Andre Durand still keeps the original business plan he created for Ping Identity back in 2002 in his desk drawer.
Sure, it’s mixed in with some other papers and under a Nerf dart gun, and sometime in the past 12 years someone spilled Sriracha on it, leaving dried hot sauce caked on the spiral binding and the cover.
Durand, Ping Identity’s co-founder and CEO, showed me the plan during a recent visit to his office to discuss the $35 million growth-equity round his company closed last week.
Flipping through the pages, Durand was impressed with how well it held up, despite admiting that his younger self had yet to completely grasp some of the ideas. Then again, he wasn’t alone, as many of the key concepts in modern network security that he outlined hadn’t been named.
“This is my original business plan. I was talking about reducing the number of different internal logins using single sign-on, centralizing the management of users across networks, allowing users to self-manage their accounts …. I was talking about federation, that wasn’t even an official term back then. Identity management wasn’t a term,” Durand said.
“This is not that far off.”
Executing that plan has made Denver-based Ping Identity one of the leading companies in the emerging field of identity-based network security. The company has landed more than 1,000 clients, including big names like Cisco, McDonald’s, and Comcast. It has raised a total of $110 million from investors.
Of course, being able to capitalize on changes like mobile and cloud computing as they sweep the tech industry has been important. Durand didn’t predict those developments, but his company’s products have gained a foothold in those market segments as well.
Durand and I discussed the round, Ping Identity’s products, new investors, and the competition it faces. Here are some highlights:
Why raise VC now? Last year, Ping Identity raised a $44 million Series F round, and at the time, Durand said an IPO might be on the way in the next couple of years. The new investment changes that schedule, but taking the company public is still the long-term goal, he said.
Over the years, Ping Identity has created an array of products for enterprise clients focusing on single sign-on access to servers and identity access management. Early on, its major product was an on-premises server that companies could buy to manage access, and that product still is part of Ping Identity’s lineup. But over the past few years the company has moved to offer cloud-based software sold on the software-as-a-service model.
That move has come as demand for single sign-on and identity access management software continues to grow and is estimated to be about $50 billion per year. The growth of cloud-based apps like Salesforce and Dropbox as well as the advent of mobile devices and the “bring your own device” trend have driven the market expansion.
Investors have noticed.
“We’d be remiss not to take advantage of a good market at the right time,” Durand said. “Our market continues to heat up, that’s been the case for the past couple years. The demand for a next-generation identity infrastructure is accelerating as companies get serious about their cloud and mobile initiatives.”
That’s led to a boom in the amount of venture capital raised by companies like Ping Identity. A notable example is the $75 million Okta raised over the summer. Okta offers similar products to Ping Identity and frequently is cited as a competitor.
What’s next? For now, the focus will be on growing the company. Durand doesn’t give details about revenues or the company’s valuation, but he did say its annual revenue growth averages around 50 percent a year. The company also says it has more than 1,200 customers, including half the Fortune 500.
The money will be used to continue Ping Identity’s growth and expansion plans, including expansion overseas. It also will enable the company to expand its product offerings, he said.
Ping Identity moved in that direction this summer, when it released its PingID app for mobile devices. PingID allows users to securely log in to applications like Gmail, Box, or Salesforce using their smartphones, and it also offers new security features like two-factor authentication and verifying the geographic location of users.
“It’s a great example of where we’re taking our history in single sign-on and we’re adding the mobile device as a mobile identity and mobile authentication platform,” Durand said.
The technology underlying the app was developed by Accells Technologies, an Israeli company that Ping Identity bought in March for an undisclosed price.
The acquisition and new product are examples of the types of options Durand wants to keep open as Ping Identity moves forward. The cash also provides the company the wherewithal to wait if the economy turns south and the climate for tech IPOs sours.
New investors, board members: The round brings on two new investors, Wall Street private equity firm KKR and Ten Eleven Ventures, a new fund that will specialize in digital security companies.
KKR (NYSE: [[ticker:KKR]]), originally known as Kohlberg Kravis Roberts, usually is associated with leveraged buyouts. According to reports, KKR has been increasingly interested in late-stage growth equity investments in technology companies.
The investment in Ping Identity comes from KKR’s new late-stage growth fund, Durand said. In addition to the cash, the connection with KKR gives Ping Identity access to new customers.
“There’s a relationship to 100 significant companies that are in their portfolio, several of which are customers, but several dozen of which are not, and that was really intriguing. They all have needs for our capabilities,” Durand said.
Ten Eleven Ventures was formed by Alex Doll, an entrepreneur and executive with a background in the security industry. Doll co-founded and was chief operating officer and chief financial officer of PGP Corp.—short for “pretty good privacy”—which created digital encryption and cryptography software. Symantec bought PGP for $300 million in 2010.
Doll and KKR’s Herald Chen will join Ping Identity’s board.
“They were both operators, they both knew the space, and they both knew Ping, and all that makes a difference,” Durand said. “They have conviction about the space.”
Along with the new investors, prior investors Draper Fisher Jurvetson, General Catalyst Partners, SAP Ventures, W Capital Partners, Volition Capital, Triangle Peak Partners, and Appian Ventures also participated in the round.
Facing the competition. With demand for single sign-on and identity management software growing so quickly, Ping Identity faces a number of competitors in the market.
First, there are the large incumbents in the industry that have been selling products meant to address a broad range of security needs. Durand thinks they’ve been playing catch-up when it comes to identity-based security because they need to focus on legacy products and multiple problems.
“We’re very well poised against the stack vendors who are defending a much broader fortress. They’re not just looking at the identity component, the identity is just one piece,” Durand said.
The other set of competitors are startups that deliver “identity as a service” through online software. That class of products, which Ping Identity does offer, is well suited to small- and medium-sized businesses that need to manage their employees’ access to third-party cloud apps and their own networks, Durand said. But he thinks enterprises that need to protect the most sensitive types of user data, or face strict compliance regulations, need something more secure.
“There are plenty of scenarios where a cloud use-case for security is not what the enterprise is looking for. None of our banks our looking for a cloud solution to make their banking portals secure, and they won’t anytime soon,” Durand said.
Ping Identity sells standalone servers those enterprises can buy to meet their needs.
“A lot of our big clients in the financial services, government, and healthcare sectors, that are running customer-facing, revenue-generating applications, at best they want a hybrid solution, and we’re the only ones that can provide that,” he said.
