Cloudflare’s Journey from TechCrunch Disrupt Battlefield to Public Company

Hi hi everybody Um Mike Butcher editor at large TechCrunch and uh obviously many of you Have been listening to the uh startup Battlefield uh yesterday and today but It's always interesting isn't it to find Out where what happened to those Companies you know after they've gone to The battlefield and then one of the Legendary companies that went from Battlefield in TechCrunch disrupt in 2010 All the way to IPO not long ago was Cloudflare and today it's obviously a Public company so we're super excited to Hear about that Journey all the way from Battlefield to IPO with Matthew Prince And Michelle zaitlin the co-founders who I shared pizza with not long after their Launch in Davos in the world economic Forum and they had nobody knew who they Were and now here they are incredibly Successful and moderating this panel With them is our very own Enterprise Guru Ron Miller give them a big welcome Ladies and gentlemen thank you Thank you Foreign [Music] Everyone welcome and welcome to Matthew And Michelle I want to start off with a Show of hands and I'm wondering how many Startup Founders if any are in the Audience this morning yeah there's a few

Of you Um you're in the right place because This company went from zero to a 21 Billion dollar public company in Just Around 13 years they raised over 330 Million dollars along the way and by the Way they debuted at this very event in 2010 at the tech runs disrupt Battlefield and I will point out that Matthew actually came in the t-shirt From that event today so that's pretty Which was very hard to find in my deep In my closet You can tell how old we are because There were floppy disks on me Yeah that's that that's all you know I'll also point out that they didn't win But that didn't matter because they they Won in the end they they became a very Successful company and there's a lot you Can learn from them so let's get started So you know when when I think about Cloudflare and you kind of alluded to That when we were coming on people have A hard time nailing down what you guys Do right Um because you do a lot of things your Internet Security your content delivery Network your infrastructure as a service Your platform is a service and are Probably missing a few things Um Matthew how how would you describe the Company in a succinct way uh especially

For folks who might not know who you are Yeah I remember it's it's actually I Um I before I came out today I actually Went back and watched our pitch from 2010 and uh was was was sort of Horrified at how young I looked uh Compared to today but you know what I Remember one of the the questions from One of the judges was What's your goal what are you trying to Do at cloudflare and I said our goal is To rebuild a better version of the Internet and I think that's exactly what We've done today so today we run one of The world's largest networks and on top Of that Network we've built a bunch of Functionality that makes the internet Perform frankly the way it should have If we'd known what the internet was Going to be from the beginning so yes it Has security for sort of the front door Of your business your website your API Whatever applications you're putting Online but it turns out you also want Security and performance for the back Door of your business making sure that Your employees have a great experience Making sure that they're secure making Sure that they don't get hacked and you Want that Network to be incredibly Reliable to be something that is as fast As possible to be efficient because it's Actually embarrassing that yes there are Four billion people that have access to

The internet today but there are four Billion who don't largely because it's Too too expensive and complicated and And frankly you want it to be more Private because the original into the Internet is that privacy wasn't built in From the beginning and so when we think About what we're doing we think that We're trying to live up to our mission Our mission is to help build a better Internet and that's what we come to work To do every day So um Michelle we we I interviewed you In 2020 which was the uh when we were in Lockdown so it was a virtual interview We were on Zoom but um we talked about Building a bold idea and obviously what You just described is a pretty bold idea Um Yesterday there was a panel here on Building Capital intensive startups and Part of what that entailed was having a Worldwide network of data centers to to Run this kind of a business and that's Pretty Capital intensive when you guys Were pitching to investors and for People out here who might have a Similarly bold idea how how do you how Did you pitch to investors and what Reaction did you get yeah you know There's Um so many different ways to build a Company so let me just start by that and Like lots of different ways to build a

