Episode 15: Understanding the Shift from HR Tech to Work Tech (Interview with Jason Corsello, CEO at Acadian Company)
The HR technology space continues to attract a lot of attention as well as a growing level of investment. There are literally thousands of vendors in this space. John Sumser said there's 40,000 that he's tracking, which means there is a hell of a lot of choice. But whether you are an HR practitioner, a buyer, an investor or an HR tech company itself, how do you navigate what is a complex and at times confusing market and should it even be called HR Tech anyway?
That's the topic for this weeks episode. Where I talk to one of the most knowledgeable and experienced people working in the space, Jason Corsello, now founder and CEO at the Acadian company and previously Head of Strategy and Corporate Development at Cornerstone as we talk about the shift from HR Tech to Work Tech.
You can listen below or by visiting the podcast website here.
In our conversation Jason and I discuss:
Advice to offer to potential investors, startups looking to secure investment, and practitioners looking to buy work tech for their organisations
We talk about the areas of Work Tech that are attracting the most attention and investment
We also explore the likely areas of consolidation moving forward
And like with all our guests, we look into the crystal ball and ponder what the role of HR and HR Tech will be in 2025
This episode is a must listen for anyone in the HR space particularly those looking to invest, those looking to secure investment for their Technologies and practitioners seeking to navigate a complex market.
David Green: Welcome to the Digital HR Leader show Jason. It's great to have you here.
Jason Corsello: David likewise. Thanks for having me.
David Green: Can you give our listeners a quick introduction to yourself and your vision of HR, HR Tech or Work Tech even…
Jason Corsello: Yeah, so I've been in the broader HR Tech landscape for about two decades now, which I'm dating myself a little bit here.
I started off as an industry analyst so that was back in the day where you actually did real research and understood markets and market size and market trends. I spent about four years doing consulting. So I was a Management Consultant in a boutique management firm that was bought into, Appirio, which is now a big practice of Cornerstone and Workday. And the last seven years I spent at Cornerstone OnDemand leading strategy and corporate development, so that was everything from taking on some big initiatives for the business. M&A was part of that remit as well as, M&A, Acquisitions and corporate development. Corporate Venture, which was investing in companies. We invested in about a dozen companies or so in Cornerstone.
David Green: Okay. Thank you and you've written about work tech rather than HR tech. It needs to kind of shift to that, what do you mean by that?
Jason Corsello: Yeah. So, you know, I think HR tech for too long has been focused on automating and process and it really has been designed for the benefit of the employer and I think we're at this day and age now where the power is shifting to the employee.
They have lots of choices. They have lots of demands. And so that's where I think more broadly on Work Tech because it's the combination of HR Tech. You still need a lot of those things. Processes within an organisation. But it's more designed to the employee themselves. What do they care about?
Is it about progression? Is it about promotion is it about purpose? So that's where the blend is starting to come in and how do you make people more efficient towards work as well. I think we have been making HR Tech products a lot easier to use but I think on the employee side, there's still a long way to go and so being able to make it.. Josh Bersin has referred to it as kind of in the flow of work and I think that's what we're trying to accomplish here is how do you make HR Tech seamless into employee's lives? They don't even necessarily know about it, but you're helping them achieve their goals at the same time and make it easier to get the work done.
David Green: More personalised than HR Tech has been in the past.
Jason Corsello: Yeah, and that's where analytics and data certainly have a big emphasis. It's almost, you're striving for an outcome. Maybe you don't necessarily know about just yet, but we have lots of data but we haven't made the leap into is really making it seamless and focusing on whatever those outcomes may be.
David Green: Okay, and actually talking about data... And I'm starting to see a shift really in around who owns the data, historically that's been the organisation's there seem to be more and more talk now about how employees could potentially own their own data. Is that something you're seeing as well?
Jason Corsello: Yeah. Absolutely. I mean certainly I think here in Europe has been much more like influential around data privacy and I think.... US companies are starting to embrace that but all the things that we're seeing in the consumer world and the challenges that consumer technologies like Facebook and others are having, LinkedIn you can certainly put that boat as well. There definitely is more importance... People care much more about the data than they did even two or three years ago.
