Lessons Learned in Scaling Your Team & Revenue from $1M ARR to $1B+ | Cloudflare CRO Chris Merritt

I'm here today to talk about, like, the last 30 years I've been working, the last 10 we've been building Cloudflare. I'm going to talk to you about that today, the lessons learned. Caveat, very big caveat, this is one company's experience. I've been doing this for 10 years across the whole arc from a million in run rate to approaching a billion. And I'm going to share my experiences. They're mine. I didn't get them out of a book. I didn't copy-paste out of some Harvard text. These are my insights. And I'm just going to share the things I thought were relevant. Contextually, we're not allowed to promote, so I'm not promoting. But we're helping to build a better internet. We work with a lot of companies. We process about 20% of the web. That's context. Lots of customers, very long tail. So millions of customers, some spend nothing, some spend a lot with us. And this is just representative sample of the customers that we have. I've been with the company for a long time. 50 employees is about when I joined. Steve Wozniak does not work with Cloudflare, but this is the only photo that I could find from the early days. We're about 50 people. Fast forward, we went across the threshold, we're public, actually 3 years ago yesterday. And very interesting, like a little tidbit on this is Of the 10 people that are in this picture that were involved with the company, 7 of them— 7. So a 7 to 3 ratio. 7 were back when it was 50 people that were involved then. So we've been— it's this long longevity. And that's like my experience. I don't think that's normal in the space, but it's my experience. So as I talk about this, I've been there a long time and a lot of the other folks have as well. Super excited to share some of the things that I think are important. And I had this long list of I want to talk about this and I talk about this. I have to give you some reference. So the way I thought about breaking it up is in 3 phases. This is not some textbook phasing. These are mine. So like less than $50 in terms of ARR, so less than $50 million in ARR, phase 1. Phase 2, $50 to roughly $250 million. The lines are like a little blurry. And then from there, marching across $1 billion. And Cloudflare is on a long journey. Like there will be more phases, but these are the 3 that are relevant to us today.

All right, let's unpack.

Let's get straight into it. Phase 1. I have some props. And the things that, as I was thinking about today, is like Magic 8 Ball. Like, the future is somewhat uncertain in Phase 1. If you flip it over, like, your goal is to make things more certain by the end of this phase. So as I was thinking about what— if I were to go back and retell the story on what I thought was important and what were the lessons that I learned, One, it's builders. So hiring the team, you need capacity. I showed up, there was nobody else building out the revenue part of the organization. So you're like, I need capacity. And as you think about adding capacity, what I really focused on was builders, people that were willing to show up when it was not obvious this thing was going to be a success, right? The Magic 8 Ball, like future uncertain. You've got to find people that are like enthusiastic and irrational, some combination of those two things that want to build. We had plenty There were a lot of people that were looking for a job. I wasn't looking for those people. I was looking for people that were willing to show up and do what it takes. And some of the stories that like really represent that is we hired somebody as a salesperson. 4 weeks in, I said, Travis, I've got a lot of customers that need somebody to talk to because it's not going well. Can you do this thing? At the time, it was almost 10 years ago. Can you do this thing called customer success? And he just said yes. So you're looking for the mentality of, I will do whatever it takes to make this thing successful. And I'd categorize those folks as builders. This next one is prepare to be embarrassed. And it's really around a couple of axes. The first is in the beginning when you're figuring out the product and you're scaling and you have lots of people that are starting to tug on the service. It's not going to work all the time. It's embarrassing. And if you're good at what you do, like one of the most— I think one of the best determinants of great people that are out in the market is will you sell to people you know? Are you willing to bring the service to your friends? Are you willing to bring it to family? Are you willing to bring it to former colleagues? And you're looking for people that are willing to do that because they're like irrationally enthusiastic. And when it doesn't go well, they're going to be embarrassed. You're going to be embarrassed. So my, my, my learning is I look back as I was embarrassed all the time. Embarrassed by, well, did you oversell the work? Yeah, we're not really all that yet. We're still figuring it out. Did you oversell the product? Like, where have you gotten yourself into this uncomfortable position? And as I look back, like, embrace the embarrassment. That's part of this phase. And I really will talk about how you squeeze that out across the other phases. But in this phase, like, be prepared because you're embarrassed a lot. And the next is around celebrate the wins. This is talked about a lot, but I made a little, like, a little modification in here. It's like celebrate the big W wins. Everybody will talk about celebrate little wins. I think the big Ws are important. If you celebrate everything, it feels like everybody's getting a trophy. And I— that's great for kids' soccer. There are some studies that suggest that's not great for kids' soccer. Like, I'm not here to unpack that, but what I will talk about is celebrate the big wins. In the beginning, in this phase, we celebrated the wins not with a person. It wasn't about that person. It wasn't even about that team. It was about the whole company. We crossed over a threshold and delivered X million or finished a project. We actually bought a pinball machine for the company. And in hindsight, like, you weren't like, though, sure that was a good idea. Somebody was like, let's get kombucha. And then somebody else said, I don't want to bring, you know, uncultured processed drinks to the organization, get people sick. Like, let's, let's do a pinball machine. So we did a pinball machine, and like, that is a part of our heritage, and it's a reflection of celebrating the wins. I kind of would focus on the big W's. Don't celebrate them all, but make it a team win and Try to like memorialize it. That pinball machine is a part of our culture. The next is painful for me personally. I was with a smaller company prior to Cloudflare that didn't work, and we got over our skis on capacity. And like the worst days are when you're rolling and we're going through an environment where there are some reductions in force. Like if you've done that and you didn't have to do that because it wasn't market downturn, it was because you got over your skis, you got overzealous, you're rationally enthusiastic, and you hired to that standard, it's not awesome. You made a mistake. So I, like, when we were thinking about it this time is we're sort of constantly on this tension of I need more capacity, but I don't want to go over capacity. If you get too many people sitting around with not enough work, they get bored, and that's where the drama starts. So as I think about, like, the, the call to action here is I would rather have a little bit more demand, being asked, asking people to do a little bit more than maybe the capacity model suggests, and be a little bit under capacity. There's tension because in the beginning you want to sort of ramp up the team and show growth and take load off of people. But I would pull back a little bit. That's if I were giving myself advice for the next time I do this. Under capacity versus over capacity, I think wins. And then this, this like to wrap up this section, like the thing you're trying to do in getting past the, you know, future outcome uncertain is you're trying to like learn and you're trying to get these loops in place. And how, how much can I learn? How fast can I learn? How much can I absorb? You will be asked in various forms of what did you learn lately? And where I think it comes down for me, I was asked at a board level all the time, like, what have you learned? What have you learned? What have you learned? And I'm like, no, no, no. Like, here are the results. Let's talk about that. Like, what have you learned? What have you learned? In the early phase, you have to be really clear with like, what's the insight that you've gleaned? What can you take away? Like, doesn't have to be something that you were good at. It could be something you failed at, but you learned. And like, keep a cheat sheet of what you've learned. Flip over the back page and keep the back part of your notebook full of Well, this customer doesn't— this customer type does not like this service, or these service disruptions cause these problems downstream. So I think about this over the whole course of this phase. Keep documenting what you've learned. It's really important. It'll come in handy when you're under pressure, like on a stage, like, what have I learned? Well, I don't remember. Let me go to my book.

