Don’t want to become the next Ashley Madison? Silicon Valley thinks you need to upgrade your security.
Investors are putting their faith in a company you may never have heard of called Okta. The six-year-old San Francisco-based company provides software that gives businesses an extra layer of security when their employees are accessing Internet-connected services, like Google docs or DropBox file storage.
The company does this through a system called single sign-on, allowing people to log in once and then access everything, instead of having to remember various usernames and passwords. For employers, Okta’s software promises that the right employee is accessing the right information, a feature becoming increasingly important.
The startup’s value to investors has grown nearly 77 percent since June of last year when they put $75 million of venture capital into the company. That kind of investment isn’t unprecedented in Silicon Valley, which has been pumping out so many new startups worth more than a billion dollars that it even has a name for them: unicorns.
On Tuesday, an atmosphere of fear helped the herd of 116 mythical and precious creatures grow by one more when investors put another $75 million into Okta, valuing the startup at nearly $1.2 billion. That quick growth in Okta’s value underscores the wide-spread anxiety among corporate executives that their companies — and their jobs — will be the next victims of a costly hack.
As more businesses have embraced cloud software applications that have the benefit of giving employees the mobility to work from anywhere, a wave of high-profile hacks against companies such as Ashley Madison, Sony and Target have led to data theft and CEOs being fired.
That’s put cybersecurity on the front burner. It’s even a common sight to see ads warning about the next breach on buses in San Francisco and street-side billboards near downtown Oakland, California.
“The conversations about security are in their board room,” said Todd McKinnon, Okta’s CEO, referring to the increasing attention companies are paying to cybersecurity. “They read the news about Sony execs’ emails being public information. That’s very tangible.”
Those boardroom conversations are also translating into more dollars spent on software to prevent the next hack. This year, companies and governments are expected to spend $80 billion on cybersecurity technology, according to a report by technology research firm Gartner. That’s 8 percent more than last year.
Okta’s rivals include Ping Identity, Centrify and Microsoft.
McKinnon, who co-founded the company with fellow ex-Salesforce.com employee Frederick Kerrest in 2009, plans to make Okta a publicly traded company someday but has not provided few performance details. He will not disclose its revenue, for example, nor when he’s planning to file paperwork for an initial public offering.
However, some numbers provided by the company do show the extent to which it’s benefiting from corporate security concerns. Notably, McKinnon says Okta’s sales have grown at “nearly 100 percent year over year.”
The company says more than 2,500 companies use its service today, including LinkedIn and Western Union, with 21st Century Fox and Dish Network among its newest. Okta is adding 250 new companies as clients every three months.
Okta employs about 500 people, mostly in San Francisco. It also has offices in Toronto, Seattle and the Netherlands.