Times of great transition can often be just the right moment to start a company. They can also offer up new opportunities to embrace workplace policies and practices that help companies become more nimble, adaptable and effective organizations.
On this episode of Greymatter, Okta CEO and co-founder Todd McKinnon shares leadership lessons for times of dramatic change, and how they’re meeting the surge in customer demand for Okta since Covid-19 hit. Todd, who left his job leading engineering at Salesforce in 2009 to start Okta, a Greylock portfolio company, reflects on the platform shifts that convinced him to take the leap, the parallels he sees today, and what’s next for Okta. Finally, for over a year predating the pandemic, Todd has been a proponent of the nuanced “dynamic work” (rather than fully remote work). He explains that philosophy and shares Okta’s approach to talent.
Below are key highlights from the conversation with Todd McKinnon and Greylock general partner Sarah Guo.
Okta was launched in 2009, during the economic recession. How did you assess the risk of starting a company in uncertain times?
“It was super scary, but was at a point in my career where I’d already lived through the dot com bubble and I still saw all these people go out and start these companies that were amazingly successful. Yes, there were a lot of dot coms that didn’t work out. But there was also Yahoo and Google and a lot of businesses that were actually successful, and they did it during this time of transition: The transition and technology from the offline world into online; the web world. Now it was 2008, 2009, and my co-founder Frederick Kerrest and I got really excited about the future of cloud. We saw the success of cloud and the potential of cloud. And so I saw that we were in another place of transition, and I just knew in my gut that there was going to be a big opportunity here and I couldn’t watch it pass me by again.”
“The hardest part was quitting my job. Before I quit, I talked to my wife. She’s amazing, and one of the reasons we are such a great team is because she’s pretty different than me. I’ll take risks and she likes stability. The way she thought about things was, ‘You either have a job at a company people have heard of, or you are a bum.’ There’s no gray area. It was a mindset of if you are going to leave a job at Salesforce for something you are going to start yourself, you might as well be a hobbyist in a basement. Plus we had a six-month-old baby. And there was a big economic downturn, so when I came home and told her I was going to quit my job, she said, ‘What? Are you crazy?’ But she used more colorful language than that. To convince her, I ended up making a presentation and a Google spreadsheet. And the title of it was Why I’m Not Crazy: My Proposal to Start a Company.”
How has Covid-19 and the shift to working remotely impacted your strategy?
“This whole world right now reinforces what we are about, which is to enable any organization to use any technology.”
‘We’re very lucky in that we are benefitting from these macro trends that are accelerated by a really bad thing going on in the world. To a degree, we use it as a motivating factor to focus more on our mission and purpose. It’s good to not have a shifting vision and purpose for a company, because pivoting is really hard and costly.”
You’ve said that Okta’s future is dynamic. What does that mean?
“About a year and a half ago we started this initiative internally that we called “dynamic work”. The vision was that people would have much more flexibility on how they utilize the office. It’s ‘dynamic’ in terms of sometimes people can be more productive from home, so we will not assume a bunch of false barriers to their productivity. So I can use the office as a collaborative space, as a customer visit center, and be much more flexible in terms of how it’s built and how it’s designed.”
“We decided to have a dynamic office because of two reasons. One is that we wanted the best people in the world to come work here. We figured if we remove the constraint of being physically by an office, we can have a better chance of getting the best people to come work for us and be collaborative and be productive. The second thing was real estate costs: We’re a US- based company, and of course we’d love to hire people here, but they’re not enough of them. And by the way, it’s not just us looking for talent, it’s every other company and every other organization in the country. To make the country strong, we need the best talent from all over the world. In the U.S., we need to educate people, and to bring people up and promote them, but we also need people to come into the country and help us. And I feel like we’re missing that big picture with the current immigration policy.”
Okta’s annual conference, Oktane, is one of the most important events of the year for you. How did you adapt it for Covid-19?
“Our first reaction was that we were stressed. We were like, ‘How is this going to happen and what it is going to mean? Can we still close deals? Can we still deliver our marketing message?’ So we scrambled around to make that happen, and I think that through that process, we learned a lot about ourselves as a company. I think we underestimate our ability to adapt and be flexible and these changing times. We had a lot of preconceived notions about what Oktane had to be and what the inertia was around it. We had about 6,000 people who were going to be there in person in Moscone West in San Francisco. It ended up being 20,000 people online. And not only was the event online, we then had all this reusable content – there were talks and breakout sessions and demos that were all recorded and presented in a way online that was actually much easier to follow.”