All right.

Phase 1, get rid of the uncertainty. Phase 2, like you're kind of irrationally enthusiastic in the beginning. Phase 2, like you've got something cooking, you have something that is working, and now you're ramping, right? This is— I felt a little bit odd about, was it $50 to $250 million? Is it $50 to $150 million? I don't know. Make it your own. Like, this is, this is just sharing my own observations and my own experience. But it's— it definitely starts post the, uh, not, not really working. Like, it's working now and you're in this constant scaling and ramping phase. Consistency. I, I, I, I love endurance events and like, this is all about looking for a little prop here. It's like, how good are you at working out and maintaining consistency. This is like one of those PowerBar things. And the key to long-term performance is consistency. And in this phase, it's like, how good are you at looking at the same metrics over and over, even when they don't tell you the story that you like? If you don't like the story, don't change the metrics right away. Maybe you can, but like deprecate those things slowly if you don't think it actually matches the business. But actually watch the metrics and try to get consistency in there. Like, in this phase, consistency really matters. And it ties into my next point around using winches. A winch— if you're on like a— if you're on a boat and you're trying to get a line to stay, you pull on it to get the sheet in. Like, typically a winch is what you put in place so that the line doesn't go back out when the wind pulls on the sail. Right, you lock it in and you lock it in, you lock it in. Sometimes people use winches on pulling out a car that goes in a ditch, right? Winches, the whole idea is that it only goes one way. When you pull it in, it doesn't slide back. And I think about this in the construct of building long-term durable revenue. Get customers that you think are actually going to renew, that have a good experience, because if you're constantly throwing crap or throwing not awesome examples of what your business will be long term into your stack of customers and they're attriting, that's not helpful. You're burning cycles on the business. If you're learning, that's cool. But if you're just adding revenue or adding customer types that you don't think have sort of long-term potential, like they're going to roll back on you and it's like letting line out. It's like letting slack out in a sail. It's not going to hold the power. So I think about like, try to have something ratchet to where you're adding it and you know it's going to stick, and you add it and you know it's going to stick, and you add it and you know it's going to stick. So that's my, that's my sort of reference around winches. Learn how to say I don't know a lot. Back to the earlier phase, it's about being embarrassed. This phase, you don't have all the answers because you're growing really fast. And in my experience, there were a lot of things I didn't know. And, you know, if you go back, I'm in my early 50s now, I was in my mid-40s in this phase, and I don't think I was that comfortable saying I don't know this frequently.

So I have a trick, like learn how to say I don't know differently.

Like, oh, I haven't cracked the code yet. That's a good proxy for I don't know. Like, that's acceptable. And learn how to say I don't know in other languages. I don't know. Pick something that you like, but you will not have all the answers. And be comfortable saying I don't know, especially when it comes to being inspected, going through board meetings. You will not have all the answers. They are paid to ask smart questions and they're trying to find like, how do you think about it? Are you self-aware? So find ways to say I don't know. And also be prepared for— like, always be asked for a little more. I find this phase, as I look back, I was talking about, you know, be consistent and what's the key to being an endurance athlete. Well, it's consistency. You're working hard in this phase. You're expending a lot of calories to get the scaling motion to work, to be consistent, durable, repeatable. And you're kind of getting— you get a little worn out in here, but you're going to chronically— you're consistently being asked for a little more. Like, hey, I know you did that, I need a little bit more. So be prepared for that. Keep— and I don't know if I'm suggesting to keep a little bit in reserve, just be prepared to be asked for more constantly.

