Cornerstone Acquires Learning Experience Platform EdCast
Corporate learning and talent technology company Cornerstone has entered into an agreement to buy EdCast, the companies announced on March 17. Terms of the transaction, which Cornerstone expects to close in Q2 2022, were not disclosed.
This is the first deal for Santa Monica, Calif.-based Cornerstone since the company went private last year after its October 2021 acquisition by Clearlake Capital Group. Cornerstone has more than 6,000 customers and 75 million users in 180 countries and across 50 languages, according to company statistics.
Privately held EdCast, headquartered in Mountain View, Calif., is a learning experience platform whose products include its Talent Experience Platform, EdCast Marketplace, a digital adoption platform, and Spark, a mobile-first learning product aimed at small- and medium-sized businesses. Customers include Wyndham Hotels, Dell, Deloitte, Diageo, Genpact and Abbvie. The company has received $107 million in investor funding since its founding in 2014, according to Crunchbase.
The aim of the deal is create a "next-generation" infrastructure for corporate learning and talent management, said Cornerstone CEO Himanshu Palsule in a press release statement.
“Today’s fragmented HR technology landscape is ripe for reinvention as organizations seek new ways to unify people and business in areas most critical to growth — workforce engagement, talent retention, skills transformation and career mobility," he said.
Growth of the LXP Market
Cornerstone, which got its start in 1999 as a learning management system, rapidly expanded its customer base when it acquired former rival and fellow LMS provider Saba Software in 2020. While that acquisition fueled Cornerstone's expansion, it didn't answer a growing market challenge the company faced from the rise of user-friendly learning experience platforms that give companies the ability to create customized learning pathways for individual employees.
The main difference between an LXP and the more established learning management system, or LMS, is a bottom-up rather than top-down approach, putting the experience of the individual end user first and melding that with organizational priorities.
“If you think about your traditional LMS, it was what the organization thought you should have and should need … whereas the LXP is much more about what the individual thinks they need and then building the pieces they need together to fit what the organization needs,” Stacia Garr, principal analyst at Red Thread Research, told Reworked in 2020.
It's a market that Cornerstone was slow to enter as companies like Degreed, LearningPool and EdCast stepped in. Cornerstone announced the launch of its own LXP, Cornerstone Xplor, in November 2021 but had largely missed out on the rapid growth of these skills-enabled LXPs, wrote HR industry analyst Josh Bersin.
The acquisition of EdCast will help solve that problem. Bersin reported EdCast is a $40 million company that is growing at a rate of 80% per year.
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What's Next for Cornerstone and the Market
While the deal has the potential to shake up the market, the ramifications have one other analyst scratching her head. It's indisputably a big deal, wrote industry analyst Dani Johnson of RedThread Research, but the acquisition raises a number of unanswered questions.
If Cornerstone's strategy is to let EdCast operate independently for a time, as they did with the Saba acquisition, it's unclear how the companies will handle their competing products and avoid cannibalizing one another, she said. The long-term product roadmap is also unclear.
"If we go by experience, Cornerstone may be buying EdCast in hopes of leapfrogging," Johnson wrote. "Engineers with vision are hard to come by these days. As they did with Saba, Cornerstone is likely using the acquisition of a product that aligns with their direction to move more quickly in the market."
She anticipates that EdCast will eventually be incorporated into Cornerstone to create and sell an all-inclusive platform with pieces that work together. The acquisition may also cause friction with the ecosystem of software and content vendor partners EdCast has built over time. "With their recent launch of Xplor, Cornerstone has onboard native solutions that directly compete with many of EdCast's partnerships," Johnson wrote.
Bersin sees the acquisition fueling Cornerstone's LXP growth, as well its role in the emergence of skills engines, AI-powered systems that create a taxonomy of skills across the organization that can be used to fuel employee learning and talent mobility. Cornerstone acquired French technology firm Clustree in 2020 for its ability to analyze employee skill data and guide decision-making on hiring, development and workforce planning.
Skills engines and the related rise of internal talent marketplaces aim to create a single source of information about end-to-end skills that is updated in real time to give HR leaders tools to create a more resilient, more inclusive and internally mobile workforce.
“It gives them a data-driven way to show how maximizing the skills in the workforce can drive better business results," Visual Workforce CEO Bryan Bostic told Reworked in April 2021.
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About the Author
Mike Prokopeak is editor in chief at Reworked, the premier publication covering the r/evolution of work, where he leads content development focused on the transformation of the workplace.