As a CEO, how do you prioritize in chaotic times?
“The first priority and the second priority is customer success. You might have problems with customers who are not going to be able to pay, who are potentially going out of business. But you need to be flexible and prioritize working with them even though you may take a hit in the short term. Another part of that is to make sure we keep our service running, because what we are doing is mission critical. If we need to prioritize stuff to make sure everyone can be supported with our service and our infrastructure gives them the ability to run their business, that’s what we have to do.
“The third priority is to rip up the playbook. At the beginning of the year, we had our playbook, but we were wrong. Even though we made our plans, we have our annual planning cycle, and every customer got their plans – guess what, the plans changed.”
What’s the best thing you’ve done in terms of how you change your interactions with customers?
“We’ve benefited from the fact that we weren’t Johnny-come-lately in terms of being customer-centric. We have a good reputation of showing them that we care about them and what we’re doing. Identity is seen as complex and cumbersome, so if you can have that brand of a company that cares about this and cares about helping the customers, that is powerful. This isn’t something we are just turning on right now. It’s something we’ve built up, and now you put in this pandemic and it’s even more important.”
“How are you thinking about the next phase of product development?
“For [the past] four months, we’ve been able to finish the stuff we had already started, from a product and innovation perspective. Our lifeblood is innovation and creating the next great product, the next great solution, so we have to figure that out. Maybe it’s an innovation around our current products, or a new product. And I think the jury is still out in terms of a company’s ability to do that in a working environment that has changed dramatically.”
“Thinking about going all remote, it’s not exactly a panacea. I see a hybrid future where there are going to be much better online partners while also having some in-person work. For example, I see a use case for conferences. This is where I think a dynamic model will work well.”
“Humility is the foundational thing. Don’t think you have all the answers, or all the problems solved. I think that if we can get people to collaborate in a spirit of not having the answers, we can get better. That’s as good of a solution as anything. This is going to be hard. It’s different. We have to always be evaluating if we could do it better, what worked, what didn’t work. We have to think, ‘Let’s try this. Let’s evolve.’”
What are the lessons you learned from leading the Okta team through challenging times?
“I’m taking a lot from what I learned in the early days of Okta, when it was pretty hard. We weren’t one of these startups that was just rolling out of the gate. We took a while and it was a grind. There were some times where we missed sales numbers, and the board wasn’t happy with what we were doing. And my first instinct in those times was that I was going to try to hide things and internalize things and figure it out myself, thinking, ‘I’m independent. I’m strong. I can figure this all out.’ But instead what I did is I flipped it around and said, ‘I’m going to share the problems. I’m going to tell the team, ‘We’re kind of in trouble here. You guys got any ideas on how we can figure this out? I have some ideas, but I don’t have the answers.’ And that was a lesson: Even if it doesn’t feel right, you’ve got to be visible. You gotta get out there. You got to show up. You got to be an example. And fast forward to 2020, beyond just having the right priorities, you have to be hyper visible.”
“You can’t just start [a certain way of leading] from zero. From day one, you gotta build up that equity, so to speak – that relationship and authenticity in your voice and how you interact with people. You can’t just suddenly start when there’s a crisis. You can’t just show up and be like, ‘All right, I’m gonna have town halls every week.’ Because the first reaction from your team is going to be, ‘Why is he having a town hall? We must really be screwed.’ They are going to think things are really bad and they are about to get fired because suddenly the boss is talking to them every week. You build it up over time so when a crisis does hit, or when you really need the company to pivot or re- emphasize something, you already have that relationship and authenticity so you can sit down and say, ‘Ok, here is the deal.’ And everyone recognizes that voice.”
What advice would you give early stage entrepreneurs building companies in today’s environment?
“I would actually say, in general, people tend to take too much advice. People should be more decisive. I think most people are smart enough to kind of do the math and figure out the probabilities of what they should do. Obviously, there can be lots of flaws in the way people make decisions, but generally speaking, I think people can narrow down the bad choices pretty quickly.”
“The biggest danger ever is trying to over-generalize things. And yet, I’ve seen people make the mistake of ‘analysis paralysis’ more than I’ve seen people be too decisive too fast. Leaders of early companies need to remember: who knows the most about your business and your situation? You.”