Pod Insights Invest Like the Best with Patrick O'Shaughnessy Michelle Zatlyn – Protecting the Internet – [Founder’s Field Guide, EP.11] About this episode My guest today is Michelle Zatlyn. Michelle is the co-founder and COO of Cloudflare, a now $25 billion dollar business which she helped take public last year. Cloudflare helps businesses make their websites faster and more secure, and over 25 million websites are running Cloudflare today. In our conversation, we discuss the catalyst for starting CloudFlare, explore the layers of the internet and the future of distributed storage and computing power, and discuss how and why Cloudflare operates its network across 200 cities globally. We close with the importance of finding and working with great co-founders and partners as you build a business. I hope you enjoy our conversation.
DocSend is a document sharing platform that enables companies to share business-critical documents with ease and get real-time actionable analytics. With DocSend’s security and control, startup founders, investors, business development executives, and financial professionals can drive business outcomes that have a lasting impact. Start for free at www.docsend.com.
This episode of Founder’s Field Guide is also brought to you by NetSuite. Netsuite allows founders to centralize their payment systems, ditch old spreadsheets and Quickbook tools, and finally gain visibility and control over their financials, HR, inventory, eCommerce - all in one place, instantly. Whether you are doing a million in revenue or hundreds of millions in revenue - see why over 22,000 companies are using NetSuite today. Schedule your free product tour at https://www.netsuite.com/invest.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
(2:52) – (First question) – Project Honeypot and how it started
(3:39) – What question was Honeypot solving
(4:59) – Working through the idea maze of Cloudflare
(7:30) – The first iteration of Cloudflare
(8:15) – An overview of the cybersecurity market and why more leaders need to pay attention
(10:33) – First big break for the company
(12:50) – Risks they help mitigate
(16:42) – Cyber weapons that Cloudflare protects against
(20:14) – Hardest part of the building process
(24:06) – Effective marketing lessons
(25:41) – The sharks vs mosquitoes concept
(27:53) – How do decide where to focus next
(31:34) – The Cloudflare workers program
(36:33) – Their scale vs other cloud providers
(42:21) – The finance side of Cloudflare and their relationship vs Wall Street
(42:40) – John Collison Podcast Episode
(44:47) – Relationship with their founding partners
(50:46) – What about the future is most excites them
(52:32) – Kindest thing anyone has done for her
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Transcript 12,600 words · 4 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Patrick O'Shaughnessy? I know firsthand how complex the tech stack is for asset management firms. And seemingly every new tool and data source makes the problem even worse, adding more complexity, more headcount and more risk. RidgeLine offers a better way forward. One unified platform that automates away the complexity across portfolio accounting, reconciliation, reporting, trading, compliance, and more, all at scale. RidgeLine is revolutionizing investment management, helping ambitious firms scale faster, operate smarter, and stay ahead of the curve. See what RidgeLine can unlock for your firm. Schedule a demo at ridgeline.ai. This episode of Founder's Field Guide is brought to you by DocSend. DocSend is the standard for founders to share their pitch decks with VCs when they are raising capital. With DocSend, you control who has access to your fundraising materials and you always
0:45 Patrick O'Shaughnessy? know what's happening with your pitch deck after you send it. Did VCs actually open it? What slides did they spend the most time on? Did they share it with others? Founders are using DocSend to fundraise, but also to share investor updates with their board, or to send their sales pitches to prospects for better security and engagement. I personally know a number of successful startups that have been able to raise using DocSend. Check out DocSend.com to start your free trial. If you're curious to hear more about DocSend, stay tuned at the end of this episode where I talk to DocSend CEO Ross Hettleston. This episode of Founder's Field Guide is also brought to you by NetSuite. If you're an entrepreneur, you know how hard running a business is. Don't let QuickBooks and spreadsheets slow you down anymore. NetSuite makes running a business simpler and faster. Whether it's centralizing your multiple payment systems, ditching old spreadsheets,
1:29 Patrick O'Shaughnessy? and outdated software, only NetSuite gives you the visibility and control over your financials, HR, inventory, e-commerce, and more in one place instantly. Whether you're doing a million of revenue or hundreds of millions of revenue, join the 22,000 other companies using NetSuite right now to save time and money for your business. Schedule your free product tour right now at netsuite.com/invest. That's netsuite.com/invest. Hello and welcome, everyone. I'm Patrick Rochaunese, and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs, and operators building great businesses. I believe we are all builders in our own way, and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at investorfieldguide.com.
2:18 Speaker 01 Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.
2:43 Patrick O'Shaughnessy? My guest today is Michelle Zatlyn. Michelle is the co-founder and COO of CloudFlare, a now $25 billion business which she helped take public last year. CloudFlare helps businesses make their websites faster and more secure, and over 25 million websites are running CloudFlare today. In our conversation, we discuss the catalyst for starting CloudFlare, explore the layers of the internet and the future of distributed storage and computing power, and discuss how and why CloudFlare operates its network across 200 cities globally. We close with the importance of finding and working with great co-founders as partners as you build a business. I hope you enjoy our conversation.
3:22 Patrick O'Shaughnessy? So Michelle, I would love to begin by setting some context around CloudFlare and its history. And I thought a neat place to begin would be with you describing Project Honey Pot. What was Project Honey Pot and how did it start?
3:34 Speaker 02 Project Honey Pot was co-created by two of my co-founders, Matthew Prince and Lee Holloway. And Project Honey Pot is a community-based project where any website owner can go to projecthoneypot.org and get a piece of code and it basically installed on their site and it becomes a virtual honeypot. And what that honeypot does, it looks for bots or people trying to do malicious things online and catch them in the act and sends all that data back to Project Honey Pot to kind of become a Petri dish of information around who's doing bad things online and why.
4:08 Patrick O'Shaughnessy? When you first started it, what question were you trying to answer?
4:12 Speaker 02 It's actually a cool story was where does spam come from? And the whole point, actually, I'll just tell a little, I know that was not the question, but I want to give a little bit more context. This is the story. So before Paul Graham did Y Combinator, he ran an anti-spam conference out of MIT. This is back in 2003 and 2004. There's probably some listeners who maybe have been there before. And Matthew was invited to come give a talk and he gave a talk and he won the best speech of the conference award and he had this can of spam. He actually, for a long time, had the can of spam. And so he was invited back to come back and give a second talk this next year. And of course, the stakes are high. He has to compete for best speaker award again. And he was like, well, I can't give the same talk. So he had to get a new talk. And so the first time was around the laws around spam and whatnot.
4:57 Speaker 02 And so the second year, he's like, what would be really cool is if we could have an initiative to say where does spam come from online again? This was back in 2004. And to answer that question, him and Lee Holloway created this project, Project Honey Pot. And the whole point, they launched at that conference during that speech. And the whole point was to say, where does web spam come from? And to start to provide insights and data that we can go use to create products and services over time to help solve the problem. That ended up becoming the impetus for CloudFlare almost a decade later.
