Starting Up In A Downturn: How Okta Built An Enduring Enterprise Company | Summary and Q&A

TL;DR

Okta CEO shares his experience of starting a company during a recession and the advantages it provided.

Key Insights

• 🤨 Starting a company during a recession can have advantages in terms of hiring and raising funds.
• 👨‍💼 Initially targeting smaller businesses may not necessarily indicate long-term success.
• 🥅 Providing value to customers and profitability should be primary goals for a company.
• 💪 Building a strong and diverse customer base is crucial for sustainable growth.
• 🎮 Independence from capital markets is important to maintain control over the company's destiny.
• 👨‍💼 Aiming to secure paying customers early on can validate the business model and provide a solid foundation.
• 😌 Hard work and perseverance lay the groundwork for future success and expansion.

Transcript

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Questions & Answers

Q: How did the CEO convince his wife to start Okta during a recession?

The CEO created a PowerPoint presentation titled "Why I'm Not Crazy" and included the fact that successful companies like Oracle and Microsoft were started during a recession.

Q: How did the recession affect Okta's ability to raise money?

While it was slightly harder to raise funds in the first six months, Okta was still able to secure investments.

Q: Who were Okta's initial customers?

Okta's first customers were mostly small businesses and startups, but they later transitioned to serving larger enterprises.

Q: How did Okta ensure long-term success?

Okta focused on delivering value to its enterprise customers and making sure they were willing to pay for the services provided. They also ensured profitability and had a diverse customer base.

Summary

In this video, the speaker talks about their experience of starting a company during a recession and how it impacted their ability to raise money and hire people. They also discuss the importance of building infrastructure and understanding the market when starting an enterprise software company. Additionally, they touch upon the challenges of finding and securing customers, and the factors they consider in running a company in a high valuation, bubble-like market.

Questions & Answers

Q: What prompted the speaker to quit their job and start a company?

The speaker decided to quit their job and start a company a few months after Lehman Brothers, despite their wife thinking they were crazy. They made a PowerPoint presentation titled "Why I'm Not Crazy" to convince her, citing successful companies like Oracle and Microsoft that were started during a recession.

Q: What kind of company does the speaker's company, Octa, help?

Octa is an enterprise software company that helps companies of all sizes manage, control, and secure the applications they use. They assist with deploying cloud applications and mobile devices, making it easier for end-users and customers to build an infrastructure software and security company.

Q: Why was building infrastructure and processes crucial for Octa in the early years?

Building infrastructure and processes takes time, and it was important for Octa to understand how everything worked, get the first customers up and running, and ensure their success. By 2012, when the economy started recovering, Octa was in a good position due to the foundation they built during the recession.

Q: How did Octa initially find its first customers?

Initially, Octa reached out to anyone who would respond to their emails or pick up the phone. This led them to work with smaller startup companies and those not necessarily in their target market. However, they quickly realized that the problem they were solving was not a significant pain point for these smaller businesses, so they shifted their focus to larger companies.

Q: What were the challenges in finding enterprise customers for Octa?

Octa aimed to build a long-term, independent enterprise software company that relied on enterprise customers paying for their services. Initially, they had smaller businesses as customers, but they soon discovered that larger companies experienced more significant pain in the area they were targeting. They eventually found a balance between larger customers and a growing mid-market business.

Q: How does Octa approach running a company in a high valuation, bubble-like market?

When running a company in such an environment, Octa considers several key factors. Firstly, they focus on providing value to their customers and ensuring they will pay for it. Secondly, profitability is a crucial aspect to evaluate. Thirdly, they seek customers that are established businesses and won't be severely impacted by any market collapse. Lastly, Octa ensures they have enough money to chart their course and fulfill their destiny, avoiding dependency on capital markets.

Q: What was the goal set by Octa in 2009, and how did it influence their approach in the early years?

In 2009, Octa set a goal to have one customer live and paying for their services by the end of the year. This aggressive goal shaped their mindset and approach in the early years. They focused on providing value and getting customers to pay, seeing it as a validation of their business rather than relying on free usage.

Takeaways

Starting a company during a recession can have both positive and negative impacts. It may be more challenging to raise money initially, but it can also be easier to hire people. Building infrastructure and understanding the market are crucial steps in the early years. Finding and securing customers can be a learning experience, with adjustments often needed in targeting the right pain points. In a high valuation market, it is essential to focus on providing value, profitability, customer stability, and financial independence from capital markets. Finally, initial success and customer base provide the foundation for future growth and opportunities.

Summary & Key Takeaways

• The CEO of Okta quit his job during the recession and convinced his wife to start a company.

• The timing of starting Okta during a recession made it easier to hire and raise money.

• Okta initially focused on smaller startup customers but later shifted to larger enterprises.