Matthew Prince: The Two Biggest Mistakes Every Founder Makes | E1072

Matthew Prince 0:00 If you go and you watch the Tech Crunch pitch, there's a judge at the end of it. And he asks, "What's your vision?" And I was like, "Our vision is to run the internet." Mic drop.

Harry Stebbings 0:09 Matthew, I am so excited for this. I've wanted to do this one for a while. So first, thank you so much for joining me today.

Matthew Prince 0:16 I'm, uh, I'm, I'm happy to be here, although I feel a little bit like a cheap date. Um, you know, I, I get all these... I, I see your posts where you're saying, like, you had to email, you know, Benioff, like, 70 times before he wrote back. You had to... I simply reply to one tweet and the next thing you know, I'm on a podcast. So, I, I, I, uh... anyway, hopefully, hopefully, uh, next time I'm gonna be harder to get.

Harry Stebbings 0:38 And you strongly disagreed, Matthew. (laughs)

Matthew Prince 0:42 Yes. (laughs)

Harry Stebbings 0:42 Which is

Harry Stebbings 0:43 a much better way to start a podcast though. I think it's fantastic. Before we get into the, um, debate, let's call it, um, take me back to when you were a child, Matthew. What did you want to be when you were growing up?

Matthew Prince 0:53 A magician, I think. Um-

Harry Stebbings 0:56 Why?

Matthew Prince 0:56 You know, I don't know. Both my parents were, um, were... Uh, they, this isn't how they would have described themselves, but they were both entrepreneurs and both bootstrapped entrepreneurs. They, they weren't, they weren't going and talking to people like you, they were, you know, building, you know, small businesses and had a lot of, um, both, uh, you know, success, um, but, but also a lot of failure along the way. I think as a result, uh, I didn't really ever know how to app-... I didn't know how to do anything else, like I didn't know how to apply for a job. I just assumed that, you know, kind of what you did, uh, when you were an adult was you started, started businesses, most of which failed, but some of, sometimes they occasionally worked and you hopefully made enough money to, to put food on, on the, on the table for your family, which is what my, my parents were, uh, again, you know, uh, nice enough to, to be able to do for, for me and my, my, my family.

Harry Stebbings 1:42 How did you first make money? I ask this of every founder that I meet on the investing side. I think it's very indicative of one's mindset.

Matthew Prince 1:49 I, I mean, uh, the first thing that comes to mind, and I don't know if they're something earlier was, you know, in about fourth grade or so, um, I, uh, I, I, I, I had access to a bunch of illegal fireworks, and I would sell them at school, which was... it made me really popular with the other kids, but not so popular with their parents. Um, and, and so I think that that, that... probably something around that. Um, there, there, there are a bunch of, again, sort of strange little entrepreneurial things that we did, did in, in school. Though, um, again, it was, uh, none of them were necessarily big moneymakers, but that was, uh, that, that was probably, that was probably the first thing that I, I, I charged someone money for.

Harry Stebbings 2:26 Final one before we actually get into the meat. What was the aha moment for Cloudflare? When was that? "I'm starting

Harry Stebbings 2:31 the company, we're doing this."

Matthew Prince 2:32 You know, I had started another company that was, um, it was in the anti-spam space. It was not, it was not particularly successful. Still kind of muddles along, um, but, uh, but, but wasn't particularly successful. We had a really amazing engineering team, uh, without a whole bunch of amazing things for them to do. So, we would come up with these sort of side projects, um, that, that were, you know, just var- various things to keep, keep the team busy and, and entertained. So, we predicted the winners at the Sundance Film Festival in advance using Bayesian statistical analysis. Today, we'd call it AI, but, um, (laughs) it's, it's all just statistics under, under the hood. We built a browser plugin that would like switch your Google cookie with other people. Uh, this was before Gmail and, and those things. And the idea was, it's really hard to keep Google from getting the signal 'cause the very nature of you type something in, it's what you're searching for. But the best... so that you can't eliminate signal, but if you can throw enough noise at it, that's another way to, uh, prevent tracking and preserve privacy. So, so we had that, which was called Lost in the Crowd. And then we, we, we... actually, for, um, Paul Graham, who's someone a lot of your, uh, listeners will, will know, um, Paul, before he started Y Combinator, um, would host a, a conference at, at MIT, called the MIT Anti-Spam Conference, and he would invite me to come out and speak and, and, uh, and one year, I was trying to figure out what to talk on, and I was, I was talking to, uh, um, a engineer on our team at, at Unspam, which is the name of the old company. And I said, "Hey, could we build a system that would track basically how spammers, uh, harvest your email address online?" Uh, and that turned into something called Project Honeypot. It allowed us to, to, uh, pull together a bunch of, of data, um, like, like things like if, if somebody is, you know, a spammer for Viagra, are they also, um, spamming for, you know, fake university diplomas? The answer is no, by the way. People, people tend to specialize. Um, what's the length of time between when a, when a, a spam crawler, um, harvests your email address and then when you get the first spam message? It averages about a week, um, but, but sometimes it's been as long as like six years, and sometimes it's been as, as short as, you know, a, a few seconds. And so, we could track all of that. We built this thing, um, you know, gave, gave kind of a talk at Paul's conference, um, got written up in Wired and a bunch of things, and then sort of put it in the corner and forgot about it. And over, over the years, about 100,000 people signed up for, for this thing. You know, the number one request was, "Can you not just track the bad guys, could you actually stop them, um, as well?" And to be totally honest, like, I ignored that. Um, and we were like, "That's a dumb idea." And then I, I had, um, taken a sabbatical.