5:28 Patrick O'Shaughnessy? Talk me through that very specific, I like that phrase, idea maze. Like when you're conceptualizing of CloudFlare in the very beginning, how did you decide what to attack first? Like who to do it for? These initial decisions, I feel like are really weighty and hard to make. How did you navigate that problem?
5:46 Speaker 02 So I was a student. I was doing my MBA at Harvard Business School. I say this because it's very relevant. And so as a good student would do when you're examining a problem is I sent a survey out. And so we sent a survey out to actually all of these website owners who happened to be Project Honey Pot community and surveyed them on the problem. We said, we had a hypothesis, we had a thesis of that if you were a Big company, they were good cybersecurity solutions, but if you were anybody else, they were bad. And that was bad for the internet was our general thesis. And so we started by going to figure out whether there was a real problem here. And so we went to talk to the potential customer set. And that potential customer set were small business owners, IT administrators, developers who all happened to be part of this project honeypot community.
6:29 Speaker 02 And we, I said, we sent them a survey and it was the first half of the survey was tell us how much you care about this problem. So it was like, how often do you think about web spammers, like one through 10, like a lot, very little? How much time, how much, how much do you care about this? And then the second part of the survey was, and what do you do to solve the problem if you care about it? And you know, there's some things in your career, obviously, there's lots of things you forget, but there's some things that are forever imprinted. And I just remember getting some of those survey results back from the survey we sent out. And the answers were just unbelievable. It was web spammers are the scourge of the internet. They're criminals, they steal resources. Web spammers make me believe in the death penalty. And so they were just very strong reaction to this survey. So very quickly it was like, wow, there's a problem here.
7:14 Speaker 02 And that was the, in your idea maze, it was like, wow, there's clearly a problem here. We still didn't know all the sides of it, but there was something, there was a string to go pull on and see where else it would go. And that's where it started. And then after that, it's well, could we come up with a technical solution to actually solve the problem? The second part of the survey where I said, what were they using? So there was clearly a problem. And then when you were asking everybody, these small businesses, IT administrators, entrepreneurs, developers, what they were doing to solve the problem? The answer was basically nothing, Band-Aid, like duct tape on their servers. And there was no good, common technical solution. And this was one of those places where, oh, there's a problem. Could we build a technical solution to the problem? And often a lot of really great businesses, that's where you find them. It's when you can use technology to solve a known problem.
7:59 Patrick O'Shaughnessy? In the very first iteration, what specific pieces of defense did CloudFlare offer its users?
8:07 Speaker 02 So when we first launched our service in September of 2010, we'd been running a private beta, we were really good at web level spam or web level cyber attacks, things like bots trying to come to your website to get to see if there were any open doors, like the probing. So we were really good at removing the bots. We were really good at known malicious actors online. We just increased the friction to them to be able to get to your website or your blog. We launched, it was really focused on websites, blogs, and really stopping bad actors from being able to steal resources or do malicious things.
8:45 Patrick O'Shaughnessy? So cybersecurity is, obviously it sounds very important. My guess is, most people have not thought about or engaged with the concept that much, other than if something bad happened to them, or they probably read about a bunch of credit card data getting leaked, or these sorts of things. Talk us through a little bit of the backstory here. How would you describe cybersecurity and its importance and sort of the aspects of it to someone fully uninitiated?
9:08 Speaker 02 I really think the cybersecurity industry did itself a disservice for its first 15 years that it was created, where it was really the cybersecurity experts that were the ones who spoke about it. And it wasn't a business issue. It wasn't a leadership issue. It was just, or it wasn't about running a business issue. It was really, oh, go talk to information security. Go talk to, go talk to Tom, who's on the InfoSec team. He'll deal with it. And I think that's why we find ourselves in some of these issues. And so when it comes to cybersecurity, I actually think, people think it's harder than it should be. It's really, than it is. It's not that hard. If you understand the ABCs, you're in the top quartile. And I really do think it's something that every leader across the business should have awareness around. It's not just the chief security officer, or the chief information security
9:53 Speaker 02 officer that should be thinking about this. I really think it's a responsibility across all leaders, like marketing leaders, for example, have a responsibility to think about cybersecurity, when they're picking tools that they're going to adopt. And when they're thinking about, they're adopting all these sorts of services to track their visitors. Well, are those secure? You know, could they do something malicious to hurt your brand? And so I do think it's something that the best leaders today understand a little bit, and it's not that complicated. And so that's my pitch for why everyone needs to understand a little bit about it. It's from the marketers, to the engineering, to the CEO, to the boards. And I think that unfortunately, it's taken some really high profile Bad incidences or breaches to raise the awareness.
10:35 Speaker 02 But it's really one of these things where we should all be raising the tides of insecurity. And we all need to play a role. And if you understand the ABCs, you're better positioned.
10:43 Patrick O'Shaughnessy? If you go back to the early customer set, what felt like the first big break in the company's history?
10:49 Speaker 02 There's been many ahas. I call those like the ahas along the way where the light bulb goes off. So the one was the survey results before we had the company. It was just clearly there was again, this aha.
10:59 Patrick O'Shaughnessy? You found something, yeah.
11:00 Speaker 02 I found something. And so then when you build something, you need to get some initial user. So we were running a private beta. So we were getting initial customers on boarded and feedback. And that was the good old days where I used to call every single customer after they onboarded to find out like, how did you like, why did you, what are you seeing? How do you think about it? Like trying to understand, because it's one thing to build it. It's another thing to describe what you're doing. And hearing it from the words of customers is helpful. And I just remember we thought we were a cybersecurity and we were really focused on that. And I remember we launched this first part of our product, which we were embarrassed by. And you often hear this from builders saying, man, I was really embarrassed by the product. And I was definitely embarrassed by the product, the first version of the product thinking,
11:45 Speaker 02 oh, it doesn't have all these things that we had left on our list to do. But we had to ship it. We had to get in the hands. There was no analytics. You couldn't see what it was doing. So you're like, customers signed up and they had no feedback loop of what it was doing for it. And I thought that was a big deal, but it was interesting. Early on, these initial customers would send emails saying, oh, my God, thank you, thank you, thank you. And I was like, how are we getting thank yous when we can't even prove to them that we're doing? It turned out they can measure because they were IT administrators or developers, and they really knew a lot about monitoring their server load. And all of a sudden they put Cloudflare in front and they're like, wow, my server load decreased by 50%. And all these resources are freed up. And now I can serve all the legitimate traffic much better. And so not only have you taken off all of this scourge of the internet,
12:30 Speaker 02 all these automated robots roaming for something to latch on to, to do something bad. You've stopped that completely. And in the process, you've speed up my website. And at this point, we weren't very distributed. It was really early. We kind of had two points of presence. So we were not expecting performance to be part of the value proposition so early. And so it was one of these. Some of the initial customers in a product that our team was pretty, oh man, this is not ready yet, already seeing a lot of benefit, I think just was almost a flywheel to what we had seen the year before with the survey results of there's a real problem here and there was just no good solution. So even though our solution was maybe the first tiny centimeter on a very long roadmap,
13:12 Speaker 02 it was already delivering a lot of value for some segment of customers, which is the best feeling as a builder. I mean, the most rewarding feeling.
