Ben Horowitz ’88CC on Todd and Freddy of Okta Identity Cloud

When I first met Todd and Freddy, they were two guys with an idea. When Todd and Freddy first met Marc and me, we were two guys with an idea plus a couple of folding tables. They were raising money for the first time and we were looking to make our first investment where we would take a board seat and be the lead. We did not have a projector and they did not have a pitch deck, but I loved the idea — that they would reinvent directories and, by extension, corporate identities in the cloud and by doing so would be in the center of the modern corporate application architecture. Todd’s experience building a large scale, highly reliable SaaS application at was exactly what was needed on the technical side and Freddy’s go to market experience was the perfect complement. I felt like I really understood them and they really understood me — we saw the world in the same way and might be able to work together.

So, I made an offer to invest and they accepted. I was excited to take my first board seat and I described my rationale here:

I was excited, but I recalled the words of the great Venture Capitalist Andy Rachleff who once said to me: “We invest in the size of the market and the quality of the team and a bad market always beats a good team.” During the first couple of years, it looked like I might have invested in a bad market. You know the story: sales were slow, money was running low, and we needed cash to grow.

Those were tough times. So tough that they’d make most people want to quit. Faced with the prospect of running out of cash and no way to raise, it would have been easy to hide from the problems, make excuses or give up. Todd and Freddy felt the pressure, but they did not succumb to it. They reworked the strategy, improved the team and found the way out.

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