Harry Stebbings 5:11 Wh- why did you think it was a dumb idea?

Matthew Prince 5:13 I... 'cause I, I don't know. I just didn't... I didn't... I, I was like, "That sounds hard," and, and at the time, we, we thought it would have to be software where it would be like a Apache plug-in and writing Apache plug-ins and Apache was being updated and, and it, it just didn't... it didn't seem, it didn't seem like there was a really clear path on how, how to build it. It also seemed, you know, like it was... to do it, um, would be really kind of big and hard, and that, that sounded, that sounded daunting. And-

Harry Stebbings 5:43 That does sound pretty daunting.

Matthew Prince 5:43 And I'd taken a sabbatical to go, um, to, uh, to business school, l- largely 'cause the, the company I started got sued and it was a whole, anyway, a whole, whole big thing. I met Michelle, who is... so Lee, uh, Michelle and I started Cloudflare, but I met Michelle and I... and Michelle was just clear was the, the person I should start a company with, um, which is something we can talk about if, if that's, if that's of interest. And, um, she, uh... I, we... I was trying to pitch her on idea after idea after idea, all, all of which, by the way, in retrospect, were terrible ideas. Um, and at some point, I was telling her about Project Honeypot.... and how people wanted us to, um, you know, build the thing to stop it. And it was actually Michelle who was like, "That's the idea. We're building that." And so it wasn't really even my aha moment. It was, it was actually Michelle's.

Harry Stebbings 6:27 I mean, clearly you're not a VC because then you'd take credit for everything. Uh, my question to you is, and there's a couple that I have to (laughs) spin off from that, is, uh, often we're told you have to love what you do, and it has to be kind of the central passion of your life in entrepreneurship. Do you agree with that statement?

Matthew Prince 6:43 I will say that this is the first job I've had where I haven't been imagining what else I could do. And people now are like, "Why do you, why do you still, you know, work at Cloudflare?" And I'm like, "'Cause I can't imagine anything where I'm happier and, and can have more impact and, and make more of a difference in the world." You end up spending a lot of time on these things, uh, w- if they're, if they're successful. And so you either, I think, have to, have to really love what you're doing, or, or you've, or you've got to, you know, fall in love with it. Because otherwise, um, otherwise it's gonna be tough. I don't, I, but I don't think that my... if you had asked me, you know, 14 years ago was the thing that I cared about most in the world helping defend, you know, the internet, I would've, I would've probably said, I would've said no. Um, but I think, um, having then spent the time doing this, you know, I, I feel, fall more and more in love with our mission and what we're doing as a company every, every day.

Harry Stebbings 7:44 Do you ever get a hard moment of like, what now? You know, Cloudflare is a $19.6 billion market cap company, I think it was when I checked yesterday. You're a public company, you have an incredible team. It's like, now what? Do you ever get that?

Matthew Prince 7:59 We just celebrated our, our 13th, um, anniversary of, of launching, which we, we (mumbles) think of as our birthday, which was on September 27th. And I was in our office in Austin, um, and we had a, had a little birthday party with a cake and things. And, and, um, and I was talking to an engineer and they said, um, "Hey, what do you think you're gonna be doing, you know, 13 years from now?" And usually when people ask that, they ask it on a, on a more civilized timeframe. And my answer is always like, "I'll, I'll be at Cloudflare because I can't imagine anything else that I, I would do." And I'm 48. So 13 years from now, I sort of did the math in my head and I was like, "I'll be 61." And I was like, "Wow, that's really old."

