Michelle Zatlyn

Hi. How's everyone doing? Excellent. Awesome. Well, I'm super excited to be here, so thank you to the Euro Hero for inviting me. You know, we have about 25 minutes together, and so I'm going to tell you a little bit about, you know, my company and where we've gotten to. That's just the beginning. And then I kind of want to share what I've learned along the way, because I was in your seats about five years ago, and I don't want you to make the same mistakes I made, and you should double down on the things that went well. So here we go. Okay, so five years ago, me and my two co founders, or three of us, started a company called Cloudflare. And our mission as a company is to build a better Internet. Five years ago, people laughed in my face when I told them that because it's a very big, audacious goal. Today, people start to believe it. And so that's really exciting of how you want to dream big, and then almost your dreams become a reality. And so what does building a better Internet mean? So, just a little bit about Cloudflare. So this is a graph that my grandmother could understand. So without Cloudflare, you guys all have businesses or as part of a business, and that means you likely have a web presence. You either have a website or a web app or an API or some way for people to interact with you. And a world without Cloudflare means you treat human visitors the same as search engine crawlers, the same as online attackers. And all that traffic kind of comes to your web server and you have to deal with it. And it might not cause you stress, but it likely causes your IT person or assistant admin person a lot of stress. So what Cloudflare does is we put ourselves in the middle. And if you're a human visitor, we make your experience better, hence a better Internet. So we make your web pages load faster. We make sure you're always online. Even if you launch on Shark Tank, you get the spike in traffic, your site will stay up without any drift. If you're a cyber attacker coming to your site, we defend your site. We then act like a shield in front of your web property. Or if you're a search engine crawler, we make sure you're the best SEO there is online. And so that's what Cloudflare is doing. So how do we do this? Our value proposition is really simple. It takes five minutes to sign up. We double your site's web app's performance. We protect you from a range of Online attackers. And it's ridiculously easy. And that's going to be really important as I go through what I learned. So that's our value proposition. It's pretty compelling. So other customers think so too. So since we launched five years ago, we've had over 2 million web properties sign up. So that's a lot of people. We built out a global network, so we don't build on Tampa. I'm at the foundation. We're a web infrastructure company with a nice face. And so, you know, we don't build on top of Amazon's properties, we actually build our own. And so we have 24 points of presence around the world and adding Watson work dots on the map. And so we do this all in house. And so our team is constantly shipping servers all over the spot place. And so we have this big global presence. You know, you've probably heard of some of these companies like Instagram, ebay, Amazon, to take all of these websites that get a ton of traffic, add it up, times it by five, and that's how much traffic is going through my network right now. And so we work at real huge scale. This has kind of been our growth curve since the beginning. That's a good growth curve. It's also called up and to the right. So this is good. Also stressful, but good. Lots of traffic on a given month. About 5% of the intranet's webpage runs through our network. And all from a tiny little startup here in San Francisco. Companies you've heard of use us. National governments use us from around the world, not just the United States. And then these are some customers who've signed up in the last two months. Again, people you've likely heard of and you know, yes, we were named in Wall Street Journal's most innovative company two years in a row actually. And then recently they kind of had this billion dollar startup club and Cloudflare has been listed on there, which if nothing else, I can point my parents to it saying see, I am doing something, I promise. So anyway, so that's where my journey's been like last five years. And I can tell you I have lots of battle stories and lots of amazing highs. But it didn't start, start out like this. I mean this is what you become, right? But I again started in your seats a little bit, not sure what I was doing. And so this is five years ago in September of 2009. So like literally almost five years ago, we did our first pitch to a partner meeting. Benrock was the B.C. firm we were pitching Their office is down on Sandhill Road. And they were literally the first partner meeting we were really pitching to. And you show up on a Monday morning. All partner meetings for those who have not pitched to VC yet are on Mondays. That's when all the partnership gets together and the partner kind of brings you in to pitch to the partnership. And if you're going to a partner meeting, it's yours to lose. In a way. It's. The odds are pretty like they. You pass a lot of hurdles for you to bring to. For them to bring you in. That partner's putting their neck on the line. And so it's a little bit yours to lose. And things happen. It's not always a yes, but it's. That's the right camp to be in. So we went to pitch in September 20, 2009, and they liked it. And we ended up raising $2 million. Just over $2 million. Just over $2 million dollars in October 2009. And that's Matthew and Lee and I. Those are the three of us. And then we didn't know what to do. So we drove to Carmel to have a management meeting to say, okay, we raised money. There's three of us. We raised money. Now what I mean, because, you know, we were working for free. Matthew and