Like, constantly.

This is— this is a product of success. They'll ask other questions if it's not working. But if it's working, I'm like, a little bit more. Let's go a little bit faster. Can you give me 3% faster? Can you give me 5% faster? And you need to be prepared to answer that. And the answer can't be, oh my God, did you not just listen to what I just— you know, we just put up all these results. Why are you asking for more? Like, that's the job of scaling. It's uncomfortable. And it goes to my next point, which is like no coasting.

We have this—

it's become very obvious that if you watch the duration of being at a company and building from $1 million in revenue to $1 billion in revenue, you don't get there by slowing down and like backing off the pedals. You're constantly pushing harder and harder and harder. And you want people around you We— this is a very important part of my own DNA and the culture that we're building.

No coasting.

You can't show up and like, oh, I'm tired for the next 3 days or the next 3 months. Like, it's okay to take PTO. There's all this unlimited PTO. It's intentional to try to give you the flexibility to take the time that you need. But when you're showing up, we expect you to show up and care and work hard. And I think that this is a key element of this $50 to $250 million, you're going to get tired. Your teammates are going to get tired. Make sure they have time to take time off. But when they're at work and working, like, you got to be pulling, no coasting. And that does not change. I, I wasn't sure where to put this, which phase, but it landed here. And I think it's applicable across all the phases. All right. Phase 3, there's like something happens. In Phase 2, Phase 3. We showed the sort of public offering phase, and if you look really closely, if you want to go back, like, everybody had an orange tie on or some orange glasses, some orange flair. And it was an incredible event. But it is, it is over so fast. I have not taken this tie out of the packaging since I wore it on that day. If anybody needs one and they are an orange-branded company and they're going to be, you know, up there with Stacey Cunningham or her replacement on the NYSE, the NASDAQ, I've got one. You can borrow it. It's like collecting dust. It's over. Like, it is an ephemeral thing. As you move into this phase, you've crossed the line. You're no longer in the sort of— you're not in the like outcome uncertain phase. You're not in the, well, we don't have any of these scaling mechanisms in place. You're expected to be able to endure at this $250 million. And you could say it happens at $150 million. A lot of companies go public in there. A lot of companies get bought in there. I'm not over-rotating on whether it's $250 or $100 or $150 or $500. Markets determine that. But there's a point at which you cross the line and you're expected to have a lot of endurance. This is not easy, but recognize the shift. It's very different. The last phase was about like being creative and flexible and figuring it out. And like, those things don't go away, but you're expected to be able to do this repeatedly every day, day in, day out. And that is very different. It's sort of like it dovetails into my next theme, which is around governance. There's always somebody looking over your shoulder in this phase. It's quite different than the other phases. You don't have a lot of oversight, certainly in phase 1 when you're less than $50 million in revenue. It's many ways, it's just, you know, just us kids running the company. That changes in phase 2 and phase 3. It's, it's gone. Governance is cool. And it exists to provide a framework so that you feel comfortable to continue to operate. You can't see everything and know everything and deep dive into everything anymore. Embrace governance. It'll make your life a lot easier. It certainly did with me. Our internal audit folks, like, they actually can be your best friends. They can be helpful. And that is not obvious in the early part of the phase. This is where I think a lot of folks that are in my shoes They don't like people showing up and putting their fingers in your pie and sort of checking the temperature and checking whether it tastes good. Too much salt. You're like, you're kind of offended, especially if you've been doing this for a long time.

Like, hey, I like—

take a look at the charts. Aren't they great? Like, no, process matters. And I can't overstate that it changes a lot in this last phase. At least it did for us. And if you embrace it, it becomes much easier to deal with and you sleep a little better because you can't know everything. Just like today, I'm kind of uncomfortable up here. Like, there are really smart people that are judging every word that comes out of my mouth. I'm kind of used to it now in terms of like, I'm always uncomfortable. This phase is not easy. You don't get to do the easy things. Nobody brings you, hey, I've got this problem that you can solve with like a flick of your pen. Those things are— they're in the rearview. You are only working on uncomfortable things. I'm doing an uncomfortable pause right now. Do you feel a little uncomfortable watching me? It's uncomfortable. It never stops. My day is a series of uncomfortable Conversations. My CFO said that a few years ago, and I just kind of laughed. I'm like, yeah, you're right, and I don't want to talk about that anymore. Can we talk about something else? But it's true. So recognize that happens in this phase and be prepared for it. It's very different than the other phases. You have this happy-go-lucky, you're getting to work across customer problems and things that you're naturally oriented to and naturally like. You're probably not going to be doing that a lot in this. You're going to be looking at the things that nobody else can solve. And there's a lot of that that's required of you as a leader in this phase. Be comfortable being uncomfortable. Kind of goes to the next part. Everything gets measured, and it's not your choice. You may drive metrics, and you may suggest metrics, and others will drive metrics, and others will suggest metrics. And kind of back to this governance thing, everybody's going to measure things, and it's internal. Then you have these external metrics that some smarty pants with a spreadsheet is doing, and like, it's really good, it's just a really long list.

