Starting Up in a Downturn: Lessons Learned with Michelle Zatlyn, COO Cloudflare

During the economic downturn right after the financial crisis in 2008. And so we started to work on this in 2009. And while it's different, it's definitely a different thing going on in the world today. I do want to say that there are a lot of companies that actually started kind of with us, that class of companies, and many of them have turned into big great companies today. So if you're one of those entrepreneurs who are working on your ideas and thinking, man, is now the time to start? It's definitely, definitely possible. So we, so we started Cloudflare in 2009 and today we have about 1400 people around the world. Our customers are Internet properties. So websites, apps, APIs, and those customers come to Cloudflare to be fast, safe and reliable online. So we build a service that does cybersecurity, global performance reliability for any Internet property. And in these last 10 years, we have 26 million Internet properties that use our service on any given day. So huge scale, we stop about 50 billion cyber attacks daily on behalf of those 26 million Internet properties. And we make the Internet faster, safer, more reliable for a lot of people. So we're really proud of that and our whole team is really proud of that. And so that's one of the things we've done the last 10 years. And one thing that's been really cool, starting the company 10 years ago in an economic downturn to today, about six months ago, Matthew and I and our team took the company public on the New York Stock Exchange. So we went from an idea that started during an economic downturn to a company that went public about six months ago. And today we're about a six, seven billion dollars market cap company.

So Michelle, as you think about starting Cloudflare in the midst of an economic downturn, you know, when you sort of fast forward to today, do you have sort of a sense or a major tips for entrepreneurs as they're thinking about either starting a new business or extending their current business?

Yeah, you know, I sometimes I think it's easier if you're starting than extending. So I'm going to answer your question with that frame of mind because, you know, I think back to 2009 and it was really hard to get a job. I was doing my MBA at grad school and so many of my classmates couldn't get jobs. I had done my summer internship at Google and I remember getting the call from Google, my manager at Google, saying, hey, we've decided not to extend any of our summer internships, a full time offer because again, it was 2008. Like, there was this huge financial crisis and people just were not hiring. And in many ways, when it's hard to find a job, it's actually out of necessity. It's actually a really good time to start a company, the right company anyhow, because I wasn't competing with a lot of other offers. It wasn't like you had a choice of 100 things to go and do, and you had to say no to 100 things to go pursue this one sort of thing. So if I think back to our year at business school, a lot of amazing companies came out of that. And I think part of it is because it was. The job prospects were kind of gloomy. And so for entrepreneurs who are starting to think about starting again, I think for the right idea that you're really passionate about, if you really think you're solving a big meaningful problem of a big market with tailwinds to your back, it can be a really good time. That doesn't mean it's easy. It's still really hard. And there's lots of things that was hard about it. You got to be really frugal. You got to innovate your way out of problems. But I do think the mindset of it's almost like your plan, your option B or your other options. It's almost easier to walk away from it because it's like there aren't that many other good things going on. So let me go create this thing that I just can't stop thinking about. And so that's for the people who are currently. And then the second thing I will say that I remember, we raised our first round of money from. Ben was one of the partners who helped us raise our Series A and then Venrock, and we raised $2 million, which today. People laugh. That's like nothing for a Series A. But back then that was kind of the size of round. And I just remember Matthew and Leah and I and our team of the original eight people who really worked on this idea. I mean, we spent every dollar so wisely because we just. It was a scarce resource and we only have a little bit of money. You really innovate your way out of problems or engineer your way out of problems. And we had this great engineering team and we really innovated our way out a lot of problems and tried to figure out what ways to do things cheaper, better than we would instead of throwing money at the problem. We used to have a saying, don't throw money at the problem. Let's Innovate our way out of the problem. And again, in a downturn like today, where money is still going to be hard to come by, that's actually, I think a really good. It can take you very far when you're building your company.

No, I recall in the beginning that your rule used to be that the answer when someone wanted to spend additional dollars to solve a problem was the first answer was always no. And, and that the, and that in the future, to the extent that you couldn't solve your, solve it through creative programming or what have you, that potentially you'd loosen the purse strings. But the reality is, is that smart engineering was an important part of how you, how you approach building that, building the business.

That's exactly right.

In terms of when you were ideating on Cloudflare, how did you get to a conviction on the scale of what you were solving and the size of the market? Because largely at that point, particularly on both the content delivery, but also the web security side, this was not a problem that people were really focused on.

