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 and I'm gonna 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 a 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. More about 50 people. Fast forward. We went across the threshold or public actually three 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, seven of them. Seven, so a seven to three ratio. Seven were back when it was 50 people that were involved then. So I'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 like this long list of. I want to talk about this. I'm gonna talk about this. I wanna talk about. I have to give you some reference. So the way I thought about breaking it up is in the three 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 one, phase two, 50 to roughly 250 million. The lines are like a little blurry. And then from there, marching across a billion dollars. And Cloudflare is on a long journey. Like there will be more phases but these are the three that are relevant to us today.

All right, let's unpack.

Let's get straight into it. Phase one, I have some props. And the things that, as I was thinking about today is like Magic 8 Ball, the future is somewhat uncertain in phase one. If you flip it over, 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 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. Four 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 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 learnings, I look back, is 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? Where have you gotten yourself into this uncomfortable position? And as I look back, embrace the embarrassment. That's part of this phase. And I really. We'll 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 thing here. It's like, celebrate the big W wins. Everybody will talk about celebrate little wins. I think the big W's are important. If you celebrate everything, it feels like everybody's getting a trophy. And that's great for kids soccer. There are some studies that suggest that's not great for kids soccer. 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, 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 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, and 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 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 if I were giving myself advice for the next time I do this. Under capacity versus over capacity, I think wins. And then this. Like to wrap up this section. The thing you're trying to do in getting past the future outcome uncertain is you're trying to learn and you're trying to get these loops in place. And how much can I learn? How fast can I learn? How much can I absorb? You will be asked in various forms, 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. 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 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 and 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 one, get rid of the uncertainty. Phase two, like, you're kind of irrationally enthusiastic in the beginning. Phase two, 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 definitely starts post the not really working. Like it's working now and you're in this constant scaling and ramping phase. Consistency. I love endurance events and this is all about looking for a little prop here. How good are you at working out and maintaining consistency? This is like one of those power bar 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 and you lock it in. Sometimes people use winches on pulling out a car that goes in a ditch. 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 gonna roll back on you and it's like letting line out, it's like letting slack out on a sale. 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 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 if you go back 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 had a trick.

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 that's acceptable. And learn how to say I don't know what 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 I 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 chronic. 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. 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 on. 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 a million dollars in revenue to a billion dollars 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. 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 three days or the next three months, 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, of this 50 to 250 million. You're gonna get tired, your teammates are gonna get tired, make sure they have time to take time off. But when they're at work and working, like, you gotta be pulling. No coasting. And that does not change. 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 three, there's like something happens in phase two. Phase three, we showed the sort of public offering phase. And if you look really closely, if you want to go back, everybody had an orange tie on or some orange glasses, some orange flair, and it was an incredible event, but 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 Stacy 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. 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 repeatably 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 one, 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 two and phase three, 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. Like you're kind of offended, especially if you've been doing this for a long time. Hey, take a look at the charts. Aren't they great? 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 rear view. 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 on the next part. Everything gets measured and it's not your choice. You may drive metrics and you may suggest methods 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 you can't keep it all straight. But you have a responsibility to be aware that everything is getting measured.

So.

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'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. 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. 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 there's a bunch 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 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 that I'm like, ah, it doesn't really fit in one phase 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 in 24 months, that's gonna look like this. And we guarantee that the outcome went 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 the 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 six. It was only supposed to be here for six weeks. Well, we're six months in or six 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 me. 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.

Get into it. Figure out what the customers are going to be using you for. Get into 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 downside when you do this wrong, 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 on a really sandy foundation and it's not going to work. Test for this always. And some people may show up in care for a while and then they don't. That may be a good example. If you're talking with somebody about performance problems, you're like, yeah, but you were great and you were perfect for this phase. 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 gonna try to figure out, well, do you really care? Do you really care that I tried to do something? Cause you asked me to do it and it didn't work? Like, you got my back. Do you feel bad about it? And it's constant, like, 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 downstream, like, people. People are involved. You have to be able to say, I'm sorry. Whether that's a customer or internal or 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 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.