David Green: Yeah. You mentioned Josh. I think Josh is quotable, eminently quotable. That's for sure. And I heard him talk about the top HR technology or work technology landscape as being like the Wild West. John Sumser told me he's tracking over 40,000 vendors in the space, which I don't how he manages to do that.
What are the trends that you're seeing in this space cause obviously, it's something you're analysing quite deeply.
Jason Corsello: Yeah. So yes, there is a lot of companies. Because the problems are vast in this industry, some of the data I look at is more on the funding side of companies and....
Last year, we saw almost 4 billion dollars of venture capital go into kind of broader HR Tech or Work Tech. That's more than the last two years combined. So 18 surpassed both 17 and 16. So there's certainly a lot of venture capital flowing. There's a lot of potential capital flowing in other markets as well.
But there's certainly a lot of interest among the investors. I think part of it is because there's a lot of fragmentation in the marketplace today. You look at recruiting there's hundreds of recruiting... But we still haven't solved a lot of the fundamental recruiting challenges. How do you build dialogue with a candidate that maybe you didn't have before and our systems are becoming... The systems that we've traditionally used need to evolve right? The ATSs of the world, those need to evolve from kind of dumb back office transactional systems to systems that candidates actually enjoy using and go and engage and have a dialogue with so I think you know in all these areas recruiting is one of them learning is another one.
I think why we see so many companies as you've mentioned it is because there's such a great opportunity and there's still a lot of challenges that we haven't fundamentally solved yet. And it's going from that shift from employee centric to or employer centric to employee centric.
David Green: And in terms of where the investment dollars are going, are there any particular areas where investments going. You mention obviously recruitment as being... I know that's an area where a lot of investments going in but what about some of the other areas?
Jason Corsello: Yeah what you typically find is Recruitment and collaboration are the two areas we've seen over the last couple of years demand the most investment. Certain areas like learning we've seen an uptick over the last few years in learning which is certainly an interesting area of opportunity. There's been pockets of performance last year in terms of investment. It was down I think because we saw prior years of investment in areas like Performance Management.
Analytics I think is still... We see kind of ebbs and flows in terms of investment of technology and analytics. I think that's certainly a huge opportunity. So I think if you look at them by pockets, you kind of see trends evolve or change over time but recruitment and collaboration still are fundamentally every year, the areas that get most investment.
David Green: And in terms of advice to investors? We know there's a lot of hype around AI and every vendor now tells me they've got AI in their technology. I'm sure you know that that's not true.
I mean what sort of advice you're kind of offering to investors and...
Jason Corsello: Well, it's a good question. I think it depends on the stages of the companies right? I mean if it's an early stage company the investment looks very different and if you're an investor you should be more Hands-On. Not that later stage investors aren't necessarily hands on but there's a lot more work at the earlier stages because that's really where you're setting the foundation, right?
That's where you're setting.... How you price, how you package, how you go to market? So investment there looks very different versus a late stage company or a pre IPO company where it's more focused on a financing of that. How do you get it to the next round or how do you get it to the outcome?
So it's a bit different in terms of those levels of investments but across the board. I mean there's interest from all areas, whether it's seed investment. Certainly that was up year over year. Series B and Series C typically command the most amount of investment. You see the bell curve often in all areas of investment.
But that's where you see most of the dollars flow in that A and B, or I'm sorry B and C round. But yeah, I think it each investor has to look at the own unique opportunity that's in front of them because there's so many different kinds of strategies even financing strategies going on today where you seeing now private Equity firms play a bigger role in HR Tech. Some of them are rolling up companies to build a bigger company to have some sort of event in five to seven years. So, the nice thing in this market today is there's plenty of capital whether its private Equity whether it's venture or the public markets are certainly open as well.
Now as we know that doesn't stay open forever. But it's a good time to be in this market whether you're raising funds or you're playing funds. There's a lot of capital. Tricky part is how do you get your focus? Because there's so many opportunities as you know.
David Green: And is the kind of life cycle from taking initial investment through to fruition whether you IPO or sell, is that getting shorter or is it pretty common standard.