Yeah, you know, so I'm going to answer this question, but I want to make one caveat to my answer. You know, a lot when Matthew and Lee and I started cloudflare, we really wanted to build a big company. That was our desire. And so a lot of my perspective is always behind building big companies. You know, again, a multi billion dollar public company, that's what we wanted to do. And so I'm going to answer your question because that was the first frame of mind of what I was looking for. I was looking for a big, meaningful, hairy problem to solve that was going to turn into something a big company. But there's lots of different ways to build businesses and there's lots of amazing companies that don't that never become a multi billion dollar company that are equally great and profitable. They're just different. So the advice that I'm going to share is really related to kind of this swinging for the fence model. And that works for some people and less for others. And so when you think back to what was happening when we start back in 2010, when we were working on this idea in 2009, we just saw there's this huge shift going on where we were going from a world from hardware and software that you owned to services in the cloud that you rented. And I remember like AWS was growing really quickly and at the time there was like a big debate of will big companies ever really use AWS? Well, fast forward 10 years later, that seems like such a naive thing. To say today, them and Azure, they've just had tremendous success. But 10 years ago, that wasn't a given. This huge shift was going on. There was all these software companies and then the advent of all these SaaS, application companies like Salesforce and Workday that were breakout successes. And we saw the same thing kind of happening at the network layer, where businesses have always wanted to be fast, safe and reliable. And they used to buy a lot of hardware boxes and we said, can we turn that into a, a global service in the cloud that customers rent from us? And we knew that was a big idea and there was just this huge shift going on. So again, kind of this idea, there was a big market and there was a tailwind, there was this macroeconomic shift which creates opportunities for new entrants. And then that was the first kind of aha. And the second thing that I was really proud of. And I think that if you're a founder that can find both, it's like, wow, there's a big business here. First you have to ask yourself, is there a business here? Because businesses are what sustainability. The second aha that we had was our go to market where we wanted to start with all of the startups and small businesses and nonprofits and developers out there who today were using nothing because they didn't have the budget or technical resources to buy these enterprise grade services that existed for big companies. We had this big aha of like, wow, we're going to start with small businesses and small websites and developers and startups and, and nonprofits who need to be fast, safe and reliable around the world. And today they're using nothing. So when we launched, our competitor was nothing. We were trying to get people to go from using nothing to something. And so we had to make it ridiculously easy to sign up and attractive. And if we did, it kind of became a flywheel, knowing that our end goal was not only do we want to help startups and entrepreneurs and small businesses and developers and nonprofits, but over time we also wanted to go help medium sized businesses and large organizations and big enterprises and government organizations. And again, fast forward, today we do all of that. But early on we really started with a different go to market. And that allowed us to build our product and our technology and get momentum so that we can then go compete more heavily with current competitors among large enterprises. And so, so it was those two things. It was like, wow, there's a big macroeconomic shift if we can help make the Internet better for all these people around the world who currently have Nothing like I'd be really proud to work on that. And so it's this idea of, I thought there was a big business opportunity and something that I think Matthew and Lee and I were really proud to show up every day and work really hard on.

Yeah. I mean, one thing that I think it's worth spending a brief moment on is just the distinction between good technology and good and a good business. And I think, you know, one thing that, that you and Matthew have always been focused on is building both really solid technology and a good business. But I think for people that are thinking about building a business in this environment, it's not just solving a hard technological problem, but it's also creating a real business out of it. And I think it's worth you talking about that for a few minutes.

Yeah. So, you know, again, when you start a company, and then now we've scaled it to, you know, in 2019, we did about 208. We did 287 million in revenue last year. So just to give you a sense, so going from 0 to 287 million in revenue last year and some time along the way, you realize as a founder, it's all about mission and your vision and do I have a problem here? And how can I get people to come work for me and how do I make sure that people love where they're working? But at some point, I remember having this big realization of, wow, we're founders and a business owner and it's really hard for companies. You cannot. Tech is amazing. I mean, we're an engineering driven company. That's where we love when we celebrate it. But it is so hard to compare technology between one company and another. It's way easier to compare business metrics. And so at some point, we had to keep all the great things about our technology. It is about the tech. We love that. It's differentiation. We live that on a daily basis. But at the end of the day, we also had to put our business owner hats on. And the questions we ask ourselves as business owners are different. They're like, how fast can we acquire a customer? Do they renew our service? Do they want to adopt more of our services? How happy are they? How much does it cost us to deliver this service to them? And it turns out you really need to do both. And I think some founders forget about caring about the business metrics and actually think that's a real mistake. Because at the end of the day, if you have a really great business around awesome technology, that's when magic happens. And so I did not realize this on day one, and I wish someone had kind of come up to me in the face and told me really directly, Michelle, at some point, you got to think about the business metrics. And for us, it was around 50, 60, 70, 80 million in revenue that I really had an aha of like, oh, wow, we are going to get compared on these KPIs and these metrics. A, I got to know what they mean, and B, which ones are we good at today? Which ones are we bad at? And the ones that we are bad at? Okay, how are we going to get better at them? And then over time, we've slowly moved them in a direction that we're proud of. And even today, there's some that are better than others, and we continue to work at it. But I think the faster that founders can realize that they're also running a business, I hope that that means you'll get to 80, 100, 100 million in revenue faster than we did.

