Lessons Learned From Silicon Valley

So, first of all, just for the people in the room who aren't familiar with Cloudflare, because you're not a household name like a Facebook or a Google yet. Just very, very briefly, what does Cloudflare do?

Sure. Cloudflare runs a global cloud platform. Our customers are Internet properties, so your websites, your apps, your APIs. Our customers come to us for cybersecurity solutions, global performance and reliability solutions. In the past, companies used to buy this through hardware boxes. But as more businesses are using a lot of cloud computing services and a lot of SaaS, company services like Salesforce or Workday, they need something else. And that's what we do. We're about nine years old as a company. We have 2 million free and paying customers, everyone from nonprofits like the Women's Global March or the Trevor Project to millions of small businesses around the world who need these sorts of services. And then 10% of the Fortune 1000 are Cloudflare customers, including many brands in this room like Starbucks and Walmart and l'. Oreal. And so we just went public five years ago, and I started the company nine years ago.

Five years ago.

Sorry. We went public five weeks ago.

Thank you.

And we started the company nine years ago.

Has it felt like five years?

No, no, it hasn't. Actually. The whole experience was incredible.

Okay. All right. Now that we have established that. So for. For those in the audience who don't live and breathe Silicon Valley, give us a little bit of a sense of what the mood is, like, what's changed, what hasn't in this, like, post, Cambridge Analytica post, Travis Kalanick post, we were weird S1 filing and whatever you want to call what's going on there now, so much has happened. I realize not all those companies are in Silicon Valley, but in tech and in Silicon Valley specifically. So what's the mood?

What do you see? Well, if you think so, 10 years ago, there were eight tech companies that had market caps over $100 billion. And today that's 25. And so what's changed is technology companies have kind of grown up from the kids table to being on the main stage. And so there's a lot more scrutiny and a spotlight on how these companies are growing. And those are companies worth $100 billion in market cap or more. There are so many that are in the pipeline trying to grow in that direction. And so there's a lot more spotlight. And what we've seen is that there's some really crummy behaviors or bad management from some small portion of tech companies. It's definitely not all, but I think it's a mixture of tech is again, 10 years ago was kind of the geeky corner. No one really understood, but now it's really mainstream paired with the spotlight. So there's a lot of people are holding people accountable for their behaviors. And I actually think that's a good thing.

How do you see that manifesting itself, like in tangible ways in Silicon Valley and in the tech industry? What are the conversations that you guys are having that you weren't having just a few years ago?

Well, there's really. So first of all, you take capital. A lot of these companies are venture backed, so they've taken capital and you have to be good stewards of your capital. And you see the companies who are bad stewards of the capital, it's not working out very well for them. And again, I think this is a good thing. And so founders and the investors are saying, hey, wait, we're going to reward good stewards of capital. And so even at Cloudflare, I mean, we've always been running our company like a public company for years while we were private. Whether it's flying coach or how we allocate, how we deploy these resources, it matters. And I think that the really great tech leaders realize that the second place we've seen are through the employees. I mean, if you want to talk about competitive talent pool, try to hire in the Bay Area. I mean, there are a lot of great jobs there. And so employees are voting with their feet. They're saying, I want to go to a company that I believe in, that's doing the right thing and they're running their companies the right way. And actually, I think because of all the things that have recently happened, that's going to become an increasingly important part of the next two years of hiring. Because people, I mean, you can read in the news about whether it's Uber or WeWork or Theranos, the people who really got the short end of that stake are not only the investors, but the employees. I mean, people go work there, they are getting below market wages, usually in exchange for equity upside. And a lot of cases their equity is underwater. And so I think that's interesting. And then the third thing I've seen a huge shift recently is actually customers. Customers want to do businesses with companies that align with that they believe in. And so customers are having a lot more scrutiny of deciding who they do business with. And so it's actually shifted a lot in the last three years. Actually think in all three cases for the better.

Okay. Well, let's drill down a little bit in one specific area that you guys have grappled with. I mentioned earlier, you're maybe not a household name like a Facebook or a Google, but you've had to make some very tough decisions recently. You help to power and secure millions of different websites. Yes, a lot of them, you probably don't agree with their values, but you typically in the past at least have not shut off service to any of them. And you've done that recently. And the most recent example of that is with 8chan, which is this toxic message board and gathering place for white supremacists, among other things. Talk about the decision to cancel service to 8chan.