I were working for free. We were doing this in our spare time. We had started as students, we graduated, and, you know, literally this was our thing. Lee had another job, so he's like, well, I guess I should quit the other job now. We were like, yes, that's probably a good idea. We were working from home. We needed somewhere to go work. We needed other people. And so again, this was a very important management lunch. But it was. It happened down in Carmel. And, yeah, exactly. This was us. And again, we found our way out of there and things have gone very well. But as my business partner Matthew would say. But then the problem started. Not the problems, but the things that you start to learn when you're really building a company. And I'll tell more on that in a second. And. But first, I want to talk about my friend Sarah. So Sarah's an entrepreneur who's much earlier stage than me, and she sent me a text message saying, michelle, I need some serious advice. I have no idea what I'm doing. And there's a lot of shark. Now, for some people, you might think of Nemo, if you have any kids, then this probably resonates. Or maybe this guy Bill Gates, I'm sure some of you have heard of him. Some people consider him A shark. Well, in the last month, Bill Gates put out from the Gates Foundation a study on the world's deadliest animals. And this is kind of where. This is where the sharks and mosquitoes come in. And so my husband's a surfer. He's really scared of sharks, and I'm really scared of sharks. But he always says, michelle, the chances of me getting bit by a shark are like nothing. And he's right. It's actually 10. 10 people a year die because they're sharing sharks. But I obsess over sharks when he's surfing because I don't want him to be one of those 10. However, the people we should really be worrying about are humans and mosquitoes. Like, the order of magnitude of deaths. It's like, that's a large magnitude larger. So the same could be. So let's make some analogies in business. Okay, so back to my friend Sarah. So she's like, what am I supposed to do? And in her world, her shark is really VCs. So we'll go through this. So the first is, and people have mentioned this in the previous session of someone is gonna steal my idea. In a way that is a shark problem. Because, and I think Alexia put it perfectly, you have no idea how much work it takes to make a business happen. Ideas are cheap. I mean, it really is. And if your business is some silver bullet, likely not going to be successful, because there's always a better mousetrap, like some way to get around the silver bullet. You want a series of smart decisions and really great execution. And so stop worrying about whether someone's going to steal your idea. That really isn't your problem. The next are the lions, where it's, oh, my God, the media won't write about me. Again, not a problem. Because media will start to write about things once you have momentum. And so it's kind of putting the cart before the horse, not where you should be spending a lot of energy. It will happen. And I'll tell you, some grass, some scrappy ways and things that you can do to help build that up. But just I promise you, there are a lot of people looking for interesting things to write about. And so if you're doing something interesting, people will find you and will want to write about you. And then there's the elephants. I need to raise money from VCs. Being in the Valley, this is a very prominent discussion. People treat it like a win. And really, it's the same as the media. People who are associates at VC's firm, their sole job is to find deal flow. Deal flow means the next company that they can back. And so you aren't going to find the VCs, the VCs are going to find you. And there's some things that you can do to strategically replace yourself. But again, if you're onto something that's viable and a good VC backed business, they will come to you. And so again, these are really, I talk to entrepreneurs all the time and they're always asking these questions and I'm just like, you're focusing on the wrong things. So in my opinion, one person's opinion, focus on the humans and the mosquitoes. And so the humans. The first one is how am I going to create a company that actually attracts and retains the best people? Because in the Bay Area a good person can go work anywhere. Like job optionality in the Bay Area is very high. Anybody can go work anywhere. So you have to create, have some idea or some mission or some, some place to work that people choose you over others not because they have to, but because they want to. And then the second thing, what I call the mosquito problems, is how am I going to do all those things that really create a problem? Like that creates a business that solves a real meaningful problem. And I think that's how you build these really big amazing stories if you're solving a real problem. Because I'm going to talk about some of the things that we've learned, they really focus more on the humans and the mosquito aspect and much less on the sharks, lions and elephants. So let's start with the humans. Okay. Oops, wrong one. So the foundation of any business are your co founders. And you either are a solo co founder or you have co founders. A solo founder, you have co founders. And so the way I think about it is you have to choose your partners wisely. Think of a Venn diagram. If you have co founders, you, you want to spread out and cover as much surface area as possible, but enough overlap that you can communicate and have a shared vision. And so Matthew Lee and I, we are three totally different people. Matthew is our CEO. He's my business partner. We both went to business school. So people often say, oh, how do you, Matthew, divide up work? If you spent more than 10 minutes with us, you'd be like, wow, Michelle and Matthew are totally different people. Matthew is a lawyer by training. He's a technologist. Like he has a