212 - "Here's How We Accidentally Made Millions Of Dollars" | Adam Miller, Cornerstone onDemand

What's up, guys? JD here and on today's show. I'm bringing you my conversation with Adam Miller, who built and sold a business for $5.2 billion. This conversation is from episode 158. You guys loved it. So I thought it was worth a replay. Adam is the godfather of LA Tech. He started a tech company in Los Angeles way back in the early 2000s before anybody was doing it. And it was an e-learning company before anybody ever used the word e-learning. You guys are going to love this story. That's coming up in just a sec. Welcome to the podcast. My name is John Davids, but you can call me JD. I'm the CEO of Influicity and on this show, I talk about awesome businesses and the people behind them. If you don't think I'm doing a terrible job, then go ahead and leave me a rating or review wherever you're listening. Get my best stuff to your inbox at johndavids.com. And now let's get to the show. You're listening to making it with John Davids. So Adam, you started what became a pretty big company, Cornerstone On Demand, out of a one bedroom apartment in New York City. Can you kind of take me back and tell us the story? Yes, started literally in a small apartment in the Murray Hill manner, 34th and 3rd in Manhattan with nothing more than really a whiteboard and an idea. Convince a few of my friends to join, I convince the people I had been working with at an investment bank to be the initial investors and was really focused on this idea that someday the internet could be used to educate people. And we decided to focus on adults because the thinking was kids are already in school and a lot of our content was likely going to come from universities at that time and we don't want to compete with our partners. So we're going to focus on adults who even though they have more money and more flexibility actually have the least access to education because depending on where you live, there might not be a school or a college near you. Depending on your work schedule, you might not be available when classes are being dealt and financially it might be cost prohibitive for you to be taking classes depending on what you were doing and what your job is. And are these classes of any sort or was this professional development? Was it cooking classes? What kind of classes were you talking about? Early on it was mostly professional development but it was a little bit of everything and most of the content you have to remember is a lot of time ago. This was 1999 2000. Most of the online classes were being done by innovative professors at some universities. It was not widespread. There were very few people that were learning online. In fact, I remember when I started the company every time we had an onboarding class of new people working at the company, I would ask how many people have ever taken an online class? And for probably the first seven or eight years of the company, the answer was nobody. Nobody had ever taken an online class and as the company got more mature and the market got more mature by the end we would have new higher classes of 30, 40 people and everybody had taken an online class. So over the course of 20 years this went from a crazy idea that people would actually use the internet, use the web to get trained and to learn things to something that had become so commonplace was completely obvious and everybody had done it. But back in 1999 when you were starting the company, did you already have a full-fledged idea that online-based training education is going to be a thing or did it start with a different vision and then pivot? Yes, so as you know, all successful companies have that inevitable pivot somewhere along the way. In our case, we knew that kind of the thesis from the beginning was that the internet was going to be a way for people to access things from anywhere in the world, including training, including ideas. And so we did think the internet, the web specifically, would be used to deliver training. In fact, the reason I started the company in November of '99 was because I thought broadband was about two years away from being widespread. I was wrong. I was off by a few years. The problem was five years later that you really had broadband connections and people were able to actually download a class. But the thesis was that people would use the internet to train and on that little whiteboard that I had was one picture. And on the picture were the three places that training might come from, universities, corporate training providers, and potentially these new e-learning companies that would be focused on online training. And that the user of those, the student, would be either at home as an individual, today we call those consumers, or somebody in a smaller company, we call that SMB now. And it could be somebody who was working at a large corporation, call that enterprise. And so literally in this picture had the three boxes on top, the three boxes on the bottom. And then we called the original name of the company was CyberU and CyberU was in the middle. And so we were going to write a very 99 name, CyberU. And it's funny how we got rid of the name. But the idea was we were going to be back then. This was a 1999 word. We were going to be a intermediary that sat between the buyers and sellers of, in this case, education. And so our first approach here was consumer. And so we started with web developers, we scoured the internet for anything we could find that looked like a class. So by this point, I had moved to LA. It was probably three months into the company. It was a rainy day in New York City. I was at Staples buying some stuff to make me feel like I was doing something useful for the company. And as I walked out of Staples, there was a