Okta: Thank you — Todd, Freddy, and A16Z.
It was near the end of our investing cycle in Fund 2 when we met Todd McKinnon and Freddy Kerrest in late 2009. They had an idea for a company called “Saassure.” (thank goodness they changed the name!) Ann and I were captivated by the vision and accomplishments of someone who had become a star in engineering at Salesforce at such a young age. And Freddy was a perfect complement as a co-founder.
The concept of the company was compelling: in a world of multiple apps in the cloud, there was the need for a “Switzerland” of software companies who could manage access across the offerings from very large and dueling vendors like Microsoft, Salesforce, Oracle, Google, and hundreds of others who would not naturally trust each other. I had seen the power of this thinking in my prior life as a startup entrepreneur when Tivoli made a similar argument that the heterogeneous operating systems from IBM, Sun, Microsoft, and HP should be managed by a “vendor-independent” type of company with an unbiased platform agenda.
We knew it would be expensive to build a company like this. They would need a world class sales force along with all of the support infrastructure to look credible and deliver success, in a treacherous ocean where the other players were very big sharks. How in the world could we invest enough to help these guys prove their idea? Our maximum initial bet size as a $35M seed fund was just $1 Million.
A few months later, Ben Horowitz and Scott Kupor invited us to a Warriors basketball game. I was seated next to Ben and Ann was court-side with Scott. While they were talking, Scott mentioned to Ann in passing that Andreesen-Horowitz was about to lead an early-stage investment in a raw startup called Saassure. Ann texted me “You have to talk to Ben about Saassure right away. If they raise from Marc and Ben, we will have a strong enough partner for this to make sense.”
To Ben’s credit, they allowed us to invest alongside them at the very beginning. If my memory serves me, it was a $5M round and they let us in for $500k, which was a very generous move on their part. Ben was under no obligation at all to do this. He did it just out of collaboration and because he had heard from Todd and Freddy that they would like us to be part of it. In a world of sharp-elbowed VCs who often go for all they can get and ask for super pro-rata rights and any other edge they can get at the expense of others, this was a real rarity. I have never forgotten that gesture from Ben and Scott and the advocacy from Okta’s founders.
On Thursday and Friday, I had the exciting chance to be with Todd and Freddy the night before Okta’s IPO and with them during the big event. I am very nervous about making any claims about their business prospects: I would be mortified if I did something the SEC doesn’t like! But I will say that there are a few lessons to learn from Okta’s journey so far:
VC done right is a team sport: Ann had the presence of mind to get us into that first Okta round. But she also knew it was a better fit for my background and I should lead it. A lot of firms jockey for who gets credit for winning deals, but Ann was all about winning for Floodgate. I had the great privilege to work with Todd and Freddy, but there’s no way it happens without Ann’s heads-up play and focus on winning.
Not all VCs have sharp elbows: Ben Horowitz prioritized the needs of the COMPANY from Day One. You hear lots of stories about people burning bridges in this business but this was exactly the opposite. Ben is the real deal.
Sometimes the “good guys” win: I have never felt ashamed of this investment for one single day. These two founders have been great company designers, not just product designers. In my mind they have epitomized everything we look for in strong founders. People often talk about management and technical debt…But Okta has created management and technical wealth. The stories of bad behavior and brogrammer culture get the clicks these days, but it’s guys like this who build things that make things better for all of us.
Finally — It’s only over when you decide to quit: Ben said in his post that he always asks “Are these the kinds of people I want to be in business with?” My corollary is “Are these the kinds of people I would like to get in trouble with?” Every startup has near death experiences and in the case of Okta, product/market fit did not come easy or fast. But, when times are tough and scary and uncertain, you learn who is real. It’s only over when you decide to quit.
Congrats to team Okta.
Todd and Freddy: you are truly a couple of Prime Movers.
And to the management team and employees who have created something legendary…I wish you only the best in this next phase of your journey.
