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Okta’s $6.5B acquisition of our portfolio company, Auth0

When Auth0 co-founders, Eugenio Pace and Matias Woloski, approached NXTP in 2013 for a seed investment, they said they wanted to build the first modern identity management platform, pitching the company as the “Twilio for identity”. And we immediately jumped onboard: the founding team was stellar led by two ex-Microsoft coders, the market opportunity was attractive as enterprises looked to offload the creation and management of their apps’ authentication, and the go-to-market strategy was ingeniously developer-centric.

Fast forward eight years, $200M+ in annual recurring revenue growing 50%+ annually, hundreds of millions of users, billions of log-ins per month, and Auth0 is the undisputed top choice for developers worldwide to authenticate and authorize their applications with just a few lines of code. The Auth0 team has built an incredible company based on developer-centricity, simplicity, and extensibility, and positioned the company as a leading consumer identity platform.

Identity management is a part of digital life that remains hidden to most users. This is by design. We want to log into and out of our favorite websites, apps, and work tools securely, and ideally, without having to remember our childhood pet’s name or clicking on buses. That frictionless world is the world of identity management. Roughly speaking, it can be split into two categories:

Simplifying some, Okta dominates the former business and Auth0 rules the latter. It is not uncommon to see a company use one for its employee- and the other for its consumer-facing portals. Combining the businesses leads to a variety of strategic advantages and opportunities:

1- Doubles each company’s TAM to $55B and positions the platform as the future identity cloud category leader.

2- Enhances the customer value proposition and ability to cross-sell consumer and workforce solutions to enterprises.

3- Enables a hybrid go-to-market strategy by leveraging Okta’s top-down enterprise sales approach with Auth0’s bottoms-up developer-first capabilities.

4- Expands international reach as 40% of Auth0’s revenue is from outside the U.S.

We have a lot to say about Auth0’s product-led-growth. It played a critical role in Okta’s decision to acquire the company and deserves its own post. What is clear today though is that the Okta+Auth0 platform is uniquely positioned to dominate the identity and access management space. As Okta CEO Todd McKinnen put it, identity is the “connecting tissue of all primary clouds.” It is vital to the basic functioning of every business in a $55b market that can only grow as more and more consumer-facing applications are built and as enterprises migrate to the cloud entirely.

We could not be more proud and grateful to the team at Auth0. It has been incredible to watch them build an amazing company. Auth0 has inspired so much of our current investment thesis at NXTP Ventures, backing strong founders building scalable enterprise software, product-led growth, and developer-centric businesses. Thank you, Eugenio, Matias, and the entire team.

Originally published at https://nxtp.vc on March 5, 2021.

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Alex Busse

Alex Busse

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