downpour. It's pouring rain. It's just pre-Uber and couldn't get a cab. And I didn't have anything for the weather. It was nice when I went out to the store and pouring when I came back. And I thought, wow, this is just really too hard here. It's very expensive. It's hard to hire people here for a startup salary. And why don't I do this somewhere nice? I can do this anywhere. So what part of you did you work in the first place? Are you born there? I was born in New York, grew up in New Jersey, had a lot of friends there, had worked in New York. That was kind of where I thought I was going to stay. And I thought, you know what, you could start a company anywhere. So I packed up my white board, my clothes, and moved out to LA. And that's where the company really took shape. This episode is brought to you by my new tool, the one-minute marketing road map available at johndavids.com/roadmap. It's a fully customized report that shows you how people are finding you online, and where you're losing sales. We've packed 10 years of research at Influicity into a smart AI power tool that delivers real results. I'll tell you things about your business, you probably haven't thought of. Go to johndavids.com/roadmap and get your custom report. That's johndavids.com/roadmap. And was the product just to kind of nail down this? We're talking 1999, CyberU, was the product, the software underlying the classes, or were you actually going to create the curriculum, the material, the video content, the whole staff? Great question. So early on, we had seen what happened to the CD-ROM business. So this is how long ago it was. And CD-ROMs kind of came and went really quickly. But what you saw in that short period of time in that space was that initially it was the developers of the content. People that were making the games or making the educational content, the entertainment, were the popular successful businesses. But by the end of that space, the winners were the distributors, the publishers. Electronic Arts, Blizzard, Activision. They weren't initially. They weren't developing the content. They were publishing or distributing the content. And so I thought the same thing's going to happen in this space. So we don't want to create the content, we want to distribute it. And that's what we did. We started out as a distributor. But our thought was, we would sell the classes and take a cut. And the internet bubble burst, probably nine months into the company, maybe even less, six months. And so that was when we had to make our first pivot. And we realized we're not going to be able to sell the consumers. We had these web developers. We created product over the web. We created basically a website for people to go and find the classes. And we realized, hey, it's going to be easier if we sell the companies. Why don't we sell the small businesses? We'll talk to people at big companies that we know, get their feedback to build a product that works for small companies. And two things were true at that time, which make it interesting. So one was all our developers at that time were, everybody we had in the development team, were web developers. So when we started building the software, we built it over the internet. Today, you call that software as a service, cloud computing. That wasn't such a thing. It wasn't such a thing. It just happened to be the kind of developers we had and how we built it. And the other thing that became true was our friends or friends of friends that we could talk to in HR that were responsible for training or got us introduced to somebody who ran training or ran employee development. We're all working at big companies. We thought we're this tiny little company in L.A. Nobody's ever heard of. There's no way we can sell the big companies. But let's talk to them, figure out what to build, and then we'll sell to the little companies. And so literally every two weeks, we go to New York, talk to people of these big companies, get their feedback, fly back to L.A. I draw on cocktail napkins, what the screen should look like. We would build it in two weeks later, come back. Now, it just so happens coincidentally that sprints today in software development or two weeks long. That just happened to be our travel schedule. So every two weeks we were going back and forth. Lucky coincidence. We were kind of doing best practice before what's such a thing. And what happened was that the after doing this for months and months and months, the big company people started to say things like, oh, you know what? We could really use this because we'd show them what we built every couple of weeks. And they'd say, you know, the screen, we could use this. And we would say, well, of course you like it. We built when you told us to build. We built exactly what you suggested. And they said, no, really, we, we want to use this. And we're like, well, but you can't because this is for small companies. No, I know really, we want it. We were terrible at sales. And so it sounds like you were saying no to a buyer. That they literally wanted to buy this stuff. And it turned out that our very first clients were huge enterprises. They were in these big banks and insurance companies. What was the first deal? Do you remember that first sale? Oh, I remember the first three. Yeah. First three clients were at Salmonsmith Barney. So Smith Barney specifically, Aeon, which is a huge insurance company in Washington, Mutual, which is no longer a business. But at the time was the hottest bank out there. Oh, it was huge. And so, and the dollar figure, these are six figure deals. So our very first deals ended up being seven figure deals. Wow. Wow. You accidentally found your way into a seven figure deal. Yeah. And you did it. It sounds like it's not a big deal. So they were kind of per user per month at