So all—

you can't keep it all straight, but you have a responsibility to be aware that everything is getting measured. So be mindful that you have to be able to absorb a lot of information, and you have to be able to understand the context of what they're measuring. And that, like, that's also quite different from the earlier phases, because usually you're driving the metrics and you're defining what metrics matter in the earlier phases. This is quite different. You no longer get to define those. I debated whether to put this one up here. Board dynamics. Um, I'll say this about your board changing over time. In the beginning, typically, like in our industry, if it's venture or somebody putting money in, oftentimes they'll take a board seat. So your board is people that have put money and/or they've founded the company or they're really close to one of those two groups. Everybody's interested in the outcome of the company, and typically they have a lot of skin in the game. Fast forward through the process, a lot of the— some of those folks will still be involved and you will bring in experts. You'll bring in people that are professional board members. You'll bring in people that are really smart in certain lines of the business, whether that's go-to-market or product or engineering or audit or like there's a bunch like it changes and it can be subtle. You'll have people roll off and you won't even realize that they're there anymore. You'll have people roll on and you'll meet new people. And the dynamics have changed. Just like they— the dynamics change across phases, your board changes too. And be mindful of that. Take advantage of them. They're really smart people that are engaged with the company. Oftentimes, like, the work to be done just changes at the board level. And you should try to develop a really good relationship with your board and be mindful that the composition will change over time. All right. I had a slew of things. I'm like, "Ah, it doesn't really fit in one phase. It doesn't fit there." But I thought it was important. So, I'm going to cover them here. These are like, "Always do the following." I don't know if I should use those words, like always and never, kind of challenging when you're up on stage and being recorded.

But let's try it.

Experiments. I use— and I put this in quotes for a reason. I use experiments as like a magic, like open sesame or get out of jail free term. Learn how to like give yourself the latitude to try things. Doesn't take a big plan. We're just going to run an experiment over here. It gives you the latitude to try stuff and not know the outcome. Like if you do 15 pages and you will in 24 months, it's going to look like this and we guarantee that the outcome like this. Well, that's great. That's kind of not what I'm describing. I'm describing the when you don't know the outcome, call it an experiment. And everybody, at least my experience has been, people's anxiety level drops. They're like, oh, okay, experiments are cool. Go ahead. How much do you need for that? How much time do you need? What can I do to help you? It just changed, like the lexicon of using experiments versus making plans and making changes. It puts people at ease. And my belief is that if you put people at ease, you'll execute better. So I like— it's like a magic elixir. I'm sharing that with you, and folks back in the office now go, that's why he uses that experiments term all the time. This is obvious. The first part is obvious. Do things that don't scale. It's true, you will do them. If you can be intentional about it, it's a little bit easier. You will do things that seem really odd, and you're like, ah, like We can only do this for a few weeks because I don't think this is going to work. Yeah, but you got to solve a problem now and you're going to learn something. The thing that I appended to it is take an inventory, keep a list of those things that you did that you knew were not going to scale because you're going to have to go back and fix a lot of those when you go, oh, well, we only did it for 6— it was only supposed to be here for 6 weeks. Well, we're 6 months in or 6 years in and it's still running. What are you going to do about it? You have to like— you are creating debt when you do things that don't scale. And it'll help you if you kept a list of things, or at least a list in your mind or a list on the back of a notebook, so that you're not sort of surprised. Like, oh my God, I totally forgot we did that. Keep a list. Show up and care. I had this like appended to the no coasting reference, but I thought it was worth mentioning. Across all the phases and back to this notion where I started with builders wanted, you want people to show up and care about what you're building. And that starts with you. If you are like, oh, this is an interesting company, I don't really know anything about the space, that's fine. Like, get into it. Figure out what the customers are going to be using you for. Get into, like, the problems that have existed and why. If you can't get yourself excited about why you're showing up and doing the work that you're doing, or about the use case, how are you going to build a team that is going to pull when things are hard? Care about it. I think that the, the The downside when you do this wrong, like you don't really care, the work is going to show it. And all that scaling that you did before, it's going to be like on a really sandy foundation and it's not going to work. Test for this always. And some people may show up and care for a while and then they don't. That may be a good example. If you, if you're answering, if you're You're talking with somebody about performance problems, you're like, "Yeah, but you were great and you were perfect for this phase." Like, but maybe they don't care anymore. Maybe they just sort of ran out of it, and that's okay. It's an always required. I can't overstate this. This matters a lot because the intensity as you're going through building these companies, they take a lot out of you. And if you don't care about what you're building, It's really hard to do a great job. This is like a— the embarrassed piece is like learn to say I'm sorry. And you say I'm sorry a lot, and you have to mean it. People are watching. They're going to try to figure out, well, do you really care? Do you really care that I tried to do something because you asked me to do it and it didn't like, you got my back? Do you feel— do you feel bad about it? And it's, it's constant.