Company but one thing you you use the Word bold I think we've never been short On being really bold and Big Ideas I Mean to help build a better version of The internet that's a big idea there's a Lot of people who walk the other way They're just like whoa that's these People are on a different wavelength but What's interesting when you have a big Idea and you're a good Storyteller which I would say Um my my business partner is a very good Storyteller is uh there's some folks who Say hey tell me more about that and they Lean in because they're like that's Interesting because everything else is Not so bold you're comparing you know There's a lot of things that are kind of Easy to get your hands around makes it All the all the eyes are dotted teaser Cross and that's what most um whether It's investors or reporters or just General public here things that are Really easy to get your hands around They're kind of neat boxes but when you Have something bold you stand out and so I think that early on we had a big Vision we had a big story we had a big Idea and well not everyone came along With the right people that came along And it was interesting I remember We were telling folks what we were doing A lot of people like like I don't get it That's that's gonna take a lot of money

Take a long time but there were other Folks who said this is super interesting And I want to be involved in it and that Was both people who were engineers who Wanted to come work on something that Was interesting that was going to change The world they're like I love the Internet I want I want to be a part of This and that's how they came to work at Our company instead of other companies Or investors who said I want to be an Investor because if you do what you're Going to say you're going to do you're Going to build something iconic and I Want to be part of something that's Iconic and so I think that um you don't Have to get everyone to see the vision But you do need to get some portion of Investors and people to see the vision And then if you start to get traction Then some of the folks before they're Like not for me they start to say hey Actually I want to learn more maybe Maybe I wrote you off too soon let's Talk again and over time you turn a lot Of these folks into Believers or Champions and that's a good thing yeah I'm wondering how many times you heard No before you heard that first person Who saw your vision well no one says no Exactly they say it in a really polite Way there's a lot of politeness that Goes on because humans are bad at saying No you know you kind of want to be liked

It's a connected world one of my biggest Lessons doing this for 13 years very Connected world even when someone is not So nice to you I'd say kind of take the High road because people might need them At some point because it just a very Connected World by the end and so what Happens you get ghosted a lot or they Slow things down and people just kind of Don't say no so they just slow roll you And you know as a startup founder many Of you have raised your hands I mean Speed urgency is one of your Greatest Secret Weapon you have to be able to do More things in a big company in a Shorter period of time because you got To make progress you got more things to Do and so um I think it was maybe less No it's more of the politeness of hey Not right now or are they slow to set up The next meeting and I think what Um I what carried us through those Periods of okay they weren't as bought In as us because again not everyone was Bought in early on where we were super Aligned and we had a team that was super Aligned and we had initial users that Were super aligned like our customers And I like I really remember You know these old sayings of 10 highs In a day 10 lows in a day being a Startup founder that was what my Experience was you know like great Things followed by not so great things

But one of the things that really Carried us through were customers using The service writing us emails saying oh My God I signed up for cloudflare and For the first time in five years I got To sleep through the night because my Pager didn't go off Because what was happening before is There are apps or websites were falling Over from just you know attackers and we Stopped that and we just made it go away And I think that um it was those sorts Of that sort of feedback that carried us Through all those periods yeah I'm Wondering how much Being on this stage not this stage but The tech Ranch stage in 2010 how much Did that help in terms of opening doors For you for for investors like maybe Taking it a little more seriously I Think it was you know it was um our plan Was always to launch at the TechCrunch Event Um and it was actually the TechCrunch 50 And I remember Mike Arrington announced As we were starting to ramp up because We it was our plan uh that they were Canceling TechCrunch 50 and we were Scrambling to figure out what we were Going to do and then there was a and Then disrupt launched in in New York and Then we were like well we're not ready To do the New York event because that Was in the spring and is there going to

