Investing in Innovation: When it Pays to Play

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Here is an interesting proposition. You are a software provider, but you know you will never have the time to create every feature your customers might need, especially in the timeframe they want it. But you have other choices:  typically, a company might partner with other providers, such that their customers can get the solutions they need – but you may not have too much influence over that partner’s roadmap or product direction.  Or perhaps you as a software provider might just acquire that other company rather than partnering with it: a venture that may prove pricey, and may or may not deliver long-term value.

 

But what if there were something in the middle – more skin in the game than partnering—but not as much skin as if you acquired the whole company?

This is the road that software provider Cornerstone OnDemand (CSOD) is taking: the “something in the middle.”  Through its Innovation Fund, the company provides venture capital, workspace and mentorship to the young companies, particularly those seeking to build businesses in the LA area, where Cornerstone is located.

That said, one of the early growth stage companies involved in the program is in Silicon Alley—New York City.  Named One Month, it has an interesting value proposition:  that its clients can learn a new technical skill in one month. Its video-based courses help students complete a project (such as building an app), possibly while learning a new software tool, such as Ruby, Python or Swift.  Company executives state that 25,000 people have taken its courses with a high retention rate.[1] Course enrollment start at $49 a month.[2] Named one of Social Media Week’s “10 Start-ups to Watch”[3] last February, it has had three rounds of investors, including Cornerstone in the third round.[4]

In theory, this functionality could be available to CSOD’s customers as a means of promoting rapid learning models.  The company has made no promises for any long-term support of the solution for its customer base.

Silicon Valley isn’t totally ignored here either. Rallyteam relocated to San Francisco from the Santa Monica area to participate in the Orange Fab accelerator program.  Backed by Norwest Venture Partners,[5] among others,[6] and now by CSOD, the company provides SaaS solutions which encourage what it calls “smart matching” of employees to projects for agile and effective teamwork.[7]

Workpop and Strive are both in Santa Monica and both companies have created programs for hiring management.  Workpop was recently named one of the “Coolest New Businesses in LA” by Business Insider.[8] It provides tools and data to give an employer a better understanding of a candidate’s fit within a company, with the goal of both reducing time to hire and decreasing attrition. A key feature of Workpop is its tracking of people across companies rather than solely within a specific company. Workpop has completed its second round of funding.[9]

Strive, also in its second round of funding,[10] goes after that illusive technical software developer.  Founded by the same team that created CodeWars (a community in which developers compete on code challenges), Strive’s goal is to automate the technical hiring process for its client companies. Its platform is intended to source and test qualified developers, exercising their coding skills for more effective matching with positions.

Investing in young startups is nothing new in the software industry: companies such as Salesforce.com have been doing it for years.  However, in the integrated talent management suite world it is a bit rarer: Cornerstone may well be a bellwether as to the effectiveness of such an initiative by an HCM software company.

 

  This publication contains general information only, and none of the member firms of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collective, the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

 

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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

 

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[1] https://onemonth.com/

[2] As reported by One Month executive at an introductory event sponsored by CSOD.

[3] http://socialmediaweek.org/newyork/events/startups-to-watch-why-entrepreneurs-will-build-the-future/

[4] https://www.crunchbase.com/organization/one-month-rails

[5] http://www.nvp.com/team/matt-slotnick/

[6] https://www.crunchbase.com/organization/rallyteam/investors

[7] https://www.crunchbase.com/organization/rallyteam

[8] Business Insider, February 18, 2015.

[9] With $7.9 Million In Funding, Workpop Launches As A Job Marketplace For Hourly Workers by Ryan Lawler. September 16, 2014 http://techcrunch.com/2014/09/16/workpop/

[10] https://www.crunchbase.com/organization/codewars/investors

Christa Degnan Manning

Vice President, Solution Provider Research Leader / Bersin, Deloitte Consulting LLP

Christa leads technology and service provider research for Bersin, Deloitte Consulting LLP. In this role, she helps businesses align their workforce support strategies with appropriate third-party software developers, service partners, and governance models. A 25-year technology industry veteran, Christa’s expertise assists organizations in creating functional capabilities and employee experiences that increase productivity, engagement, and workforce efficiency. Frequently cited by business and trade media, she has presented market research on business to business trends, leading practices, and expected challenges and benefits at industry and user conferences globally throughout her career. Christa has a bachelor of arts in English from Barnard College, Columbia University, incorporating studies at University College, University of London. She also holds a master of arts degree in English from the University of Massachusetts and has completed executive coursework on business metrics at the Wharton School, University of Pennsylvania.

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