the time. But they got very, very fast because they wanted to roll it out to every employee. Because it turns out in big company, everybody needs to be trained. Everybody's got to take compliance training. Everybody has development needs. Everybody needs to be onboarded. So it really ends up being not some people in the company like most software, but every person in the company that was part of it. And so these deals got very, very fast. And so, did you ever hit the SMB market or you never needed to? It was just always big companies. Eventually. Eventually. At first, we were doing all these New York financial service firms and companies that had a big presence in the city. And when September 11th hit, we were super exposed because our entire portfolio of our entire pipeline were New York based or New York concentrated financial service firms. And so the first thing we did is we diversified our portfolio. Remember the next deal we did was SOB. And then we did a deal with Honda. And we just kept going from there. And so we went to other big companies. So at the very beginning, I remember one of our early board members said, oh, you're really a financial services company. And I'm like, we don't want to be a financial service company. That's a bad idea. We're going to diversify. And so we started doing manufacturing in other industries. And then people would say, oh, you're really an enterprise company. You just deal with big companies. I thought, well, there's a lot of other companies, aren't all big companies. And so we started a mid-market team. And over the years, we ended up building a small business team. We built a team just selling to the government, just selling to schools, just selling in nonprofits. We ended up with a really big sales team that was broken up into every vertical and every geography you could think of. So there's two things that struck me about the story you just told. And I've got some experience with this myself is you came into a market too early. And like all entrepreneurs, you maybe felt like you were right on time or too late. Turns out you were five years early, which happens. How do you survive? Because when you are on time or late, truly, it's way too late. You've totally missed the opportunity. But then how do you survive five years before the market is really ready? Did it take five years for this thing to take off? It took seven years. And how did you last have enough? I'd say we had a couple of different disadvantages early on. One was at the time, we were the only tech companies in Los Angeles. So it was really hard to find people to work with us that had any sort of experience that was relevant. So we would have to find high potential people that we were trained and they became relevant. That turned out to be really good for us. And we ended up with very loyal employees and had great retention and great culture at the company. But it was also challenging because people didn't come in with experience knowing what they were doing. The other disadvantage we had was all the money was in Silicon Valley or in New York. So our kind of early investors were all in New York and all the VCs were in Silicon Valley. And at the time, this was back in 2005, tried to raise money and just completely failed because there weren't enough deep-pocketed VC firms in LA at the time. And the VCs in Silicon Valley had the luxury of never having to get on a plane or drive to go anywhere. They'd be able to go to board meetings that were really close to them. They had no commute. And so it was a different bar to be able to get investment where somebody would have to get on a plane to go to a board meeting. And that made it harder for us, but it also made us super disciplined. So we were really scrappy. We were really good at conserving money. We were really good at living kind of paycheck to paycheck almost during those early years. It made it harder to grow because we couldn't kind of advance capital to grow faster. But we built all the right systems and discipline. Retention was super important because we couldn't afford to lose any clients. And it made us, I think, ultimately a much stronger company because of all the disadvantages. How early on did you raise money? Was it pretty much at the beginning? So the very first money came the day I went to quit my job. So when I went to quit my job to start the business, typically in investment bank at the time, I was working corporate finance. And the standard was, and I had seen this over and over again, that if somebody left the firm, they were immediately escorted out by security. And the reason was there's a lot of inside information. And so people don't want anybody taking any of that confidential data. The day I left, I had already cleared out my desk. I was ready to be escorted out. And I went to my boss, tell him I was resigning. And he said, oh yeah, we all knew you were going to start a company. How much do you need? And how much time do you need? And my seed money came from everybody I worked for. So I was an associate. So it was the director, the VP, the managing director, the even the vice chair, all invested in the company. And even my analysts who worked for me invested in the company. And all of them did extraordinarily well. I think they all made about 150 times on the money from that investment. That's a lot of faith and a lot of pressure. So you raised that money. The dot com bus happens pretty early in your journey. And that was a challenge too. I'm sure. Was that a big headache? A huge problem. I mean, obviously the dot com bus was huge problem. And so very hard to raise money at that time. And when September 11th happened, also really hard for us because it was huge risk. Everybody in my sphere of influence told me to cut the company, right? Cut it down