Be a fall event and everyone was being Super cagey and and we didn't know I Mean today we we would just call Mike or We'd call Um Connie and say hey what are you guys Doing and we'd know but no one would Return we were no ones right and and so When it finally happened we went and Applied and we're fortunate enough To get in and you know we really thought That the spirit was you had to launch a Product and open it to the public that Day there on stage so we really used That time as a deadline for our team to Motivate them to get done and we had About eight we had eight people Most of them engineers and when Michelle And I walked backstage there were still 40 unresolved bugs that if they didn't Get resolved by the time we flipped the Switch we weren't gonna it wasn't gonna Work and so we're watching our phones And it's like okay I got number 17 I got Number four I got in and they're just Ticking them down and as we walked on Stage there were still about three that We weren't sure like sign ups were gonna Work And um and it was crazy we started that Day with you know probably about a Hundred customers we ended that day with Thousands by the end of the first day we Had customers in 10 countries around the World by the end of the first month we

Had customers in literally every country On Earth and it's just really been just A rocket ship ever since and so I think We owe a ton to TechCrunch and what's Also interesting is a year later when we Came back Um the TechCrunch folks were oh you guys Were like hey you should have something To announce And I remember we were like we've got to Figure out something to announce so we Use that as a deadline to come out with A new product that we announced at that At that stage and it it took something That would have otherwise been kind of a Boring announcement and it and it gave It some life both internally but then Also externally and one of the things That I think has been a real Hallmark of Cloudflare if you've been following this Is we have these things called Innovation weeks and The Innovation Weeks are a little bit like how we strip Down a user conference to its Bare Essentials of how do we create a Deadline for a product team and really That was born out of that first Anniversary coming back to TechCrunch And so September 27th is our birthday Which is uh which is next week and we've Got an innovation week our birthday week Which is when we think about what we do In terms of giving back uh to to the Internet and it's um I was we were

Spending a lot of this morning and and a Lot of uh yesterday reviewing all of the Announcements and it's um it's pretty Amazing and again I think it comes back To that idea of having a deadline having A stage having an event and using that Right I was hoping you could do some of Those announcements here but as it Turned out that didn't work out in Timing wise it'll put us on the stage Next door it just is a little hint Um so it's not always a smooth ride when It comes to being a startup right and in May you guys announced that you were Laying off some people including a Hundred sales people Um and you kind of ruffled some feathers Publicly stating that these were Underperformers and You know I'm quoting you and you said When fish are jumping right into the Boat you don't need to be a very good Fisherman which the implication being Like when you have to really sell if You're not really a good salesperson It's going to show you're going to be Exposed right but you were criticized Pretty pretty hard on social media for That for lacking empathy and when you Were asked about it by by reporters like Me you didn't back down for me you sort Of said that's who we are and so I'm Wondering do you have any regrets about That at this point you know I think that

Not really honestly Um I think if you look across the entire Industry Um Things change during covet Um one I remember early in Cleveland's History somebody said you know clever's Like a family and Michelle said no no We're not a family Because the problem with families is Families are incredibly rigid in their Hierarchy no matter how obnoxious your Drunk uncle Hank is you still gotta Invite him to Christmas dinner right no Matter how hard you work and how Successful you are you know your parents Are always going to be above you and Their parents are going to be above them And it's gonna it has this and so that Makes for great comedy and drama that Fact that humans change but the Structure of families don't but it Doesn't make for a great team what you Want a great team to be is like a great High performance team and you know Chris Paul might be a terrific basketball Player but he wasn't the right guy for The Suns and so you trade those people Around and in the early days of Cloudflare up through When we went public in 2019 up through The beginning of the pandemic we were Very much a high performance culture I Think we were very empathetic culture

But we weren't the right place for Everyone to work and you had to work Hard to come to cloudflare because we Had really hard problems to solve and we Had a real challenge of taking this Complicated product and figuring out how To sell it and what changed was you know I remember the phone calls early in the Pandemic where people would say I don't Know I'm living at home now I'm a single Mom or a single dad I've got a kid who's Now not going to school I've got to Figure out how to hold my own mental Health together I had to figure out how To hold my family together education for My kids together And what do I do In terms of you know also doing my job And we said what I think was the human And right thing to say which is those First things about yourself come first And then when you have time come do Stuff at work and I think that's exactly The right thing that we should do Because we were going through this Massive crisis as a species And uh it was super hard but while it Was clear that on March 13th of 2020 That was the day usage switch from kind Of high performance team mode into Family mode what wasn't clear is when You switch back right and so when we Look across a bunch of Industries and Other companies that are out there I