Like, it's—

this is hard, but you have to mean it. When you really care about what you're building and it doesn't go well, and there are downsides— like, people, people are involved— you have to be able to say I'm sorry, whether that's a customer or internal, or, you know, your home team, your family team, where you're like, hey, I let you down, I had to do this thing at work. I'm really sorry. It's the, it's the for reals part, like really mean it. And going back to being like an endurance athlete, like learn to live with your setbacks, but get back up and keep going. Be honest. Kind of a part of like, I don't know, haven't cracked the code yet. Look at yourself and like, you know what you think is going well and what you think is not going well. Be honest with yourself, be honest with your board, be honest with your team. Bad news does not age well. There's all these little axioms. It's true. And then as leaders, whether you're an individual contributor that people look up to, or if you're running an organization, like these things scale because you have a collection of people showing up and working hard and working on a problem that they care about. If it worked, Make sure that everybody feels like that win, small W or big W, make sure that that win is shared. You get good feedback, share it. If there is terse or pointed feedback that something didn't work, like, step up and say, ah, you're right. First of all, recognize what is being described. Take the blame so that you can get on fixing it. It's all about moving forward and getting on with fixing. It's never about being perfect. It's all about making progress. And I think about sharing the credit and taking the blame as a way to do that faster. How do you go faster? And the last is thank you. I know we're out of time. Many customers here. Thank you for listening to me. Thank you for taking the time. There's a Q&A session. It's that way, and it's 30 minutes. Thanks very much.

Well, thank you for following over here. I think I saw a lot of the faces that are here now maybe 30 minutes ago.

Yes, yes, thank you.

Thank you for validating that.

What can I do to help?

Like, I'm here to serve. What questions can I answer?

And I will try—

I will do my best to answer your questions directly and not avoid them too much.

Yeah, just a reminder to have a mic to get your question answered. So, we'll be looking around for you.

Yes, and I will direct you back to a mic if you just call it out. Good afternoon.

Thank you for the other talk as well. You mentioned at the end that you have to be in it to win it. You have to be really excited about work. And there might be a time where somebody's been a great performer for, let's say, 8 years and then the passion dies in their eye. And you mentioned maybe it's time to maybe let them do something else. Have you found experience either finding that something else internally or is it in your best interest to find something else externally? Because it's hard to lose that much institutional memory, but I also understand if you're checked out, you're checked out. So what are your thoughts?

Oh, I love that question. It's a hard— like, I love you going straight to the— like, that's not an easy warm-up question. That's like straight at it. Thank you for doing that. Um, you're— I think I would start with the end in mind where you said like there's, there's a bunch of IP. If you've had somebody at the company for a while, we historically have not required people to come in knowing the industry. So you invest a lot in folks learning the industry. And, oh, by the way, the industry is moving. So they've picked up things while the company has been picking up things. So you've all learned it sort of at a pace. And it's reasonable for folks to get fatigued. I think it's very normal. The question is, like, is it a, I'm fatigued and I just want to do something else? And is that something like a different function, or is that just, I just want to work on a separate set of problems? We're helping to build a better internet. That's our, that's sort of our charge. Do you want to keep doing that, or is it you want to go and help, you know, insert solving other problem? And I, I try to pivot on like, what problem do you want to solve? And if you're just tired solving this problem for a while, what's the facility to give you time to recharge? And is that measured in minutes, sec— you know, seconds, minutes, days, weeks, longer than that? There are mechanisms. I always try to retain the IP because you spend— we spend a lot of time hiring people. We all do. You put a lot of energy into it. Sometimes you get those wrong and sometimes people just are not a great fit later and your responsibility is to make them find— you know, is to help them, not make them, help them find something else. I try to have a bias towards finding something internal first or at least trying to solve the fatigue first. Thanks for the question. Somebody please have another question.

I have one.

Ah, thank you.

The question on the strategy of retention of people while you're growing from the first to the second phase. I can imagine Akamais and companies like that might be going through your AEs, especially the good ones. So what type of things did you do in this first and second stage to retain and motivate the team to continue betting and investing in Cloudflare?

Yeah, thank you for the question. Just to put some more context on it, phase 1 is like when you're still roughly small and figuring it out. I put a number and there was less than than $50 million in revenue. But let's just say you're going from tens of millions to hundreds of millions in revenue across that curve. How do you retain people and what do you do? I kind of go back to our earlier point, which is like, are you still interested in the problem? And if you're a high-growth company, often across that spectrum, you're adding other use— you're adding other use cases specifically, meaning your portfolio of services is expanding. And that does two things. One, it gives you more problem surface area for people to engage with. But it does— the other thing is, well, just, it makes it harder.

It's confusing.

So the surface area is like a double-edged sword. But I use that as a way to go back and talk about, well, there's all kinds of problems what is the problem that we're trying to solve, what is the problem that you want to solve. And you were asking specific questions around like competitors or others coming in, you know, burning down the list of your employees. You have to assume that's always going to happen. And if you take pride in who you're bringing into the team, as soon as somebody else gets wind of they want it, like you should kind of celebrate like, ah, we built something others want. And I think about embracing that, not hiding from it.

In fact, some of the best stories start with, "Well, I had this—

the competitor called me and they tried to recruit me." And it makes you like— it makes you uncomfortable when one of your employees says that. And they say, "But I used it as an opportunity. I learned about their product." And then your anxiety level comes down a little bit. So it's a culture of just assume your best people are constantly constantly getting asked to come and do something else, it's better to have that transparency so that one, you can figure out like, are some of your best employees like a little loose in the saddle? Better to get ahead of it. And then if competitors are coming in, I would almost use that as validation. You don't want to lose your team. Like that's not the goal. But the goal is to retain people but try to get this things to the surface that might cause somebody to be more loose in the saddle and willing to go somewhere else. So I think it's— if I were to sort of encapsulate and play it back, I would say don't make it taboo. Assume your competitors are going to burn down your employee lists and try to use it to your advantage somehow. Thank you for the question. Didn't have a stock answer for that.

