Okta - Cloud Security to the Rescue

Okta, Inc.

Ticker: Nasdaq (OKTA)

Industry: Internet – Cloud

Okta is the 4^th best investment I had for 2019. I say this with a pained look on my face because it would have EASILY been my best pick of the year.  Why do I say this – well Okta is like the relationship that was going great but simply ended to early.  If I would have held onto my shares Okta would have been in my Double Trouble club this year. To my knowledge the only other stock that was in this club is Tesla and that is because of its recent surge above $400 (Tesla, became a value play on my radar as it dropped into the low $200s)

To aide in my discussion on Okta, I want to talk about the Cloud and Cybersecurity. This is a space that I should know a little bit about since my primary hustle is helping Fortune 500 companies manage complex risk scenarios and a few of my focus areas are: IT and Cybersecurity. To stay compliant for my two professional certifications that I hold in this space, I am currently studying a few topics to receive educational credits.  I pulled up a series of articles from 2010 that I was going to be quizzed on and one article was providing an overview of disruptive technology that was going to change the IT landscape. This technology was the: CLOUD.  My first thought was I wish I had read this earlier and created the technology for my next investment. But the article pointed out the biggest risk to the move to the CLOUD. It made me think of this year's 4th best investment:

Okta addresses a major security problem caused by the increase of cloud based apps.  If your app is available on the internet conceivably anyone could try to access and steal important information.  Okta (a cloud access security broker) and other identify management platforms solving this problem are going to continue to do very well as companies look to restrict their crown jewels.

Okta traded in Q4 2018 around the $60 dollar range so I picked up one of my largest positions ever. However, I got a little nervous holding such a large position that when it appreciated in a few months to about the $75-80 range I removed the position.  Well, Okta now trades for roughly $120 dollars and it’s safe to say I did well but would have had a story for the ages if I would have just held on to this as a core position.  I guess you live and learn. 

For a detailed summary of the Cloud, click hear to read on:

First, I wanted to apologize to the CLOUD because I had been underappreciating the pressure it would put on companies to bring down costs.  I focus on risks and I do this for companies that are securing one of the most important assets in our lives: MONEY. So my myopic view didn’t allow me to fully appreciate the cloud.  In fact, I’ve openly dissed the CLOUD because it’s not a technology that is new.  My experience in the IT field had provided me with many examples of companies that “outsourced” their core operations to a third-party vendor.  However, I was looking at it from the view of the Fortune 500 companies who could calculate and understand the benefits of third – party processing. However, the article (from 2010 mind you) painted a picture of what was to come and what I see happening today which I first overlooked.  The CLOUD should really be called Cloud Compute Power (think energy) or the Cloud Toll Road (think highways).  The reason I borrow this analogy is because the energy grid and federal highway systems transformed the way that consume energy and travel.  At one time, each home needed their own generator and may not have had reliable power and traveling long distances was unheard of due to inconsistent and impassable roads.  Fast forward to today and any person in a home connected to the energy grid can consume unlimited amounts of energy – it is no longer a utility for only the privileged. The same happened with the ability to travel. 

My opinion of risk has NOT changed about outsourced data centers BUT the key to the cloud was VIRTUALIZATION technologies.  This allowed Amazon, Google, and Microsoft to build LARGE data centers filled with virtualized technologies that allow companies to share and use their cloud computing grid capabilities in leiu of building out internal data centers (significant cost reductions).  Further, a virtual server can “host” roughly 300 virtual machines which could mean reduced costs due to less hardware in use, sharing of hardware with other companies, and less data center staff.  This means every business model that can be electronified will be disrupted. Amazon and Kindle is an amazing product because you are carrying a library in your pocket. Google Play means CDs and DVDs are a thing of the past because your playlist is stored in the cloud.  Basically anyone can create a company if they have access to high-speed internet.