Okta is first out of the gate among a new generation of companies that help enterprises manage SSO, which stands for "single sign-on." The company debuted Friday on Nasdaq, expecting to raise an estimated $187 million, give or take $10 million.

Okta's flagship product is SSO, which enables a company's employees to securely access every service they need to use, but it also offers an expanded suite of enterprise identity-management features. The company is competing against a score of legacy systems: Microsoft SSO, SAP SSO, Oracle SSO, and IBM SSO, to name a handful. Even comparatively young Salesforce (which is almost 20 years old) has an SSO product, as does Amazon's 11-year-old AWS. By contrast, Okta was founded in early 2009.

Okta CEO Todd McKinnon told CNBC this morning that it was an "inevitable" step for the company to go public, in what is a "good environment" for technology IPOs. On the phone with Inc., CMO Ryan Carlson stressed that Okta's IPO is the next step in ensuring its long-term viability as a neutral business. "Our vision has always been to be an independent company," Carlson explained.

Other startups who are in the identity-management business told Inc. that they view Okta's IPO as a positive sign for their nascent industry.

Some years back, first-generation SSO products were "a difficult beast to manage," said Fatih Karatas, co-founder of Saaspass. At larger enterprises, "you had these million-dollar systems" made by players like IBM, Oracle and SAP "that basically would do identity for all of their complicated on-premise applications," he said. "And you would need a whole IT team just to manage that product's identity piece."

"And then," Karatas continued, "you have someone like Okta come along, and they are among the early entrants, in our view, who really helped create this market and raise awareness of it." Okta built something that made it easier and possible "for even smaller companies to have sophisticated identity- and access-management," he said.

Karatas added that Okta's product is "still not the easiest to configure. It's still not the easiest to manage. Which is why we felt there was room for a product like ours, where we really focused on the end-user experience." Saaspass is betting on the consumerization of IT, where instead of a high-touch sales process, a product can penetrate a company simply because individual employees want to start using it.

Tom Kemp, the CEO of Okta competitor Centrify, was equally optimistic about the larger effect of Okta's IPO, despite Centrify's need to compete against a newly well-capitalized rival. "It's a positive thing, because it sheds light on the market that we're in," Kemp said. "It's good to see that people are recognizing this market. The size of the overall market is so big that I think there's a great opportunity for multiple vendors."

OneLogin CEO Thomas Pedersen credits Okta's success to its go-to-market machine. In his view, "we've always had the more capable product," he said, but "they had an amazing sales machine. That often makes a big difference." Okta targeted large enterprises early on, "where we have kind of moved up from small business to mid-market," Pedersen said. "Now we're doing large enterprises."

After being asked why he thought Okta chose to go public, Pedersen said, "because they have enough revenues to do it." He added: "If they want to maintain their growth, they will continue to burn money." Okta's S-1 indicated that its 2016 operating loss was $65 million. "So the public market is probably the only way forward for them at this point," he said. Trading publicly will also raise Okta's profile, as analysts will start coverage. "It will benefit everyone in the space," Pedersen said.

Published on: Apr 7, 2017