The CEO of $4.3 billion Okta explains why he wishes he had gone public sooner - and all of the surprising perks of life after an IPO
- One year after Okta's initial public offering, CEO Todd McKinnon shares his advice to founders thinking about taking their startups public.
- McKinnon, who cofounded Okta in 2009, said he regrets not taking the company public sooner.
- Being public is business as usual, he said - but it's way easier to get cash. He says he raised a $300 million convertible bond in a half-day of investor presentations over the phone.
- McKinnon said that he doesn't recommend public markets to anyone whose company's financials are unpredictable from quarter to quarter.
On April 7, the identity management platform Okta will celebrate one full year as a publicly traded company.
Todd McKinnon - CEO of Okta and the 14th fittest man in the world for his age - was able to celebrate a little early, after announcing 62% annual revenue growth in the company's first-ever full-year earnings report on Wednesday.
Now with three quarters of earnings under his belt, McKinnon - who cofounded the company in 2009 with Frederic Kerrest - told Business Insider that he wishes he and his team hadn't let their fears get in the way of going public a year earlier.
"If I could do it over again, I would have done it sooner," he said.
McKinnon gets asked often by other founders what it's like to run a public company, which he responds to with a quip.
"One thing I tell them is that it's only been four quarters, talk to me in another year," McKinnon told Business Insider. "Part of me feels like you can't claim victory after a year. It's a pretty short amount of time."
While going public hasn't made his job any less stressful, McKinnon said that the last year has alleviated many of the concerns that he had about how things would change for Okta.
Initially he worried about how going public would change things internally at Okta: He tried to be "open minded," but he wasn't sure how much going public would change the company culture or how it did business.
In reality, he says the culture did change a little bit, in the sense that Okta now attracts more people looking for the stability of a large company, rather than the excitement of a younger, privately-held startup.
"You kind of rotate out of employees that want to work for an early stage company to people who prefer something more stable and larger," says McKinnon.
But he feels strongly that it was important to go public, and give Okta's earlier employees the chance to make good on their stock options.
"One of the reasons why we finally did go public is that we paid people in stock for 8 years and at some point you've got to let them realize their stock," says McKinnon.
McKinnon also wasn't sure whether Okta would be able to continue to invest heavily in its product with the scrutiny of quarterly earnings reports, and he wondered whether or not being public would make Okta more visible to new customers.
"Thankfully it's been business as usual," McKinnon said. "The pleasant surprise there is that a lot of that stuff was a non-issue."
It's easier to get your hands on money when you're public
Some things, though, have caught McKinnon off guard, like how easy it is to get your hands on new capital when you're publicly traded.
McKinnon said that Okta applied for a $300 million convertible bond in case it needs to make any quick acquisitions. It took him one half-day of presentations - all over the phone - to raise the money, he says.
He compared this to the IPO, where Okta raised just $187 million in its debut, after months of preparation and its days-long investor roadshow.
"This advantage in the public debt market was really good. You couldn't do that if you were private," McKinnon said.
In terms of advice, McKinnon has one thing key thing he wants founders to know: Private startups should only go public if their financials are predictable.
Okta's big advantage in this is that its subscription model gives the company a sense of what's coming next.
"Once you have predicatability, they're just investors," McKinnon said. "Investors are still investors. They want financial return. They want you to paint a good story for them."
While McKinnon didn't divulge whether or not the CEOs of public companies have a secret club or get special treatment, he did say there is a perk to IPO day that most people don't talk about.
"During the IPO I had to have a security guard," McKinnon said, adding that it was, sadly, just a one-time thing.
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