Think a lot of people are saying gosh Productivity has slipped doesn't feel Like we've got the same urgency what do We do let's get everyone to come back to The office I think that's a terrible answer like We've actually learned how to be you Know a much more flexible workplace a Place where people can work you know Where they want and when they want and That's great where productivity has Actually been high but I think we've got To be and this is we're stealing Michelle and I were talking about this Earlier but we're seeing a little bit From the team atlassian Mike and Scotty Atlassian we've got to be much more Prescriptive about how people work and That means holding people more Accountable and the same way that if you Can't shoot If the Warriors probably shouldn't be on The starting team right if we can't have People who will sell they shouldn't be Our lead sales people they might be Great sales people somewhere else but They're not the right people for us so So you know I mean when I talk to big Companies you know and I talk to Analysts They say that big companies and you guys Are more medium than you know you're not A Microsoft or a sales force or Something like that but they will often

Use a recession as an excuse to get rid Of underperformers but you said the Quiet part are low they don't usually Say that Um if you could if you could do it again Would would you to do it differently in Terms of the way that you reacted to Questions about it not at all every our Internal team was like thank God That time all right Um that's clear Um but you as the chief operations Officer okay am I pardon me yes you have To kind of deal with the Fallout in Terms of Team morale or you know you Have to hire people you know and Um You know When I mean when the CIO frankly says Cold about how he's laying off people Um how did it affect your ability to Recruit crude quality people and did People still want to work for cloudflare Because there were comments on social Media that said like whoa this is like Really you know like I said saying the Quiet part out loud Yeah well so the answer is yes people Still want to work at Cloud four we have Hired lots of amazing people to join Cloudflare and folks are doing great and Objectively better which is wonderful Um and I you know I think your point is Actually an interesting one for all the

Founders in the room when you build your Company you just can't make everyone Happy and if you try to make everyone Happy you're that's like the fastest way To to mediocracy And you're going to have to kick sides You're going to take stances we call it Being principled it's one of our values Is we're very principled in a lot of Different things whether it's internet Policy like public policy Um or or around how we run our business Again I think being a founder-led Business you can take be more principled And take stances actually it becomes a Superpower it's like a huge founder Advantage you should really use it to Your advantage but it's not for everyone And that doesn't it's not a popularity Contest it's not about trying to make Everyone happy and be like oh there are These revered people who are doing Everything perfect it's not that it's What's best for your business and Executing on the path you're on the Journey you're on and and driving the Best outcomes for your customers your Your team or employees and and our Shareholder base and like we really are Very hyper focused on on those three Things and I think that that served us Well Applications are up since then not down We'll have over a million people apply

To work at cloudflare this year which is Up three acts over last year okay fair Enough Um one of the I mean you have Practically the internet running through Your servers right and that comes with This huge responsibility and there are Always going to be controversies Associated with that over the last four Or five years we've seen some pretty Crazy things come through the internet And you've been pressured as a company To cut off certain groups you've kind of Struggled with when to do that and how To do that and at one point Matthew you Likened it to the phone company not Cutting the line for people saying awful Things which is you know an okay Metaphor but Um Given the state of the world and some of The you know very dangerous and illegal Things that were going on sometimes not Illegal but certainly immoral Um You seem to struggle with when to cut People off and and how to cut people off Up What is your bar For saying you know this is too much Like we cannot have these people using Our services to behave this way it's Funny um You're very concerned about things which

