Starting Up In A Downturn: How Okta Built Its Enterprise Company

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In today’s tech climate – where financing sources are plentiful and investor optimism is generally high – many believe that there has been no better time to get funded and realize their startup ideas.

But Todd McKinnon would tell you that the best time to start Okta was in 2009 – just a few months after the collapse of Lehman Brothers and the beginning of the great recession.

McKinnon was running engineering at Salesforce in 2009, and he left his senior VP role to start Okta at a time when the economy was unpredictable – and getting worse. However, he noted that that several of the biggest tech companies in the world were started during times of economic downturns.

Hewlett-Packard was founded in 1939 during the Great Depression, and Microsoft and Oracle were founded at the tail end of the 1973-75 recession, in 1975 and 1977 respectively.

But rationalizing the timing for the startup was one thing. Telling his wife about his plan was another.

McKinnon recalls, “I came home from work – I had a six-month old daughter – and I told my wife that I was quitting my job to start a company. She thought I was crazy.” While the timing made fundraising a little more challenging, there were many positive aspects. The current market for talent is competitive, but McKinnon notes that back then, “it was easier to hire people, definitely easier than it is now.”

Frederic Kerrest, Okta’s co-founder and COO, points out that it takes a few years to get an enterprise software company to build its infrastructure and get up and humming. So even though starting in downturn raised some eyebrows, by 2012 when the market began to improve and stabilize, Okta had built a great product and a strong customer base.