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. What is being described. Take the blame so that you can get on with 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 and 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, but 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 do my best to answer your questions directly and not avoid them too much. Yeah, just a reminder, have Mike 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 eight 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. I think I would start with the end in mind where you said 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.

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, 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 insert solving other problem? And I try to pivot on like what problem do you want to solve. 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, seconds, minutes, days, weeks? Longer than that. There are mechanisms. I always try to retain the ip. Because you spent weeks. 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, 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, thank you. The question on the strategies of retention of people while you're growing from the first to the second phase, I can imagine Akamai 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 one is like when you're still roughly small and figuring it out, I put a number and there was less 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, as a way to go back and talk about, well, there's all kinds of problems that we're trying to solve. What is the problem that you want to solve? And you were asking specific question around like competitors or others coming in, you know, burning down the list of your employees, you have to assume that's all always going to happen. And if, if you take pride in who you're bringing into the team, as soon as somebody else gets when did 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 use 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 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. That's not the goal. But the goal is to retain people. But try to get these 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 scale stages of your company's growth and evolution. What did you measure? And then the part two is looking back what 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'd 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 going to measure CAC, LTVs. All these things, like plenty of metrics have been defined to measure and I'm not sure you're going to 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 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.

You.

When you go through this public process, you are. 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 of 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 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, 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, it'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 services 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 you kind of go back to these sort of funny, these 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, you know, 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 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. From here's where we're gonna 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 like the other stories around, like now, you know, there's demand coming out of certain markets. We would take people that understood the product. We're a 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 uk, you go to Australia, you go to. And you know, insert part of the world that we want to do more, 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. And. But I would say it did start with invest behind demand. Other businesses have that luxury. And like, 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 CRF data and your team's behavior and execution? So that's the first question. How much time do we have? I might have to time box this one, but keep going. And the second is just a yes and or no question, is like, do you believe in Playbooks for revenue teams? 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 things 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 one's kind of fun. I think it's. Playbooks are good. I think they have a purpose. I talked about the phases. Phase one being small, phase two being super hypergrowth. And you definitely have something in phase three being, you know, it's more of a proper going concern, public, more. 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 too 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 those 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 what are the physics of a 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 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 sort of articulate the six things three year art and three year science in like 30 seconds. But I'm happy to take that offline.

Hi Roxanne. I'm very much in phase one so I'll appreciate any learning that you have from that. This is more kind of a culture leadership question. We'd 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 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 great go getter salesperson looks like, that might not look like me, et cetera. And thank you so much for this. I know it's a spicy question.

Thank you for the question. 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, that's really contextual. There are bright lines around. If you put this on the front page of the New York Times or you know, maybe it's some version of insert, like maybe it's the Economist. I don't know who like everybody would consider sort of unbiased. I'm not going to make a comment on that. But he 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? Would you know, if your grandmother knew this about what was happening, would she agree? And 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 of the local market in this way. Thank you for bringing that context to the surface. So that my reference point in 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 end and I've created an environment where people can speak up and they feel safe and listened to, like, 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, like you got to kind of line up and it's not your question around inclusion, but I think these things start to become related. So as long as you're, 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, thanks for taking question. So this is regarding like public companies. Like 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 in 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 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 reflexive 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 really 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 employee becomes harder because especially in the 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 expect, how do you manage expectations and keep your true north? I go back to like 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 evolved 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 think about that as you're asking the question. 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 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 the some of the framing that I would put in place. I'm happy to talk about more of that offline mind. I'm curious about how you think about goal setting and how that's changed as Cloud Fair has grown. So at our organization we've sort of tripled in size over the past two 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 think it's like I have two different axes I'm thinking about responding to. And like your question like changed the, 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 auguring 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. I thought about that. I think it's important to just call it out. Then there's the 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 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, 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. So 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, 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. You 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. 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. Say it again, just the first part of your question. 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. How much time do we have on this one? I think if you've done my job long enough. You look 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. 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 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 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 across Sasser 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 service 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 abandoned alone. 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, etc. 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, well, you have to be low cost, you have to be low priced, you have to be really easy to use. All these things are not bad for the enterprise. So I would say the examples of where that has not gone well is maybe where we've not thought, 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 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. Where 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 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, and I need to give up the stage. Sam.