Cornerstone Moves to Acquire EdCast
March 17th, 2022
This morning, Cornerstone announced that they have entered into a definitive agreement to acquire EdCast. The deal is expected to close in Q2, 2022. You can read the press release here.
While consolidation in the HR tech market is expected, we admit this acquisition caught us a bit off guard. We know EdCast has been looking for a home for a while now. However, rumors we've been following hinted at either a similarly sized HR tech company or business tech buyer (maybe like Microsoft or Amazon – they've been threatening to get into the space for a while).
Here's what we know now and what we want to know.
What we know
It isn't a lot.
For those not entrenched in the HR tech space like we are, Cornerstone and EdCast are both providers of tools focusing on employee training and development. Both also offer a Learning Experience Platform (LXP).
According to the press release, the move will "accelerate value for customers with innovations in experiential learning, content, and skill-building, and a unified and scalable talent infrastructure designed to transform learning into a connected engine of growth, agility and mobility for people and business." Which isn't super helpful.
Although the press release is not explicit, we imagine that Cornerstone will take a similar approach with EdCast as it did with Saba: leaving it alone for a while. Leaving EdCast as-is will take the shock out of the acquisition for clients, partners, and employees. It may also allow both parties to get their ducks in a row and form a more thought-out strategy about how they'll work together.
What we want to know
Obviously, this is fairly big news in the learning tech space. Two big players in the LXP space will merge, which may cause angst to competitors and clients alike. As we read through the press release and our notes from our conversation with Cornerstone, we have additional questions:
Our biggest question continues to be, "Why?" Why would Cornerstone buy EdCast, and why would they do it now? Cornerstone currently has what appears to be a solid LXP with a similar feature set to EdCast, so they aren't buying to have an offering in the space.
Given their size (6,000 customers and 75M users), Cornerstone also likely isn't looking to acquire EdCast for its customer base. EdCast is a relatively young company without the reach say, Saba had.
For the EdCast acquisition, the announcement contains platitudes about innovation and solving business challenges. This is a valid reason. But it's vague and difficult to implement if EdCast remains a separate entity.
We also don't understand the urgency behind this acquisition. By Cornerstone's own admission, this was the quickest acquisition they've ever done. In the time it took for them to do due diligence, it's difficult to imagine that they were able to create a strategy for how these organizations would work together – either short-term or long-term.
How will Cornerstone and EdCast play together?
Cornerstone and EdCast directly compete in several ways – LXP and Content and Skills being just a few. Sales of one will cannibalize sales of the other. If we're correct, and in the short term, EdCast is left alone, we'd like to understand how they'll play in the market together.
And, if there are synergies we can't yet see, we'd love to understand what they are – what owning both entities will add to clients and customers. And partners.
How much of this is about Xplor's future?
Cornerstone also told us they have a multi-year vision for their new platform, Xplor. If we go by experience, Cornerstone may be buying EdCast in hopes of leapfrogging. Engineers with vision are hard to come by these days. As with 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.
Of course, to do this, the Xplor and EdCast roadmaps will need to merge eventually. We get the need to leave EdCast alone for a period of time, but anticipate that EdCast, similar to other acquisitions, will eventually be incorporated into Cornerstone's tools. Cornerstone tends to create and sell solutions that are all-inclusive platforms with pieces that all work together. They are not a holding company of like-minded HR technology subsidiaries.
What about the different approaches to partnerships?
EdCast has a history of partnering with other platforms to provide a more complete solution (Docebo, Fuel50, Gloat, and others). EdCast has used partnerships such as these to expand its reach and capabilities. These partnerships, and neutrality to other LMSes and learning tools will likely continue to be important to EdCast.
On the other hand, Cornerstone tends to build or buy to ensure that the infrastructure and ecosystem stay under one roof. With their recent launch of Xplor, Cornerstone has onboard, native solutions that directly compete with many of EdCast's partnerships. We're curious about those partnerships in the long run.
What happens to the EdCast leadership?
The press release and our discussions with Cornerstone were absent of any concrete announcements about leadership for EdCast moving forward. Even if Cornerstone keeps EdCast intact, some clarification would be nice. I want to know. I'm sure EdCast employees want to know. Heck, maybe even Karl wants to know.
What about culture and the Great Resignation?
What'll this do to culture? We know that tech mergers are often fraught with difficulties, primarily because of differing cultures. Cornerstone is, in the HR tech space, well-established and institutionalized. EdCast has only been around since 2014, and all indications from Glassdoor reviews are that it runs very much like a startup.
Merging 2 such different companies is sure to bring challenges, and may cause some unrest among employees. In our current environment, clarity seems to be important. For instance, according to CNBC, the Great Resignation shows no signs of slowing down. Likewise, SHRM says that tech skills will be hard to find in 2022.
So. That's what we know and what we'd like to know. Cornerstone tells us that more information is forthcoming, probably later this month or early next. We wish both Cornerstone and EdCast teams luck with the transition.