Jason Corsello: It's certainly getting shorter. I think a lot of it depends on what the ambitions are of the company. So, my previous company Cornerstone OnDemand the founders bootstrapped the company for seven years almost eight years and you don't often see that and part of it is because there's a lot of... The accessibility of capital is very different from what it was in 99, especially as the market bottomed out in 2000 so Cornerstone is an example of bootstrap for seven years, took financing in 2007 that led to an IPO in 2011. So, over that trajectory 12 years, pretty long time in most places, most people's eyes, but you see companies now that can go public in five to seven years. So the cycle certainly is condensing and part of that is because there is plenty of capital into the market. What we also see is kind of more abandonment if you will and that means, you know Founders they give up after a few years. There's not that that persistence that probably once were 10, 15, 20 years ago.
Young entrepreneurs now what you often see is they'll either lose interest in some cases or they just don't have the staying power right? Startups are hard, creating companies are hard as you know.
David Green: As we're finding out...
Jason Corsello: Yeah you go through the ebbs and flows of startups and it can be brutal at times.
David Green: And obviously if there are 40,000 vendors and I'm sure there's more than that out there.
Most of those aren't going to succeed at the end of the day. So...
Jason Corsello: That's right. And listen, success doesn't always necessarily need to be an IPO. Certainly, as an investor you'd like to see that, that outcome but success can mean many different things to many different people and that's why the variety of capital out there is nice.
For tech companies you do ... I think at some point you need capital because you're playing in a competitive field and so it requires capital but at the same time, being acquired in 10 years for positive outcome to investors certainly isn't that uncommon either.
David Green: So let's turn it turn it around a little bit.
We talked a lot about Investors then what about the startups themselves? You know that's looking to get investment what sort of considerations or what advice would you give to them?
Jason Corsello: A couple of things. One is know what your vision and mission is. A lot of companies just kind of jump into it and because they see a problem or they see they've got a solution to a perceived problem, but I think it's thinking what's the, what does the business look like in 10 years and starting to visualise what that path looks like is certainly important... If you're out raising money I think it's knowing what you want from your investors. Right? I mean certainly capital is great, but. You should be choosing an investor because they offer something else whether it's they know the go-to-market strategy or they know geography or they have some type of expertise and I think it's part of the knowing what you want and need and knowing what you're weak at and where you can kind of fill in the holes is is an important part of that beginning sort of journey.
David Green: And what are some of the, let's say some of the mistakes that startups typically make once they've secured some investment?
Jason Corsello: Boy. It's a great question and I wish you could diagnose it to one thing. I think there's... I believe right now we have this kind of golden rush mentality in start-up land, which is I have to be building faster.
I have to be building more. And sometimes you need to be patient to let the market develop and mature or there's dynamics in the market that allow you to be a little bit patient. So you can't always be driving the Ferrari down at hundred and eighty miles per hour. I think sometimes when you do that you have risk of burnout or other types of challenges.
So it's persistence and patience combined with knowing when to accelerate, when to pull back. It's hard and you never really know, but because of the competition in the marketplace my fear is right now with a lot of companies over the last five years is they've run too fast. They've taken too much capital, their valuations are pretty high level. Where they're forced to run out and they have one of two options either they hit that destination, that journey but more so, they have risk of burning out the engine and at that point, no one wins because your investors certainly, you know lose their investment in some cases or at least don't maximise the potential of their investment and the founding teams just kind of... Hit a wall which is not what you want to do. So, it's tricky right now. The great thing as I said with all the capital is I think in some cases it's created some bad habits with companies and maybe I shouldn't say this is bad habits, but it's forced them to do unnatural things and sometimes you just got to be patient.
David Green: Well, I guess it's getting that balance right between products and sales and marketing because obviously you can't have one without the other
Jason Corsello: That's right. Yeah, and you know what I've seen in the last few years is companies have definitely overspent in sales and marketing. It's easy to do right?
It's easy to say. Oh we'll just hire three more head count and if one works, we're still in that positive or, we should be investing in marketing and events and all these things. So there's certainly I think been a bit of over investment in those two areas in particular over the last few years.
And so when you do that, you either have to sustain it over time or you start to lose interest. Nothing's worse than losing interest amongst the the market.