Chris, thanks for the talk, which was very enjoyable, and for the opportunity to ask a question. I have the dreaded two-part question. The first part is, you talked about the importance of measurement along the different stages of your company's growth and evolution. What did you measure? And then the part two is looking back, what do you wish you had measured instead?

Oh, wow.

That's such a good question. So I'll try to answer the first one while it gives me time to think through an answer for the second one. So what did we measure, and then what do we wish we've measured? I would say, like, along our journey, there are a set of— here's the learning that I would share. Along your journey, you're going to measure things that are obvious. You're going to measure growth rates. You're going to measure growth rates around product categories, and you're going to measure productivity. And you're gonna measure CAC LTVs. All these things, like plenty of metrics have been defined to measure, and I'm not sure you're gonna make up a lot of new ones, but you'll probably make up a few that are very specific to your business. What I— if I look back, so we did all those, just to answer your question, like we did all those standard metrics, and I think you start with kind of none, and then you have too many, and then you shrink back. You're like, actually, these are the ones that matter. That's like the arc for us on the ones that we did measure. The ones that I wish that we'd measured— when you go through this public process, you have the standard metrics that you know— revenue, gross margin, EBITDA, like all the standard things that you can find on our investor relations website. Then there's the secondary measures, like They want to know your customer counts. These are non— you know, these are typically like not on the income statement or the balance sheet. They want to know retention rates. They want as much detailed information as they can to inform their models. And that's to be expected. What I think that I wish that we'd measured earlier is some of those things and the component pieces, the secondary measures were something that you evolve into. And I wish that we'd measure some of those component pieces way earlier. And I— we have good hygiene on these things. Back to my comment around governance is cool. We have great people making sure that we're measuring the right things. But when something is a public measure, you want as much runway as possible. So it's not like, did we not measure it? It's like, could you have done it a little bit earlier? And I would pay attention to those secondary measures.

Hi Chris, um, at what phase did you start focusing on international market sales, and would you have any tips for that, or were you born global?

Yes, that's a good question. So we were born a little bit global, and I would say that our international pull— so we try to invest behind demand. And when our service— like, our service is for developers, fingers on keyboards, practitioners, network engineers, security professionals. And if English was— because we didn't translate the website— if English was a primary language or a secondary language or Google Translate was really good in that local dialect, like, that's what our map looked like in the beginning. And that's where we started. And we kind of go back to these sort of funny internal meetings you'd have where you're like, "Well, who's covering Australia?" We don't have anybody in Australia. We're not incorporated there. We can barely spell it. And then you go like, "Oh, well, you cover Australia." Like, "Can you—" And you go down this list of carving up the world, which seems funny in hindsight, but you start somewhere. And then, you know, skip over the covering it from super remote. Then you start putting people out there. So we went down the list of typical, like, here's where our demand is coming from, here's where we're going to go. We had the benefit of having demand already. Not everybody has that benefit. Some companies have to go out and spend a lot of money to drive demand, and you want somebody close as you're spending that money. We were reacting to demand in the beginning and then investing behind it. And that's, I think, a hallmark of our business. But if you look at the other stories around, like, now that you know there's demand coming out of certain markets, we would take people that understood the product. We're practitioner-driven. You have to understand the product to get the win and to get to somebody to have the experience of success using your service. So we would take our team and sort of like, you go to the UK, you go to Australia, you go to— and, you know, insert part of the world that we wanted to do more in. So we were very prescriptive in having people rotate out before we'd opened a remote office. We always wanted somebody to seed, preferably permanently, but at the very least for months and preferably for years. And that motion has worked for us. But I would say it did start with invest behind demand. Other businesses don't have that luxury. And there are people that are more well-educated to talk through that.

Hi. So I have two questions, but they are quick. The first is, how Do you close the gap between forecasting and CRM data and your team's behavior and execution? So that's the first question.

How much time do we have? I might have to timebox this one, but keep going.

And the second is just a yes or no question is like, do you believe in playbooks? Oh goodness. Ravi, can I start with that one?

I'm going to start in reverse order. Thank you for the question. The first is around closing gaps and managing through what you can see in the data versus what you think reality looks like. And then the second was, do I believe in playbooks? The playbook one is a real— I'll start there because I think this This one's kind of fun. I think it's— playbooks are good. I think they have a purpose. I talked about the phases.

Phase 1 being small. Phase 2 being super hyper growth.

And you definitely have something in Phase 3 being, you know, it's more of a proper going concern public— more than likely a public entity. I think if you take— you hire somebody that has a playbook or you bring your own playbooks, if you take them to early and just say, hey, here's what we're going to do, I think it's like super high beta. It might work out. But the likelihood that the context for what those playbook— and I'm talking about people bringing playbooks for a second. If you bring a playbook and you say, we're going to deploy this, I don't think context was really considered in that playbook generation. It was created in a separate environment. Maybe it works. I've seen it not work more frequently than not. So I don't start with playbooks as a starting point. I will start with like, what are we, what are the physics of what we're doing? And then build up our own playbooks. And then, and then say, oh well, we don't need to recreate the wheel. Let's copy paste this portion of somebody else's playbook that we admire. But I have a very specific like, no playbooks first. And I, Not everybody in my role feels this way, so I'm an N of 1. I know others that are like, "I bring this playbook and we're going to hit this hard." You should evaluate which one you think resonates in the environment. Then the question around how do we close the gap on what you can— and I'll reframe it as what you can see versus what you think is going to happen. And that's like a— there's a lot of software chasing that right now. There's a lot of smarts. I don't know if you're one of these companies. This is like a leading question. It is a leading question. Thank you. I should have you come up here and tell us how the industry thinks about automating this. I think it's an art and science when it comes to forecasting. And I don't think I can articulate the 6 things, 3 are art and 3 are science, in like 30 seconds, but I'm happy to take that offline.

