- Empowering workers without invading their data privacy
- The acceleration of HR tools during the pandemic
- The rise of the extended workforce and the legal implications
- Working from home can be complex
- Can employee tools measure and promote wellness?
- The unbundling of HR tech through API’s and Data
Setting the scene
Jason Corsello is a much admired and respected figure in the world of HR tech, but how did he start as an analyst, become an operator, and then found and manage a dedicated HR tech fund? In our session we explore how HR tech has evolved over the years, what trends he sees emerging, and how the pandemic has accelerated changes in the employee experience. The unbundling of HR tech is upon us, opening up so many opportunities, including the chance to truly promote wellness in the workplace – whether that be the office or home. All this leads to how Jason invests via his fund Acadian, and who the new winners in this fast changing landscape could be.
How did you get into tech, and how did that lead to running a fund?
My career has not necessarily been by design. I graduated from college back in 1995, and I didn’t know what I wanted to do, and stumbled into this company called Solectron Corporation that was essentially acquired by Flextronics. I grew up in the valley when it was orchards, and the biggest employer at the time was IBM – who in fact had a nine hole golf course on their property! I always wanted to get into technology, and I fell into outsource manufacturing as my first entree into tech. Then I transitioned that into an early stage software career back in 2000, at the height of the bubble, and over the years, evolved into different roles. I was an analyst at Yankee group, and that was really my first entree into HR tech and work tech. So, I didn’t really know much about it back in 2004, but what I did see is the shift towards cloud computing and SaaS, and that was really what excited me!
Almost 15 plus years later, I went from being an analyst, to being a management consultant, to being an operator at a company called Cornerstone OnDemand. I’ve really enjoyed the software world, and I’ve really enjoyed HR tech. I joined Cornerstone in 2011, we were $40 million in trailing ARR and the company had just gone public the quarter I joined. It was a tremendous ride over seven years. We took it from 40 million in ARR to about a half a billion in ARR. Now, the company is approaching about a billion in ARR.
It’s been a great journey for myself, as I’ve been lucky to stumble into SaaS, WorkTech and HR tech. We’re still relatively early days in this world, so I wake up every day excited to meet new companies, and watching this evolution of WorkTech and HR tech right in front of our eyes.
My first job, that evolved into Flextronics, I would probably best describe it today, as essentially a CSM. But, I was working as a client success manager – back then I think we called it a ‘programme manager’. I was working with some of our largest companies and clients, that ranged from HP to Apple. We were actually one of the first manufacturers of the iMac way back in the Apple transformation, and got to watch that firsthand. I’ve been lucky enough to wear lots of different hats in my career.
The evolution of the analyst role
I think the analyst role has changed quite a bit in the last 10 to 15 years. Like a lot of things in my career, I stumbled upon it. I’d just gotten married, and my wife said, “I’d really like to move back east to where I grew up outside of Boston”. Boston is almost the mecca for many of the analyst firms, like IDC & Forrester. I got connected through a gentleman named Phil Fersht, who now runs his own analyst firm. My goal, when I got into the analyst world back in 2004, was I just wanted to meet everyone. I wanted to show up at every event and be the first guy there and the last guy to leave. Through that evolution, I got to meet all of the relevant CEOs and CTOs in the market. My goal was to consume anything I could from networking to learn. Back in the day, research was really around understanding markets, e.g. how do you think about market leadership’s market trends? That was the foundation for me.
As I went to Cornerstone to lead strategy and corporate development, it was also about looking two or three years ahead into what are the next emergent trends, so we can start investing in them today. Then, hopefully when they become more widely adopted, we can be at the forefront of those things. Now, I’m running my own venture capital firm, so a lot of that work as an analyst is coming back to root. I’m always thinking about how big the market is. A lot of times, you turn on the TV and see VCs talking about how the Total Addressable Market (TAM) is unlimited, and I’m not necessarily a believer of that in all cases, but I always try to understand how big the opportunity is. As we’re investing, I want to think about what that return on investment looks like for them over the years? And, how do these markets need to shape up as we’re making investments?