to the bone. You're only going to be able to survive if you hybridate right now. It's going to be really hard to keep going. We had about 15 people. It's already pretty small. And I thought if we cut the company in half and we win these deals that are in the pipeline, we're going to go out of business because we'll never be able to support these companies. These were big companies. They needed a lot of servicing. And so in the very beginning, we said, I remember on September 12th, September 13th, September 14th, everybody was saying, you got to cut, you got to cut down the whole company, you got to just try to survive. And I watched an episode of West Wing on the 14th. And on the 15th, I came into the office and I said, we're hiring because I thought if we cut right now and we win these deals, we're never going to be able to service them and we're going to go out of business. And I would much rather go out fighting. And we ended up closing three of the four deals we were working on. And we needed that team to service them. And that's how the company succeeded because of that. So it was big decision back then. But there was a lot of discipline early on because of the lack of capital. Of course. And it's a great training round. People completely underestimate the, when it turns out to be a luxury of not having the money because you develop a muscle that you never would have developed if you were flush with cash. So I think you raised, if I'm not wrong, about 130 million before IPO, or was that no, 20 million, 20 million. And then you IPOed in 2011. That's right. And was the IPO, were you guys sailing and everything was great and so time to IPO? So 2007 we raised our first venture capital, Bessimer, Byron Neeter, Bessimer led the round. We were his first real cloud deal. And he ultimately became the King of Cloud as an investor and had an incredible run. That was our first money in 2008. The board said after the financial crash and when the housing market collapsed, they said, you got to go out and raise some money. I said, why? We're growing things are going well. At this point, we were growing at 60% a year. And the business was doing really well, super capital efficient. And they said, look, you got to raise money because we don't know how long this downturn is going to last. It's going to be really hard to raise capital right now. And we have to assume that you're not going to be able to sell anymore. But you won't have any more sales. I thought, well, that's kind of dumb assumption. We're selling every day. They said, this market is terrible. You got to assume the worst. And so I actually had to go out and raise venture capital in January of 2009, which was an incredibly difficult time and actually pulled it off. So I spent the back half of 2008, trying to raise money again, closed around early 2009. We were one of the first deals that got funded and that helped us keep growing the business. But we never spent a dollar that money we raised in 2009. So sales didn't dry out. Our first round of venture capital, we never spent second one. Wow. And then 2011, the IPO happens and you IPO because things were going well, I assume. The business was going well. We became part of the economy called, well, we were an enterprise software company doing software as a service who were competing in the learning market. So we have what was called the learning management system. And there were several of them. And it was a very competitive market. We were not the biggest and the broader talent management market, which is kind of everything you do with your employee, recruiting, training, performance management, right goal setting, performance reviews, succession planning, onboarding, all those things are part of how you manage an employee. All of the companies competing in that space were kind of clumped together. There was a lot of companies in the space. There were a few winners, but two companies that already gone public and I was convinced that there would be a third and that was it. And that if we weren't the next one to go public, we would probably never be able to go public. And so as this, I had this epiphany in 2009 and it became a bit of a race between 2009 and 2011, who we go public first. We won and within six months of us going public, all of the other private companies either got acquired or merged together or shut down, but they didn't go public. And the day you end public was also kind of a rocky day because there was a big news event that day, huh? Well, that week, so week, we went public, you know, when when things are going well during an IPO, people will joke around and say, look, the only thing that's going to stop this thing is a nuclear meltdown. And on Sunday night, we were on the road. When you go public, you do this road, you go meet investors all around the world. We had already been to Europe. Things were going really well. We came back to the US. We were already touring in kind of big fanalities in New York. And we, I remember we were in the hotel. It was Sunday night and the investor banker called Guy Brewing Equity Capital Markets called and said, look, I got bad news for you. I said, what? I was plenty on talk to about raising our place, like the price per share for the opening price. And he said, turn on your TV. And there had been a tsunami in Japan. And the nuclear reactors were melting. And so there literally was a nuclear meltdown that was happening. The Nikkei was way down. The Dow was going to collapse the next day. He said, almost everybody has pulled their IPO. And I said, because there were multiple companies that were trying to go public that same week. And I said, you know what? We're having fun. It's going well. We're just going to keep going. Screw it. And that's what we did. So we kept having meetings, Monday