So as you think about that evolution as a company, how did you instill a culture that was about leveling up and continuing to evolve and surrounding yourself with the people that you needed to build that business?

Yeah, well, there's kind of two points to that. There's both, like, the people you bring in to hire to be part. Again, it doesn't matter how great the founders are. You need a team to go really far. And, you know, I think trying to get that first team to come join you and then scaling the team and who you need to be your first 20 teammates, who you need to be 20 to 100, who you need to go from 300 to 2,000. Actually, people look different in those stages. And some things are the same. People matter. They make a huge difference. And there's a huge difference between a great hire and a good hire at all those stages. But the types of person that we used to hire when we had 50 people in the company look different than what we look for today. Today, it's all about people who understand process and repetitive motion and automating things that we can do those things really efficiently so we can free up time and resources to do other things that that help give us leverage in our business versus when you're employee number 20 or 30 or 40. You just need a lot of doers to, like, show, like, roll up and do the actual work. Because you're in build mode. Build, build, build. And I think that, you know, the types of people you look for along the way are different. Once you have great people on Your team, you want to make sure that they stay. And I was talking to one founder a couple weeks ago and they were really proud that they had 30% attrition of their team last year. And I kind of said, 30%, that's really high. And they said, no, no, no. In a startup it's normal for people to leave that often. I was like, well, it's true, people leave more frequently than a larger company, but 30% annual attrition, there's something wrong. Either you're not hiring the right people in or you're not a very good place to work. I mean, I think most high growth tech companies kind of have annual attrition of 10 to 20% and maybe 15 to 20%. It's considered average. If you want to be less than 25, you want to be less than 20. And maybe in a nano point of time it spikes because you're going through some really important transition. But again, most of your peers are at 15 to 20% annually and you're up at 25, 30. Like something is wrong. Either you're not spending enough time on the hiring side or once they're at your company, they feel like they can't contribute or it's not a good place to work, or the culture is bad or something is broken. And I really encourage that founder to go back and kind of rethink what they thought was good there. And at the end of the day, that's a leadership decision from founders of saying what kind of place do we want this to be for people to work? And I think there's lots of great stories. And then recently in the news, the last few years, there's been some terrible stories and actually think it's upon all of us as leaders in the tech industry to show there's lots of ways to create a work environment and some can be really healthy and be a place where people choose to work and want to be and have huge success stories. So that's for like the team and getting people in. I would say that one thing that we've done that worked really well for us, that isn't always well appreciated or agreed upon and just worked for us is that hiring managers, like we have a belief that people come work for their manager and they stay if they like their manager. And so our hiring managers are heavily involved with hiring. And early on we didn't have any managers, so that meant the founders did most of the hiring. And then we hired managers and they did it. And you know, we were less than 100 people. I mean, 50% of my time was hiring. So you just feel like you're trying to. Always looking for people to join, and that wasn't. I also had all my other things I had to do, so I just meant I was working all the time. And today, of course, we have a recruiting team. We have a great recruiting team, and they partner with the hiring managers. But even to this day, hiring managers are responsible for building their teams. And again, we have a much bigger organization today, and the recruiters partner with them to build great people in. And even to this day, hiring managers spend about 20% of their time hiring every week. And that's. I mean, that might not sound like a lot. That's like one day a week or two hours every single day. And we just. I just. I just don't believe you can outsource it. Good people. We think there's a big difference between a great hire and a good hire. And great people want to work for great people, and they need to know their manager. So that's a little bit about getting great people to come into your company. I think if you're thinking about a founder scaling and how do you scale yourself through all these different phases, it's slightly different because I. Cause I think some, you know, it's. It's rare to start a company and then still be running the company as a public company. And, you know, I'm really proud of that, and I know Matthew's really proud of that. And I hope that we have role models above us, whether it's like Marc Benioff and Parker Harris or whether it's, you know, the Shopify founders or Atlassian or Jeff Lawson at Twilio. Like, there are definitely people that we look up to that we can look up to. And I hope there's a whole other class of companies coming up behind saying, wow, they did it. We want to do it too. Because I think. Definitely think it's possible. And I guess there's a couple of things I'd say about scaling yourself as a founder is I remember someone said this to me once, and they were totally right. They're like, either you're running your business or your business is running you, and you got to decide which one it is. And I mean, I'm a competitive person. Obviously, I want to run the business. I don't want the business to run me. And this is kind of, again, going from a founder hat to a business owner hat. And so you gotta do things to scale with the business, because what matters that 20 million in revenue is different than 100 million. It's different than 300 million. And I think that if you can be a sponge, that is like, if I can only give you one piece of information, advice, it'd be like, be a sponge. Just this growth, mindset, constantly learning read. I mean, Saster, Jason Lemkin and his team do an amazing job getting people here to help you. And if you just show up and listen for free, you will avoid making so many mistakes and grow as a leader. Like, that's what I did. I went to a lot of things like this and I learned from people ahead of me and we got to where we were faster. So there's so many resources today that help you learn as a founder, like way more than 10 years ago, it's pretty phenomenal. You read books and whatnot. I think as you hire your leadership team, sometimes people don't want to hire people as good as them because they're worried that they're going to look bad. I mean, that's like rookie mistake 101. You need to hire leaders team that's better at you than everything you do. Because as long as you're confident that you still, you know, you're the vision, you're the founder, you're going to care about this more than anyone ever does. And if you can partner with these amazing leaders who are so good, the best head of product, the best head of engineering, the best cmo, the best chief revenue officer, and you all get everyone rolling in the same direction. That's how you build an amazing business. Right. As a team together. And so you got to really hire a leadership team better than you.