computer science and English degree. He's amazing at telling stories and like a visionary and strategy and he plays all the edges and he's like, we need to get there. I'm much more, okay, how are you going to do that? What does that mean? How do we package this up into something that people understand and can easily use and so much more operationally? What are we doing? And then Lee is our technical architect, so he's architecting the system that enable our vision. And so we are so different. We cover so much surface area, we have enough overlap that we all have this shared common vision that we want to build a better Internet. That's a really strong founding team. We're very, it's very diverse, very diverse skill set. So that means we don't have to hire people, we don't have to go out to look for people to do things, because internally, when it was just the three of us, we could get a lot done. And at first you have no resources and you're stressed about money and time and all these things. We could just do it. Juxtapose that with Matthew, his previous company. He started with two high school friends, all who were lawyers. And the three of them are no longer in the business because there was no clear division of who should be doing what. They were constantly running into each other. So if you're at the point where you're deciding, is this person a good co founder or not, think to yourself, do they have a complimentary skill set to you? And at first that might be, it might not be comfortable. Again, it wasn't comfortable for Matthew, Lee and I at first either because we didn't know each other that well. But the fact that we had very diverse skill sets in the long run is a really great, is a really great symbol. And so this idea of choosing partners wisely, I would say not only applies to co founders but also to like partners. You know, I'm in a relationship, so definitely possible. But my husband has been, who at first was my boyfriend, then fiance, and now husband has been our biggest champion. He roots for our success. And unfortunately I've seen lots of friends who that isn't necessarily the case. So you want somebody who's supportive because it is going to be a big part of your life. So again, coming back to this human aspect starts with a really strong founding team. The right co founders, incredibly powerful, the wrong co founders, incredibly stressful, and you end up finding ways to part ways in the future. And that's sad. So again, on the execution front, so you have this great founding team and then the most important thing in a startup is execution. This is getting things done because again, people come up with ideas all the time. But what you do with that idea is what makes you special. And so a way to crystallize this is the average product cycle at a big company is 14 months. And I don't care what your idea is, it's for sure there's somebody else there out there who's doing something similar. And so you have to move faster than the incumbents. So you need to move things faster than a big company. That takes about, on average, 14 months. So whether that's two months or three months, you just have to be continually moving the ball forward. And as you have momentum in your business, people start to come along for the ride and it's much easier to retain people. So how do you do this? How do you execute faster? Well, one thing we did really well early on is we held our team accountable. And so I'm going to share what we did. You should take my story and make it your own. But holding people accountable is incredibly powerful when you have a really small team. So this is a photo from my office. This was when we had about 25 people on the team. And so focus in on this whiteboard. That's me with my head poking out. So we used to have this whiteboard. We divided the world into three weeks. So it was week one, week two, week three, and everyone's name was on the whiteboard on the side. And we planned in three week increments and everybody had between three and five sticky notes next to their name per week of which they were going to get done. And then on Fridays at 5 o', clock, we, we had a meeting, we called it beer meeting, where we open a beer or whatever your drink of choice was, and people would stand up one by one and say, I was supposed to do X, did I do it? If yes, they got to take down the sticky note. And if not, the sticky note stayed up. And at the end of three weeks, the goal was to have all the sticky notes off the board. It was an incredibly physical way of saying, yes, I'm getting what I'm supposed to be getting done and I'm holding myself accountable to the entire team, or no, I'm not. And this is why. This is what I need help with. And so this works really, really well for us. Now, I'm not saying go out there and adopt my sticky note methodology to your business, but what I'm saying is you need to find something that works for you, for accountability. I've had people saying, oh, engineers can't commit to timelines. That is rubbish. There is a Start, middle, end to every single thing that you need to do. And so if someone's telling you that they're probably the wrong person for your team, or you might need to help break down the task, but there is a start, middle, end to lots of different things to make a business successful. And if you need a good founding team, you need execution. You need to hold your team members accountable to hit that execution. And so some companies use Scrum, other people use Agile methods, other people use Lean Startup or Toyota use Kaizen or the Cloudflare Magic Sticky method. Pick a method that works for you or come up with your own. But please just get into habit of holding your team accountable early on, because then you'll make execution early and that's how you attract and retain really great people. And then my last point on humans is you're going to spend a lot of time together, a lot of time. And so avoid the