Um end up being actually small concerns Um internally so it seems like and again It's an interesting press story but that This would be something that we think About every single day But it turns out for the most part for Us it's a pretty easy standard which is If something is illegal somewhere in the World then it can't be on our Network in That place in the world and it's pretty Simple we follow the law wherever we Operate around the world there's a Extremely small set of circumstances Where there are things where it's not Technically illegal But it's also something that we're just Very deeply uncomfortable with and we Think is actually outright dangerous and If I think back over the entire last 12 Plus years of cloudflare I can think of Three examples of that so the mean time For us having one of these challenges is Once every basically four years And when that happens I think you know We take actions and it's we should Struggle with it one thing we could do Is just pretend it wasn't hard and point To paragraph 13 G in our terms of Service and say this disappeared no Comment I don't think that's the right Thing because as Michelle said we want To be a principled organization but we Also want to be a transparent Organization and we want to talk about

The places where maybe this the laws of The land haven't caught up with some of The challenges that we're seeing online And that's why we have a significant Public policy team that's why I spend a Lot of time in DC and Brussels and Around the world meeting with policy Makers trying to say I don't think we're The right people to pick what is good And bad online but that doesn't mean That there aren't people who should be Picking what's good and bad online but Those people are elected or endowed with Some sort of sense of true through Sort of rule of law cognizance and if You don't have that again I think it's Something that's that's dangerous but on A daily basis this isn't actually Something we struggle that much with Which isn't to say that if you're Further up the stack someone like a Facebook or a Twitter or YouTube or I Guess X now or YouTube they have to Think about this much more whereas being A little bit lower down you know it it Becomes something where once out of Every four years it's gonna Bubble Up And there will be something that bubbles Up undoubtedly you know probably you Know we would expect actually probably Sometime in the next uh two years Because of the election you think I Don't know because of the election Actually I don't think because of the

Election um the election tends to be Actually fairly fairly straightforward In terms of in terms of what's there and And you know that's a very U.S Centric View we operate a network that's all Around the world so there's a there's an Election in some country that we're in Every single day and I think that the Global nature again by the by the end of The first month after we launched we had Customers in every single country on Earth so we had to be an expert not just In California politics or U.S politics But to understand the entire Global Perspective and um and so no I it's Really hard to predict what the next Thing will be but I'm glad that we have A really smart team who thinks about These issues so I'm a little surprised That you say you don't think about it Because it seems to me like there are Pressure groups that must you know every Other week say this site has to come Down they're saying outrageous things But that doesn't happen very I mean Honestly it bubbles up about once every Four years do you have like a public Policy team similar to what the artist Formerly known as Twitter and and meta Have in order to kind of field those Kinds of concerns I I we have a very significant public Policy team and we work with Regulators Around the world but their their job is

Not so much to field those concerns Their job is to think about what's the Right policy for the internet going Forward so for instance you know right Now Um actually if you go back to Um uh December of 2021 Um we saw in indications across our Network that made us think it was very Likely that Russia was about to invade Ukraine and we then briefed through our Public policy team U.S government Officials saying we think this is the Case and they said yeah we're seeing Something similar let's go to the EU and Tell them the same do you we felt a Little bit like we were Chicken Little Saying that you know sky is falling and They're like they're not going to invade It's not a big deal and and frankly Between from December through mid February 24th Um it felt a little bit like maybe we're Wrong but behind the scenes our public Policy team worked with the Ukrainian Government to identify what are the Different critical pieces of Infrastructure and how can we provide Our services at no cost into that Country and that's the sort of work that I'm incredibly proud of because we made Sure that Uh president zielinski could get his Message out about what was going on that