Okay, we have eight minutes. I don't want to use eight minutes to talk about this. So let me start by saying the next 10 years, I think, are all about policy. It's the technologists and the policymakers coming together because there's a lot of angst around what's legal, what's not. And some of the laws that were penned 25 years ago did not take into account what technology has democratized. And so there's a lot of work to be done on the policy side. And, and it's the policymakers engaging with the technologists, the business leaders to help, and the academics to help move that forward. And I think on the good side, the conversations are happening. So I'll start with that because that's important in our case, the Internet, there's a whole stack that makes the Internet work. And Cloudflare, we provide infrastructure for Internet properties. I like to joke, we're like plumbing. Plumbing is not that exciting sometimes. When I say we build infrastructure from Internet, people turn the other way. They're like, that sounds really boring. But it turns out plumbing is really important. You really want it to work. And that's what Cloudflare offers. And we enable performance, security, reliability for Internet properties. And we just don't think we should be deciding what content should and should be online. Somebody should. It just probably shouldn't be the infrastructure layer because it's very deep in the stack. If we make a decision that someone doesn't like. How do you vote with your feet as a consumer to say that's a bad decision? I'm going to go there. And it's not transparent because we're so low in the stack. And so as a business, we've always said we are a law abiding organization. We definitely are a law abiding organization. But there are laws are kind of outdated. And so there's a lot of gray areas that have popped up and the policymakers are trying to pass law that works for everybody. And as a society, we're having those conversations. But we're Switzerland. We kind of say we're just going to provide service to anyone, whether I personally like it or not. So that's our stance and it actually works. I think it's the right stance. We've thought it through and if you ask the experts, they agree it's the right stance for the most part. Recently, 8chan is this lawless platform. It's much higher up. It's places where people here can vote with their eyeballs, their time. And they were particularly lawless platform. And so they weren't doing a good job moderating content on their site or the harm they are invoking in the world. And again, we don't think it's our job to decide what should be online or not. But we, we stopped service to them. And it was the second time in the company's history that we stopped service without a court order to do that. We had done it once before two years ago with Daily Stormer. With Daily Stormer two years ago. Another particularly terrible Internet property. And this is the second time. And what was interesting about this decision is we did it without a court order. Everything else, we take things off our network all the time. But it has gone through the court. There's been due process, which again, I think holds us accountable. But in this case, there is no due process. And when we do these things, even though we are not a household name, turns out people pay attention. And I'd say a lot of people applauded us saying, thank you for taking a leadership stand. We know you don't have to do this. Thank you for getting this terrible platform off the Internet. It was particularly terrible. But some people think they're like, it is creepy for Cloudflare to be making these decisions. You should not be making these decisions without a court order. And so one thing I will say is that two years ago we took discontinued service for Daily Stormer. And then this year, this summer, the conversations has changed so much. We've made a lot of progress. If you talk to the policymakers here in the United States and in Europe and the business leaders like the people who are talking about this, the conversation has evolved a lot. It's making progress, but the really tough issues. So people are working on it to figure out what the law should be and what should happen in these cases. But. But that's where we are.

So. And just for more context, 8chan was associated with some of the mass shooters in some of the most recent shootings, including El Paso. So what does this mean, though, for the future? I mean, I get what you're saying about policy not having caught up to what's really going on on a lot of these platforms like an 8chan and that, a lot of that, government regulatory bodies and obviously companies are struggling with this. But as long as there is that mismatch, I mean, how do you, especially now as a publicly traded company with even more scrutiny, how do you draw the line? You know, there's. We're all talking about free speech, but what is your role in this? How do you. It's so tricky to be the arbiter of what you cancel, what you, what you allow, right?

Well, that's true. Well, I mean, I think we've drawn a line for a long time and engage on it. And we are incredibly transparent as an organization. We have transparent transparency report where we report back to the world just because we want to. Every six months of how we're thinking about this, we write public blog posts that are very well read on where we're thinking. We've written op EDS in all sorts of media publications. So in many ways I think we're very. We have drawn a line. We've said, hey, this is why we take this position. This is how we think about. We're engaging in the conversations. So I think we've actually done a very good job on that. And I invite more companies to take that same approach. And I think even whether you like what Mark Zuckerberg said last week or not, at least he's now talking about it publicly, I actually think that's a good thing, to bring more voices together to get the issues on the table so we can move the conversation forward. The conversation is moving forward, but these are hard issues. There's like no silver bullet, which is kind of unsatisfactory answer. But the conversations are happening. And even in Europe, there's a lot of agreement on the path forward. And here in the US there's slowly becoming a path forward. So I think those are good, that people are coming together to have a conversation. And again, I think we've been very transparent as an organization. We're very principled. We, we've kind of stuck to that. We've explained why we're making these decisions. Here's where it's hard, here's where it's not. And that transparency has helped us, has been very helpful. And so again, I encourage more companies to engage in the conversation.

And just to point out real quick that in the statement when you made the decision to cancel service for 8chan, your co founder and CEO Matthew Prince wrote in a statement, we reluctantly tolerate content that we find reprehensible, but we draw the line at platforms that have demonstrated that they directly inspire tragic events and are lawless by design. And he also said that while removing 8chan from our network takes heat off of us, it does nothing to address why hateful sites fester online. That is obviously a much broader conversation that requires a lot of coordination. I have a ton more questions for you, but I want to open it up to you guys. We very quickly probably have time for a question, if there is one. Otherwise, I'm happy to keep going. Yes, Malin, let's wait for a microphone for you. Can you introduce yourself?

Malin Yen with Operator Collective. Michelle, I've watched what you and Matthew have done. So many awesome, amazing things. So this is a little bit of an easy question, but it's also a hard question because I know there are so many things. What is the thing that you are most proud of over these past nine years? Building Cloudflare.

Every day we stop 44 billion cyber attacks on behalf of our customers. And we make the Internet a lot faster for 99% of Internet connected population. And so we're kind of doing what we set out to do. Our mission is to help build a better Internet. There are a lot of flaws with the Internet technology, but the goods way outweigh the bad and it's going to keep happening. And so the fact that we can provide these services to our customers and help make these Internet services easier for everyone, I think I'm incredibly proud of and our whole team is really proud of, and that's why we come to work every day.

Well, Michelle, thank you so much for joining us and for making this your first public interview since the IPO five years ago.

Yeah, thank you.

Thank you. I'll see you back there.