Sep 22, 2010
Even among MIT entrepreneurs, Frederic Kerrest is a rarity. Not even two years after his graduation, his startup Okta went on to attract the backing of industry’s most venerable angel and venture investors. In Part I of our Student To Founder Series interview with Frederic, we talked about how he incubated Okta while at school at MIT Sloan. Here in Part II, we will get Frederic’s insights on the keys to success attracting top investors.
MITER: It’s very impressive that Okta attracted such venerable angel and venture investors. Very few entrepreneurs can pull that off. What do you think you did differently?
FREDERIC KERREST: We are very, very lucky and very fortunate to have some fantastic investors and advisors to the company. Ben Horowitz, Marc Andreessen and the entire Andreessen Horowitz team – Scott Kupor, Frank Chen and everyone else there – are fantastic folks to work with. Mike Maples and Ann Miura-Ko from Floodgate are also amazing investors who bring a lot of experience. They’ve worked with a lot of very successful companies at young stages, so they help tremendously with a lot of pattern matching and pattern recognition and say, “This is what we’ve seen work and this is what we suggest that you think about.” Ron Conway has a fantastic rolodex and can introduce you to everyone. In addition, we are very, very fortunate to have the support of folks like Maynard Webb (CEO of LiveOps), Dharmesh Shah (MIT alum and Founder/CTO of HubSpot), MIT Professor Ed Roberts, MIT Sloan alum Stephen Marcus, and others. And the MIT network, select people like Bill Aulet, Howard Anderson and others, are always willing to help and give us advice, which is invaluable. We are very, very lucky.
I think the biggest takeaway is that they say that ninety percent of life is just showing up, but I would take that one step further and say that if you can actually execute when you show up, you’ll be ahead of ninety-nine percent of people. I saw this a little bit in venture capital, I was only there for a couple months, but investors see a lot of people come to them and say, “Oh, I’ve this idea and this team and the giant market – I want to go build this thing.” And then investors say, “That’s a good idea. I’ll give you some money.” The entrepreneurs give the investors their plans and then they come back a year later and say, “Well, we didn’t do exactly as planned because the things went wrong, so we need a little more money.”
One of our attributes is that we are very fortunate to work on a team that is very good at executing. Last Summer two months after I graduated we raised our seed round of financing – one million dollars – in a process that went relatively quickly. We said to our investors, “This is our plan and it’s going to take us a year to get it executed.” They said, “Why don’t you raise more money – a couple million dollars.” We said, “We don’t want to raise another million dollars, because we have a plan and our plan is, ‘We are going to take this million dollars and build our first team and build our first product and sign up the first paying customer. And we think that’s going to take us a year’.”
But we actually did it in six months. We signed up our first paying customer right before Christmas – a software company called Xactly Corporation where a very early adopter named Mark Brennan saw our vision and bought into it. The ability to say “Here’s what our plan was and we executed to that plan, and faster than we anticipated” is a very, very powerful message. People say the proof is in the pudding, I think that goes a long way with investors.
We were also very humble and very honest about what we didn’t know. A lot of times people get uncomfortable because they are asking for financing and if they are unsure of the response to a question posed, they will make something up. And as Jeff Bussgang recently said in a post on the MITER site, “You know, what’s really valuable to me is that entrepreneurs make it clear to me that they understand the risks and that they are aware of what they don’t know.” I think that’s very important and very well said. We were very candid and said, “Hey, we haven’t done anything yet, we’ve put together the team like we said we would, we signed up the first paying customer like we said we would, we talked to over a hundred CIOs, we showed them our new product – first it was drawings (Balsamiq is a great tool btw), then it was PowerPoint, then it was HTML mockups, and then there was some real logic and real code. We’d gotten enough data points to go back to our investors and say, ‘Look, there’s a pain, it’s a giant market, it is about to explode, no one solved this, we think we can build it and here’s why.’” We also spent a lot of time and put a lot of thought into the plan that we presented: it said that we were going to put together a great team, that we could recruit very well, that we had a lot of credibility and the right contacts in the industry, that people were willing to come and work for us, and that we wanted to be aggressive about taking the market. Our investors agreed with all of that.
MITER: Finally, for smart students out there who are looking to join superb startups like Okta and really learn to execute, are you hiring and who are you looking for?
FREDERIC KERREST: We are hiring! Absolutely. We love to hire smart people. You have smart friends, send them our way, the address is firstname.lastname@example.org! We are hiring across the board. We have six or seven open engineering positions right now. Our team has gone from Todd and I when we started to over twenty five people in the company now. We have a new office in downtown San Francisco that is very nice and bright. The office is walking distance to CalTrain and BART for people who commute; there’s parking next door and it’s an exciting neighborhood to work in. All the startups are here, Twitter is right down the street, Aliph/Jawbone, SlideRocket, Zynga, Yammer, Splunk, Eventbrite, Stitcher, Zendesk, VoxPop, Meraki Networks and on. We are hiring a ton of software engineers – front end, back end, database, testing, usability, performance management. We are looking for outstanding account executives and have a number of open inside sales positions. If you’ve sold SaaS or enterprise software before, give me a call. We are also looking for a number of marketing people – both marketing managers as well as a director of marketing to do lead generation and work closely with our sales team.
We have an experienced, grounded team here and are developing great company culture. Recently, we hired a new vice-president of sales and business development, Roger Goulart, whom I’ve known for eight years. He was with Salesforce.com and then SuccessFactors; before that he was with Broadvision and has just a ton of experience, and is a fantastic manager to work with. We just hired a great VP of Products, Eric Berg, who was at Microsoft for six years and was most recently a VP of Product Management and Marketing at a company called Apptio, a very well-funded and well-managed SaaS company. We have a great team of people, we’re having a lot of fun, and the opportunity is just starting and we can’t make enough phone calls to prospects. Our customers are extremely happy and we get more every day. If you like enterprise software, we’d love to talk to you!