The world could see the horrors on the Front lines of uh of the of the battle That is happening right now in Ukraine And had we not done that I think it Would be much less likely that Ukraine Would have been able to share that with The rest of the world and it would have Been much much likely that they would Have Um uh dealt with that the other thing The public policy team does is then we Do that Russia turns around and Personally sanctions me which was sort Of a weird badge of honor right and then They sort of say okay now don't fly over Russia so well I'm just zooming out for A lot of the founders in the room it's Interesting when we started cloudflare I Don't think we thought that we were Going to need to be leading experts in This area But this is what happens this is what I Get back to when you're if you're Building a bold company you find Yourself in places where you're like Okay okay who do I call to get help on This topic and their the list is pretty Short you gotta build the capabilities Internally and that's called leadership You got to stand up and make it make a Call and take a stance Um we again are 13 years old so I know a Lot of the founders of our era and and And not everyone invested in taking a

Stand for stepping up but eventually you Have to if you're successful you Eventually have to invest in this Because what's interesting and I think We I love that you're talking about this Ron because you know six years ago Nobody was talking about this but Actually I think it's really important For AI That's about to come like this is Super important the internet's 30 years Old so all these laws that were made Didn't take into account the internet And digital and meanness online and some Of these things that happen online and So countries are saying okay wait what Are we what what rules do we need to Create and it's not so black and white There's some easy things but most things Are kind of nuanced it's hard Um and so it takes multi multiple state Holders to come together including the Founders who are building the most Innovative things for sure the big Companies out to the table the academics The policy makers all to lean in and so What I like to say is the tech companies The tech Founders who lean in get to Shape the future with the policy makers Who are are leaning in they are defining The future and the new set of laws for The next 20 years I think it's pretty Cool for the folks that are coming to The table and thank God we've gone Through this with the cloud the last 10

Years it makes me much more optimistic About being able to navigate the risks Associated with AI Because we have a framework we have some Conversations already started they can Kind of they're different but they're a Lot of overlap and so I think we're Better prepared today than we were eight Years ago eight years ago this was Definitely not a topic that you would Have on top on stage here well and if You look at the mistakes of this you Know if anyone's travel everyone's from Or traveled through Europe the fact that We've got you know cookie banners that Have just trained everyone to say accept Accept which is one of the worst things We could possibly do for security which Doesn't hasn't actually dramatically Improved anyone's privacy is increasing An enormous amount of costs and has made The user experience worse that's as we Think about regulation what happens when The people in this room don't engage With policy makers as policies are being Written and that's what we need to do And and that's very much why we lean Forward in this policy issues and it's Why I think that hopefully the folks in The stage next door are doing the same So I mean I can't believe how fast this Clock has run down I have so much more I Wanted to ask you but we only have two Minutes left so I I want to ask you a

Question about being Founders and about Still being with your company long after An IPO and that happens but it's rare Usually you sail off into the sunset you Get a bow you become an investor you do You know something that is kind of Outside the startup grind and the Company day-to-day grind but you didn't Do it what keeps you going and when you Start and within mine I'll be brief I'll I'll make mine brief um you know I I Think being a Founder there's a huge Advantage and it's a huge privilege and Responsibility and then when you do Something I think not all opportunities Are created equally again it doesn't Make one better than the other but Opportunities are different sizes There's lots of ways to build a business Lots of ways to be successful to build a Successful life but cloudflare is a very Big shiny opportunity and I bet you many Of you in this room have a really big Shiny opportunity and for me at clefler It's like I want us to be set up to Reach the full potential of that Opportunity and I think right now it's Better likely to happen with me there of The nod and that's what keeps me going Every single day Um and you know I one thing I'm most Proud of is that Matthew and I still get Along we work well together there's lots Of stories that you read about in

TechCrunch that that's not the case and I think we've been pretty low drama Internally and I think it's because We're just so focused on reaching the Full potential of our opportunity and That's what keeps me going every day and I say to help build a better internet I Mean that's a huge mission So we gotta rap so I'm afraid we won't Hear from you but um we'll we'll save That for another day I just want to want To close by saying that you know it's Obviously not always easy to build a Startup but you know this company is an Example for every startup founder out There that it's possible to achieve your Goals and become a successful public Company and I want to thank Matthew and Michelle for joining me and I hope You'll give them a hand Let's see


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