13:20 Patrick O'Shaughnessy? If you think about it even today, what tends to happen if you're not protected in some way? Something like Cloudflare sitting in between a website and a website visitor or something like this, like what are the risks that you're helping mitigate?
13:33 Speaker 02 Consumers, your customers, employees, expected to be fast and responsive. It's not fast and responsive. You leave. You go somewhere else. And the problem is, is like, some of the biggest sites are really fast. They're like lightning fast. And so the first is global performance. It just has to be, it just has to load very quickly. And especially if you're an e-commerce retail store, I mean, for every hundred milliseconds, you lose revenue. So I think it's just, we are all used to speed. So performance is a big one. The other big one is there's a lot of creators, builders who put things online because they love to build and create. They have a passion. They want to see it and that's what they're doing. And then all of a sudden, there's a kid who isn't at school because they're in COVID lockdown,
14:15 Speaker 02 who instead of throwing eggs at houses, is trying to say, can I knock that project offline for fun? Cause they're curious, right? And that happens. And all of a sudden, this amazing idea and passion project you have is now offline. And it's not always kids. It can be up to nation states as well when it's money involved. But the point is, is there are things where brute force attacks, where it's like, I'm just going to overwhelm whatever you've put online. So nobody can get to it. So that's called like a denial of service attack. I'm going to try and Get somebody's credentials so that I can log in and edit the content on your website, or I can log in and get secrets within your businesses. So those are very different sort of security issue, but a really real one.
15:00 Speaker 02 Whether you're a blogger who has a blog with content on it, it's like you don't want someone else without permission going into that. Or if you're a large organization, you want to make sure that employees are accessing the workloads and the applications that they should have access to, but it shouldn't be someone who is unauthorized. There's also just a lot of automated bots trying to find, any technology is just a bunch of code pieced together. And a lot of people use third-party software providers. So Microsoft this, Oracle that, legacy software. And there are vulnerabilities that get exposed to that. And these are like public information of these new saying, oh, if you're using this version of WordPress or this version of Oracle, go patch your software.
15:44 Speaker 02 And that takes time. So between the time that you find out that you need to patch your software, like solve it, to doing it, for some companies, it can take 120 days. Well, I can tell you that the hackers write a program very much faster than 120 days. They'll find the people who have em patched it because then they go exploit it to either embarrass that company saying you're not taking cybersecurity, like almost like an activist saying you gotta take this more seriously or to do real damage. And so there's lots of different ways. And so what Cloudflare does is we act like the personal trainer and security guard for whatever you're putting online. We speed it up like the personal trainer. We like make it look good. It's more reliable. It makes it all shiny. So for legitimate visitors, it's like a great experience.
16:28 Speaker 02 And then the folks who are doing malicious activity online, whether it's the kids trying to prove something to something really serious, we help provide that layer of protection. So you don't have to worry about it or that added layer of protection. We give you time to go patch your stuff because we can patch it in real time at the edge while you go update your server in 120 days. But you're now protected. You have a stopgap between those 120 days. I remember when we hired our CTO, he was really early employee number 20. And on top of his offer letter, Matthew Prince, my business partner, Steel, wrote, let's go patch the internet together. In a lot of ways, the personal trainer and the bodyguard of the internet, it's kind of like patching the internet. It's kind of fixing some of these security holes, some of the reliability holes, some of the performance holes through a global network like Cloudflare.
17:12 Patrick O'Shaughnessy? You mentioned this layers, which for some reason gave me this visual of like being able to be attacked like through the air, on land and in the sea and like through submarines or something. What are those equivalents in your world? I think people have probably heard DDoS attack or denial of service attack before, but probably have no idea what that means. What is that? Like, what are the weapons being used offensively against the people that CloudFlare is built to protect?
17:34 Speaker 02 There are many layers and there's also different types of attack vectors. And I think a good way to think about it is, let's go to saying you're going to an ATM to get money out. And you show up to the ATM and Patrick is standing in front of you. Okay, well, he's going through his transaction, no big deal. You wait in line, you get your turn in line to get the ATM, or the bank cashier, I mean, whatever you want. Now, let's say that there are 1,500 people in front of you at the line, and you can't actually get access to it, the ATM or the cashier. And you're not sure of the 1,500, who are the Patricks and who are the people who are there just to cause a headache so that you can't get it. And that's the analog example to what happens in digital world. So you want to go to your favorite website, the Founder's Field Guide, you know, landing
18:19 Speaker 02 page. And Patrick has a certain amount of resources to stand that up. You need a server, you write code, like it sits it up there. And that server can handle a certain number of people at any single time coming to it. But if you have so many people overwhelmingly coming to it, it'll fall over, kind of like the ATM, you just, you get stuck. So then the real viewers who want to come listen can't get access to it. This happens all the time. That's what a DDoS attack is. It's like, it's trying to put more through the water hose, so none of the legitimate visitors can actually get to what they want to do. And it happens all the time. And it's a very violating thing if you're a brand. Like, if you're a company trying to run your business, all of a sudden your customers can't come to your website. You're knocked offline because somebody decided to throw some more traffic
19:02 Speaker 02 at you than you were used to waiting. Like, that's not a good day. Like, that's an emergency. That's all hands on deck. And just to give you examples of where this happens. Flower stores before Valentine's Day. Busy is time to take orders. People are looking at bouquet options. And they will say, pay us X number of dollars, otherwise we're going to knock off your site offline before Valentine's Day. And they often pay the ransoms because they don't want to get knocked offline before their busiest time of the season. Where they want to be able to take orders from their customers. And you think, oh, that never happens. It happens all the time. It happens between in some industries where there's like really strong competition. Sometimes competitors do these sorts of things because it gives them an edge. All of a sudden they're online and their competitors aren't. And so
19:43 Speaker 02 it's a wide range. It can be the kids throwing a bunch of eggs just for, I don't want to take the test. So I'm going to knock the online test taking site offline. So none of the students have to take the test. It's like pulling the fire alarm bell. All of the analog, like the fire alarm going off at school, which is kind of funny to really serious. I, I think they're kind of a virtual analogies to all of that. And anyway, a service like Clover can help. And part of our mission is to help build a better internet. And so when I go back to that IDMA's that you described. That whole reason why we did this was like, wow, if we could help make the internet safer, if we can help make this less of a headache for everyone, that would be pretty cool. And that's what we've done. And so just to give you a sense of how we've done that.
20:27 Speaker 02 Today, we have over 25 million internet properties, small businesses, 16% of the Fortune 1000 developers, IT administrators that are using our service. And we stop 72 billion cyber attacks daily.
20:39 Patrick O'Shaughnessy? Holy cow.
20:41 Speaker 02 And this is the power of technology.
20:43 Patrick O'Shaughnessy? If you think about in the early days, when of course you're working hard to build and I'm sure stuff's breaking and you're learning at a crazy rapid pace. If I said to you, you have to go back and do it all again, which part of that building process would you be like, oh God, like I don't want to have to go through and learn all those lessons again. Like that was the hardest part about building the product.