Hi, Roxanne. I'm very much in phase 1, so I'll appreciate any learning that you have from that. This is more kind of a culture leadership question. Would love to know what you've seen be effective and maybe not effective in terms of instilling a culture of ethics and inclusion in sales teams. I think there's often so much pressure on sales teams, and so this is a place that lawyers get nervous. And then on the same side, it's historically not been the most inclusive in a broad range of metrics. So we'd just love to know how you've seen, you know, things work or not work there.

Say more about your question, just double-click a little bit more.

Yeah, so I mean, on the ethics side, like, um, if you talk to a lawyer and you ask them about anti-bribery, they will give anecdotes about, hey, if a sales team feels a lot of pressure and they hear from the organization, we care about what's doing right, but wink wink, make your numbers, they'll feel a need to cut corners. And then on the inclusion side, kind of just, I'm sure all the things you've seen, like not having an archetype for what that, you know, great go-getter salesperson looks like that might not look like me, you know, et cetera. And thank you so much for this. I know it's a spicy question.

Yeah. Thank you for the question. That's a— there's a lot of nuance to that. And I feel like there's two separate topic areas. One being, how hard do you stress the system and expect people to color in the lines? That's really contextual. There are bright lines around— if you put this on the front page of the New York Times or maybe it's some version of insert, maybe it's The Economist. I don't know who, everybody who's considered sort of unbiased. I'm not gonna make a comment on that. But if you put it on the front page of where people would read and expect sort of a balanced perspective, would you see it the same way? Said differently, if your grandmother knew this about what was happening, would she agree? As a leader, I think your responsibility is to make sure that you're on the right side of that and you're demonstrating the behaviors and you're articulating when it challenges you. When I got into a situation where I was like, ah, I'm pushed really hard to make decisions and to set the tone for— you described it as performance versus like, now my words, coloring inside the lines and staying inside a process. If it feels wrong, if there's like something in your gut that tells you it's wrong, listen to it. And going back to this like governance is cool comment, it applies early. You just may not have an internal audit team. You may not have somebody that's looking over the shoulder, but there are people around you that you can draw in. And back to this concept of You may not have all the answers. Just learn how to say, "I don't know," and check yourself. But it typically starts with, you know, something feels wrong. And how do you express that to the team? I think it's typically through stories. Here's the situation that was uncomfortable for me. Here's what I did about it. And outline a process. And typically, it lines up with a, "I don't know the answer, but I'm going to talk about the process." And if I follow this process, I'll feel good about the answer. That's the ethics line. That's my comment around your ethics question. And then on the inclusion side, we're all on a journey to try to have the most diverse teams. And diverse teams win because you get a very strong mesh of, "I hadn't thought of it that way. Thank you for pushing me." I hadn't thought, I hadn't thought of the local market in this way. Thank you for bringing that context to the surface. So that my reference point and the way I visualize this is like, how do I have the strongest mesh of people on the team? And you're right, if it's all everybody looks the same, like, those fibers are going to rip really fast. Whereas if I have folks that have diverse experience and I think it's an and. And I've created an environment where people can speak up and they feel safe and listened to. I think it's as much about the safe and listened to and then having a team that values diversity of opinion and the debate and a little bit of the Socratic method without turning into chaos. Because at a certain point, you've got to kind of line up. And it's not your question around engagement. Inclusion, but I think these things start to become related. So as long as you're mindful around— I think about it in terms of a mesh, a strong mesh, and I'm happy to talk to folks offline about that.

Chris, thank you for taking the question. So this is regarding public companies. You have seen what has happened in the market, and how do you manage negative reflexivity especially if the market cap goes from, say, closer to $100 billion to, let's say, $20 billion, and especially regarding two key vectors in terms of sticking towards growth and then—

Say it again, in terms of sticking—

Towards growth, like keep on driving the growth and then maintaining or retaining key employees.

The word that sticks in what you just asked is like, is not being overly reactive. You said reflexive. Not being overly reactive. Am I understanding your question? Like, how do you not be overly reactive?

Yeah, especially I think the reflexivity— reflexivity is a term that George Soros introduced which basically says that if the market cap goes down, then the chances are that organization starts taking behaviors which is different than producing the value. And it impacts like two different vectors. Vector one being chasing growth, growth, growth, you can't do that because now you have constraints in terms of how much capital you deploy. And then retaining talented employees becomes harder because, especially in growth companies, some amount of their compensation is based on equity and things like that.

I think there's a certain amount of how do you measure— how do you manage expectations and keep your true north? I go back to like, what is, what is the problem set that you're trying to solve? And is there still a problem set that exists in the construct of your business model? And over time, like, how do you maintain consistency between those two? So this is the problem we're solving, this is the business model. It's probably going to evolve, it's going to evolve with competitors, it'll evolve with market dynamics. And how do you have as little daylight sort of pulling you off that path. It's almost like that— you've seen the E-Trade commercials, like, follow the green line. I, I think about that as, as you're asking the question, there's— it's good to be reactive to new information. You should be willing to recalculate when you have new information. Do a recalc, but don't do a constant recalc and whipsaw the team. And don't do a constant instant recalc if you know that there are long cycles and you just happen to be in an off cycle. So I think there's more to that, but those are some of the framing that I would put in place. I'm happy to talk about more of that offline.