and Tuesday and Wednesday. And we ended up pricing the deal, I think on Thursday. We ended up pricing the deal on St. Paddy's Day, which was incredible because we went public on the NASDAQ, which is in Midtown Manhattan on St. Patrick's Day, which is just an incredible experience. So we flew out. And this is part of the culture of the company. We flew out. Anybody who had been with the company for more than 10 years or had been an employee of the year or who was one of the first investors, like our angel investors early on and just had an incredible experience taking the company public. We ended up successfully pricing. We didn't get the raise of price, but we priced it at $13 a share and ended up opening an $18 a share. So it was considered very successful and the rest is history. So we're then a public company for 10 years after that. So this whole journey, I mean, just what you've spoken about so far, you had to deal with a whole lot of bruises and punches and unexpected events. And you kept pushing through it. Were there ever times where you felt like throwing in the towel or maybe the team wasn't willing to come with you or were you just pushing through many times? Many times. There were lots and lots of arguments along the way. One of the big arguments we had a lot in that inner and period right between when we started the company, when we started growing and when we went public, was remember these were the very early days of cloud computing and software as a service. And so a lot of the companies that we were trying to sell to would say to us, we love what you have, give us the software and we'll install it on our mainframe. It will install it behind the firewall. And we would say no, in the head of sales that basically my partner in sales, Stephen and I would have these arguments every single day because he would say, look, we need this deal to keep the company going because we were essentially running the company off of the revenue that we had from these deals. Because people by then people weren't paying per user per month, they were paying per enterprise per year and they would pay up front. They were three year deals where they would pay up front. So we'd be able to use that money from the deal to kind of fund operations for the year. And he said, look, we really need this next deal, whatever the next deal happened to be, the only way they're going to sign the deals if we give them the software. And I had become convinced that we were onto something with this idea of leasing the software and delivering it only over the web. And I said, if we ever do it even one time, we're going to ruin the business because that one time is going to become a hundred times. And we're going to end up being this behind us, the firewall company, kind of the old way of doing enterprise software. And so we never did it. So that was that was very tough kind of holding off that idea. It turned out to be really good not to do that, but it was very risky not doing that because we needed those deals early on. And we we did in fact lose a lot of those deals. It wasn't theoretical. Like those companies said, in the early days of SaaS, they said, we don't want it. We're not comfortable having our data out there on the internet. So we're not going to do it. Yeah. Big transition. And a lot of companies would have folded and bended the knee there because they would have said, listen, the cash is more important and the customer is asking for this, but you really had a vision. And as you said, it was the linchpin to the whole business. Ultimately, it became a huge competitive advantage was that it was 100% cloud 96% recurrent. It was this kind of cash machine once it really got going. And it became a huge advantage for the business. And one of the reasons we were a successful public company, but at the time, looking at that million dollar deal and knowing that we're going to either win or lose based on this decision. And we lost a lot of those deals. So it was tough. Pay me. We persevered. And I always say that to be a successful entrepreneur, you need to have three things. You got to have passion. You got to care about what you're doing. You got to have persistence. And you got to have perseverance. And there's a fourth p2. You got to be persuasive because you got to convince a lot of people on the way to come on the journey with you. So you're in LA during these last 20 plus years. When I'd imagine the whole ecosystem, I'm not even sure if there was a tech ecosystem in LA in 2000. But certainly there is one now. What's that evolution been like? You've been kind of in the center of it the whole time. Yeah. So in some ways, we helped shape it because early on, we knew that we were one of the first tech companies. We saw the tech industry kind of explode in LA and all the companies starting. Some of those people came from Cornerstone and started other companies. And we helped shape it. We created an accelerator or office. We had a venture fund that was supporting some of these companies. We put on events. So we would host this LA Tech Summit every year to bring together the whole tech community. And ultimately, kind of later on towards the end of Cornerstone, even today, I started something called LAtech.org to have the tech community give back to the city. And that's been very effective as well. So we've been helping underprivileged kids in LA get jobs in the tech industry with an internship program. And we've done over a thousand internships for people that would never have access to those kind of jobs by opening up this this way, this path for them to get into the industry and be successful. So what how would you characterize it today? Obviously, everyone talks about, you know, being in Silicon Valley, New York and there's Austin and there's Miami