Why Former Loudcloud CEO Ben Horowitz Invested $10 Million In Cloud Identity Startup Okta

Long before he was part of the powerful investing duo behind venture fund Andreessen Horowitz, Ben Horowitz was a co-founder and CEO of Opsware (previously known as Loudcloud) a pioneer for cloud computing companies (Opsware was eventually sold to HP in 2007 for $1.6 billion). He’s considered an expert in the cloud so his first investment in a cloud computing startup is something to pay attention to.

Okta, which raised $10 million in funding from Andreessen Horowitz, is a cloud application management service. Okta’s platform allows companies to have control of their users, applications, and data both in the cloud and behind the firewall.

The startup was founded by Todd McKinnon, the former VP of Engineering of the most successful cloud company to-date, Salesforce. Horowitz calls McKinnon “the ultimate domain expert on building cloud applications” and says that he “may also be the most astute engineering manager that [he’s] ever worked with.”

Okta aims to solve the problem of how companies manage their applications that are based in the cloud. When moving to the cloud, IT admins face the challenge of securing and controlling users and access, simplifying the adoption and scaling of these applications, and at the same time making sure that the business is optimizing its applications in the cloud. As Horowitz says:

Okta’s initial product aims to solve the Cloud identity problem. I like the problem, because it is seriously different in the cloud than it is on-premise and, for new companies, different equals good.

But Horowitz adds that the market opportunity is huge “because the cloud identity market will likely become the cloud management market. Given that those current markets combined are between $10B and $20B (depending on what you count), the resulting market will be extremely large.”

Plus, SaaS offerings like Okta are being adopted by smaller companies in large numbers. Horowitz says that the average Okta customer has less than 2,000 employees and already a few application that require integration.

Andreessen Horowitz has invested in a number of high-profile, consumer-focused startups, such as Foursquare and Zynga, so it’s certainly notable to see the firm getting into cloud investments. And Okta seems to have the right combination of talent, product and investor confidence. We expect to see good things coming from this startup in the future.