Okta launched a cloud identity product in 2009, when most people were locked into Microsoft Active Directory, an on-premises holder so ingrained that no one believed anyone could touch it. It took a bit of audacity to take on a giant like that, but Okta took a cloud-first approach, a markedly different strategy from Active Directory at the time.
The company has raised over $230 million before made public in 2017. He reached unicorn status with an increase of $75 million at a valuation of $1.2 billion in 2015, when the designation meant a little more than it does these days.
With ownership on the labor side of the market, Okta decided to make another bold move when it acquired Auth0 for $6.5 billion during the stock market bubble that accelerated in 2020. The idea behind the deal wasn’t just to have a developer-preferred identity tool – though that was certainly a big part of it – it was really about owning another big chunk of the market, one that could make Okta a one-stop-shop for identity.
“There is a very deep divide between heritage and modern in this market.” Todd McKinnon, CEO of Okta
Okta wanted to own both the labor market, the core of its approach thus far, as well as the customer identity market where Auth0 lived. And Okta has made a substantial bet for a company of its size to achieve this.
Okta is not alone in the identity space; competitors include companies large and small like ForgeRock, SAP, IBM, Ping Identity, Salesforce, Microsoft, and Akamai, among others.
Like every other SaaS company, Okta has had a tough year in the public markets, down more than 80% last year (although it was up almost 10% as of midday Thursday). We also had to deal with an attack led by the group Lapsus$ it happened in January but was reported in March – and the fallout from its response.
Despite these headwinds, the company has big long-term goals to own the cloud identity market and believes it can overcome the current temporary macro conditions and legacy vendors to get there.
We recently spoke with CEO and co-founder Todd McKinnon and asked him how he’s been navigating these days — and the lessons he’s learned along the way.
McKinnon pointed out that he spent 14% of his stock value at the time to acquire Auth0, a number he knows by heart because he wants his company to own the cloud identity market, and he don’t think you can do it. without Auth0.
“We bought them to change, and we bought them because we needed change to win this customer identity market,” he told TechCrunch. “Our strategy is that we have to conquer both the workforce market and the customer identity market. And the only way to make identity one of those most important platforms for each company is [own] both use cases.
He said integrating two companies like this didn’t come without challenges and he may have moved too quickly to bring the products together.