David Green: And I guess as well with things changing so rapidly sometimes the companies are going to do a little bit of a pivot as well.
They might start off with one business problem or product that they're trying to or solution they're trying to solve that problem. But then that might change and then you've got to be aware of what's going on. I guess.
Jason Corsello: Yeah. Yeah. I mean, it's always a changing marketplace I mean... At Cornerstone when I was sitting in the M&A seat, you're always thinking about two steps ahead like playing chess, right?
So what's the move that someone else is making? How do I counteract that move? So you're constantly, it's obviously a bigger company or you've got more resources to do that, but I'm always thinking two steps ahead. Of what happens if? What happens if these things play out in the market because certain things, events that can happen that can change the trajectory of a market, right?
Someone gets acquired or a new company like Workday comes on the scene, so it's certainly important to be aware of those changing dynamics and certainly pivot is an option. There's been plenty of companies that have pivoted to being successful companies over time.
David Green: So we've looked at it from an investment perspective, a bit from the start up now the perspective of the practitioner. Now we talked about the sheer amount of work tech companies that are out there at the moment. How do practitioners stay on top of that? And how do they sort out the the reality from the hype in terms of what they need to potentially buy?
Jason Corsello: I think they just have to know themselves. I mean, I think people have historically bought technology because their peers bought the technology or they did it as a reaction to something else.
I think it's really understanding for me, when I was a consultant we tried to build a three-year or five-year journey for companies, right? You're not going to fix everything overnight and sometimes you know what some things you don't need to fix, they're good enough and that's okay.
So it's figuring out what you're really really great at and then figure out what you're not so great at. For me, I think the bigger fundamental challenge is, to me, I think just work over the next 10 years is going to look completely different. I mean the data I have looked at, productivity is down 50% in the last decade.
We have all this technology, but has it improved us from a productivity standpoint? Average tenure is down, for the average employee in the US average tenure is four years. For the 25 to 28 demographic, it's less than three years now. It's two point eight years. You go to Silicon Valley and you're lucky to find someone to stay at a job for two years.
So I think there's other macro economic or bigger challenges that companies have to face. They have to really understand, maybe the existing technology that's out and available isn't going to serve what their organisation looks like in the next five or ten years. So part of it's looking at the data part of it's looking at the workforce itself. It's also, I'm seeing in the US there's this kind of shift to.... This isn't necessarily new... But more flexibility around work. I want to work when and where I want, the whole gig economy certainly is increasing. Freelancer economy is increasing. So I think there's this whole perception and change of work and it's always evolving.
You may be a new parent, maybe you know, changes in your life that forces changes in your work and I think those are bigger fundamental challenges that companies have to be thinking about much more than the technology that supports it.
David Green: Yeah, and I think you're right there and it's not always about the technology isn't it because you can buy a great piece of technology, but then you might not implement it very well.
It might be in a new area and there's no change management. I think having the right mindset is absolutely vital.
Jason Corsello: Yeah and changing the way they buy technology right? I mean I used to dread when we would get RFPs and you hear the... Oh, 70% of RFPs they've already made up their decision before they've even gone to market. So I think fundamentally the way that we buy technology needs to evolve.
David Green: Yeah, I remember in past roles responding to RFPs and I used to think if I hadn't had any engagement with the buyer then it actually is probably not worth responding to the RFP.
So you talked about M&A and obviously there's quite a lot going on at the moment, just look at the engagement space for example CultureAmp bought Zugata, LinkedIn have bought Glint and SAP spent what was it, eight billion dollars reportedly on Qualtrics. There's a lot of stuff, do you see more consolidation happening and is there any particular areas that you see more going on.
Jason Corsello: Yeah. I think we're definitely going to see more consolidation. What's a bit different? This time versus other consolidation cycles is that there's a lot more private equity influence in consolidation right now. And so what that means is that they're much more financial buyers versus strategic buyers that are buying, in SAPs case...
They saw a need that they needed this experience platform or experience layer. So that's why they went out and bought Qualtrics. So I think the good news for companies is there are more buyers than ever. Right? You've got strategic buyers. You've got private equity buyers. You've got public investors that certainly are coming in earlier as well.
