Simple Rules to Take Over the World — The Startup Tapes #009

But so it's kind of crazy because I remember being a Cloudflare user years ago and eventually a customer and always feeling like, oh, it's a cool little startup, it's a little technology, sure, I'm using it. And now you're this gigantic company, you're in tons of countries, tons of places, you're doing everything from your startup sales to your big enterprise contracts, your government sales, you're in tons of countries. And I feel like that's something a lot of startups have to do as they grow, but very few are doing very, very well.

So.

So I was really interested in chatting with you about that process of scaling, but almost in a geographic sense of like, how do you start from San Francisco doing software stuff for yourself or for friends or for companies, you know, small startups, I imagine. And how do you kind of go at like taking over the entire world? Right. In a metaphorical sense. So what was that process like?

Well, the first thing is that we've been doing this for six years, so it was not an overnight evolution. And I think that's really important perspective to keep in mind for other founders.

It feels very instantaneous, right?

It does, it does. And everyone thinks around you, thinks like, you've been doing this forever and there's a process. Right. And so if you think about back to Cloudflare is when we started we were really focused on both our free plan and our $20 a month plan. And so that really attracted a certain set of customers. And early on we grew very, very quickly. It was anybody with a blog, a small business, people who were putting web content online, almost like pro users who were really our market. And again, that work, two years of that. So we did that for two years and then we introduced, you know, kind of a true small business plan, our business plan at $2200 a month. And then we started to go into the enterprise, which are much larger contracts, $100,000 a year, $1 million a year. And that took us two years. And now four years later, that business become a very big business for us. And now there's an evolution of how do you do government sales? Right. Focus more on that.

Right, let's talk about the first part. A little bit like that, I think is a very interesting kind of phase that everybody kind on those like low end plans, a lot of this, straight to developers, straight to startup, if you're in this kind of software developer tools, enterprise tooling. And is it true that that market is mostly like, you know, startups, mostly San Francisco type of Vibe or you know, back at 20 where you already kind of seeing kind of nationwide or international adoption of your product.

For us, we are very global from day one. So from day one, because you know, if you think about Cloudflare, Cloudflare, if you have Internet property, we help make sure it's fast and safe around the world. And that's a universal problem around the world. In fact, it's almost bigger problem internationally. And so we had a lot of international success early on on the self serve plans and which was great and we were really excited about that. And we often get asked, how do they find out about you? Right, like how do they find out about you? And you know, we were not spending a lot of money on marketing because again, early on you're spending all your time building the product and it was much more organic growth early on. And so how do they hear about us? I think we did some things to help amplify that. For example, we write a lot on our corporate blog, but we don't use it as a marketing angle. It's much more technically what's going on. And so we often talk about why we chose a particular programming language or hey, here's a bug that our technical team had and how we're fixing it. And it turns out that developers around the world are reading things like hacker news or whatnot and they discover this content and then they're like, oh my God, I need this service. And they end up just signing up because it's so easy, so effective.

Right? It was that developer audience, that indirect marketing of saying, let's look at the technical choices I'm making as a company and if you respect that, you might want to try my product and any kind of sort of variance around that. Yeah, that can work really well and work globally very, very well for sure. And you guys did an amazing job with all that through the years. But so it's interesting. So there's a bit of that notion sometimes that things start in that $20 a month or that range. They're like for startups, they're for Silicon Valley. And a lot of VCs I've talked to, they look at those and like, oh, is it just startup? Will I be able to grow past that? And so you're saying sometimes you can find at that price point selling something that's very, very technical. You can find international adoption very early on. But I assume that must have created a lot of challenges because you still rely on having data centers, you rely on latency security. I'm sure a Lot of legal constraints and different things. So how did you guys manage that process? Right, of like, okay, you're a young company, you're a few years old, you have a bunch of small customers at 20 bucks a month and you're already in so many different markets and I have to deal with so many different countries.