Embracing multi-tenant SaaS really shaped the HR tech scene
I think the emergent market leaders at those times really focused on a couple things. One was this embracement of SaaS, and even more specifically multi-tenant SaaS. That was a big differentiator for many of the companies, like Salesforce. So, just being able to support or embrace multi-tenant SaaS was a big definer, and that meant you could iterate faster and you can deliver new products faster. It was the early foundation, mid 2000s to 2015, the defining SaaS companies were really multi-tenant at the core, they also were very much focused on the user. I think it’s very different today that focus on the user, but really just a better user experience than your traditional SAP or whatever that on premise solution was.
The third is just making it easier to adopt for that end buyer, where oftentimes, for folks that just bought and implemented legacy technologies, it was always a work in progress, and you never really got to that end state. Now, I think we’re in a much different world. I still have a fondness in my heart for many of those first generation SaaS companies, because many of the executives I met at those companies they’ve gone on to do much bigger and better things. But that, to me, was the first early learning curve of watching this evolution of markets from the technology changing to the business models changing. I think, again, we’re seeing a little bit of that today as well.
Finding the best tech is a continuous cycle
I think we’re always striving to have more usable, better technology into the enterprise writing, I don’t think it ever gets solved. I think it’s just constantly iterating. But I do think we are definitely seeing more consumerized applications, and maybe that’s because we can use them on mobile devices now. I do think the beginning stages have much smarter, intelligent applications, and more personalised. When I log into a system it knows who I am, it knows what learning I may need to do, or it knows a lot of things about me either as an employee or even as a manager – I think that’s kind of the next evolution. I think we will continue to see that shift, we do run into issues around data privacy that I think are getting more complex, and potentially as applications get simpler, behind the scenes, we get more complex around how do we leverage it? Or, how do we manage data privacy in a whole unique way? I think this is certainly where Europe leads the way in defining some of those kinds of regulations or requirements. As much as we make some of these applications simpler, they still do get more complex behind the scenes, and that becomes a bit challenging for both technology companies to manage that privacy, but also to individuals on what information they want to give.
The pandemic has reshaped how we operate at work
When I first launched my fund in 2019, I put together our operating manual and one of the things I put on page one is that we’re gonna see more change in the workforce in the next 10 years than we have in the last 50. Now, this was pre-pandemic, and I think we’ve probably seen more change in the last year or we will see more change in the next couple of years. There’s so many interesting changes that are happening, whether they’re macro level changes, or technology changes, we can all look back to the wide adoption of some of the tools that we’ve used over the last year, like Zoom and Slack.
I think that we are now seeing different mandates of what we expect out of work. This whole blend of work and life is becoming a real challenge for organisations because we fire up Zoom every day, we know how people live, and we know what happens in the background with kids. We’re entering a whole new world of work in terms of what we expect out of it, how our employers and managers manage us, as well as the tools that we’re using. We’re all hardwired in many organisations and the tools that we use, but I think if we’ve learned anything in the last year, it’s that we need much more agility and flexibility in the tools and technologies that we’re using. Although we’ve adopted really great tools over the last 10 years, I think what we’ve seen is that many of them can’t support the new way that we work.
One area that I’m super fascinated with, which is an interesting global trend, is the evolution of what many are calling an ‘extended workforce’. What I mean by extended workforce is we have three types of workers today: traditional employees, freelancers and now there is the evolution of gig workers. In terms of what we call ‘gig workers’, or how we define it, is constantly changing. But, we don’t have laws that support those three classifications of workers today, and so I think this is an interesting trend. This adoption and rise of freelancers is going to keep going, although we actually saw a little bit of a dip in 2018/19, but that was part because unemployment was so low. Over the next couple of years, we’re going to see a rise of freelancers and gig workers, to provide additional income and flexibility. What a lot of people now call this ‘rise of the creative economy’ is the ability to do multiple jobs, because of your interests and things that you care about. I don’t think many organisations really know how to manage it, or effectively manage it, because it’s so dynamic and fluid.
