When Okta launched a cloud identity product in 2009, most people were locked into Microsoft Active Directory, an on-prem incumbent so entrenched that nobody could touch it. Okta took a cloud-first approach that was markedly different from Active Directory at the time.
The company raised a lot of money before it went public. When it became a unicorn in 2015, it got a $75 million raise on a $1.2 billion valuation, but it doesn't mean much anymore.
With ownership of the workforce side of the market, Okta decided to make another bold move when it acquired Auth0 for $6.5 billion. The idea behind the deal was not just to own an identity tool favored by developers, but to own another large piece of the market and make Okta a one-stop identity shop.
“There’s a very deep divide between legacy and modern in this market.” Okta CEO Todd McKinnon
The core of Okta's approach was to own the workforce market and the customer identity market. Okta made a large bet that it would happen.
Okta isn't the only company in the identity space; there are many others.
Okta has had a rough year in the public markets, down 80% in the past year, but it was up 10% in midday trading Thursday. There was an attack spearheaded by the group Lapsus$ that happened in January, but was reported in March.
The company believes it can ride out the current macroeconomic conditions and get to its long-term goal of owning the cloud identity market.
We asked the CEO how he is navigating these times, and how he has learned along the way.
When he acquired Auth0, he spent 4% of his stock value, and he doesn't think he could do it without it.
He said that they bought them because they needed to change to win the market. We need to win both the workforce market and the customer identity market. We need to own both use cases in order to turn identity into one of the most important platforms.
He said he might have moved too quickly to bring the products together because of the challenges that came with it.
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