now. But where does LA sit now? I feel like of especially throughout COVID and after COVID, there was a real renaissance. It's definitely top five, arguably top three in the country for a city around technology and has been really successful from that standpoint. The industry is just completely blossomed. And so we have a lot of expertise here. One of the big challenges early on LA has a number of universities with very strong computer science departments. But what was happening is the people with the students would graduate and would move to either San Francisco or Seattle. Now we're much better at keeping the people here. So we're keeping the talent here, we're keeping the companies here because of the success of companies like Cornerstone. There are a lot of dollars here now. So VCs either have formed here or, you know, even Valley VCs or New York VCs, Boston VCs have investments in LA. A lot of times they'll have a partner, a beast in LA to keep track of what's going on here. There's more press about companies in LA. There's .LA, which is a tech publication about Los Angeles. So the whole industry is just completely blossomed. And that's been great because what I used to say is when I started the company, it was not socially acceptable to be in tech in LA. Like everybody was either an entertainment or real estate. I would think it was pretty weird. It's sort of really weird thing. Like it was uncool to be in tech. And now everybody wants to be in tech. It's the hot industry to be in. Right. I remember I think it was transition. I think it was 2007. I think the first LA tech company I heard of was shoe dazzle. Right. And I remember hearing that they were in LA. And there were a few a few names early, but it was it was not a place where you would think about going to. And now it is quick break. So I can tell you about Influicity. That's the little marketing agency. I started in my apartment about 10 years ago. Well, fast forward. It is not so little anymore. Influicity works with some of the biggest brands in the world building customer communities that drive revenue. We do this through influencers, podcasts, paid media, social media, content, AI and so much more. You can learn more at influicity.com. And hey, while you're there, check out our case studies. We have a lot of them. That's influicity.com. So what's the next chapter? Let's just put a bow on this. What's the end of the cornerstone saga for you? Yeah. So I had been doing cornerstone at the time for 17 years. And I start to have this recurring dream. We would have these big anniversary parties every year on the anniversary of the copy, which was November 8th every year. And we would do really big ones every fifth year. So the 10 year, the 15 year. And I knew we would have a big 20th anniversary celebration. So I started having this recurring dream of what I would do at the 20th anniversary. Beyond stage. I had this dream. ACDC is my favorite band. I had this dream that I was going to come out with an electric guitar, start playing. By the way, I have no musical talent whatsoever. Start playing. And then I would have Angus come out and start playing with me. And then the mic would drop. And that would be it. That was the end of the dream. And I was done. I would never, I'd never come back. Now, keep in mind, it's my dream. So I get to decide who's there and who's doing what. But I started to think about, look, if I'm ever going to have a second act, I got to be done around 20 years in. And so I did my swan song, which was to acquire what at the time was our largest competitor. We had already become three times their size and turned cornerstone into the definitive victor of the space. So when I started out back in the early days, I told you it was very competitive market. There was a research analyst for the industry that put out these publications about the companies in the space. And he listed 150 companies in the space. And we weren't even listed. So we were like a minimum 151 in the space. And at the end, we were definitively number one. We had totally dominated the space. And I felt like we had accomplished our mission. The mission was to improve access to education for adults. We had delivered about two billion courses to people, two billion classes, to people all over the world in 53 different languages in 182 countries. And I thought, look, did that really well? If I'm going to have a second act, I got to do it now. And transition to chairman, executive chairman. And then, you know, shortly thereafter, we sold the company. We took a private in an all cash deal with clearly capital and sold the company. And so that was October of 2001. 2020 was the 20th year. In 2020, I did the acquisition of Sava, but 2020 is, we all know, also was when COVID hit, at least in the States. And so it wasn't so easy to leave the next day. So it was a bit of a transition, but we managed to sell the company October 21. And it was a great transaction for everybody involved. And I was, I was done and ready to start the second act. Wow. What, what was that next day like? Were you already on to something new? Or did you have a day where you said I got nothing to do this morning? There were a couple months where I, I had started to transition. I had started thinking about that second act as soon as I moved to chairman. I started thinking about what am I doing next and how am I doing it? But that, that period, for me, the biggest difference was COVID. So the transition was different because it happened during COVID, during the lockdown. And you may know that LA was particularly strict about the lockdown. I know. And so we were, we were whole, literally. And for me, kind of leading up to that moment of COVID, my travel had gone up to about 70%. So most people don't realize what that means. 