Organisations need to look and plan a few years ahead
Over the last year we have seen everyone be put into a box i.e. every company is going to be working from home, or everyone’s going to be going to the office. The fact that matters is that every single company is going to have to approach the world probably a little bit differently- it’s not going to be a one size fits all to the workforce going forward.
I think part of what organisations should be doing now is looking a couple of years ahead and figuring out what they want their organisations to start to look like in the next couple of years, and a lot of companies are already doing that and discussing it. Start from there and roll backwards to say, “Okay, what do we need to do in terms of changing our performance management process, our compensation management process, our systems that we’re using today?” When I was at Cornerstone, and I would go to our headquarters in Santa Monica you’d walk in the office and you would see an overflow of lawyers that we would have, from time to time, you’d see freelancers that were using the marketing department. I didn’t know who these people were, but I could recognise faces all the time. That’s the new shape of the workforces that maybe we’re not going to see them in physical locations, but certainly we’d like to know who was in that building – they could be employees, freelancers, gig workers, and I think that’s the next evolution.
The workforce is trying to get smart on who our workforce really is. Back in my consulting days, we always used to go into enterprises and say, “LinkedIn knows more about your employees than you do”, and the fact of the matter is, that was kind of a joke 15 years ago in the consulting days, but it’s still somewhat a fact. So, with this new workforce, where you’ve got folks that aren’t wearing the quote unquote badge of your organisation, we should still know who these employers are, what skill sets they have, what knowledge they have, because we can’t find them anymore. We can’t find that skilled workforce that we’re going to need in the future. We have to be leveraging where we can and most oftentimes sitting in the organisation we just don’t know it.
Working from home is somewhat a complex issue
For me personally, it actually started when I read a book by Jeffrey Pfeffer called Dying for a Paycheck. He wrote that stress was one of the leading causes of death in America. There’s a bit of math behind that, but I guess the core of what he was getting at is that mental wellness was becoming a big issue within corporations. We’ve only just put more gas on the fire over the last year with the pandemic, because of all these dynamics of work from home, stress with your family life and being locked into a house with not much relief. It’s an area that I have been fascinated with and I think it’s a somewhat of a complex issue.
Over the last few years, a lot of technology companies have been more focused on the treatment side, asking themselves how do we just provide support to our employees? That’s an important first step and the next step is helping train our managers and executives on:
- What should we be watching?
- How should we be asking the questions?
- What do we need to be learning about our employees, so we can try to solve some of these issues?
The third area that I’m probably most fascinated with is the prevention side. We’ve talked about treatment and training, but I think prevention is a really interesting one, where we have a lot of insights into our employees, just by the tools that they’re using every single day, email and Slack – there’s a lot of knowledge and insights we can get out of those tools. Also, how they communicate the language that’s being used in the linguistics that flows through those systems. If we can start to diagnose that just through everyday communications that are happening, that is an important first step. We’ve certainly made an investment in this area, it’s still early days but I think we should be focused a little bit more on the prevention side because we have the tools and technologies to be able to do it.
There’s a lot of privacy concerns; what do you want to share? Or, what do you want managers to know, if you aren’t sharing individually? Privacy is something that we have to be very careful of; how do we manage that privacy of giving information to employees, without the employee’s consent? But I think we will continue to see issues with mental wellness, in part, because there’s still just lots of uncertainty in work and in the world, and I’m not sure we’re going to solve it – at least this year!
Giving your employees tools to use will drive success
One of the thesis in our fund is around ‘software for the people’, and what that means is that a lot of the power of technology is shifting from the corporation to the employee. In doing so, this means that when I fire up an application, it has to be useful for me as an individual. A wellness example is that if I can see through a technology telling me how I communicate and telling me if I’m redlining in my wellness, then that should be personal to me, and then I should be able to determine who else has access to that data if I want to open it up.
