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In the tech startup world, there's a long-time cliche that digital businesses adhere to no borders and can move and expand geographically with a relative ease, at least compared to traditional manufacturers of physical goods. Over the years, however, we've seen a number of traditional paths emerge for European startups and founders to “migrate” around, mostly in the direction of the US. This makes companies straying from this beaten path all the more interesting.
Japanese-founded online authorisation startup Authlete has been operational in Europe since September 2016, which is when it established an office in London headed by the company's co-founder Ali Adnan. Born and raised in a Pakistani family in Japan, Ali has co-founded a number of companies since 1999, most of which ended up being acquired by the likes of Samsung or the major Japanese music content provider Music.jp.
In 2015, together with full stack software engineer and architect with a long experience Taka Kawasaki, Ali co-founded Authlete. The main idea behind the venture was simple — to make it easier for organisations to implement OAuth 2.0 secure authorisation standards.
“I wanted to create a business that's like the glue to a wallpaper,” Ali said. “You have tons of people in the world creating the wallpaper, but you have very few people manufacturing the glue. Nobody sees the glue, but without it, you can't get the wallpaper on the wall. The glue could be actually more important than the wallpaper.”
The API economy
Initially, Adnan and Taka saw an opportunity in the OAuth standard. Without going too deep into technical details, OAuth powers user authorisation at most websites on the Internet. However, it may not be easy to implement and maintain it properly without well-trained (and expensive) in-house security professionals.
“OAuth is an open standard but you need to have the knowledge and experience to implement it properly,” Adnan said. “You need to possess a lot of knowledge and be thorough in your implementation. Also, the standards continue to evolve; with any security standard, there are always people who want to hack it. You need to be on top of it all the time.”
Several Authlete's team members are actually involved in working on the OAuth standard, which gives the firm a unique advantage and a deeper understanding of where the development is headed.
Unlike many other companies providing similar products, Authlete has gone for a unique API design solution, decoupling authentication from authorisation and focusing on the latter. This means that Authlete's solution allows to control what a user may and may not do or see when they're authenticated on — that is, logged into — a website.
One of the benefits of this approach is that thanks to an API connection, Authlete doesn't ever get to see customer databases of its clients. This is an important feature for banks and fintech organisations, which currently make up the bulk of Authlete's clientele.
“We call ourselves a B2D company, a business-to-developers one,” said Ali. “When we speak to CEOs of our customers, it's hard to sell to them because they don't really understand what we're talking about. That's why we always ask to talk to their developers — and they get the value almost immediately.”
From Japan to the UK
Although most of Authlete's customers are still located in Japan, the company is working hard on European expansion. Ali moved to London himself to spearhead the effort.
“At first, we got involved with the open banking community in the UK in terms of testing their security standards,” Ali said. “Now we're moving into developing more business outside of the banking sector. Among our first non-fintech customers is DPG Media, a major media group with presence across Europe.”
Looking back at the time he has spent in Europe so far, Ali notes that the ecosystems in the UK and Japan are reasonably similar, particularly in terms of what it takes to get things going as a startup.
“Same as in Japan, in the UK it's very important to find the first reference customer,” he said. “On the other hand, the community in the UK is a lot friendlier, a lot more supportive to startups. Large enterprises are also a lot more open to working with startups in the UK.”
As part of its expansion to new geographies and verticals, Authlete is looking for fresh funding to expand business outside Japan
“We haven't been selling our product proactively yet, it's mostly been customers approaching us after looking at our blog and technical materials that we publish on a variety of digital publications and portals ,” Ali said. “The conversion rate is quite high, of course, since they've normally already done their homework and due diligence. So when they come to us, they're ready to engage.”
Ali is convinced that his authorisation management platform will stay relevant no matter what happens to the authentication part, which is increasingly moving away from traditional passwords to biometric solutions.
“The API economy is still in its infancy, and the world is getting increasingly connected,” Ali said. “We will continuously be a part of enhancing the security standards in this connected world.”