Harry Stebbings 8:35 (laughs)

Matthew Prince 8:35 And, and it was the first time where I thought, "Huh, there is a right time to step away from the company, uh, that you founded." And I, and I think there are people who have held on, uh, to it too long and, and sometimes, you know, at the detriment of, of their company and, and some of the really smart people that could take the, take the company over. Um, you may have, you may have had some of them on your podcast. Uh, and, um, but on the other hand, you know, it's really... it's hard to look out at successful founders, you know, who are really successful founders, that have stepped away from the thing they started and are actually living a life that I admire. Um, and for a long time, I, I looked at like, you know, Jeff Bezos. I was like, "Wow, he seems like he has a pretty good life. He seems like a pretty happy person." And, and now today, it seems like he's optimizing his life for Instagram, which is weird. You know, Gates seems like he's made a, a bunch of, you know, strange decisions. You go, you kind of go down the list. I, I went through this exercise, um, a little while ago with, with, uh, with Michelle. We had to get all the way down to like the Adobe founders. Um, Warnock, who, who just passed away, who, um, who actually seemed like he had a really pretty happy and successful life. So I, I think that they... I think that there's... unfortunately, there's a lot of founders who after they leave their companies, um, end up either miserable or, or dead. And it's, I think it's a really interesting question of why, why that, why that's the case. And I, and I don't have a, I don't have a great explanation.

Harry Stebbings 10:05 Do you think it's tied to identity? And I, it's something that I struggle with.

Matthew Prince 10:09 Totally. Yeah, absolutely.

Harry Stebbings 10:09 I never go, I, I never go on holiday because I never know what to do with myself.

Matthew Prince 10:14 (laughs) .

Harry Stebbings 10:14 And then I have to look in the mirror, Matthew, and go like, "I don't really like this person. Kind of shallow, (laughs) just likes venture capital, and it's horrible." And so my, my identity is my work.

Matthew Prince 10:24 I mean, that's a lot... I think that's absolutely what it is, and it gets back to your, your original question, which is, do you have to love what you, you do? I think that to be as successful as, as Gates, to be as successful as Bezos, to be as successful as Benioff, not only do you have to love it, but it becomes you. And, um, and you have an enormous stake in, in the success of the firm. And that's very different than if you're hired to be, uh, you know, the CEO of, of a company or you work, work your way up through the ranks and, and become CEO of a company. And there are unique superpowers that as a founder, uh, you have. Um, but there are also unique blind spots that you, that you have, um, as well. And I, and, and I think the thing that, um, I think that is a very rational thing to look out and see the sort of wasteland of, of former very successful founders who, who, again, we've all made more money than, than we need. Like, that's not really what motivates you.

Harry Stebbings 11:28 Has Cloudflare become you, Matthew? You mentioned being with Benioffs and your Gates and your-

Matthew Prince 11:32 Well, I hope it's... I mean, there's probably a bit of me, but I, I think it's, it's, it's bigger than me. It's certainly at least me and, and, and Michelle and Lee. And, and Michelle is, you know, such a radically different human than I am, that I think that that DNA, uh, that sort of cross-pollination of DNA from, from the two of our, our skill sets, um, has been really, really important. And, and, you know, the things that I'm really bad at, uh, she's, she's amazing at. And the things that, um, that, that, you know, once upon a time she was bad at turn out to be my, my strengths. But, but again, I... you know, it's been amazing to watch her also evolve as a, as a leader, leader as well. So, so I, I think for sure it becomes, becomes the founder. And I, and I think a lot of times, the fact that, you know, she and I have been doing this now for...... you know, o- over 14 years. And, um, we have hard conversations, but we, we get along. We don't have fights. We're really ... we're low drama. I think that that echoes down through, uh, the rest of the organization. And, you know, the, the probably most important thing that you, that you do in your life is pick who your partner is in, in, in, in, in, you know, whether it's marriage or whatever, whatever you, whatever you believe in. And I think then the, the probably... the second-most important thing if you're a, if you're a, a founder is, you know, figuring out who your co-founders are.