[Speaker] I'm curious about how you think about goal setting and how that's changed as Cloudflare has grown. So at our organization, we've sort of tripled in size over for the past 2 years. And it felt like early on what worked well was inspirational, outrageous, impossible goals.

Big BHAGs, right? Yeah.

And now the board is like, predictability. And I'm curious, and in my view, that leads to sort of more mediocre outcomes, or it can. And I'm curious about your experience with that.

I have two different axes I'm thinking about responding to. And like, your question like changed the axes on me as I was listening. The first is I think about goals in that I like to have a team-based system first. When we're small, how do you have everybody doing all the work required to hit that goal? And like not augering in on, well, I only care about this thing. So I think team goals are a good way for organizations to have concentration on the bigger outcome and not losing sight because they just want to do the thing. I, I describe builders wanted as compared to individuals that just want to do a job. So that's where I thought your question was starting. That's what I thought. I thought about that. I think it's important to call it out. Then there's a question like as you start to get traction and you want to continue to have really big audacious goals. I love a big TAM. I love a big addressable market. I love having the conviction that we should have an unfair share of that. And the thing that keeps me awake, and it hasn't come up yet, is I I worry about us living up to our full potential. So, I think setting big goals helps you sort of stay on that path. Maybe a little bit of like stay on the green line. The question is, do you create goals that are unachievable? Because it's like a little bit of bravado. The downside of setting those goals is you create a— I Let me say, an upside of doing it right, you create a culture of success. And like, success repeated equals confidence. And I think confidence matters a lot, especially when it's not obvious what the outcome is going to be. Confidence matters. Having people show up and care and keep the enthusiasm and the endurance. A culture of success will help you ride over those speed bumps a lot easier. I don't think these two things are, you know, having big aspirations and setting big long-term goals. I don't think there's anything wrong with that, and I really like those things because it keeps you on the path of living up to your full potential. If you just set those and they're not grounded in fact along these little micro steps along the way, you run the risk of losing this culture of success. And I think that's the guardrail that I would manage around. If you don't feel like people are being successful or don't think they can be successful, problem. And you have to reconcile those two. Often that's just a function of timing and how you set sort of stretch versus near-term, we know we can do this. And then that gets down the rabbit hole of like forecasting. Thank you for the question. It's like, it's a very insightful question and it gives me anxiety because I've lived through this. You want the tension between culture of success but always, "Can I have a little more, please? Can you go a little faster?" Like, that's the— too much daylight between those is problematic.

[Speaker:MALE #3] What are some surprising examples, I guess, of challenges and failures that you've had to overcome learning and building the muscle for an enterprise, large enterprise go-to-market motion? Oh, say it again.

Just the first part of your question.

Well, what are the surprising examples or surprising stories you have of failures or challenges you've experienced building the large enterprise go-to-market motion?

Oh, okay. How much time do we have on this one? I think if you've done my job long enough, you look at— when you get up in the morning and you look at yourself in the mirror, like, I see so many disappointments, and I wish that we'd done this differently. Um, as you move— we're a company that's gone from sort of like heavy practitioner focus and starting off at the lower end of the market and in some of the categories and then moving up as the product matures. The enterprises have different expectations than a practitioner that is just doing this on a hobby site, as an example. And what I think is a challenge is if your business has this really, like, a lot of surface area between between the two. Many companies will abandon the low end to go after the high end. And there's like a whole— I'm sure somebody here at Crossaster is doing a really smart strategy talk on low end, high end, where to. We've always had the mentality of like, we want— if you want to help build a better internet, if you really want to serve and create a set of services that are all about use cases on the internet, they should be across all categories. And that is— back to earlier around the goals, like, that's a big goal, to have a service that fits that surface area. So you— we could have moved our focus up and had our roadmap become more and more focused on enterprise. And sort of abandon the loan. We didn't do that. We think about sort of stretching. Like, how do you stretch the product? Anchor it. You will not leave the practitioner. There's lots of reasons why you don't want to leave them. You don't want to leave exposed, your flank exposed. We're building something for the long term, et cetera. But I think it just puts more tension. So we've tacked down and said, "We will not abandon the practitioner. We will not abandon the low end." And it gives us like, "Oh, you have to be low cost. You have to be low priced. You have to be really easy to use." Like all these things are not bad for the enterprise. So the— I would say the examples of where that has not gone well is maybe where we've not thought about stretching or we've tried to stretch too fast or we've left something thin that at the enterprise level like has to be enterprise grade. And where I think we've gotten it wrong sometimes is is sometimes an enterprise customer will adopt features that are really early and are really practitioner. We typically get things shaken out at the practitioner level and then over time move them to the enterprise level. Where we've skipped that step, I think that's where I, when I look in the mirror, I'm like, ah, I wish that I'd done that differently and probably had a little bit more patience in allowing our biggest customers customers to get access to features and put them in the really critical environments, I probably should have shaken it out longer at the low end. So that's probably the one example I would give you. And I'm sensitive that I'm now keeping you from your next session. I need to give up the stage.