Well, look, I think that you and Matthew, in particularly with your own example of educating yourself along the way and making sure that you are getting better at your business over time, sets an example which I think keeps a lot of employees motivated. If your employees see you struggling to become a better version of yourself over time, inevitably that leads down into the ranks within your company and is highly motivating for people.

Definitely.

And I think that's been one of the things that, from the cheap seats that I've been in that I've observed you and Matthew really pushing forward with, you know, because that, that good hire, great hire situation, it's not just hiring those people, it's retaining those people. And so a lot of your time has to be spent not just on getting the, getting those people in the door, but making sure they stay there.

Definitely. Yeah. And you know, I will say growth solves a lot of these problems. If you're growing and great people like just being part of a growth company. It's all of a sudden their job is changing every, every year because again growth companies, they're growing revenue at 50% year over year. So naturally the business is changing a lot. And if people are doing a great job who are in the company and again in the company's a reasonable place.

To live.

All tides are rising. And I think that's Janet who runs our people in places team. She has a saying that and she says it all the time. And I think she spent her whole career in high growth skills companies and she's like there's no training, like on the job training. And I think that's very true in a high growth company. I think if you stop growing it then the rules are totally different. But it's true. If you're growing 40, 50, 60%, 80% like Zoom annually, it's just that means more career opportunities. You're growing in one thing. If you're a SaaS business, for every 100 million in revenue you need about three to 350 people. If you just look at all the SaaS companies and do it, I mean it kind of, there's some range, but it's, you can go take the Atlassians of the world who are super self served to an enterprise business and it's Basically for every 100 million in SaaS revenue you need about 300 or 350 people to make that happen. Regardless of how they're allocated between sales or R and D, people allocate them different but that's kind of what the formula looks like. And so those people need managers. And so you got either hire managers from externally, you can promote from within. And so again, I think growth in many ways is the best motivator. Getting people to stay at your company as long as it's, it's, it's, you know, you're taking care of it as a culture place, as the founders.

How do, when you talk about the distinction between a great hire and a good hire, like how do you make that distinguishing that distinguishing characteristic as you're looking at people and talking to people?