Harry Stebbings 12:50 I, I do want to ask about that. I do just want to ask you, on, on the kind of founder theme, are you willing to trade off happiness for success? And what I mean by that is, you know, your Benioff, your Gates, your Bezos, they have given up massive elements of life that others don't for things that others don't have.

Matthew Prince 13:08 Uh, I mean, to answer that question, you have to define what success is. Um, and so, um, and so I, I ... like what, what do you mean by success?

Harry Stebbings 13:15 Success, I mean seismic impact on society combined with market cap. I would put it in those two buckets.

Matthew Prince 13:23 So I think that those two things are, are linked. But, but I think that the, that happiness for me, at, at some level is the seismic impact. Like if I think of like what are the things that really motivate, um, me today, the, the fact that, you know, we detected, in December of 2021, the early indicia of, of, um, of Russia probing, uh, i- in a way that was similar to w- how they probed before they went into Georgia, before they went into Crimea, when they, when they, um, got more involved in Syria, and, you know, briefed, um, government officials in both the US and, and in Europe on what we were seeing, um, offered our services at no cost to Ukrainian, um, you know, government, uh, and, and infrastructure companies. And then, to be totally honest, felt a little bit like Chicken Little because, you know, December passed, then January passed, nothing was happening, nothing was happening. And then unfortunately on, you know, February 24th of 2022, um, Russia invaded. Um, and, and we helped make sure that the Ukrainian infrastructure, um, stayed online. You know, had that ... had we not done that, it would've been much harder for President Zelenskyy to get, get the message out on what was happening. It would be, be much harder to see what was happening on the front. It'd be much harder to see the atrocities that the, the Russians, um, uh, continued to commit. And I, and I think it would be harder for Ukraine to, to be able to defend themselves. In exchange for that, like I've been personally sanctioned by the Russian government, which is somewhat surreal. But like, I am super proud of that, and I'm proud of the fact that we, um, helped, uh, are, are continuing to help, um, Ukr- Ukraine win, win the war. I'm think ... I'm proud of the fact that in Iran, um, there are women who are organizing protests, they're using our technology to do it in a, in a private and secure way. Those are the things that motivate me, um, uh, and, and the work that I do.

Harry Stebbings 15:10 How does it feel when you get sanctioned by Russia? I'm sorry, I'm used to interviewing VCs. This is, uh ...

Matthew Prince 15:15 Yeah. I was on a, I was on an airplane, um, and I remember thinking, "God, I hope we're not flying over Russia." Which, which we obviously weren't, 'cause the war had started and no, no, (laughs) no aircraft were flying over Russia at that point. It was, again, it was three ... you should, you should try it, there's, there are three tech executives that, uh, that (laughs) got sanctioned at the same time. You ... you already interviewed Benioff, who was one of them, it was me, and then, uh, and then Zuckerberg. So now you've just got to get Zuckerberg on, and, and you've, and you've completed the trifecta.

Harry Stebbings 15:43 Oh. Well, I mean, that, that's wonderful. I'm two-thirds of the way there. Um-

Matthew Prince 15:46 (laughs) .

Harry Stebbings 15:46 (laughs) I'm, I'm very glad to hear that.

Matthew Prince 15:48 But I, I ... it's sort of like what, which of these things is not like the other? I think that, that success in anonymity is like the best possible thing. Um, and, and I, and I, and I, and I love that I ... that I've got that. So, so I think it would be a lot scarier if you're ... like, Benioff walks down the street, people recognize him. I walk down the street, nobody recognizes me. And that's, that's awesome. So ...

Harry Stebbings 16:11 Great you're doing this podcast, then. (laughs)

Matthew Prince 16:15 (laughs)

Harry Stebbings 16:15 If you're in San Francisco, it's a, it's a funny one. Uh, can I ask you, I heard that actually, um, there was a time when there was like a security incident, and that you actually proffered your resignation to the board. Can you take me to that?

Matthew Prince 16:28 That, I, uh ... uh, that's not ... that, that never, that never happened. The, uh, we've had, we've had all kinds of, you know ... I mean, it's hard to imagine any threat actor that isn't trying to attack Cloudflare on, on any given moment. Um, that, uh, s- some ... a senior government official once said that, you know, it's, it's crazy, there are more, um, people employed by the Chinese government to hack Cloudflare than there are, um, employees at Cloudflare. And that was, that was like, "Huh, okay." You know? I, I kind of, kind of held a, h- held a guilliance. But I, I never, I never offered my reg- resignation. It was never asked.

