CEO Todd McKinnon on why Okta is steering clear of buzzwords

SUMMARY:

Cloud identity management vendor Okta has laid the foundations for a very interesting product, but it wants to avoid industry hype.

Todd McKinnon, Okta CEO
Todd McKinnon, Okta CEO

Cloud identity management vendor Okta laid out a very interesting proposition for the future of its platform this week at its annual user event in Las Vegas. CEO Todd McKinnon took to the stage to explain why identity needs to become the “lynchpin” of a modern digital ecosystem, serving as an integration layer for companies to manage both security and end-user experiences.

The sell is quite compelling, when you think about the homogenous and dispersed nature of modern digital enterprises. It’s not hard to understand why Okta is pitching people as the new perimeter, with identity becoming the new central control point.

However, it’s about more than just security, according to Okta. Via its API Access Management product, companies can expose customised digital apps created in house to the identity layer, making Okta the platform that manages the end user experience, as well as the security in the back-end.

And speaking to customers this week at the event, it’s clear that Okta solves a problem. One national energy provider said to me that it never before had been able to use a platform to manage its entire company, which had hundreds of systems and multiple companies.

However, what has been interesting about the event, is that Okta appears to be very cautious to buy into the industry hype that has been seen at other events this year. I think this is the first cloud conference where I haven’t heard the words AI and machine learning mentioned, and there was very little talk of IoT (which could be an interesting area for Okta).

Instead, attendees got a cogent pitch about how Okta has laid the foundations for a platform that could be very compelling.

I got the chance to sit down with CEO Todd McKinnon at the event, and I was keen to find out why he had stayed clear from the buzzwords – a notable absence. He said:

Maybe it’s a weakness, but we tend not to [latch] on to the buzzwords. We took out the AI and the IoT. First of all, I think that, like a lot of things, there has been innovation in machine learning and artificial intelligence. The algorithms are getting better, certainly. But really what’s different is that there is more data.

And you can run these algorithms across big data sets, that combination is important. The reason why Google is driving around thousands of miles every day for driverless cars, is to get the data. If they get the data, the learning will get better.

When people spin products and services as being machine learning or AI, they may have some algorithms, but they’re not gathering the data. If it doesn’t have both sides of the story, it’s not going to be complete. In our company we are focused on building capabilities that help us gather data. And then the machine learning part can come later. It’s kind of all hype without that.

Creating a platform with APIs

And this theme of laying foundations to later scale something successful ran throughout my interview with McKinnon. And I found it very refreshing. It’s been a long time since I interviewed a CEO that didn’t claim their company could do everything and anything right at this very moment. Instead, Okta is focused on getting everything in place, integrating with other companies to build an ecosystem and signing hundreds of customers.

As noted above, Okta is focused on creating an identity management platform, beyond single sign-on, via its API Access Management product. I have explained why I believe this is a strong proposition, here. However, it can’t be denied that almost all major cloud providers want to be a platform. And creating platforms are hard – the technology isn’t enough, you need a dynamic ecosystem. iOS is nothing without the app developers and the iPhone users, in its simplest terms.

Some companies have succeeded more than others at this. Salesforce, for instance, has whole companies that have been created on its platform – some that have been gone on to be sold for large sums. However, McKinnon is all to aware that this is hard to do, which is why he has focused on laying the foundations. He said:

Everyone underestimates how hard things are. First thing is, you have to build the underlying tech, you have to have something that’s going to add value. Building a platform is not a new idea, everyone wants to build a platform. You can create a tonne of impact, you can create a lot of economic value. Everyone wants to build DOS, or Windows, or Facebook, or Google. First thing you need is to have something valuable, to expose to developers. That takes a lot of different forms – with Apple it was an amazing device with a touch screen, with a fast network, on a mobile phone. We spent eight and a half years building something that’s very valuable for developers, and something that’s needed in every application – user database, authentication, authorisation.

The second thing is, you have to actually have a whole version of marketing and sales that’s applicable for that audience. There’s a reason that Steve Ballmer stood up on that stage all sweat and yelled, “developers, developers, developers”. Smart guy. We’ve spent a lot of time building the foundation and now we are focusing more on making sure the word gets out there.

Then it’s about continuing to add value to developers and the fact that you’re connecting all of these developers and APIs together, makes the platform more valuable. The more developers we get using the platform, the more value we can add for developers, because we can expose more of the value of other people using the platform to developers. It’s possible if you do it in the right order.

Building a data capability

During his keynote presentation, McKinnon demoed a couple of interesting new dashboards – for example, how Okta’s network is being used by customers (as in, which apps are popular, which ones are growing in popularity etc.). Okta also highlighted how it could use aggregated and anonymised data on the network to analyse and inform customers about threats to the network, or which passwords high risk, as examples.

I was interested to find out if this could be a future commercial offering for Okta. For instance, using anonymised data to package up and sell back to customers, informing about security threats, or how best to manage their systems, could be very valuable.

And McKinnon was sure that this would be the case going forward. But again, Okta is building the capability first. He said:

Absolutely. Yes. It’s very important. We are focused on building integrations, providing the value to gather the data. We could focus more of our efforts on great reports and dashboards, but we think we would undermine our potential, because we have a lot of work to do just connecting broadly and getting thousands and thousands more customers.

We do some of that already. We use the data, for example, for IP addresses that seem to have fraudulent activity from them, locking those down across different organisations, even though the initial attack may be against one. So we do use the data to make our products better. But it’s almost infinite on how much we could do there. It’s only bounded by the amount of data we collect, which is close to boundless.

Moving forward

Okta IPO’d in April this year and McKinnon is now focused on scaling the business, putting effort into building the integrations for the platform and attracting customers. But, what keeps McKinnon up at night? What are his main concerns about scaling the business? He said, focusing investment is his main priority.

I think we are growing very quickly, just the management, coordinating that, and running things when you’re growing, is a lot harder than running things when you’re not. That’s a high class problem.

I don’t think this is going to change in the near term, but I think the space we are in, it’s incredibly broad and it’s connected to everything. It touches a lot of things, identity is central to managing and extending the secure enterprise, it’s transforming the customer experience. And you put yourself in about six different industries there – from marketing analytics, to security detection for internal employees. So that’s very broad.

So one of the challenges is figuring out where, across all of those fronts, to focus on, and where to work with partners, and where to innovate ourselves, or buy a company – the opportunity cost of getting that wrong is high. If you don’t invest in the right area, you might lose an important leverage point to build up the data, build up the core. Getting that investment level right is something I spend a lot of my time on, if it’s something that I worry about, that’s what it is.

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Disclosure - Salesforce is a diginomica premier partner at time of writing.

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