I mean, I don't, I don't, we don't, I literally said it last week because I still do a lot of hiring for different parts of our teams and I, and I'm just like hiring is so hard. It's, interviewing is so hard. It's. Some people are great at the interviews and end up being bad at the job and other people are terrible interviewers. But end up being amazing in the role. And at the end of the day kind of have a saying. It's like, I actually don't really care how the interview goes. It's like, how are they going to do six months in? And we want people to stay for a long time back to this attrition. Like we, we want people to stay at Cloudflare for a long time. We want them to have the career of their lives at Cloudflare. And so part of that we take this really seriously. We don't want people coming for 18 month stints, we want them to come for longer periods of time. And so a couple of things that we do that I think help but again with the caveat of it is, you know, it's, it's part art, part science. You know, the hiring manager heavily involved, which I mentioned and I think that makes a huge difference. Like they are helping drive the process meeting candidates. Again, they have a recruiting partner to help them. But the hiring managers are involved and what happens is a, the person gets to know the person, their manager better. But then there are no surprises. Like expectations are aligned and we really try and throughout our entry process, not make up theoretical problems. We try and really give real life things that we're going through right now on that team and talk to candidates about like if you join, here's what you'll be asked about. Like right now on the marketing team, it's, hey, we used to depend on a lot of in person events. That's not working anymore. If you were on the team, we'd be thinking about what, what other things can we be trying to help connect with potential customers around the world. And that's like a very real life thing. It's not a staged question. Whereas, you know, six weeks ago the answer might be different. It might be, hey, we, we do a lot of events. How do we drive better behavior in this way? And so we try and make it very real life. And when you make it very real life, you kind of, I think, start to see a little bit more of people's colors because they got a brainstorm with you and figure it out and you can kind of say, are they engaged or not? Do you have a good rapport working through the problem? Do they ask good questions? I mean, it's not about having the best ideas. It's like, do they ask good questions? They like might say, well, what other things have you tried? And you kind of learn a lot about the candidates. Much to our team chagrin. Like we do not have a Fast hiring process. It is a very deliberate, purposeful, and this is something that, you know, in high growth times where all these other companies will do a start to finish interview process in two or three weeks. There's just like no way we've ever done that. And I, you know, our recruiting team, our hiring managers, like we aren't as competitive and it's like, no, no, we should be deliberate and purposeful and we shouldn't be long. But I don't. Two weeks. How can the candidate get to know us and how can we get to know them in two weeks? It's just, that's just like a really short amount of time. So we try and be really deliberate.

That process has always been obviously something that's been effective for you all. I think one of the other things that you've talked about a little bit in the past, but I think it's worth talking a little bit about, is your philosophy around scaling the team and how quickly you can scale a team and what that means for your culture. Because it's not just growth that drives retention, but it's also the maintenance in, in the context of that growth. The maintenance of some baseline of culture and values.

Yes. Yeah. Well, this is, we have a saying that the only truly thing that's democratic in a company is, is the culture. Because that's truly what the majority decides. And otherwise we don't like that. Companies aren't democracies except for the culture, which is decided by the majority. Yeah. So one thing that we have ascribed to and lots of other companies take different paths and that's fine, is you're right, the rate at which, how fast we hire. And so since inception, we've always kind of hired 70, 60, 50% annually. 70% at its peak, but it was always kind of 50 to 60% year over year, even when the business metrics told us to hire faster. So we had many board discussions where it's like, wow, all your metrics are great. Why don't you hire faster, get more salespeople and get more engineers in. And we always kind of said we just don't think you can grow a team faster than that and keep the culture. Like all the great things about Cloudflare. And again, we've always thought about building a very long term business. We want to build a big long term business. So we were really thoughtful about this. And it wasn't an explosive period of time, it was like, no, we want to be a very sustaining business. And so that was something that really governed our philosophy on that and so that's been helpful because people come in and we have lots of people join. That's a lot of team growth. But they feel like they can get involved and be productive. Ship, we love to ship. We're all about shipping things. Finish, start, middle end, and then bring on new people. And it kind of is this self fulfilling virtue. And so yeah, that's been a deliberate.

Decision, you know, as I'm sure that there are a bunch of people who are watching this who are either in the midst of a fundraise, maybe we're in the midst of the fundraise before the pandemic hit, or are anticipating a fundraise and then in the coming months. I mean, do you have any thoughts about how to best prepare yourself for a fundraiser in the midst of economic headwinds? You know, and maybe this is a little different than the headwinds that you faced at the time, but maybe, you know, if you have some perspective on this particular, this, this particular bump in the road that we found ourselves in.

I know. Well, it's a better question for you, Ben, since that's what you do for a living. I mean, I, you know, there's a couple and there's, you know, things again. Our series A, which was the first time we raised money was $2 million and it was a priced round like today or two months ago. People thought we sounded crazy, but it was just a different time when we used to fundraise. And so we'll see what, how things go back. So I don't have, I don't, I have less of advice about right now. Again, I think it's, if you have, if you're solving a big meaningful problem, I do think that there's money, there's a big meaningful problem, there's people, investors are looking for those ideas. And so if you think you have something big and meaningful, I think that there are investors who are willing to give you some money to go see if you can make that happen. And I remember back in 2009, we were the only tech investment that Benrock did that year. And so it was just one of those things where it just takes one. You just need one person to say yes. And so I guess that's that. The two things about fundraising that I don't think less about now, but just in general, I used to really dislike fundraising. I really did not enjoy it. And then I just realized at some point it just never ends. Like at this point I've raised a billion dollars between venture capital and then now we're A public company. So we raised a bunch of money from the public market investors. And I'm still going to meet investors all the time to try and get them to be shareholders in the Cloudflare stock. And they're public market investors, but it's just like mutual fund investors and the pension fund investors. And so it's a skill that you can't outsource. You shouldn't outsource, because if you're going to be a founder that also becomes this business owner driving your big business, you're going to do a lot of it, so you might as well just get better at it. And that wasn't obvious to me when we were doing our Series A, B and C, that I thought it was kind of like, okay, we're going to get through this and be done. It's kind of like almost the more successful you are, you're almost never done unless you're going to stay a private company for a long time. So that's kind of been. And then the second thing I will say is just optimize for the person, not the firm, the person who does the deal. We've been, you know, whether it's you, Ben and Carl, who is your partner, and you know, Venrock nea, Scott Sindel, nea. I mean, these people have been just amazing champions of the business, amazing board members, amazing. Just partners in us as we built Cloudflare. And you hear so many stories where the investors and the founders break up and the founders almost always lose. So I think that picking the right person and finding people who are aligned and doing it, it's like, it's possible. But it's up to you as a founder to help make that happen.