So that's certainly great news for a lot of companies. But I think this consolidation wave will probably see much more focus on the financial buyers or rolling up companies. One area in particular as you asked is I think recruiting is going to be an interesting area of consolidation. I just wrote about this just last week.
I think that recruiting we're going to see a lot of consolidation this year and maybe even into next year and part of this is you've got legacy systems or fundamental systems that now are needing new infusion of innovation. And so that's where they'll go buy a CRM system. So recruiting is certainly an area I think that we'll see a lot more consolidation this year probably more so than any of the other areas.
David Green: And I guess another thing is we all heard the stories from some of the vendors a few years ago, you need to buy our whole suite because if you buy our whole suite you've got the one source of truth and I think now people are starting to realise that's not the case but if you look at ATS and we we're talking about recruitment and certainly some of my background, there are some of those legacy systems that a lot of companies still have.
And then there are the systems that came from some of the big HR core systems as well. And then we got some new players in that space, are we going to see maybe some of the big companies buying some of the new generation vendors do you think? Ripping out some of those technologies they bought a few years ago?
Jason Corsello: I think certainly that's an option. I think you have to look at each company individually. All of the bigger, I don't want to call them platform companies, but Oracle and SAP and Workday of course. They're all kind of very different companies. Their strategy or product strategies are a bit different.
So I think we'll see a mix of of build and buy over the next couple of years filling out gaps that they had or for some acquisitions that haven't been hugely successful. They bring in other other types of technologies. I think, you know the nice thing with a lot of these companies they are sitting on a lot of cash so they can, and in some cases, SAP, some have been very open with their strategy which is. they've got to digest this big acquisition they just made similar to what they did with success factors before they can do something much bigger that doesn't mean they may not do some smaller tuck-ins, but there are certainly a good amount of strategic players out there that have gaps in their solution.
You asked the question of best of breed vs suite. I think we always have that debate and some years oh, it sides to sweet vs. best of breed, but I do agree with your premise that I think we're shifting back towards more of a best-of-breed focus because functionalities are just much more richer.
I think we haven't seen the suites really play out as I would have hoped that have both the depth of functionality as well as the ease of integration and all the other things that you'd want. So but that's attention that's always going to exist. Right? Maybe one of the suite players buys some of the best of breeds and all of a sudden that changes, but I think we're always going to see that tension?
David Green: And what's interesting, I don't remember the exact figure something like 70% of mergers and acquisitions fail. But yet we still do it.
Jason Corsello: That's right. Well, I mean because when they succeed, you look great, look at in the consumer side, Google will probably be a little bit of a different company without YouTube or Facebook and Instagram.
So yeah, I think certainly, even our Market I think SAP would say that their acquisition of success factors was a successful one. Now maybe conversely, Oracle and Taleo maybe didn't play out as well as they thought. So, yeah, I think certainly when it works well it certainly has huge potential and huge opportunity and I think that's what people strive for. I think that the challenge is less into figuring out which one to buy I mean certainly, you know, you want to buy one that fits and has culture fit. But, what I've learned over my years is the integration is really the hard part and, what most companies like to do is kind of absorb it all in and make it their own.
Where I think more recently the best integration strategies are let it run let that Instagram let them kind of run as a separate business. Maybe over time we start to infuse other parts of the core Facebook business into that. And so I think it's understanding what integration strategy works well for your company and sometimes, what's fascinating is the big M&A machine that was revered 15 years ago was Oracle.
Now not so much right maybe because certain people have left the business, but I think you have to evolve it as well.
David Green: Yeah. I mean you mentioned that buying and just letting it run. It seems to be what Microsoft has done with LinkedIn and they do seem to be very successful particularly in our space now, Microsoft's appears to be the coming force within the HR technology space.
Jason Corsello: Yeah, it's a great example. I think they've done a tremendous job with LinkedIn and in a short period I mean it's only been two years or maybe not even two years. I think they've done the right thing, which is just let it run, infuse it with capital and resources which they've done and if you looked at the the best acquisitions over the last 10 years in the Enterprise space, I'd put that right right near the top of them.
