First-Time Entrepreneur at 37: Okta CEO Todd McKinnon (Part 7)

Sramana Mitra: As you have built the company, how has the evolution been? Did you start with large enterprises and come down, or did you start with the mid-market and move up?

Todd McKinnon: Initially we had a lot of success with companies that had between 1,000 and 5,000 employees. In the last year and a half, we have had a lot of success with companies that have over 10,000 employees.

Sramana Mitra: How do you price the product?

Todd McKinnon: We have a product that is sold based on the number of internal employees who use it, and that is sold as a monthly subscription. We also have a product that is for people who are logging into applications less frequently, such as partners or individuals from another company. That product is sold on a per transaction basis, so we charge for each log in.

Sramana Mitra: What has been your ramp from the first customer in 2009 to December 2012?

Todd McKinnon: In 2012 we grew the team by 300%. We have grown from our first customer in 2009 to over 300 customers today.

Sramana Mitra: What advice do you have for entrepreneurs?

Todd McKinnon: If you are going to be an entrepreneur, you have to make some bets that are not obvious. If everything lines up and it seems obvious when you start, then you are probably not betting on the right things. In 2009, even though everything was moving to the cloud, it was still a bet to build an identity management service that would authenticate users and manage the complex permissions and attributes as a cloud service. All of the incumbents were doing that on-premise with enterprise software.

It was a leap to build an identity management service purely as a cloud service. That turned out to be a good bet. Four years later, people trust the cloud and they know you can have a reliable service. As an entrepreneur, you need to make these kinds of bets.

In 2009 you had a lot of things going on in consumer. Zynga and Facebook were setting the world on fire. Starting a company that was enterprise focused in 2009 was out of favor. Today it is back en vogue. My response has always been that I have not considered what is en vogue or not. As an entrepreneur, you need to have conviction when you start a company. If you base your decisions on what is en vogue, then you have a problem.

If what you are doing does not feel awkward, like you are taking a leap, then you are probably not doing it correctly.

Sramana Mitra: Doing something en vogue does not come from conviction, it comes from a gold rush mentality. I don’t think that produces good companies. I was here during the dot-com bubble and web 2.0 bubble, and that was the behavior. Nothing good came from that. There was a company, Blue Nile, that started in 1999 with the idea of selling diamonds online. They survived the crash and are a sizable company today. This company would not have been built with a gold rush mentality. What has been your funding strategy?

Todd McKinnon: We raised a Series A in early 2010. We did Series B and C in the subsequent years. Our funding has fueled growth. We are building a public SaaS company and that takes money.

Sramana Mitra: How much have you raised?

Todd McKinnon: Just over $50 million.

Sramana Mitra: What is the future of Okta?

Todd McKinnon: I truly feel that the work we have done is just the beginning. The company now is getting to the size and scale where we can finally do some interesting stuff. We are going to take all of our customers and users and utilize them as a launching pad. In our business, people want to buy from the company that has the most customers. People want to use the identity system that is connected to the most applications and is integrated as a network. I think we have that foundation.

Sramana Mitra: Is there one lever that you have identified that will make a difference in your growth process?

Todd McKinnon: We have an internal platform that we use to connect to over 2,000 applications. Opening up that platform is our big lever. We need to let the world build on that platform. That is huge for us. We need our customers to tell our story. All of our customers want to buy from those who have success.

Sramana Mitra: Great story, thank you for sharing. Best of luck as you move forward.

This segment is part 7 in the series : First-Time Entrepreneur at 37: Okta CEO Todd McKinnon
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