Look, I think one of the things that you and Matthew in particular have done, both of you have done very well, is using those fundraising processes as a way to learn from potential investors. You know, you talked a little bit about that, you know, understanding business metrics as you moved along in the evolution of the business. You know, I think that interactions with investors, you know, it's something you and I talked about very briefly yesterday. But those interactions with investors can be. It can be educational and can provide some sense as to what the business metrics you should be paying attention to look like.

They are. They're very smart and again, they're comparing, trying to compare companies. So sometimes you don't like to hear what they have to say, but if you open your ears and listen, you can learn a lot. And B, probably make better decisions because of it.

What do you wish you could tell the 2009 version of you.

I've gotten a lot better this last two years, but eight years of my life, maybe I did it less well, is enjoy the journey. It's not a destination. I mean, I, you know, again, I just. The early days of building a company, there are so many highs and lows, like hour by hour. It's just. It's so hard. I mean, it's amazing and hard and messy and rewarding, and it's all those things altogether. And, and, and, you know, I think that the more you can enjoy the good and the bad and see it as opportunity and whatnot, I think that, that, that would have been great. So I've gotten a lot better that the last two years. I told myself that two years and I've gotten a lot better. But in 09, I wish I had that conversation with myself.

Before we get to questions from some of the viewers, do you have any thoughts about how best leaders should communicate in a crisis like this or in a crisis generally, or how to approach this or things that you've learned on that front?

I mean, I, you know, I. Everyone has different styles, so I don't, I don't want to project our style onto you because I think there's lots of ways to be successful. You ask 10 smart leaders that you're gonna get different answers. You know, one style that we like is. And we, as I'd say, Matthew and I and our team, Clear. I think clear is better transparent. We try and share a lot. We try to explain the why we're making a decision. You know, the clear and the transparent way, being authentic, like, caring about your team. And again, I think I've read a lot of things that people believe this. It's like, at the end of the day, you want people to take care of themselves. Right now, there's a huge pandemic. People are sick, people are dying. And the first order is, are you okay? Take care of yourself, take care of your family. It's hard to do a good job at work if your family is like, those are the things. And then for us, it's like, okay with anything left over. Now we got to focus it on the work and we got to help our customers because there are customers. I mean, Internet traffic is way up right now. People are moving to these digital first presidencies, like, and they need our service more than ever. And so it's, yes, focus on yourself, focus on your family, and then whatever's left over, you got to channel towards doing the Best work for our customers because they really need us right now. They're going through hard times and I think that that's been well received in different ways. But I think being clear and again, putting your teammate first is really important because it's hard to do a great job at work if they can't take care of themselves first order.

Well, should we move on to a couple of questions from those that are watching this?

Sure, that sounds great. Are you going to read them out, Ben?

Yeah, I'm just. Multitasking is probably easier for founders than it is for investors.

There we go. Probably. Probably. This is where I need it.

So this one. At what point as a founder, do you let go and trust those around you?