70% means you're on a plane two to four times a week minimum. And you are maybe at home Friday to Sunday, but you're probably not home the rest of the week. And I was traveling nonstop all over the world. We had offices in 25 countries with 3,000 people all over the world. And there were investor conferences and industry events and, you know, seeing the employees and dealing with customer meetings all over the world created this need for intense travel. And then it just went to zero. So it went from 70% to zero. And that for me was the biggest transition. It happened to almost perfectly coincide with when I transitioned out. But that was the big difference. And so there was definitely a couple of months where my family was like, who is this guy and why is he here? He's doing the house all the time. Wow. And so what is act two? I mean, this part of your life is pretty different. It's philanthropic. It's charitable. You're trying to solve some pretty big problems. What's the mission today? Yeah. So act two for me has always been a vacuum back to the community. And I tried to be really proactive and thoughtful about what that meant. So my wife and I started 1p.org, which is a foundation focused on solving intractable problems. And we thought a lot about what problems are intractable. What should we be trying to solve? And so we thought about it as concentric circles. In our city in Los Angeles, the biggest problem by far is homelessness. In our state, California, there's definitely issues around education and workforce development, which was a big focus with cornerstone. In the country, there's lots of issues, but one of the biggest ones we chose to tackle was gun violence. And in the world, obviously the biggest intractable problem is climate change. And so we started thinking about how can we have impact in all those different areas? At the same time, I still love startups. I love tech. I was doing a little bit of investing. I had been doing investing really after cornerstone when public I started doing some side investing, mostly in other software companies. And I continued that, but that alone I found a little bit boring, candidly. And I thought there's a lot of money out there, but there's just not enough operators. And so I decided to spend a little time operating as well, but still focusing on giving back to the community. So I helped co-found a couple of companies. One of them in still is building modern software for nonprofits, because I had spent a lot of time with nonprofits all throughout the time with cornerstone, because early on I decided that I didn't want to be on corporate boards, but I would be on nonprofit boards. And so got very involved with some pretty successful nonprofits and helped them grow and scale, but also saw the challenges they had with technology and tools to help them do their jobs better. And so thought, if no way else is going to do it, I'm going to do it. And it still is really meant to give nonprofits a holistic purpose-built solution to maximize their impact. And then another company I helped co-found was with the CEO of Team Rubicon, where I had been chairman for a decade. He had been CEO. And that company is called Brownswell. In Brownswell, in some ways is like the Robin Hood of Charity, where we're helping the democratize philanthropy by enabling corporations in the same way they set up a 401k plan to set up a private foundation for each of their employees. It's really a micro-donor advice fund to help empower the employees to not only save, but also give back to the community and be filled with nonprofit. Yeah, so you just listed off the biggest problems in the world from homelessness to gun violence, to climate change. Let's just take homelessness for a second, because I know a thing or two about this. I mean, lots and lots of friends in Los Angeles, and I've driven the streets many, many times, and so I've seen it up close. What do you do about that? And are there transferable skills that you learned in 20 years as an entrepreneur that you can take to fight homelessness? Absolutely. So we spent about 18 months doing research on why is the homeless problem so bad? Why is LA so much worse in other cities? What are the organizations doing? What works in other cities or even countries that's been successful to fight homelessness? Why is it such an epidemic? LA just threw out some numbers, spent $10 billion over the last decade on fighting homelessness, and the problem got 72% worse. There's now about 75,000 unhoused individuals in LA. And unlike most cities, 80% of those people are also un sheltered, which means they're living either on the street or in their car. They're not housed or even sheltered. And so we spent a lot of time trying to understand how did we get here? This is an epidemic. How did this happen? And what we found unfortunately is that there's no silver bullet. There's no one problem. There's no one solution that it really is a series of different issues that need to be resolved that are conflated together to create the mess of a problem that it is. And so that, if you're going to solve the problem, it has to be a comprehensive solution. You can't solve a really complicated problem with a simple solution. It's got to also be a little bit complicated. It's got to be holistic. But if you spend $10 billion and you're telling me the problem gets a lot worse, I mean, fundamentally there's probably one or two things that are going very wrong. The money's not going to the right place or it's not. Definitely. So we created an organization called Better Angels. We're on the CEO. We treat it like a hyper growth startup. And the organization is leveraging innovation and pragmatism and just bold thinking to actually change the game. We're focused on five pillars, prevention, because even if you