Category Archives: Venture Capital

Okta Businesses at Work 2024 – Legal Applications are the Growth Leader

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Okta has application usage data which you simply will not find anywhere else. This year’s report draws data from their anonymized 18,800 global customer base. Okta is a leader in identity and access management products. You may download the full “Okta Businesses at Work 2024” report here.

Growth in app categories: Legal software is the leader in customer growth

Source: Okta (My Annotations) – Growth in App Categories

Okta kicks off this year’s report with a spotlight on Legal applications, which was the leading app category in growth of number of customers.

“There’s no time for deals or
contracts to get hung up in legal. So, as we look
across the most popular app categories, it’s no
surprise that legal tools have locked up a win,
claiming by far the highest growth by number
of customers (35% YoY) and substantial 34%
YoY growth by number of unique users. Apps
including Ironclad, LexisNexis, and LegalZoom
drive this remarkable growth story. (Fun fact:
Ironclad contract management software was
our eighth-fastest-growing app in 2022.)”

-Okta (my bold type)

Let’s look at those three applications:

Ironclad – Offers Contract Management software, which includes moving sales contracts through the processes of review and sign-off to speed the business process.

LexisNexis – Provides legal, regulatory, and business information and analytics, now including Generative AI. LexisNexis is a premier product in legal research.

LegalZoom – Its online platform for business formation helps entrepreneurs by providing legal, tax and compliance products and expertise.

With that promising look at the growth in Legal applications, let’s take a look at four more charts in the Okta report.

Growth of the 50 most popular apps

Source: Okta

There are two leaders here. 1Password is the fastest growing application by number of customers at 39% YoY. Amazon Business with the fastest growing by number of unique users at 89% YoY growth. Law firms are ramping up usage of password managers like 1Password as one of the essential tools to prevent phishing and social engineering exploits.

Not to be missed by law firms is the growth of KnowBe4 at over 20%. KnowBe4 is a Security Awareness Training product, with a focus on phishing awareness. In 2022 I cited that KnowBe4 was the leading Security Awareness solution used by 62% of law firms surveyed in the International Legal Technology Association’s 2022 Technology Survey.

Most popular apps

Source: Okta

It’s easy to see the trend of law firms in the “Overall” ranking. Microsoft 365 is rapidly being adopted, as firms migrate from other Microsoft on-prem products. Number five, Zoom, and number eight, DocuSign, are nearly ubiquitous at law firms. Number ten is KnowBe4, the Security Awareness training SaaS application.

Fastest-growing apps by number of customers

Source: Okta

Data compliance applications make a first time appearance in the fastest growing app ranking by number of customers. Vanta holds the number one position with 338% YoY growth. Drata ranks number six, with 91% YoY growth. Data compliance software is growing at law firms as firms are subject to regulatory and client requirements.

Most popular security tool categories

Source: Okta

Okta entitles this section: “The perimeter shifts.”

They observe that VPN/firewall continues to lead the security tool category, as it has since 2020. However, deployment of VPN/firewall grew 12% last year versus 31% in the prior year. 57% of customers have deployed VPN/firewall tools.

The second fastest growing category in security tools is Endpoint Management and Security, deployed by 43% of customers. This category has grown consistently since the emergence of work-from-home.

For those interested in legal or enterprise technology there is much more in the Okta report worth looking at in detail. You may find the report here.

– Maureen

The Unicorn is 10 Years Old – My Four Favorite Charts

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Ten years ago, Aileen Lee, the founder of seed stage VC firm, Cowboy Ventures, studied the characteristics of VC-backed companies. In the 2013 report, “Welcome to the Unicorn Club,” Lee coined term “Unicorn” to describe those privately held startups with a $1 Billion or greater valuation. Unicorns were off to the races.

Now, ten years later Aileen Lee and her “Cow-lleagues” have taken another deep dive into VC-backed startups. They have just published, “Welcome Back to the Unicorn Club: 10 Years Later.” And, yes, after a pandemic and years of near-zero interest rates, things have changed. The slide version of the report is 54 slides long, mostly graphs. Here I provide a four chart teaser of the gems in “10 Years Later.”

The Unicorn Club in 2013

2013 – Cowboy Ventures

It all famously started in 2013 with 39 unicorns, out of thousands of companies analyzed. Consumer companies dominated at 80% of the value of analyzed companies. Facebook eclipsed the others at $121B valuation. Facebook was the sole Superunicorn, defined as over $100 Billion valuation. Watch this data point: Enterprise Capital Efficiency was stellar at (26X).

Unicorns Grew from 39 to 532 in a Decade

2023 – Cowboy Ventures

Fast forward to 2023. Unicorns grew by 14X to 532. Consumer flipped in value with Enterprise with Enterprise now at 78%. There are 15 Superunicorns, over $100B. OpenAI leads the herd. Ten years later only 7% of the pointy headed beasts have exited, down from 66% ten years ago. Enterprise Capital Efficiency went off a cliff, from 26X to 7X. There is much more about ECE to dig into in the report. Here’s a not-so-fun fact, “60% are what we call ‘ZIRPicorns’ – they were last valued between Jan 2020 and March 2022, when interest rates were near zero and multiples at peak.” ZIRP, refers to Zero Interest Rate Policy – money was low-cost and company valuations were high.

The Deeper Story: Papercorns and ZIRPicorns

2023 – Cowboy Ventures

While there are 14X as many Unicorns as in 2013, 93% of the Unicorns are “Papercorns,” which have not exited. That is, their value is on paper only, not substantiated in the recent marketplace.The chart shows that as the cost of money increased, the number of new Unicorns decreased precipitously. ZIRPicorns make up 60% of today’s Unicorns. ZIRPicorns were last valued between January 2020 and March 2022 when public multiples were at their peak and interest rates were near zero. Their challenge: raising funds or M&A, which in many cases will involve a down round. Cowboy Ventures writes that they expect abrupt shutdowns in 2024. They also write that there are many healthy Unicorns which will grow larger.

NYC Up, SF Down (As a Percentage)

2023 – Cowboy Ventures

While the SF Bay Area grew in number of Unicorns, it lost in percent of companies based there. NYC climbed from 11% to 19%. Cowboy Ventures offers that COVID effects likely played a role in the wider distribution of Unicorns.

What Did Not Change Very Much?

Take a wild guess. If you guessed gender diversity, you are correct. Cowboy Ventures generously says, there is “LOTS of opportunity to increase diversity in founding teams.” In ten years, the number of startups with a female co-founder has grown from 5% in 2013 to 14% in 2023.

“There are more founders named Michael, David and Andrew than there are women unicorn CEOs. At this rate, we won’t reach equal gender representation until 2063,” per Cowboy Ventures.

Fellow data-lovers there is much more in “Welcome Back to the Unicorn Club: 10 Years Later.” I recommend the further data on Enterprise Capital Efficiency.

Let me know which data appealed to you.

-Maureen