Todd McKinnon, chief executive officer of Okta, hopes to parlay his experience at two former employers into making his company the next great publicly traded enterprise software purveyor.
Okta (OKTA), which sells identity and access management (IAM) technology designed to give business users secure access to myriad cloud-based software applications, will start trading Friday on Nasdaq (NDAQ). The company hopes to sell 11 million shares at $17 per share, raising $187 million. That values the company at about $1.5 billion.
This is McKinnon’s third gig, and it reflects his business software background. He started at PeopleSoft, a provider of human resources software that Oracle (ORCL) acquired in 2004. He then spent more than five years at Salesforce (CRM) as senior vice president of development.
“PeopleSoft did a great job making the company feel like it was the employees’ company. That was super powerful. And the thing about Salesforce was it was fun to be part of inventing totally new. That attracted a certain kind of person with a certain amount of swagger. At Okta we’re trying to do both,” McKinnon told Fortune a few hours before he was slated to ring in trading on Friday morning.
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Salesforce (CRM), founded in 1999, is famous for pioneering the delivery of software from its own data centers over the web to customers. It’s no exaggeration to say that 100% of software companies including Oracle and Microsoft (MSFT) have since followed its example.
Okta’s IPO comes a few weeks after MuleSoft (MULE), another business software company specializing in software application integration, went public.
San Francisco-based Okta, which sells six products including single-sign on and API access management, is attacking what McKinnon says is a $7.5 billion-a-year market opportunity.
Okta’s pitch is that it can offer an independent way to ensure that a business user can safely use many different cloud-based products via single sign-on (so one set of authentication works for all applications) and identity management technology that requires users to prove who they are before gaining access to specific data.
Okta competes with offerings from giants including Google (GOOGL) and Microsoft in some areas, but it also partners with them. The company is also allied with Facebook (FB), which is pushing into business software with its Workplace business collaboration product.
Given that most Fortune 500 companies use many software applications to run their processes—maybe Workplace for human resources, SAP (SAP) Concur for expense management, Salesforce for sales lead tracking, and Microsoft Office 365 for desktop applications—there is an appeal there. Okta claims big accounts including Experian (EXPGY), the credit tracking company, and Fox Entertainment.
“What has changed in the past few years, and what we benefit from, is that identity and access management used to be part of other companies’ platforms. You had Oracle Identity in the Oracle stack and Active Directory in the Microsoft stack. Now everything is connected and identity has moved from being part of other companies’ platforms to being its own platform. That’s a long-winded way to say it doesn’t work anymore if it’s part of one company’s stack,” McKinnon said.
That may be true, but huge companies with lots of resources, including Google and Microsoft, are also working to offer cross-platform identity management. To McKinnon’s point, many business customers might prefer to use a neutral third-party identity management provider that has no vested interest in supporting one set of applications over another.
Given that some IPO-bound companies have been purchased at the last second by giant tech firms— Cisco (CSCO) snatched up AppDynamics on the eve of its public offering, for example—it made sense to ask McKinnon about that possibility.
His response? Okta “has got to be neutral, there’s a lot of value in independence, so our path is to be large important independent software provider.”