were to somehow magically solve the problem tomorrow, if you don't deal with prevention, it's just going to happen again next week. And so we started with prevention. We have a micro loan program that's proven to be very effective. We're dealing with services and shelter and housing. We're starting an affordable housing fund to prove that the private sector actually can make money in this part of the market. And that this idea that has to be solved with public money doesn't make sense. The government is not that good at housing development. The private sector is way better at it. And so leveraging the private sector, leveraging private capital to show that people can make money in this part of the market and still be successful while also helping solve the problem. And then lastly, technology. There's about 3,000 outreach workers in Los Angeles County in close to 10,000 people in LA that deal with homelessness either directly or indirectly. And the technology they have today is terrible. So we're building state-of-the-art technology to make them effective at what they do to deliver results. Yeah, and so I'll just preface this by saying I'm not an expert on this at all, but I know I believe that capitalism is a wonderful tool to get a lot of stuff done. And when you can put a profit motive in place, you can align incentives. So I thoroughly believe that if you can actually turn this into a business objective and people can build businesses and make money around this, absolutely that this, you know, you can build houses 10 billion dollars and the problem gets 70% worse. If there was a profit motive there and when you have the government trying to solve this problem, the motive is often let's get reelected, let's stay in office, let's let our constituents think that we're doing something when maybe we're not doing anything at all or it's kind of productive. So I mean, is your general ethos that this needs to be, this needs to move to more of a private sector solution? Or do you think the government can fix this, but they just need to maybe realign their incentives? Housing specifically and the creation of affordable housing needs to be a private sector solution. The way the government's doing it, an individual unit, just think about taking a homeless person off the street into an individual permanent housing unit is costing about $750,000 for one unit in L.A. It is taking five to seven years to build. The private sector, we believe, can do that same unit for $250,000 and have it done in 18 to 24 months. So it's completely different. It's day and night and so if we can get the private sector to do that, they should. But when you think about something like prevention, that ultimately should be the government solving prevention. We're showing them how we're creating a model that works that can be replicated and we're proving out that it works, but given the scale, it really should be the government that's solving it. And a couple years into this new journey for you, how are you seeing what's the reception? Are people listening or are you encountering a lot of big challenges again? You know, the challenges are different. Challenges are different. I thought there was going to be, with better angels in particular, I thought there was going to be a lot of opposition from the nonprofit sector, like Who's this guy who is he think he is and why is he coming into our playground and that's not been true. They've been super receptive. We've been very inclusive about how we've approached this to really bring everybody together to help solve this problem and that's worked really well. Where we've had a little bit of resistance is the government itself. We're really the legislative bureaucracies that are out there because they want the credit for fixing the problem and so they don't or they just want to keep doing what they're doing. And so they don't love the idea of a disruptor coming and messing up their day job. But that's not what needs to happen. I think you're very generous in that description. But this comes down to very simple. You show me the incentives and I'll tell you what's going to happen. When the incentive is, I want to get re-elected, it's totally logical that you would have a lot of lip service. But you don't actually want to solve the problem because then what are you getting elected to do next time? So I hear you. Well, listen, this is amazing and it's amazing that someone like yourself is rather than just hanging up the shingles and hitting the beach. You're going to do this all over again and maybe it's because you're maybe gluten for a punishment, but you also love the adventure of it. Yeah, look, it's exciting. It's fun. It's mentally challenging and super interesting, right? All these things we're doing. Also building another company today knowing all the mistakes I made at Cornerstone and being able to replicate the good things and eliminate the bad things is super helpful, leveraging all the new tools that are out there, leveraging AI in a way that you couldn't do before. So all of that is fun. It's really interesting, but I also try to leave some time for friends, family, and fun. I think you've earned it. Adam, where can people learn more about all this stuff right now? So they could go to 1p.work, the number one letter p.work talks about everything I'm doing philanthropically and 1p.bentures is everything I'm doing for profit and 1p stands for one planet because we only have one planet and we're off to share it and it's trying to make it better. One day at a time. Adam, thanks so much. This was great. Thank you. Appreciate it. Thanks for listening. Hope you enjoyed this episode. If you did, leave a rating or review on Apple or Spotify wherever you listen to podcasts. 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