Jason Corsello: Pioneering the Future of HR Tech and Workplace Innovation

Please share a bit about your personal and professional journey.

I was born in the San Francisco Bay Area during the birth of what we now know as “Silicon Valley.”  It was an amazing time to see the emergence of companies like Intel and HP, later Cisco and Oracle, and watch the valley change before your eyes.  

From an early age, I fell in love with entrepreneurship. When I was twelve I started businesses delivering newspapers before school and mowing lawns on the weekends. When I graduated from university, I started my first “real” job in the technology sector.  I worked in a customer-facing role for a company that later became Flex. Today, Flex is one of the world’s largest supply chain and manufacturing companies. I later worked a few startups in product roles with a mix of success and failure.  

My experiences, though, over the last 20 years have most defined my career. I worked as a research analyst, where I really got to understand the human capital management (HCM) market, a consultant where I got to work on strategy with enterprise clients, and more recently at Cornerstone OnDemand, where we grew and scaled the business to become on of the largest HCM software companies.  

In your experience, why do you find selling to HR departments particularly challenging?

Selling into HR has been challenging for two reasons. The first is complexity. Managing and paying people globally can be very complex. How people get paid across the world is very different and changing regulation adds to the complexity. The second is funding. Technology today can help make workers dramatically more productive, more creative and more innovative. Yet, most companies underinvest in technology to make their workforce more efficient and effective. Organizations, on average, spend less than $2,500 per year on technology to support their workforce.

Having been an HR leader for over a decade, what key insights have you gained?

Success for most companies, whether you are building a enterprise software company or defense manufacturer comes down to three things.  First, can you out-innovate your competitors and build products that customers love.  Second, can you build a ‘talent factory' where the most skilled people want to work.  Lastly, can you build a defining culture where employees can thrive, build a career, and be proud of the company where they work.

What areas within HR and the future of work do you find most exciting?

The most exciting part in work technology isn’t necessarily a category but a broader technology shift and that’s AI. We believe AI has the potential to fundamentally change when, where and how work gets done.  

You recently announced your second fund. Tell me more about Acadian Venture Fund II.  What excites you most in venture right now?

We are excited to share that in the last few week’s we finalized Acadian Ventures Fund II, a $30M early-stage venture capital fund.  The new fund is anchored by ServiceNow Ventures and Connecticut Innovations with additional participation from venture capital firms, family offices, high-net individuals, many of the firm’s founders, and a majority of limited partners from our first fund.  Acadian Ventures Fund II is almost triple the size of its inaugural first fund and we have already made 12 investments out of the second fund.  Right now, we are focused on four core themes:  Intelligent work applications (i.e. A.I.), work infrastructure (i.e. data and APIs), new regulatory and compliance, and the emerging global workforce.  These emergent areas in technology will create opportunities for new ways to manage work, creating new market categories, and disrupting existing incumbents.

Reflecting on your decade-long tenure with Cornerstone, from early revenues to the IPO and beyond, what were the highlights of this journey? What did you learn that was unique?

Cornerstone was an amazing journey.  When I joined the company, the company was only $40M in trailing ARR and had just listed on the NASDAQ.  We had an extremely cohesive executive team and even though we would often disagree, we were well-aligned and rewarded with increasing market share growth.

For the first 4 years as a public company, Wall Street loved us.  We “beat and raised” for 11 quarters in a row and could do no wrong with investors.  Then we missed and subsequently punished by investors, crushing our share price and losing trust with analysts and investors alike.  The next few years we battled with activist investors which made it increasingly difficult to manage and grow the business.

One of the biggest lessons I learned at Cornerstone was focus.  When I look back, one of the reasons why we missed our guidance was that we were trying to do too much.  In hindsight, we took on too many initiatives and, in doing so, we ended up creating mediocre products and stopped investing in some of our most important products.  Focus is so important whether you are a large public company or a small startup.  

Acadian Ventures is renowned as one of the top HR investors globally. What sets it apart from others?

We are an operator-centric firm. Between myself and Thomas, my other general partner, we have been part of executive teams that have built and grown some of the most relevant companies in enterprise software.  We have a set of experiences, combined with many mistakes along the way, that we believe can be hugely beneficial to entrepreneurs.  We also have nearly 100 limited partners that make up our operating network.  These are CEOs, CMOs, CTOs, and CROs that have built some of the largest companies in the space and are easily accessible to all of our founders.  

Could you tell us about some of the companies you've invested in that particularly excite you?

I am proud of many of the investments we have made over the last 5 years. We had some early successes in our first fund including Nomi Health (USA), Oyster (USA), SmartRecruiters (USA), Techwolf (Belgium) and Copyleaks (Israel).  Our second fund is off to a strong start with investments in Compa (USA), Figures (France), and Kombo (Germany).  

You mentioned making adjustments in ownership from fund one to fund two. Could you elaborate on these changes and how fund two differs from the first? What lessons did you learn from this transition?

