Why Developer-first IAM, and Why Okta’s Auth0 Acquisition Matters
As every company is starting to build its competitive advantage, the developer-first IAM will free developers from inherent complexities in doing Identity integrations.
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In the article, The Next TCP/IP Moment in Identity, I discussed why the enterprises will demand developer-first IAM. As every company is becoming a software company and starting to build their competitive advantage on the software they build, the developer-first IAM will free the developers from inherent complexities in doing Identity integrations.
The announcement came yesterday on Okta’s intention to acquire Auth0 for $6.5B, which is probably 40 times the Auth0’s current revenue, which is a true validation of the push towards developer-first IAM. However, this is not Okta’s first effort towards developer-first IAM. In 2017, Okta acquired Stormpath, a company that built tools to help developers to integrate login with their apps. Stormpath soon got absorbed into the Okta platform, but yet, Okta’s selling strategy didn’t change. It was always top-down.
In contrast to Okta, Auth0 follows a bottom-up sales strategy. One of the analysts I spoke to a couple of years back told me that the Auth0 name comes in an inquiry call only when a developer joins in. The acquisition of Auth0 will give Okta, access to a broader market. So, it is important for Okta to let Auth0 run as an independent business, as also mentioned in the acquisition announcement.
Auth0 is not just about the product; but also the developer tooling, content, and the developer community around it. Okta will surely benefit from this ecosystem around Auth0. Also, for years, Azure is the primary competitor of Okta, and the Auth0 acquisition will make Okta stronger against Azure in the long run.
Late 2020, in one of the earnings calls, Okta announced that it sees the total market for its workplace identity management software as $30 billion, but it sees another, the additional market for customer identity software at $25 billion. In the customer Identity space, when we talk to enterprises, they bring in their unique requirements. In many cases, they look for a product that can be used to build an agile, event-driven customer Identity (CIAM) platform that can flex to meet frequently changing business requirements. The developer-first IAM is more critical in building a CIAM solution than in workforce IAM. In the latest Forrester report on CIAM, Auth0 is way ahead of Okta, in terms of the current product offering. Okta will probably use Auth0 to increase its presence in the CIAM domain. Like Microsoft has Azure AD to focus on workforce IAM and Azure B2C to focus on CIAM, Auth0 could be Okta’s offering for CIAM.
When Auth0 was founded in 2013, it picked a less-saturated (even right to say fresh), a future-driven market segment in IAM — developer-first. Developer-first is all about the experience. Auth0 did extremely well there. They were worried about building the right level of developer experience, rather than the feature set. Even today, Auth0 stands against others not because of their feature set, but the experience they build for developers.
The developer-first experience is not only about the product. How you build product features in a developer-first manner, probably contributes 50% of the total effort. The rest is about developer tooling, SDKs, and the content. Then again, the content is not just about the product. The larger portion of the content needs to be on how to integrate the product with a larger ecosystem — and also to teach developers the basic constructs, concepts, and best practices in IAM. That helps to win the developer's trust!
Auth0’s vision towards developer-first IAM evolved over the past. The way the Auth0 website itself evolved in terms of the messaging and the presentation, reflects how much they want to be on the 'enterprisy' side more today than in the past. As they claim Auth0 has 9000+ enterprise customers, which probably generate $150M annual revenue, the average sales value (ASV) would be around $16500. That probably means the majority of Auth0 customers are in free/developer/developer pro tiers. So, it’s understandable why they want to bring in enterprise look and messaging, probably moving forward to focus more on top-down driven sales strategy. The big Contact Sales button over the Signup button on the Auth0 website today sums up this direction to some extent. The Okta’s acquisition of Auth0 could probably strengthen this move.
Like Microsoft’s acquisition of GitHub for $7.5B in 2018, Okta’s acquisition of Auth0 for $6.5B is a win for developers! Congratulations to both Auth0 and Okta and very much looking forward to seeing the journey of Auth0 together with Okta.
Published at DZone with permission of Prabath Siriwardena, DZone MVB. See the original article here.
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