21:04 Speaker 02 You can't see me because this is audio, but I have a lot of gray hair from that for yes, and I have some, a lot of scar tissue. So just for the founders listening, especially if you're an early-stage founder, I mean, things break and that happens. I think what's important is how fast do you react and learn from it and make sure it doesn't happen again? That would be my biggest lesson learned. I think if you beat yourself up for a breaking, like you could really get into depressed states. You gotta keep going, you gotta learn, you know, we eventually said, okay, we're just not gonna ever make the same mistake twice. Like, that was our bar. And how fast can we learn? And of course, you want to get ahead of these things, but just doing things for the first time, you miss things. And so I think that's the silver lining and maybe a good lesson. But some examples,
21:45 Speaker 02 I mean, we started kind of the exact opposite of how companies are starting today. So you have an advantage. But we started with 10 of us sitting in the same room in Palo Alto, California. And then the 10 of us relocated up to San Francisco. We went into the office every single day. We sat next to each other every single day. We could like read each other's minds. And we, up until 20 people, we were all in the same room. We never wrote anything down because of that, ever. Because it slowed everything down if you have to write first, right? No, just do. You're building, ship the code, do this. And so we never took the time to write down why we were doing something or the thought process. So again, we were all in the same room. So we were sharing it verbally. We went really quickly
22:29 Speaker 02 for those first 20 people, which was wonderful. But fast forward to when we had 65 people, and we might not all be in the same room, or even if we were all in the same room, you can't listen to 65 people at once. That became hard to not have written things down. And we got better at it, but we still weren't great at it. But it really took to when we were north of 100 people to start to get much more disciplined about, we gotta write things down. Because now we don't even have people in the same office, and they have no earthly idea why we made this decision 18 months ago. And it's a huge learning curve for that person trying to figure it out. And so we gotta make this easier. So that's one. I would write things down more early on. It sounds simple, but I think it's really important. And now you have a company like GitLab, which is 100% distributed. I
23:11 Speaker 02 mean, their docs, like what they write down is, their documentation is absolutely world-class. If anyone wants to know how you do it, go look at, it's all online. It's all open for all of us to learn from. Everything is documented. Because of the exact opposite reason, none of them are together. So they write everything down, and everyone's working asynchronously. And in this world, in a post-COVID world, if we have more asynchronous work, I think that's gonna be really important. So we've gotten a lot better at over the year, but it was painful there. I have a lot of scar tissue from not writing things down early. We would have, we would have gone faster later if we had done that. So that's one. And then the other thing I would say is, and this is a high-class problem, but it's true, is we had great product market fit. We found a problem. We had a great technical solution and
23:56 Speaker 02 we grew like bananas, which was great. But we never really did any marketing, but we were just growing. Like people were telling you there, it was like word of mouth, which is an investor's like dream. You're like, wow, that's really inexpensive. It's true. The other lesson is going from founder to now business owner is if you have good product market fit and you have real scale and you're on to something, likely it's going to become something really big. And Cloudflare today is something really, really big. And when you have something really, really big, marketing is a discipline and an investment. And I wish we had started earlier. Like we basically grew to eighty million dollars in revenue with three people in our marketing team, which is good, but then to stand that up after the fact was hard.
24:36 Patrick O'Shaughnessy? What have you learned now about effective marketing? What are the key parts of that discipline?
24:41 Speaker 02 Earn media is very powerful, like where you can have others helping amplify your story versus having to pay for everything. That goes a long way. Every dollar goes further in that regard. And so whether you're doing it through your community or social or media or speaking, especially if you're not a known brand, either you as the founder or you as the company are not a known brand, that's a good way to help amplify and seem a lot bigger than you are without having to spend as much bidding on a ad word that a big established brand might pay or the Super Bowl ads or the billboard. Those cost a lot of money. So you have to make every dollar go further. And so you're, we're always trying to think about what can we do that's clever? And so early on, we had a big community, these people
25:24 Speaker 02 talking about us on forums and community boards. And that just got the word of mouth and people signed up. So our customer acquisition was really easy because we had people talking about us around the world. And then we did a lot to help amplify that with media and speaking, doing these things like podcasts. I hope some of you will go check out and sign up for our service. Like it matters. I bet you most of your listeners have never heard of Cloudflare and they're like, oh, wow. You know, go look into it. And hopefully if you have a cybersecurity or performance reliability issue, you say, I'm gonna. I'm gonna go try CloudFlare. Like, that's one of the reasons why I do this, not only to meet you, Patrick, is to help raise our awareness with a new audience to say, everyone wants to be faster, safer, more reliable if you have an app or an internet property. So do things that are clever. If you're doing just the exact same thing as everyone else, then you've got to be a better at
26:08 Speaker 02 execution. Otherwise, you're going to be paying more.
26:10 Patrick O'Shaughnessy? Can you talk about the interesting concept I uncovered when exploring CloudFlare of sharks versus mosquitoes?
26:17 Speaker 02 This is for the builders in the audience. I've been building CloudFlare for 10 years. It's been an amazing adventure, an amazing experience, and I get to meet a lot of entrepreneurs along the way, and we're really lucky. We are a huge success story. We went from an idea, we've taken it public, we're over, I don't know what our market cap is, but it's over $15 billion market cap.
26:34 Patrick O'Shaughnessy? Twenty something billion, yeah.
26:36 Speaker 02 Okay, twenty something billion market cap company.
26:38 Patrick O'Shaughnessy? What's five billion here or there?
26:39 Speaker 02 Well, I just, I don't pay, I'm focused on running the business, so I guess that's a good thing. It's a huge success story. So I meet a lot of founders who are like, wow, I want that. And again, we obsessed over this problem and then getting the group of people to come help us solve the problem versus sometimes this mosquito and shark analogy is what people really focused, obsessed over early on is how do I raise money? And raising money can be important for certain types of business, but really it becomes a lot easier if you focus on finding a problem that needs solving, because then the money will come easier. And so I think that the mosquito and shark analogy was actually Bill Gates put out this research six years ago now, that basically said, you know, most people are worried about sharks
27:23 Speaker 02 in the world as the greatest risk, but really what you should really be focused on are the mosquitoes, because they kill a lot more people every year. Don't focus on the sharks, like, how do you raise money? You should really focus on the mosquitoes. Are you solving a meaningful problem? How do you get people to come and work with you on that problem? Because you can only go so far with one person. You need a team, and you need to convince a team. And it's one thing to find co-founders, another thing to get the first couple of people. But recruiting employee number 25 to come join your company is so hard unless you have something. Like, why would they do that? There are a lot of good jobs in the world. It's very hard. Makes it easier, you get a higher quality person. If you're solving a meaningful problem that is there, you can demonstrate it, and you create a bigger value
28:05 Speaker 02 proposition around it, then you're more likely to be able to go get the people you need, whether it's the engineers or the product managers, that you really need to make it all come to life. And that's, I think that sometimes gets missed in the, I want to be written up in TechCrunch because I raised some money. You're focusing on the wrong thing.
