. “Had we fired those people we would never have been able to service those accounts. Those accounts meant capital, and capital meant we could grow.”
Customer financing is sometimes the best form of financing.
This taught Adam a critical lesson: Customer financing is sometimes the best form of financing. But it didn’t get him all the way. “I spent between November of 1999 and May of 2007 trying to raise money.’ I say ‘trying’ because it was virtually impossible at the time. The Valley VCs had no interest in companies in LA.” That wasn’t the only challenge. The terms “cloud” and “SaaS” didn’t yet exist and convincing large companies to store data outside of their walls was difficult.
“It wasn’t even called cloud computing yet. It was just ‘stuff over the internet,’” says Adam. “Ninety-percent of the time we’d pitch a company, the IT department would say ‘This is great. Send it to us.’ And we’d say, ‘There is no software. It’s over the internet.’” Many deals died there. For those companies that did buy, this was the first “internet” service they had purchased.
By 2005, the business had gained true momentum. They’d reached product market fit, so Adam decided it made sense to go faster. They went up and down Sand Hill Road and hired a bank but nothing came through and, now with 45 employees, they found themselves $150,000 short of making payroll. Adam called everyone he knew and scraped together another $50,000. But that was it. The month was up and the well was dry.
“My CFO called and said, ‘It’s over. We’re missing payroll. If we don’t get it today, we violate the law,’” says Adam. “So I’m depressed and I meet with a friend who says, ‘Do you really need the money?’ I said yes. He says, ‘No. Do you need this money? Only do this if you really need it.’” This friend had a gambling problem and knew a loan shark, who Adam promptly met.
“This guy looks me up and down and asks lots of questions and at the end says, ‘You know what? I think you’re good for it. You personally—you’re guaranteeing it,’” says Adam. The next day the loan shark wired Adam $100,000 at an eye-watering interest rate of 100%. “We paid payroll,” says Adam, “and lived to fight another day.” (Note: We don’t recommend this approach, but in retrospect, it makes a good story!)
“Good entrepreneurs need to have the three Ps: passion, persistence, and persuasiveness. There are going to be good times but there will also be bad times, and the road is longer than you think,” says Adam. Persistence in particular has helped Adam sometimes buck convention, and move forward when no one else thought it wise. Like when they went public.
“Good entrepreneurs need to have passion, persistence, and persuasiveness.”
“In 2010 two other talent management systems went public. I thought there was room for one more. We had a line of sight to $44 million in generally accepted accounting principle (GAAP) revenue,” he says, “so we went for it.” The weekend before they went public, on Sunday night, they were oversubscribed in Europe and feeling good. Then Adam got a call that they’d have to put the IPO off. A tsunami had just struck a nuclear plant in Japan which was now melting down, and markets were expected to follow.
“I said, well, the one thing we hadn’t encountered, we just encountered it.” Undeterred, Adam pressed on. They launched. And to his credit, it was a success. Today, Cornerstone OnDemand is a highly successful multi-billion dollar public company.
“There are good days and bad. Sometimes it’s the success that makes the problems. Part of it is just maintaining balance all throughout the journey,” says Adam. “People are looking to the CEO to not be too cocky when things are good, and not too down when things are bad. Find your personal balance so you can bring the balance. It’s a journey, so don’t long for the destination—love the journey.”
As of March 2020, Adam Miller, co-founder of Cornerstone OnDemand, stepped down as CEO of the company to focus on philanthropy with 1P.org.