So, you know, our approach is always, you have to ruthlessly prioritize. So the list of things you need to do is always longer than the resources you have available to do them. And so early on, there were some things that we chose not to do. And I think because we chose not to them, it helped us succeed. So yes, we were global from very early on, but we did not. And to this day we still don't. Although we should eventually. We only sell in US Dollars because it's simple. It's simple. It's like this is what you're signing up for. And so we didn't do the work to say, if you're buying in France, here's the Euros, and if you're buying around the world. Now I think that there's a way to optimize that. And going forward there's definitely optimizations we can do and we'll get a lift if we start to sell local currencies. But early on we just said we don't have the resources to do that well, so it's okay if we don't do it. If someone really wants it, they will sign up for it. And so things like that, some of the translations, localization. Early on we did crowdsourcing. We basically used our community to help us translate the most important pieces. Now today, I would never do that, but when you're small, it's okay because the risk is really low and you're just trying to go as fast as you possibly can.

Right. In a sense, it is a way also for you to say like, oh, we're going to do this thing that works for most cases and we'll see where we get traction. We'll see who's grabbing it, we'll see if Europe is okay, cool, we got everything. We're going to go there and you can just kind of let the market come to you, I guess, in a sense.

Yes, exactly. You just don't want to over complicate things early on. And again, we had a long list of things to do. We were very focused on building the product and the service. And again, we wanted to have customers along the way, make sure we were delivering real value. And our general premise was we don't want to over optimize. Now we just kind of want to keep going and do things that are step change functions and we can go back and optimize later.

So what about like let's say Asia? That's something that comes up quite a bit. And my experience, you know, requires, you know, maybe a bit of specific marketing, a bit of cultural adaptation, a bit of a local force. Did you have that experience as well or did it, you know, how do you think about kind of expanding towards, you know, other territories beyond the usual western countries?

So, you know, for a self service product? No, it was just this is what you get, right. And you know, there are some other things where it was more support 24 hours a day where we had people writing in because they were an Asia based customer and they had questions at 2 in the morning California time. We had to make sure that we could respond to those. So. So it actually made us more build internal teams to be able to service those markets. But on the self serve side we didn't really change the product anything. Now as we've gone into enterprise, it's very different because you're right, there are a lot more cultural differences. You need different marketing material. How you do business in the markets are very different. And again today we're a much larger organization that can support those needs than we were early on. And so our general sense was early on let's build a product that's really, really good. And again we had to do certain things to service. And now as we've gone into these markets, we've built out the different functions internally to, to be able to do that.

So in a way it's kind of like okay, you kind of grab a lot of territory but then there's still spots. You know, you're not addressing the enterprise need of that country, you're not addressing this particular sub market. And so imagine your government is also something like within the US that maybe, you know, as you grew and you were everywhere, maybe like Washington D.C. was still kind of a bit of a blind spot on the map and you had to do something different to really cover that, right?

You do. Exactly. And so today we were just starting to do more sales in D.C. and we' I think that's a huge opportunity. Those can be really big businesses for large enterprise companies. But if you actually look at Cloudflare customer list, we do have a lot of dot gov customers because we solve such a problem for them, we solve such a need that they found a way to use our service even though we're not fully selling to the government, yet we're not fully doing federal sales. And so as a founder entrepreneur, I think what we've done is let's go find the people who has a problem that we're really solving, who will also jump through hoops to use it, and then let's find the rinse and repeat the repetitive scaling and build out our full federal sales program, but not the cart before the horse. And I think that's been generally our model all along. And again, it's very uncomfortable, but if you can get that right as an entrepreneur, as a founder, it's so powerful.

That's such great advice. Don't try to make into something where you have zero traction and zero people, but if you can take a little bit of traction and then really invest and grab that market, that usually pays off so well.

I agree. Momentum, yeah, absolutely.

Makes a lot of sense. Thank you so much.

Thank you, Tim.

I think the world has changed in the way that most of the new software deployments are on the cloud and you do not deploy your own infrastructure anymore. You get it from the cloud provider. And that was different. When we built out MySQL, everybody deployed their own thing and they talked about downloading the LAMP stack. Now if you ask a developer, they upload an image and they create an instance so they don't even download. They don't think about distros. So I do think the world has changed completely. Open source is still the superior method for developing software, but you couldn't build a new MySQL today, right?