One thing we have personally witnessed in our first fund is that ownership matters. We bootstrapped our first fund, meaning we spent the first two years simultaneously fundraising and investing at the same time. There is a saying in venture, “your fund size is your strategy” and we found it difficult to execute a portfolio construction model when you really didn’t really know the total fund size.  That translated into writing smaller checks early in Fund I just to be “in the game.”

Today, we strive to be at least 5% of the cap table. We have the flexibility to invest less than that but we built a portfolio construction model where we expect more concentrated ownership that will allow our investments to compound over time and continue to put us in the top decile of fund performance.  

Fundraising in 2023 posed its challenges. Can you share your experiences and insights from that period?  

Fundraising over the last year can be defined as a masterclass in resilience.  We started fundraising towards the end of 2022 when the capital markets began to deteriorate very quickly. It was very clear early on that many institutional investors, particularly those who target emerging managers, would be on the sidelines for a while.  We adjusted our fundraising efforts to focus on strategic investors and family offices that aligned with our thesis.

Due to the difficult fundraising market we decided in mid 2023 to set our target at $25M. We determined that a $25M fund size would allow us to execute our strategy while starting to invest in growing our brand.  We are thrilled to close the fund in Q4, overachieving our fund target, and closing the fund at $30M in commitments.  We are thankful to have strong support from the limited partners in our first fund.  90% of our first fund LPs re-upped in Fund II and many were helpful introducing us to new LPs.  

One of the biggest factors that assisted our fundraising efforts was the performance of Fund I. Not only is our first fund in the top decile of performance but we actually have DPI. We’ve returned nearly 1/3rd of the capital back to LPs.  Even for many of the institutional investors that passed were impressed that we have DPI when most emerging managers in the last 5 years have little to no DPI.  

As an emerging manager who is comparably more experienced, how have you found the transition to working in this environment? And when and why joined Thomas Otter?

I love it. In the corporate world, you are always juggling resources, priorities, deadlines, goals, and ultimately financial expectations. As an emerging manager, everyone one of those things changes on a daily basis. We have a mentality to be building something every single day.  

One of the challenges I faced as a “solo GP” in Fund I is that you often find yourself on a lonely island. I was lucky to have Thomas as a LP in our first fund and, over the first few years of the fund, he was by far the most helpful LP, whether is was sourcing deals or helping portfolio companies. When I started to think about growing the size of Fund II and ultimately expanding the partnership, Thomas was the first person that came to mind. We’ve actually know each other for 20 years and, although similar in many ways, we are also very different. It’s been a game changer for our firm and an incredible partnership.  

Given your high-conviction approach, how do you build that conviction? What is your process for evaluating deals?

Our process has evolved quite a bit in the last few years.  We look for the following:

• Founder-investor fit - Do we have alignment with the founders on what the company can become and how to get there.  This is also where we assess the team and ambitions of the team.  

• Product speed and differentiation - Can the team build fast and are they doing something that we haven’t seen before.

• Financial acumen - Do they know how they want to build the business, how much capital will be required over time, how they intend to go to market, what variables will determine their success, and how to scale the business over time.  

The last step in the process is price.  Can we get to a valuation and ownership that fits with our strategy?  

Your path to working with founders includes a vital personal component. How does this distinguish you as an investor?

We are always on.  We have found that founders often just want to talk with an investor they trust, with a set of experiences that can be helpful in the moment. There is not a day that goes by where we don’t talk with a founder about something. One of the questions we get often from prospective LPs is how we “add value.” Our answer is very simple…we provide them with a list of our founders and tell them to call any of them. We can tell them a bunch of VC bullshit but we’d rather they hear it from our founders directly. One of the proudest metrics we track, beyond TVPI and DPI, is founder NPS.  Our founder NPS is currently 96%.  

In the rapidly evolving landscape of HR and talent acquisition, what emerging technologies or trends do you believe need to be receiving more attention but have the potential to revolutionize the industry?

Every 15-20 years we see massive technology shifts.  Over the last two decades, that shift has been software as a service (SaaS).  During those shifts we see new vendors emerge and new categories defined. We think we are at the precipice of a new, generational technology shift, defined by AI and open compute models.  AI isn’t just about building large language models and algorithms.  Its also about building unique data sets, easily integrating systems using open APIs, and over time, changing the user experience away from keyboards and clicks.

Considering the increasing importance of diversity and inclusion in the workplace, how do you think HR and talent acquisition strategies must adapt to address these critical issues better?

This is a very hot topic right now particularly in the United States.  Over the last few months, there has been a strong “anti” DEI movement emerging that suggests companies, universities and alike should hire the best, most qualified candidates regardless of race, color, religion, etc. We are strong believers that diverse workplaces are better workplaces.  We encourage every one of our companies to be very intentional about diversity and how it gets infused into their startups culture.

This doesn’t need to translate into DEI mandates but we do think its important to track DEI metrics that are relevant to the company.  We track a few DEI metrics ourselves and use them to advise our investing allocations over time.