I think what we’re doing in this next generation of SaaS is leveraging data. But it’s also, trying to answer the ‘what’s in it for me?’ from the employee. That is a big shift that is certainly underway right now, but I don’t think we’ve necessarily done that with a lot of the existing technologies within the enterprise. I came from Cornerstone, which is the leader in enterprise learning, and most times learning today still is very much ‘take this course and complete it by this date, because you need to be in compliance’. But there may be things that I care about because I want to develop and progress in my career, so what courses should I be taking to help me progress in my career? We’re at the early days of being able to answer this question.
A lot of the technology companies that I look at today, I think they have to be able to answer why this is important for an employee and manager, because we’ve seen this evolution of product led growth, and we’re going to continue to see that. The more ability that you have to give tools to employees, and they’re actually going to use them, it’s better for the vendor and hopefully better for the employer.
There are big changes ahead for employee training
I’m mixed on this, where I think there’s a lot of myths out there of what training is done over the last year, I don’t believe that because people are home, they’re going off and taking hours long training courses. I’ve got three kids, a dog and other things that are keeping me busy here, so I don’t necessarily buy into the belief that people have now spare time, and they’re going to take training courses. But, I do believe that training is more accessible than it has ever been- that’s certainly a good thing! However, we haven’t cracked the nut on the personalization side i.e why should I take the course?
There’s a lot more work that we could be doing there, and part of that is determining what is the training for; are you taking the course to get a certification or are you taking the training for the nuggets of information? We have lumped training and learning all together, where it’s very unique and what it’s based off of- we haven’t yet figured out the best way to do it.
We invested in a company that’s doing text based learning, and it’s fascinating because you get it when you want in a format that you use every single day. The idea was created because they wanted people to actually use training and in their model their completion rates are around 90%. When people actually get the course, on a text message, they actually take the course. You can make it much more engaging and user friendly. We’re in another midst of change in learning and development, and we should be enabling our employees to find more time to train themselves.
The motivation behind Acadian Ventures
I became interested in venture capital about a decade ago, and it was when I joined Cornerstone back in 2011. We had two really interesting VCs on our board. One was Byron Dieter from Bessemer Venture Partners, and the other was Rob Ward from Meritech Capital Partners. I would sit back at board meetings, and I would watch them interact. I reached out to them recently and told them that they’ve been important mentors for me from just observing their careers and how they’ve progressed.
One of the things that we decided to do at Cornerstone was we launched a corporate venture fund in 2014-2015- that was my first entree into actually writing checks- and it was the one part about the job that I love. Launching the fund was really based on my days of corporate venture at Cornerstone where I would get the question of who are the VCs that really understand these certain markets and I could never come up with a single person. Not to say there aren’t any great investors out there, but I thought there’s a unique opportunity to create a specialised fund in HR tech and WorkTech. We’ve got a good viewpoint of the evolution of what happened at Workday and Zoom, based off of the committee of LP’s that are in our fund. So, I certainly hope and expect that’s a benefit, because I am a firm believer that having a historical knowledge of markets is very important. If you know what happens within all these companies, it gives you a good viewpoint of what could happen in the future, or how you need to look at the world maybe a little bit differently.
The new markets in HR tech software
We’re going to see disruption in existing categories, for example learning, and we’re going to see new markets being created. I certainly wish I knew what those are going to be- and my crystal ball was working! We invest both with the viewpoint of looking at categories and seeing what categories may be disrupted, and part of that is looking at market size, market trends and areas of opportunity. We are seeing this unbundling, not just in HR tech software, but I think more broadly and part of that is because the ability to open API’s creates platforms to be more accessible than we’ve ever seen them. We are in a current time of unbundling of software, because we’re seeing a lot of innovation that’s happening in early stage venture markets. Also, we’re seeing customers demand of their vendors that they need to be much more open and willing to integrate.
I think we’re seeing HR organisations realising that they have a lot of data that just goes unused, and that they’ve got AI and machine learning capabilities now that we probably didn’t have five years ago. So, we combine those two things, and we’ve got a tremendous amount of power of data that can be leverageable. Now, I don’t think a lot of organisations know what or how to do that, and part of this was maybe because they just don’t know the right questions that they need to be asking yet.