28:22 Patrick O'Shaughnessy? How do you think about through the course of the company's history, what to choose to do next? One of the big tropes has become like, keep the main thing, the main thing, like focus wins, be the best at one specific thing. Maybe it's DDoS protection or something. But now, obviously, Klavfler does a number of different things. And my suspicion is that will continue to be the case. Talk me through that decision-making framework. Like, what have you learned about when to focus, when to expand, when to try something new, when to experiment? I guess this is a question on capital allocation. Like, what makes good capital allocation, in your opinion?
28:56 Speaker 02 It's an art and a science. Capital allocation matters a lot because there is a finite amount of money and people and time within an organization. So you have to figure out how to spend that and where you can get the most, where are the best places to invest? So I think it's really important. We've done two things that are interesting. Like, from early on, we are so ruthlessly focused on getting things done. Starting a project, there's a middle and then you ship it. And you go to the next thing. We were really set up to, what are we doing? Who's doing it? Did it get done? Okay. And that pace of shipping, I think, is different company to company to company. And I actually think it can become a huge superpower. Like, I think it makes this a little bit easier because you're like,
29:41 Speaker 02 okay, we have what time? How much people? How much time do we have left? What are we going to do with it? And so we are always very focused, and we still are to this day, prioritizing and who's doing what and what are we going to do? And did we do it? And holding ourselves accountable. So when I look at companies I admire, like Salesforce, and you talk to Parker Harris there, when I had a call with him a few months ago, and I said, Parker, teach me everything. And he said, like, we still, to this day, are just, the pace at which we execute things is really high. And we're just obsessed about it. So I think that's an important one. The second thing is, and it's so interesting, that organizations, I think, struggle with, and we did something different, is We have a core business. We absolutely have a core business is where we make a lot of our revenue great. But we also think there's a huge opportunity. So we want to invest into the future.
30:24 Speaker 02 And what we found, and we've always had a lot of vision and we think that there's more very early innings of what's possible. And early on, what happened, what happened is we had one R and D organization, one product and engineering organization. And what happened is when the priorities came, all of the things that were over the horizon got de-prioritized for things that were known quantities now. Like this is part of our core service. We know there's revenue attached to it. We should be doing this now. And that's great for now, but you're kind of mortgaging your future if you keep doing that. And so we did something that we think is interesting where we said, okay, we absolutely have to invest in the core. Even within that, you got to prioritize what's most important. And we have a whole process to do that. And that's generally works really well.
31:08 Speaker 02 But we also set up a second R and D team where their job is to just think about the future of what's over the horizon. And they don't get measured on how much revenue it generates the next quarter. They have much more over the horizon. It's like, hey, help us throw a lot of spaghetti at the wall and figure out what's next. And we put them in a different location. We were still at this point, a very San Francisco centric company. We're no longer that. And we took someone senior in our team who was really good at getting ideas out. And we gave him some resources and he moved to Austin and he set up what we called at the time, the project strategy team. And the, at the time, which is now the emerging tech team, which is they just build the future.
31:50 Speaker 02 And we still have that team today and it's pretty cool that we have been able to do that. I don't know if that model with every company, but it lets us prioritize the core products, the core business, while still investing in our, what we call our next act.
32:04 Patrick O'Shaughnessy? When I asked publicly what the most interesting thing about CloudFlare was just before our conversation, some large percent of the people said the workers program. Can you describe what that is? Many people mentioned it as almost like a sneaky potential competitor to the major cloud providers in some certain ways. Talk us through the workers program and what's exciting there.
32:25 Speaker 02 So I've talked a little bit about what CloudFlare does. I haven't talked a lot about how we do it. And again, the geek in me is like, how we do it is so cool and it's relevant to this question. And so maybe just like one quick word of how we do it, and then it'll explain how workers fits in. So I've talked about the personal trainer and the bouncer for your website, your apps. Talked about people, your employees or third-party contractors accessing information. But how we do it is we run a global network. So CloudFlare is in 200 cities around the world. So we have hardware there. We have a real capex cost on our balance sheet. And we run all this hardware there. And if I am in San Francisco trying to go to CloudFlare.com, I will get routed to the closest kind of CloudFlare point of presence, which for me is in San Francisco, San Jose.
33:10 Speaker 02 Versus if I get on a plane, which I'm not doing right now, but if I was on a plane, I went to London and I went to the same, tried to access my same sort of thing. I had hit our London, CloudFlare London's point of presence. And if I'm in South Africa, I'd hit somewhere in South Africa. So we're in 200 cities around the world. And at each of those cities, that's how, if you're legitimate, we're making your experience better. And if you're not legitimate, we're increasing the friction to protect our customers. So the foundational element of CloudFlare is our global network. We've built this network. There aren't that many companies who are building global networks. Like we are one of very few. And it sets us apart. All of our software, all the code we write, all of the firewall, like all of the VPN, it runs at these 200 cities around the world. So we're running code in a lot of places.
33:51 Speaker 02 That's where our technology sits. It's really neat. So it really does act like the immune system for the internet. And so now what workers is, what if you can write code at each of those 200 cities around the world? What if you can put code into the network? The network's already doing performance and security and encryption and identity management. Well, can I also do compute there? And that's the whole, so Sun Microsystems had a saying, their tagline used to be, the network is the computer. They were right. They were just 20 years, 25 years too early. When Oracle bought Sun, they forgot to re-register that trademark. So CloudFlare now owns it. And the network is becoming the computer. And the operating system for the internet, it's, we're making things fast, safe, reliable.
34:36 Speaker 02 But can you also start to build applications into that? And again, we're not going to build them, but I sure hope the next builder does. And so there's a whole paradigm shift. It's called serverless. And the whole point is, well, you're not spinning up a server anymore. Before I used to buy An EMC or Dell or HP server and then it now you might be spinning up Azure or AWS or Google Cloud instance, but you still gotta pick a region. You're spinning up Google Cloud, you gotta pick a region. And again, those businesses are doing extremely well. Are there some of the things that you spin up a server for that can be done at the network layer? So can you take some of those workloads and put them in the 200 cities around the world? And so we see developers doing that. We see big companies doing that. There's some good,
35:20 Speaker 02 when you run code in the network, you can fix some big business problems. So like I've had a lot of large organizations, they were a content company and they have a global audience and they're like, the watermarking on our content, like the licensing of our content is a big deal. And to do that check on the server side just slowed everything down. And they're like, man, we can't, the latency penalty, we can't do in the server side. Doing it in someone's browser or app is impossible. Do you think we could try and write a worker to solve that? And we did, because we're in 200 cities. So if they say, yeah, you have access to this content in this region, that code can now run across Cloudflare, we can do it in the region versus ever having to go to the server or on the client side. And so it's like a third place to write code,
36:03 Speaker 02 which is really exciting. And the question is if you can get storage distributed, because right now you can't really, it's hard to run a large database distributed. But that's the limiting factor, one of the limiting factors right now. But if you can get that, then well, all of a sudden, the conversation becomes what's appropriate to write on the server, what's appropriate to write for a client. A client is either like your app on your phone or your browser, and what's appropriate to write in this now new third place to write code in the network closer to eyeballs. And I think with where you can update it and have the control over it. So it's super exciting. It's early. I think it's going to take five, six, seven years for this to really come to fruition. But in the interim, I love that
36:47 Speaker 02 we're helping our enterprises solve problems like watermarking content. It sounds silly, but it literally went from a top five board level discussion to like, they literally saw revenue generation from doing that. And so I love that we can invest in it while we wait to see how this paradigm shift plays out.
