How I built a killer tech company outside of Silicon Valley

Adam Miller is CEO of Cornerstone OnDemand.

Gallery

Remember 1999? I do. Silicon Valley was overflowing with hundreds of millions in venture capital, thousands of dot-com business plans, and foosball tables up and down the San Francisco peninsula. Me? I was incubating my own web startup – an online training and development company – out of my apartment in Manhattan. At the time, I had zero customers, no funding, and only a group of friends and former colleagues committed to my idea.

As an entrepreneur just dipping my toes into the then-nascent world of cloud computing – our startup was one of the first Web-service platforms for enterprise training and development – I had plenty of advisers and investors urging me to close up shop in New York and head for Palo Alto.

So I packed my bags for sunnier climates and headed west, with one minor adjustment: instead of Silicon Valley, I landed about 400 miles south and a stone’s throw away from the Santa Monica Pier – a place where, for most, beautiful beaches and the Hollywood lifestyle appealed more than building an emerging technology company. Why? From a business perspective, New York and Silicon Valley were extremely expensive places to start a company, and finding basic service providers was very competitive. More importantly, I believed that a great tech company could not only survive but thrive outside of Silicon Valley.

Turns out it was the best decision I’ve ever made. It’s been 14 years, we’ve been through a couple dot-com booms and busts, the worst economic recession in a century, and I haven’t once considered moving out of our Santa Monica headquarters. We’ve grown from a seed of an idea into a global public company with more than 11 million users around the world, and I’ve got to credit Los Angeles, my neighborhood and my neighbors for much of our success.

Setting down roots in Silicon Beach, before anyone called it that

Outsiders call it “Silicon Beach,” but I call it home – LA’s once sleepy tech scene is on fire these days, with 500 startups lining its shores and incubators popping up regularly to turn out hungry new entrepreneurs. And why wouldn’t LA become the next hotbed of tech talent? It’s got cheaper rents, better weather, and more space than our neighbors to the north. And running a cloud company for the last decade has convinced me more than ever that location, in fact, isn’t everything.

We may not have the same volume of investment or caliber of success stories as Silicon Valley, but we’re getting there. There are challenges to turning your back on the obvious decision and putting down roots in less well-charted territory. As with any location, who you pick to partner and work with is crucial, but even more so in a place where resources are harder to come by. If I had to pick a few nuggets of advice for entrepreneurs launching companies in locales off the beaten path, I’d suggest they focus on these four:

In the early days, right before the bubble burst, I had flown to San Francisco to meet with AOL after months of working on a deal with them to sponsor their research and learn center. This would have been quite the coup for a bootstrapped business to land such a sought-after contract. At that point in time, AOL was king – they were the ones who decided who won and lost. I was sitting at their boardroom table after months of working on this deal, and they handed me the contract and walked out of the room. I had one hour to sign. AOL was famous for doing this at the time.

I looked over at my colleagues – I was holding the prize in my hand, but something just didn’t feel right. I put down the pen and walked out. A couple months later, the bubble burst. Had I signed, it likely would have put the company out of business. Instead, I headed home and didn’t look back. It was one of the hardest decisions of my life at that point, but I’m glad I went with my gut. We decided very early on that building a strong technology company wasn’t about how much money you had in the bank or a quick exit. It was about creating a great company.

When I was first building my company more than a decade ago, there were no other enterprise software companies in Santa Monica. There were no other cloud computing companies. We had to teach everyone we hired how to do it. We had to build it ourselves. The challenge had its silver lining, however, in the fact that we were forced to think extremely carefully about our hiring decisions and invest early in folks who had the drive and the long-term vision to get us where we wanted to go.

If you’re not in Silicon Valley or New York, you likely won’t have the same abundance of skills and experience at your disposal. It’s just a question of resources. You’ve either got to scour the local talent landscape for people who have the right attributes or potential for the job, if not the exact experience, or you’ve got to broaden your search and offer the right incentives to folks in other markets who do have the skills to pick up and move.

Even when it seemed like I had little in common with all my neighbors who were caught up in the entertainment and gaming worlds, I threw myself into the networking scene. Make sure you proactively network in your community and beyond to understand the competition, the landscape and new developments on the horizon. In the Valley, there’s a lot of osmosis going on, and everybody seems to be in the know, so you have to work harder to make those connections elsewhere.

On the flip side, there’s less competition and you’re in a smaller community, so it’s easier to get to know your neighbors better and become an influencer.

One huge challenge when getting started was raising money. Ten years ago, there was extreme resistance for Silicon Valley VCs to invest in LA. At the end of the day, they’d have to get on a plane to attend a board meeting instead of driving down the street. And there are plenty of opportunities to invest right down the street. The bar is set much higher when trying to attract those top investors. Which is why it pays to fight for those big names.

Picking your partners and service providers wisely is essential, because they’re going to become your advisers. Set your bar high and don’t settle for less. It’ll be a struggle for sure, but it’ll make you stronger in the long run.

Copyright 2013, VentureBeat

 
Read what others are saying