I think about this next evolution; we saw the first iteration of SaaS, and then we saw this evolution of early adoption of AI. But to me, the leaders of the next 10 years are really going to have this understanding of data, how to capture data and how to use the data, whether that’s in an enterprise application, or whether that’s providing those capabilities to an HR executive, so they can go and use them themselves. AI is one of these terms that has certainly been overblown over the last three or four years, but I still don’t think we’ve seen much progress in the last two years. I think we’re still dabbling in some interesting ideas and interesting ways to use it, but I don’t think we’ve harnessed the full capabilities just yet.
Talent could be hidden inside your organisation
We’ve all gone through annual performance reviews and we’ve all gone through different cycles of processes and many of them, unbelievably to most employees (myself probably included), a big focus over the last couple of years has been around skills. I do think that we still don’t have a harness on how to manage skills and build skills, because we’ve all seen this in corporations; someone leaves the organisation, you fire up the job rack, you post out the job, and you hope to get all these inbound candidates, when nine times out of 10, you have probably a good enough or better candidate in your four walls who you can develop probably relatively rapidly. But, you didn’t know how to do it. The ingredients are there, we just haven’t put them all together just yet. However, it’s not to say that the companies aren’t doing things.
Sometimes, workers are just disposable, you have to look at it a little bit differently globally, and that presents another challenge in itself. But, I do think that we are in an interesting stage where we don’t have a gap in technology or a gap in a lot of these areas, it’s more of a gap on how we want to harness all of these things together and explore new products to get to where we want to be. If we’ve learnt anything in the last year, it’s that we should be doing much more experimentation, particularly in HR tech and work tech. During the pandemic, we’ve seen companies that haven’t been prepared and were stuck because their technology wasn’t able to support the rapid changes that happened in the organisation. Unemployment went from three and a half percent to 14% overnight. We didn’t know what to do in that short period of time, and now we don’t know what to do to build the organisation of the future.
Acadian ventures give back to the community
We are definitely seeing this move towards more stakeholder capitalism, and we will continue to see that. Part of what we did when we started the fund is we signed the 1% pledge, like many startups do, of which 1% of our profits, essentially our carry, goes towards the foundation that we set up. We did that for two reasons:
- It’s something that I care about personally, because I’ve got young children, and I think it’s important for them to learn how to give back.
- It’s something that we try to infuse in all of our companies.
You can point back to a lot of successful companies, like Salesforce and Twilio, and many others that have embraced this concept because it was a core element of their foundation. So, I definitely think that’s a movement that is not going the other direction. The way I like to articulate our fund is we’re super specialised, we’re a collective of operator builders, and although we’re not an impact fund, we’re impact investors. I try to think about that, within every investment that we make, hopefully when our fund becomes very successful we’ll have options to put that into our foundation and do good with it. But, it’s also a way to infuse that mentality into the earliest formations of companies.
Diversity inclusion is very important, especially in this day and age. It is something I think about every single day. We’re not where we want to be as a fund in terms of funding entrepreneurs of diverse backgrounds, it’s going to be a journey for us, but it’s something I think about every single day- both from an investment perspective, as well as an LP perspective. You have to look at all these things collectively, and that’s what we’re trying to do is look at what we can be doing to give back and influence our companies. Then, how can we be looking at this from a data understanding that we’re evolving our fund to where we want it to be.
Who do you admire?
I have had a lot of mentors in my career. Adam Miller, who was the founder and CEO of Cornerstone has been a mentor of mine, both directly and indirectly. He’s become an LP in the fund, and we’re now investing in his next company. I look at someone like Marc Benioff, who has been a great pioneer of our industry, but also the things that he does philanthropically are just fantastic. I look at a lot of VCs and try to emulate a lot of things of what they’ve done. Byron Dieter has certainly been one that I just have watched both in a boardroom and on CNBC. My father has been hugely influential to me, and just understanding that you have to put the work in, which is something I try to teach my children as well because nothing comes easy.