37:03 Patrick O'Shaughnessy? I love that this is like a potentially new creator tool or platform that sounds, I don't want to say it happened by accident, but it's sort of Became possible because of a different way that you were doing something had to be more distributed based on what you were doing. Give us a sense for like, when I think of cloud, I just think like, oh, it just happened somewhere like cloud is someone else's computer. It's just, I don't have to deal with it, but I have no idea like where those computers are. So when you say you're in 200 cities, is that an order of magnitude more than like a typical cloud provider, two orders? What is the difference? Why does that matter so much?
37:35 Speaker 02 This is actually back to what we said. I didn't go deep into it, but there are different layers to the internet. Like there's different layers of how the internet works and how technology environments work. So if you're a enterprise, there's kind of three tiers to your enterprise stack. You need the store compute layer. So servers where the content actually sits or the workloads actually sit. Then there's an application tier on top of store compute and like those would be companies in the past, like the SAPs of the world, Microsoft's, Oracle's, where they used to have applications that were software. And what we've seen in the last decade is a huge proliferation of cloud-based application companies. And so those are kind of called the SaaS companies, right?
38:18 Speaker 02 So Salesforce took content relationship management, which was something that you used to buy from Microsoft, Oracle and SAP and did it way better in the cloud and dynamic. And so now companies are adopting like enterprise are adopting a piece of that and then they might use Workday for HR and they might be taking Box for their storage, document storage. And you can all of a sudden create your own application bundle without just having to buy for those three. And you probably also use Microsoft or Oracle or SAP for something else or ERP. But you're, there's this huge proliferation that you can mix and match. And those are all the cloud-based application providers. And so there's many of them, like many, many, many, many, many. And sometimes those application providers, actually almost all the time, build on one of the cloud-based store compute providers.
39:03 Speaker 02 So those are the AWSs of the world, Google clouds of the world, the Azure's of the world, where they are able to exist because all of a sudden it's easy to spin up workloads and applications through one of the big cloud store compute. So when people say cloud providers, there's like the store compute providers, like literally. The people who are selling the store, the computer, instead of buying on premise servers, you're using Google or Amazon or Azure or Alley Cloud IBM is there. And they're really big. They spend like a billion dollars a quarter. It's huge capital intensive. And then because of that, there's all these applications that have existed and a huge proliferation. And people are trying different sorts of things and that's great. We sit at the network layer, the one layer, the tier that no one pays any attention to.
39:47 Speaker 02 Where we used to be like, you used to have to buy a load balancer from, or a firewall from a hardware vendor, or a WAN optimization for our provider to make all those other things work. That's also moved to the cloud. So all three of these tiers, whether you're at the network, application, store, compute, went from a world where you were buying hardware and software to cloud-based services that you rent. And I think that often when you say, where are the clouds? How do they compete? How do they compare? It depends on which tier you're talking about. Because AWS and Azure, their cloud looks different than what the application providers are doing, which looks different than what CloudFlare is doing, because we're all playing in a different place on the stack and playing a different role of where we came from. And so for us, 200 points of presence is a lot.
40:30 Speaker 02 200 cities is a lot. It's a big network. It's much bigger than something like an AWS, because they're doing something different. They have different regions around the world. And those regions, those points that they have are much, much bigger than ours. Whereas we need to be in a lot of places because we have to be close to the eyeballs.
40:47 Patrick O'Shaughnessy? That sounds like a big chicken and egg problem that if having the distributed network is key, to be close to eyeballs, to make your service effective, and they're expensive and hard to build. What was A to B doing that? Did you decide, is the sequencing really important? Are you just getting denser? Talk me through how you did that. That sounds really hard.
41:05 Speaker 02 I don't know if our secret sauce, but it kind of is. It's, it is what makes CloudFlare like, it is our foundational element to understand. It's not something that a lot of people are doing. Just put it that way. It's rare. And so to build a global network, you need internet traffic. Because it becomes a currency, you need internet traffic. So you can buy your way into things like Equinix and TerraMark. You rent space. That's their business. They sell space for you to be able to put your servers or gear around the world. But they're only in so many locations, they're not in 200. If you want to enter 200, you have to go into the ISPs. You have to get invited into the internet service providers in each of the regions around the world. And CloudFlare has three points presence in Pakistan. And the reason why we have three points presence in Pakistan is because the local ISP there said,
41:50 Speaker 02 "Hey, I see a lot of traffic that I have to pay for to get backhauled to Frankfurt. Can you please send your gear to us? I'll put it into my cages here in Pakistan. And not only will it make the internet faster for now, all the citizens of Pakistan going to these websites behind CloudFlare, but now I don't have to pay the third-party transit provider to backhaul internet traffic back to Frankfurt. And so we basically send our gear to Pakistan. And all of a sudden, we take costs out of how much it costs us to run this network around the world, which is why we can deliver at really good value. And if we had no traffic from Pakistan, the ISP there would never invite us into their... It's not like a SKU you can call them up and pick.
42:32 Speaker 02 That's not the business they're in. They're in a different business of selling internet service access to the citizens of Pakistan. And they see this as a way to making it a symbiotic, because in most of the world, aside from the US, you pay for the more you consume the internet in region. And the fastest way to get someone to consume more internet is to make it faster.
42:50 Patrick O'Shaughnessy? Talk me through a little bit your experience on the finance side of the business. Obviously, you took the company public, you've been there from the beginning, and the financial needs of a company change a lot over time as it evolves. There's been a lot of talk about, do you go public through IPOs or direct listings or SPACs? What is the relationship with Wall Street? One of my favorite discussions I had with John Collison at Stripe is like, is accounting even right for these new kinds of businesses? It doesn't seem to really capture the essence of the business in the same way that it might, you know, an old-school, factory-based business or something. What's been your experience thinking through that part of the business of, is the finance world equipping businesses like yours in the right ways with the right tools?