jerks. We had someone recently who started who said to me, everyone's so smart here, but they're also not jerks. Because I worked in other places. If you work smart for the or just like a holes, I didn't like being there. And you can find smart people who also aren't jerks. And so personally, life is too short. So back to so those are the humans. So that's kind of really. How do you create this company with the people to get what you need done? And those are some tips. So then let's start with the mosquitoes, which is really, really, how do I know even whether I'm building something that's meaningful? Do I have an idea that's going to be big? So let's start with there's no silver bullet. There really is. At the end, it seems like a silver bullet after the fact, but trust me, every company's kind of had a windy path and has figured it out. And so you're not different. It's just up to you to figure out, okay, is this worth an opportunity, worth pursuing? And so there's no hard and fast rules. But here are some guidelines that may or may not be helpful. So the first is how big is the market? And this is not, I don't need you to go do market sizing exercise. This is more like a gut feel. And so in my world, I want to build a better Internet. So that means anybody with a website, web app, API or web property can use Cloudflare. The number of people who can use my service is literally 300 million. It's massive. And so whether they can pay me or not, I don't know, but it's a big market. And so really early on I was just like, if Cloudflare worked, we were going to be a big company. It was either we were going to be a big company or not exist as a company. And it was my job as a leader on the team to figure out which one it was. And so ask yourself, in the old world, if you're doing something consumer focused. In the old world, it was a big deal to get to a million users. Now the bar has been up to more like 10 million users. Because in the world of consumers, there's a lot of hits and then hot and then not. So again, the goal is, can you impact 100 million people? Now, whether you actually get to 100 million, I don't know. But these are the sorts of questions you should be thinking about yourself, because you're going to be dedicating a lot of time to your idea and it's like, huh, I want to do something that really impacts a lot of people. Or maybe you don't, and that's okay. But these are the. This helps to. This helps to know whether you're onto something. And so again, so this is how big is the market? And we just to want questions that you can reflect on. The next is ease of use. So clockwork. I mean, I gave you really. We are a globally distributed network. We run a reverse proxy and that's provisioned through DNS. It's. I mean, most people don't know what any of those words mean, but our ease of use has been our killer feature. It takes 4 minutes and 48 minutes. 4 minutes and 48 seconds. Sign up for Cloudflare. We time it on a regular basis. Most people have no idea what they're doing when they sign up for Cloudflare, but we just make it work. Our competitor, on average, it takes closer to four weeks to sign up. Four weeks versus less than five minutes. And so for us, ease of use is one of our killer features. And if we can do it with DNS and what we did, I know you can do it in your business. And so it just a matter. Sometimes when you think outside the box and you come in with a different view, you come up with a different solution. People who've been in the industry for a long time consider easy. And all of a sudden it's like, oh, you enable this whole new marketplace. And so in your own businesses, if you're like, okay, I have the idea, really spend a lot of time thinking, how do you lower the friction to getting onto your service or signing up for your product. And the easier you make it, the more beautiful it is. And I think other companies who have done a really good job are like Mint. You guys do the personal finance site early on where they, you know, hooked into all your bank accounts. You don't even mind getting your bank account information. I mean, that sounds crazy, but they, they made it so simple and delivered so much value to you that, you know, millions of people do it. And so these are the sorts of things that you want to be inspired by in your own businesses. So I talked about this earlier. So you have this idea, you're getting progress. So what I say is have a voice. And this is one of these things. How do you get people to know about you early on? So there's a lot of great organizations, whether it's Alexis was talking about woman 2.0 y Combinator has hacker news. There's Reddit, there's Twitter, there's LinkedIn and Google have these blogging platforms. Use it to your advantage. This stuff is all free. They are all looking for high quality content. If you are starting a business, I bet you have something interesting to say either about the industry or about some subject matter or some technology that you're using to build. And even when you make a mistake, write about the mistakes you made because other companies want to learn from your mistakes so they don't make the same mistakes. And so as an early stage company, you can be super scrappy getting people to you write the content that other web properties will publish it because they're all looking for content to publish. It's really hard to find good content. And don't think like the more obscure the topic when it comes to our business, the more people read it. And I mean by obscure, we have a security engineer on our team. I mean he's very deep crypto guy. He wrote a blog post on ECC elliptical curves. This is a very obscure technology when it comes to ssl and there is no really good resource online. And so Ars Technica, which is a big web property, they wanted the content, they published it. I mean that article has been shared many, many times. Lots of comments. We've gotten tons of lead gen