Yeah, that's good. That's kind of back to the scaling yourself question, because you do need to do that. And at first we did a lot and that was hard to transition from letting go of things to giving kind of. We talked about, in the language of giving away your Legos, it's not just founders, it's other people in the team. And we actually tried to make it something. It's less right now, but we were going from that 200 to 1000 person size. It was really. We tried to celebrate giving away your Legos and I think we tried to model behavior where we said that was the case. And so, you know, I think being in the details, the first 20, 30, 40 people, like, really important because you're just trying to figure out, do you even have a. Is what you're doing working? Because you just have no idea at that stage. But at some point you start to realize it's working. And that's when you transition from, okay, yeah, this is working. And don't get me wrong, it's still gonna be messy and chaotic. Even today, it feels chaotic and messing inside Cloudflare to, wow, we have a real business here. And I think that's when you really wanna start to hire people around that you can start to give things up, give away to. Like, you don't wanna be your best marketer because you gotta run the business. You gotta hire great people on your marketing team to give those activities to. Even if you can be the best, I don't know, I'm sure you're the best at representing your company in a trade show, but you got to hire someone else who can go do that so that you can free yourself up to do other things. And so I think it's, you know, it's not the first 10 or 20 people, but if you're you know, 100 people and you're still doing everything and you feel you can't get anything off your plate that's too late too. So it's somewhere in between the two. And it's a transition. It's not an overnight. My life as a founder got so much better when we built out a leadership team. Because then all of a sudden we had these people who, like, were really smart, who could deal with a bunch of gray area. Because I found like, as a founder, what happened was all the gray stuff came up to me. We had great people on the team. They were making decisions all the time, but anything that was kind of not clear, they brought to a founder to ask. And so you're just constantly making all these gray area decisions. And it's like when we really got a leadership team, they were able to absorb so much of that off of our plates. And that's when my quality of life went way up.

Another question from one of the viewers is, how do you think about retention in sort of a post lockdown kind of world? Is it going to become more important, less important? Are you thinking about it any differently.

For retention of people?

Yeah, retention of people and employees.

Yeah. I mean, I mean, for us again. And I think this is gonna be really different company to company. We want people at Cloudflare to have the career of their lives. We want people to stay for a long time. We watch this, we care a lot about it, and, and so many ways. No, it's the same. Like, we want great people to stay at Cloudflare and feel like they can do their best work at our company and help our customers. And we feel like. Well, it's so funny, before this call, one of the Saster organizers said, oh, Cloudflare, you guys are so big, everyone knows you. And I said, oh, God, I think we're so small. I feel like we're just getting started. Like, I think we, you know, I look to a company like Salesforce, which is $160 billion market cap company, and that's what I want to be. And we're about a $7 billion market cap company. It's like, I want that. So it's. But again, back to when there was three of us in a garage, like, obviously we're a lot bigger than that. And so it's, you know, people, for us, still really matter. And we want people to be focused on the right things. We want to be investing in the right areas. I think what's changed is some of our priorities that seemed important to two Months ago, like this new environment. Now it's more, it's not nice to haves, it's only must haves. And so we've kind of reprioritized some projects and there have been projects that were important two months ago that we've said those, we're not investing in those right now. And people actually, there's been like whole teams who've been asked to say, I know that you thought you were going to do that, but can you please come and work on this, because this is what our customers need right now. And again, back to a testament to our team. And again, the best part of my job are the people I get to work with. All those people said, okay. And that's hard. Hard to think that you're working on one project and all of a sudden overnight you've been asked to, will you go do this instead? And so I think it's less about the people, but more about what we're spending our time on. That has changed. And it's definitely been a focus on the most important things, the must haves. And then invest in areas where we think we have a differentiated advantage and anything else doesn't make the cut.

How are you thinking about your marketing? How do you think, how did you think about the marketing and marketing spend in the last downturn versus this one?

And how are, you know, I'm not a good player. So we, so we, we started in the last downturn, so we didn't really do any. We did some earned media marketing. We launched at a conference and we, we loved kind of content marketing and media covering our business and social. We really wanted people, the initial users of cloudflare, to be talking about us online again. And our customers are people who run applications or websites or businesses. And so they often share, oh, wow, cloudflare, it's new service. I tried it makes it faster, safer, more reliable. So word of mouth was really powerful for us 10 years ago and that's great. We continue to do that a lot today. Like if you look at our blog, we have a corporate blog. We've been blogging a ton the last six weeks. And it's not like our marketing team blogging, it's actually our engineers writing about, here's something, a technical problem I had, here's how I solved it. And we kind of actually have gone back to some of the things we did 10 years ago when we were first just getting started, because it was just authentic. And right now I think authenticity is important, can be an asset, especially in a marketing context. And so we've done a lot on that front, and we continue to. And then we're. We did a lot of events for a long time, and now we have to repurpose, and we can't show up and do events. So how do we get those authentic stories? And how do we bring a customer's pain point and help create a webinar or talk like this so that other people who have that same pain point can learn how they solved it? And so we're trying to facilitate those conversations, and that feels very authentic to who we are. So that's some of the things that have been the same and whatnot. But again, today we have a much bigger marketing budget. 10 years ago, we literally had. We spent $0 on marketing. So it's. It's slightly different.