43:32 Speaker 02 We've lived a fairy tale existence. I don't know how else to describe it. I mean, the founder started the company. We get along. Two of the three of us are still there. The third person's just not here because he's got a terrible health issue. There's a really sad Wired article, very well-written Wired article, but keep your Kleenex nearby. It's a very sad story of a health issue. We took our company public on the New York Stock Exchange. Our stock is up a lot. It's the 14 months we took our company public. We went public at just over $5 billion market cap. And now we're at $20 billion market caps. We've delivered a ton of ROI to our shareholders. Both our venture, we raised, before we went public, we had raised just over $300 million
44:12 Speaker 02 in venture from amazing venture partners like NEA and Pelion and Ben Rock, Union Square Ventures out of New York. And then some of the public market investors were early, like Fidelity and Franklin Templeton. And then we raised more money in the market. And then we did another convertible debt offering just in May. So at this point, I've raised something like $1.4 billion. And the culture at Klattler is going well. And we reported Q3 earnings a couple of weeks ago, and we did a good job. The results were very good. So I guess things are working just fine for a company like Klattler. To be perfectly honest, I think that big idea, big market cap, and we've executed on it. The system has worked very well for us, like the existing system. I think
44:55 Speaker 02 that there are lots of companies that might not want to swing through the fences. They don't want to, they're trying to create a $20 billion market cap company. They're trying to solve something, and they just need a little bit of money. And I think that might be harder or whatnot. But for us, the system, we are kind of the Hollywood fairy tale story of what entrepreneurs' dreams are made of.
45:16 Patrick O'Shaughnessy? What have you learned about an evolving relationship with your founding partners? And what's important about keeping that relationship strong through a lot of stress and challenge? And as you said, gray hair.
45:28 Speaker 02 Yeah, I think that, you know, it's so interesting as I moved to the Valley and I've been here for 10 years. We showed up here in the summer of 09, so we kind of lived through a lot of drama the last 10 years with Twitter. Like, there's just been lots of drama in the tech industry. And I didn't really understand how that ever happened. I mean, I was so busy building Cloudflare, I just didn't really understand. 10 years later, I now understand exactly how founders end up hating each other, how venture and founders get at odds with each other, and how boards can really mess up companies. It's all three. Like, you hear terrible stories about all three. I see how all of those can happen now, and we were really lucky that never happened to us. And part of it was lucky, but part was also good decision-making.
46:11 Speaker 02 I have a saying, "Pick co-founders wisely." I actually think the same thing with life partners. Pick life partners and pick your co-founders wisely, because it has a huge impact on if you want to build something. If you pick the wrong co-founder, I mean, you're just... The odds are already stacked against you, that just makes it even harder. And it's kind of the same thing with life partner. You pick the wrong life partner, it's hard to build. So picking your co-founders matters a ton, but so do picking your investors, and so does picking your board members. Like, they all kind of go hand in hand. And there are definitely places along the way where we made really hard calls. And I'll just give you a couple of examples. We, at some point, it was like our Series C, or was our Series C. We were not known entities when we moved to the Valley to start Cloudflare. Like, Matthew, Lee and I, we were not known quantities.
46:57 Speaker 02 We did not have a brand as builders here. We'd done interesting things before, but we showed up here, kind of new kids on the block, and we were very under the radar. We raised some money or quickly, and it was this idea of like, well, if you can make this happen, this is going to be big, which is why we were able to raise a little bit of money. It was $2 million, which back then seemed like a lot of money. Now, a founder raising a $2 million round is like nothing. It's like a... That's like an angel round. But back then, that was a big deal. You can just see how fast the market has changed. The financing part of the market's changed in 10 years. Why Combinator existed, but it wasn't known, it wasn't a thing exactly. So anyhow, fast forward a couple of years into CloudFlare, we're having good traction, we're scaling, we're raising our Series C and NEA and Helion and Venrock were our investors and they were super amazing partners to us.
47:42 Speaker 02 And we started to get interest from some like famous venture capitalists, like brand name famous, like the celebrity venture capitalists that you read about in the books. And that felt really good, like it was great. And we actually ended up getting a term sheet from somebody who's very well known at a very big valuation, like it was north of a billion dollars. And again, that's not the end game, but when you're working incredibly hard, trying to overcome all these obstacles, building what you're so passionate about, trying to invent the future. And you kind of have someone who's been in the game for a long time, give you this big term sheet at these high valuation, it feels good. So we were like, wow. But every time we met with this particular investor, clearly great person, like great at what he does.
48:26 Speaker 02 His vision for CloudFlare was always different than Matthew Lee's of mine, every single time. And we weren't even in business yet. There was a little bit like friction, well, and almost like dancing around, well, we kind of see it this way. Or he was like, why do you have any free service? Get rid of the free service. We're like, well, we need the traffic so we can get the network in Pakistan. And he's like, I don't get it. Like get rid of the free. He didn't say quite like that. And so when you get a term sheet, you take it to your boards. We take it to our board and we were worried that it was going to lead to disastrous outcomes. And so we actually ended up walking away from that term sheet and we didn't have a plan B. There was not another one to go to. So we, instead of raising this money at this high valuation that we'd spun the board up with a famous investor, we kind of said, this doesn't feel right.
49:10 Speaker 02 And I think that it's going to cause more headaches in the long term and not aligned and distraction risks to the business. And so we're walking away. Now, to our board's credit, they said, okay, now we had enough cash from the balance sheet to fund the business. So it wasn't like we needed the money. And I think we all got on our merry way. Six months later, which is an eternity in startup land. We finally closed our Series C from New Year's Core Ventures, much better fit, like vision, they totally get the internet, they loved what we were doing, was all, they were great partners. And the valuation was like less than half. This was not a 10% difference. I mean, it was a huge difference now. You can't play things out, but I will say that I'm pretty sure that was a good decision that saved ourselves a lot of hassles after the fact.
49:53 Speaker 02 And it was not an easy decision, like neither of those, like unwinding the first one and then taking another. And then again, we in that round, we had more offers, there are people with higher valuations, but we really like USP. And so we always optimize for the investor and the person. And so I guess, I don't know, in the world more than ever, leadership matters. Again, we've made lots of mistakes too. So you gotta own up to things you made mistakes on and I have lots of scars to shoot about that. But I do think we made some good decisions where like we kind of always optimize for the person that whether it was the executive joining CloudFlare or the investor or the board member. And I think because of that, we've kind of had low drama in those cases and people trying to do the right thing. So it's been a very positive experience.
50:35 Speaker 02 And so I feel very fortunate to live through that because you just, all of those stories about VCs and founders and boards and the executive team not getting along are true. We've been able to kind of create our own path until now. And so I think that's been really healthy for the business.
50:53 Patrick O'Shaughnessy? I love it as a theme that spending extra time to find the right people in every key seat is a high reward. Time well spent thing to focus on for everybody, even if you're moving really fast as a startup like you guys have been and were still slowing down to find the right people seems to always be a good idea. It's just hard to do it, right? It's hard to say no to a billion dollar, billion dollar check or I'm sorry, billion dollar valuation. What are you most excited about in the future?
51:19 Speaker 02 I get to meet a lot of entrepreneurs and what I'm most excited about is if we are on something big, there's this huge shift again from hardware and software that you own to services in the cloud you rent. It feels like we have this great global network that's super flexible. It can do a lot of things. When we went public last year, Matthew and I wrote a founder's letter because we were founder led business. The very last sentence of the founder's letter said, and we're just getting started. And the reason why we say that is we really feel like we're just getting started. I think that some of that got teased out here where there's these huge shifts where can the network become the computer? Like, can you start to do compute in the network? Can you take all this hardware that's sitting in data centers around the world with all those and move it into the network through a service like Cloudflare?