from it. It's been incredible. And so the more technical, the more success we have. And so in your own world, whether it's on the industry or technology, really encourage you or other people on your team to blog about it and then get it placed. And this is a really easy way for you to gain attention early on without spending a lot of money. And what I always say is you can have a personality. The CEO of Google can't they go through a PR team. All personality gets stripped out of anything they say because of the sec. But you are not governed by an sec. So use it. Have a personality, take stances. And if you do it right, people are looking for that, right? They want the next great leader. And early on you can have personality work for you. And then finally, in terms of, you know, gaining traction, I say launching an event or it's one good tactic. Pardon me. Canadian or Chesapeake? Oh, yeah. Wow. I am Canadian. Yes. Canada, yes. Good catch. Yes, yes. So I do appreciate all the symbolic language and many of the analogies and metaphors that you're making. However, is there any literal and quite like direct advice you can give someone who is young, starting out, understands venture capitalism, understands entrepreneurialship, understands these things, but wants to be able to see something that's a locked in, more authentic than what's been going on. Authentic. Authentic authenticity. Like from my presentation or just clarify authenticity within. How does one retain authenticity without compromising one's own name? I don't. I guess I don't understand. Maybe we take that one offline. Yeah, you can come find me after I. Cause I don't understand the question. Any other questions? Yes. So when you're interviewing your folks, do you have what, 20? How many people? We have about 90. 90 people. What methods did you put in place early on to know the right fit for you? Yeah, hiring is really hard. There's a big difference between a great person and a good person. And while sometimes in life I think good is good enough, not with the first hires. You need great, not good. It's really hard. So some things that we do that have worked well, so we hire slow. We like to spend a lot of time with somebody before we hire them. Mainly because sure, there's been the philosophy, oh, you can just hire them, it doesn't work out. I think there's huge cost to firing people. I think that the morale on the team, the cost to of the company, the threat of lawsuits, no one talks about that. But I am not a big fan of firing people fast. So we hire slow. So we spend a lot of time with people. That means sometimes you lose people. But I think net positive, it's worth it. So what do we do when we spend time with these people? So we like to do pair programming sessions. Pair programming, if you're a developer, means they literally come in, they see your code base and they work with an engineer on your team on so solving some problem. The goal is not for them to know everything about whatever you're working on. The goal is to see how they think, do they think with the edge cases, how are they to work with? This comes back to avoid the jerk's policy. And so we kind of have people come in and do these two or three hour care programming sessions for engineers. But we've adopted the same sort of concept for business functions. And so if you're a marketing team member, we have you come in and do some, some sort of project, but in the office with somebody on the team. And the goal is for us to simulate a real life what's actually going on on a day to day basis. So we do these pair programming sessions. And the second thing we do is when we interview, we don't do brain teasers. And so again, some companies do and you used to do what's best for your company. So I'm not saying it's not bad, but for us, our philosophy is we have a lot of hard problems on a daily basis at Cloudflare because we run this massive network with a bunch of traffic. We run into all these corner cases. Everything we do is hard. And so every time we interview someone, we say, this is the person interviewing saying, this is the problem I'm currently facing. How would you approach it? And so they try and use a real life problem or challenge we're facing to see how that person would answer. And I can tell you everyone's answer is not the same. And people respond to that in such different ways. Some people love it. And then they come back, they leave. They leave. Being at the office saying, I couldn't stop thinking about the problem. Here are five other things I thought about since I got home. That's a good sign versus people who are like, I don't know. Literally, I've heard people say, I don't know what I would do, just like, hey, that's not helpful. I mean, at least come up with some theories. And so anyhow, so those are some things that we do where that's been very helpful. And then the third is check references what leaders inspired you. So I have a lot. So I like, okay, so living and dead and not alive. So from different industries. So especially women. So I think Diane von Furnsberg, she basically reinvented her career when she was over 50. I think that's awesome. Misty May, she's the Olympian volleyball player. I mean she is the top performer. She works incredibly hard and she seems just like a really nice person. One of these things where you can be successful in life and be someone you want to spend time with. Estee Lauder, obviously, she's no longer alive, but if you think about women, women in business now, or a few, think about when Estee Lauder was alive in the 50s, and she built this really massive empire that still is around today, I think that's pretty incredible. You know, obviously, I think Jeff Bezos, there's a lot of other people in tech that get written about a lot. But, but there's, you know, there are fewer women in technology than men. Yes. But there are a lot of interesting women doing interesting things to be inspired by.