June 28, 2021 • 44min

Matthew Prince and Michelle Zatlyn of Cloudflare: How to build a better Company as well as a better Internet

Pattern Breakers

In this episode, Mike Maples Jr. interviews Matthew Prince and Michelle Zatlyn, co-founders of Cloudflare, about how they built the foundation for their successful company. They discuss the origins of Cloudflare, their approach to product development, hiring, compensation, and creating a strong company culture. The conversation provides insights into how founders can set their startups up for long-term success.

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Key Takeaways

Obsess over making your product easy to use - Cloudflare stripped down their signup process to make it incredibly fast and simple, which drove rapid user growth
Hire carefully and spend significant time on recruiting - The founders spent 20-30% of their time on hiring and were very selective, which led to high retention of early employees
Be formulaic and fair with compensation - Having a consistent formula for offers and quickly rewarding high performers creates a sense of fairness
Focus on building a great team and culture - Prioritize hiring people who believe in the mission and creating an environment where people enjoy working together
Always be recruiting - Constantly be on the lookout for great talent, even when you don't have open roles
Create inbound interest through content - Cloudflare's technical blog posts attracted many strong candidates who were excited about the problems they were solving
Look for underemployed talent - Find great people who may be in roles that don't fully utilize their skills
Have a clear compensation philosophy - Be transparent about how you think about salary, equity, etc. to build trust
Say no to candidates who just want the highest offer - Be willing to let people go to competitors if they're just chasing the biggest paycheck
Build a company with a good business, meaningful mission, and people you enjoy working with - This combination leads to the most successful and fulfilling outcomes

Introduction

In this episode, Mike Maples Jr. interviews Matthew Prince and Michelle Zatlyn, co-founders of Cloudflare, about how they built the foundation for their successful company. They discuss the origins of Cloudflare, their approach to product development, hiring, compensation, and creating a strong company culture. The conversation provides insights into how founders can set their startups up for long-term success.

Topics Discussed

Origins of Cloudflare (2:29)

Matthew Prince explains that the roots of Cloudflare came from Project Honeypot, an open source project he had worked on previously to track spammers and bad actors online. This project built up a community of over 100,000 webmasters who were asking for help protecting their sites.

Michelle Zatlyn describes how she and Matthew connected at Harvard Business School and started working on the idea for Cloudflare during a trip to Silicon Valley. As Michelle puts it: "If that guy can start a company, so could I." Matthew's response of "Of course you could" was inspiring and led them to explore the idea further.

Project Honeypot provided the initial community and data that became the foundation for Cloudflare
The co-founders met at Harvard Business School and developed the idea during a Silicon Valley immersion trip
They saw an opportunity to provide enterprise-level security and performance to smaller websites

Early Product Development (11:56)

The founders describe their approach to developing the initial Cloudflare product:

Leveraged the Project Honeypot community for early beta testers
Focused on making the product extremely easy to use - stripped down the signup process to just a few steps
Obsessed over user experience - Matthew says "Every time we ask a customer to do something...is a failure on our part."
Iterated quickly based on user feedback - fixed issues that broke early users' sites
Launched publicly at TechCrunch Disrupt in September 2010, leading to rapid user growth

Hiring and Team Building (24:24)

Michelle and Matthew emphasize how critical hiring was to Cloudflare's success:

Spent significant time on recruiting - 20-30% of founders' time, even today
Were very selective in early hires - led to high retention of initial employees
Looked for underemployed talent - e.g. great programmers doing web design
Leveraged immigration expertise to hire international talent on visas
Created inbound interest through technical blog posts
Focused on missionaries over mercenaries - people passionate about the mission

Michelle notes: "You are nothing without a great team...It doesn't matter how awesome your idea is unless you can get great people to come work with you."

Compensation Philosophy (34:22)

The founders describe their approach to compensation:

Were formulaic and consistent with initial offers
Quickly rewarded high performers with additional equity/salary
Focused on fairness over competing in bidding wars
Were willing to let candidates go to competitors offering more
Had a clear philosophy they could articulate to candidates

Matthew explains: "What employees really want and care about is being treated fairly, and fairness matters more than anything else."

Creating a Strong Culture (41:06)

Michelle emphasizes the importance of building a company with:

A good business model
A meaningful mission people believe in
People you enjoy working with

She notes: "I think that's where a lot of the magical, amazing stories that we've read about come out."

Other cultural elements they discuss:

Avoided inflated titles early on to prevent politics
Built trust through transparency around compensation philosophy
Fostered loyalty that led early employees to stay connected long-term

Lessons for Founders (39:17)

Key advice for founders from the conversation:

Have conviction in your approach - be willing to say no to candidates
Think long-term about compensation and culture
Look for ways to create inbound interest from candidates
Spend significant time on recruiting, even as you scale
Focus on building a company people want to stay at long-term

Matthew notes the power of saying no: "It's incredibly powerful if you can just have the conviction to say, I totally appreciate that. If you can go get that at Google or Facebook...go for it, and we'll see how it turns out over the long term."

Conclusion

The conversation with Cloudflare's founders provides valuable insights into how to build the foundation for a successful startup. Key themes include obsessing over product experience, being extremely selective in hiring, having a clear and fair compensation philosophy, and focusing on building a strong culture. By prioritizing these elements from the beginning, Cloudflare was able to attract and retain top talent, drive rapid user growth, and build a multi-billion dollar company. The founders emphasize that creating a company with a good business model, meaningful mission, and people you enjoy working with is the ultimate goal for entrepreneurs.