David Green: Okay, so I'm gonna ask you to peer into your crystal ball for the last couple of questions so we won't hold you to it. Although we might play it back in a few years' time. What do you think are the next big things we're going to see in the HR work technology space. Either products, but you know, you could answer any way you want to...
Jason Corsello: Yeah, listen if I knew that answer, I'd probably be sitting on a yacht and in the Mediterranean somewhere. I think there's two things that are happening. So I'm going to probably dodge your question a little bit, but try to bring it back together. So you've got I think the technology is shifting pretty significantly, so we went from client-server, the last decade has been defined by cloud, being in the cloud and all the benefits that you get with cloud. I think we're now at the beginning or early stages of another technology shift and that's I consider more data, you know, we're going from cloud to data.
Now what that means is you've got the AI pixie dust out there and you never know what it really necessarily looks like from vendor to vendor, but I think there's certainly.... The companies that get it right I think are going to be massive successes. So there's the technology and the platform shift that's occurring and then on the other side, you've got this changing nature of work that we talked about.
So it's those two worlds coming together, what that looks like I don't... I wish I knew the answer, but so I'll say one other thing. I think there is a huge opportunity in this market to be more of an open platform. I've been on a bandwagon for a couple of years now. No one has really become that open platform in the HR Tech world.
There's other folks that have done it in other tangential markets like CRM. Slack has certainly done a great job on the collaboration side being an open platform and no one has really done that in our market. I think that's a huge opportunity. That doesn't mean you're a open platform from day one.
What we've seen with Slack is they focus on a couple of features, messaging being their core feature and opened up their platform from there. So I think that to me is probably the one of the bigger opportunities out there.
David Green: Okay, fantastic. We will hold you to it in a few years and then on the HR side. So this is a question we ask all our guests on the show. Actually.
Where do you think HR will be in 2025?
Jason Corsello: I think it's going to look very different. I mean, I think you're going to see...I think we've seen flashes of brilliance among certain HR teams or certain companies that do HR really really well. Google is always a great example of one. Although, you know, they've done some things right and some things they haven't gotten right but I think it's shifting away from a follow the rules compliance, and this has been happening, to much more of really focused on the employee, that shift is occurring. And so an example that I refer to. I grew up in Silicon Valley. I don't live there now, but I go back quite frequently and you don't see traditional HR departments anymore. What they care about is culture. What they care about is initiatives that are important to them, diversity and inclusion. That's one that we keep talking about but certainly companies that are... When I say focus, they are actually measuring it, monitoring it, putting plans in place to improve it. So those are more core strategic initiatives, their focus on that, maybe they weren't, five and ten years ago, maybe they had diversity inclusion programs but it was more, not something that they were necessarily looking at the data and measuring the data and managing the outcomes of that data.
So I think that's where the shifts going to be over the next five to seven years is much more focus on the employee much more focus on things that are important to them. And making sure that there's flexibility into that because it's changing, the thing that most employers haven't necessarily figured out yet is how do they build this loyalty of employee because it's losing its going the opposite direction and yes economy has some part to do with that but I think it's building that loyalty and culture is really where you see the sustaining companies separate from their peers.
David Green: And I think as we've said throughout if companies use the technology correctly. They can actually try and imbue of that loyalty by personalising some of this technology for, what employees or what the workforce wants.
Jason Corsello: Yeah. Yeah, and when I say employee you've said this a couple times which is personalising that experience is so important because the fear that a lot of companies have, a lot of tech companies have in particular, are burnout. Employees are just burning out faster than they ever have and it's not because they necessarily hate the company or they hate the job. They're just... They've been running fast for a period of time. How can you recognise that? We certainly have technology that probably can start to diagnose and recognise things like burnout, other things that employees are dealing with that are important that we should be focused on.
David Green: Jason thank you, fascinating to see how it plays out. Thank you for being on the Digital HR Leaders show. How can people stay in touch with you?
Jason Corsello: Yes, I'm on Twitter. It's jcorsello, is probably the best one and then obviously LinkedIn and and others
David Green: And your website where some of your...
Jason Corsello: That's where we publish research, publish a lot of the content and then the blog, Acadian insights is where we have a lot of blog content.
Please come visit.
David Green: We will do, thank you Jason.
Jason Corsello: All right. Thanks David.