Well, today you have the budget to, to go create events, but it's hard to get people together. Right. In a way that. In a way that it was. That it was when you launched before. And before, you had a lot easier to. A lot easier time creating physical presence and not the budget to create it, right?

Yes. Yeah. No, well, now. Yes, exactly. So we're trying to find other clever ways to do that. If you have any ideas, I'd love to hear them. Please tell me. Tell us where. We're trying lots. We have lots of ideas. We're running a lot of experiments, and it'll be a great talk one day to figure out, hey, here are all the things we learned from all the experiments we're running. But I do think this idea of now is a time to decentralize the ability for people on your team to try things. Because I think trying a bunch of things to see what hits, because no one really knows. We're in a unprecedented time. And so we're kind of saying, how do we run a bunch of experiments to help introduce Cloudflare to potential customers and to build our business versus a very tightly controlled budget? And so we're trying to decentralize the ideas, the ideation, and not just to the marketing team. It's. If somebody on our sales team has an idea to our engineer, we're like, great, let's run with it and try it. And, you know, Again, we have 1400 people on our team who care. And I think if you can try and decentralize those ideas, lots of flowers will blossom.

So one other question. What would you be doing today if you weren't running Cloudflare?

I need a better answer to this. I haven't been asked this for a long Time. I'm so consumed by Cloudflare that it's so hard for me to answer that question because it just feels like we're just getting started, and I'm just so consumed by it. My answer before, which is not what I would say today, was, I used to want to design the Amazing Race courses because I thought that sounded really fun. I don't think that that was, like, my answer, like, eight years ago when I was really into the Amazing Race. That seems like a really long time ago. That's not. That's not what I think today. I don't know. And I guess that's part of the problem. Like, and again, I hope you. I wish all of you this. The same problem that I have is. I just feel like we solve a real, meaningful problem at Cloudflare. Like, I'm really proud of the work we do to help make the Internet better. Like, I and our customers faster, safer, more reliable. Like, I'm really proud of this. And I feel like we got a lot of things left to do in that, and. And we have a good business, and I get to work with great people doing it. It just feels like I feel very lucky, and I realize that it's hard to replicate that. It's not, you know, it's hard to replicate that in a new opportunity. So I'm just enjoying this chapter of my life right now. So that's not a very good reason.

The reason I. The reason. The reason that's an appealing question to me is because I can't imagine you doing anything other than running Cloudflare. And you have, you have.

You.

You and the team have a lot to be proud of. And you've really. You've built an amazing company with a great team, and I, for one, count myself very lucky to have been a small part of that journey.

Well, I feel lucky to have gotten to work with you. Ben has been an amazing investor and advisor for a long time, so. Thank you, Ben.

Thanks. One more question. Let's see. What do you see for the cloud in 2030 and how are you planning for that? Yeah.

What's the next paradigm shift? Yeah, it's interesting. People should be thinking about these next big shifts, and obviously we're going through one right now. I mean, you just. The world is not going to go back to how it was. It's going to return to something hopefully better. And that means opportunity for all the entrepreneurs on this call to go build great companies that solve some of these, take advantage of some of these new opportunities that are going to emerge. You know, if you ask me in 2030, one of the paradigm shifts that I think is with the full disclosure that I think this is very self serving to my company as well is this idea of serverless computing I think is going to be much more mainstream in 2030 and that's going to enable a ton of innovation that currently isn't possible. And so this idea of being able to do compute and more CPU intensive sort of operations closer to where the people are and we run a network around the world, we're in 200 cities and you can imagine instead of writing code in one server and I don't know Amazon east, what if you could run code in all 200 cities around the world? Serverless is very new, but I think by 2030 it's going to be a big deal and I think you're going to see a lot of opportunity and applications built because that unlocks it. Could you imagine a mobile phone with a battery that lasts for like a week because there's no battery on the phone but instead it goes, basically does all the. It does where the phone itself is basically battery but it does all the computing close to the edge because it's, the power is just everywhere. Like I think that's, these are the sorts of things that it's going to enable. And so maybe the 2030 will be like the next mobile giant is actually out of Africa because that's how you innovate out of that problem. And so I think that's something that will look like in 2030 is just a lot of serverless computing that's going to enable a lot of innovation which creates opportunities for all of you.

Well Michelle, thank you for answering my questions.

Yeah, Ben, thank you so much.

It was great, great to, great to spend an hour with you.

Yeah, likewise. And thanks to everyone who listened in and hopefully it was helpful. And I can't wait to see everything you build and I hope you all build big companies quicker because you learn something today. Thank you again to Michelle and Ben. We'll be sharing the recording and everything right after. So thanks for joining us.