52:04 Speaker 02 Holy smokes, if that works, like, can you really front everything? Like, it's, it feels like we're on to something very big. And so what I'm most excited about, sometimes people say, why do you still come to work? And what I'm really most excited about is I feel a huge immense responsibility to make sure that we reach our full potential as a business opportunity. And there are a lot of opportunities that get created. Some are shinier than others, and they're not all the same size. And so I guess what I like to think about as an entrepreneur is how do you make sure the opportunity you picked becomes its full potential? And again, I think we're just really early innings and we're running as fast as we can to become an iconic company that a lot of people admire.
52:44 Patrick O'Shaughnessy? I wish we had more time here. We've gone through a lot of time very quickly, so I'm forced to turn to my traditional closing question. I have learned a ton today. I really appreciate all of this. I'm glad I asked the question so that we could explore workers in detail. I think that just sounds like the most interesting. The network is the computer is something I've got to go wrap my head around. So thanks for all the time. My traditional closing question, which I'll ask you as well, is to ask what the kindest thing that anyone's ever done for you is?
53:08 Speaker 02 Oh, that's a good question. It makes me smile. I like that. I think about all, I mean, there's, I'm so lucky. Well, look, I guess my fairy tale of entrepreneurship story really started at the halls of HBS at Harvard Business School, where I met Matthew Prince and we got the band together to do this and it's created this. So the way I ended up there is probably maybe what I would describe as it's been such a big impact on my life is, and this is a good story because I think we could all do a little bit of it, is I was at a, my older sister lives in Boston, I was living in Canada at the time, and I went to a party she was having. And one of her friends who I did not know, like I did not know this person very well. Actually, I think he was an investor. He's like, so what are you up to? What do you do? I was like, I live in Toronto. I'm working as a product manager at Toshiba.
53:53 Speaker 02 And I said, and I'm applying to do my MBA. He's like, oh, what schools are you applying to? I was a typical American. At the time, I was like a little bit like put back. So I like listed my schools I was applying to. And he's like, why aren't you applying to Harvard? And I grew up in the middle Saskatchewan, Canada. I lived in Toronto. I mean, I was applying to good schools. I guess I just didn't think that I should apply to Harvard. But I didn't say that to him. I said, oh, you know, it's really competitive. I'm not sure. I don't have any lineage there. I don't even know. He like literally looked me in the eye at this dinner party or this cocktail party. He said, Michelle, he's like, I don't know you very well, but if you don't put your name in the hat, you're certainly never going to get pulled. And I literally went home that night and I looked up the application process for Harvard Business School. And I was like, all right. And I added it to my list of schools. And next thing I know, here we are 12 years later.
54:38 Patrick O'Shaughnessy? I love it. Great place to close. Again, have learned so much. I'm going to go Google serverless for the next couple of hours and learn more. I really appreciate it. Thank you again.
54:46 Speaker 02 Awesome. Thanks you so much for having me.
54:50 Patrick O'Shaughnessy? This episode was brought to you by DocSend. In this four part mini series, I sit down with DocSend CEO and co-founder Russ Hettleston to hear the origins of DocSend, the problems it's solving and what the future may hold. In this week's episode, DocSend CEO Russ Hettleston and I discuss the origin of DocSend and why Russ decided to start the business.
55:09 Patrick O'Shaughnessy? So Russ, because DocSend has a bit of history, I thought a neat place to begin would be with a historical thumbnail sketch of the business. What was the sort of story around its original founding? And maybe walk us through the chapters of DocSend's history as you see them so far.
55:24 Speaker 03 So we started DocSend in 2013. And as context, this is my second startup. The first one, we sold to Facebook as a talent acquisition and I had to fundraise for that one. And fundraising is just really frustrating because you don't get any feedback. You don't just, you often don't hear anything back at all. I also worked at Dropbox as an intern in 2010 and always thought that their link sending model should be helpful for this, but they didn't end up building it. So in 2013, I ran around and I asked all the major companies that I thought should build DocSend, Google, Microsoft, Box, Dropbox. I said, hey, why don't you build on top of your link sending models, analytics and control and forward tracking? And I had this whole list of things and they all said, maybe later. But I just, they weren't going to do it. And we got some acquisition offers and we were going to build something else for them. So I said, okay, we got to go start this company.
56:09 Speaker 03 So that's what we did in 2013 and raised our seed round at the end of 2013. Fast forwarding to today, we've got a little over 16,000 companies that are customers. And they range across all sorts of different use cases. We thought of it as just like, hey, let's just throw this out there and see what happens. And it turns out the way we built Doxend is really flexible. Really useful. It's great for founders fundraising. It's great for VCs fundraising. It's great for salespeople, customer success people, investment banking, M and A, e-signature. And so we really just followed along what people want in the product and we just keep unblocking them. And as we've done that, it becomes more useful, it becomes more widely used, and it's been a really fun journey.
56:48 Patrick O'Shaughnessy? What did you learn in the first five years of Doxend's history that really stands out? Cause I think the company really sounds like an inflection point in 2018. What lessons do you remember from that first chapter?
57:00 Speaker 03 So the very first chapter, we thought Doxend might be a B to C company. We weren't sure. So it just said document analytics and it was a free product. And then I accidentally sold some big sales deals because it's really useful for sales teams and still is. So our board said, hey, go sell to big sales teams. So we did. So we changed our website from saying document analytics to saying sales enablement. And then fast forward over time, doing outbound sales is expensive and it's complicated and that's fine. But we always had this just inbound interest, like people just signing up for Doxend. And in 2018, I did this project where I looked at, okay, well, what are the other use cases for Doxend? We got the sales one. Great. But we got all these support requests, people being like, are you the service that does blah, blah, blah? And we'd say yes. And then they'd start paying us. So
57:41 Speaker 03 I talked to investment bankers, I talked to founders, I talked to investors, the all sorts of different use cases. And I realized that Doxend is a horizontal technology that we need to market vertically. So we then figured out that our brand promises around control. And we put that on the website and then we started documenting all the different use cases because people who are creative would figure out, oh, I can use Doxend for this. But for every one of those, there are, there are 10 more that aren't that creative. So if you go to our website now, you'll see different use cases and we spell out how Doxend is useful there. And that's created a flywheel, basically, where people get Doxend links, they tell other people about it, they come to our website, they read like, oh my gosh, that would be useful. And then they sign up.
58:20 Patrick O'Shaughnessy? To find more episodes or sign up for our weekly summary, visit investorfieldguide.com. Thanks for listening to Founder's Field Guide.
58:42 Speaker 03 To find more episodes or sign up for our weekly summary, visit investorfieldguide.com. Thanks for listening to Founder's Field Guide.
Previous Danny Meyer – The Power of Hospitality - [Invest Like the Best, EP.203] Next Sam Hinkie – Find Your People - [Invest Like the Best, EP.204] Page updated October 26, 2026 · transcript and summary are machine-generated