Harry Stebbings 17:01 I, I have to ask, you've mentioned your co-founder quite a few times.

Matthew Prince 17:05 Yeah.

Harry Stebbings 17:05 Uh, Michelle. What's your biggest advice to others on partner and co-founder selection, having the great relationship you do with Michelle?

Matthew Prince 17:13 This is an incredibly important topic. And, um, you know, we're, we're at a point now where, where other founders come and ask us for advice all the time. And, and one of the most common pieces of advice that we get asked is, "How did you and Michelle split up your responsibility?" C- and, and usually it comes from, "I've picked a co-founder. We're having a hard time figuring out who does what." I don't say this, uh, at the time, but what I think is, "Wow, they're doomed." Because if it's not totally clear, then it can become really, really bad. So let me take you back to my previous startup, which was called Unspam. Started also with two other people, uh, and those two other people, basically, I picked as, as co-founders, um, because we'd had lockers next to each other in primary school. We were, uh, three white guys, we were all basically the same height, we all basically looked the same. We'd all grown up within a few blocks of each other. We were, we were great, great, great friends going in, and, um, by the time we came out the other side, um, I just still don't talk to one of the, uh, one of the three of them. Or one of the other two, I guess. Uh, the other one I ... there w- I went-... years, um, not speaking to. We fought like dogs. And, and what was interesting was, you know, when two of us stepped away from operating roles in the company, the company went on just fine, uh, without, without the two of us, because fundamentally the problem was the three of us were the same person. We were all somewhat kind of wonky, geeky nerds. Um, you didn't need all three of us. Uh, and, and the reason, what... we might have made up different reasons to fight every day, but the fundamental reason we were fighting is that, yeah, you know, we'd cast the die and I was CEO and somebody else was CTO, and somebody else was effectively, like, COO. You could have just rotated everyone and, and it would have been, uh, the- the same, which was another way of saying that fundamentally what we were fighting over was who was in charge. That is completely different. So when I, when I started at Cloudflare, I said, "I've done this now long enough to know what my strengths and weaknesses are. And instead of picking someone who I'm friends with, let me pick somebody who is actually kind of the opposite, uh, to me." And Michelle and I weren't friends. You know, we were in the same business school cohort together. There were 90 people in the cohort. If she, if we... if she'd had a birthday party and she'd invited 40 people, I would not have made the list, uh, out of the 90. If she'd invited 60, I think I would have. S- I'm somewhere in... so I'm somewhere in the kind of 50 out of, out of 90 in terms of, in terms of, you know, in terms of friendship. But I think we both had an enormous amount of, of respect for each other because we were each very good at different things. When we went public, um, we had to go through, like, a succession planning, um, exercise. You know, if, if Matthew gets hit by a bus, who steps in as, as CEO? And the board decided, I think this is publicly filed, that, you know, Michelle would step in on a temporary basis, and then the board would do a search and figure out what the, what the long term, um, basis was. In my last company, uh, if we went through that exercise, the, the other two co-founders would have been studying the bus schedule and suggesting times that I should run across the street, um, you know, m- maybe, maybe, maybe, you know, looking the wrong way. Whereas at, at Cloudflare, um, Michelle texted me, "Don't you dare get hit by a bus." I, I think that that has in... that, that is part of... you know, it's, it's really clear that each of us have our own strengths and each of us have our own lanes. You know, if, if you, if you think about... the way Michelle would describe it is, you know, the problem space that you're trying to solve when you're starting, starting a company is so big, uh, and you want people to help with that. And ideally, you want to cover as much of that problem space as possible. So it's like a Venn diagram where you want circles that have a tiny bit of overlap so that there's, there's some ability for the people involved to relate to one another. But ideally, each of those circles has a ton of space covering the problem area, uh, to, to do that. So, you know, early on I was, I was the first salesperson, I was sort of the marketer, I was the sort of head of product, I did early customer support. Lee was the technical genius who was, you know, writing code and, and just heads down and, and that's what he wanted to do. And then Michelle was the person who made sure the rent got paid and, and took whatever the first sale was and figured out how to turn it into a process that was, you know, the second, third, fourth, sixth, uh, sale or, you know, how, how we... you know, we... I could hire one person, she would figure out how to hire 100. And those are, those are very different skill sets and I think be- because we each had our own lane, I think that that's... that was a, a big, uh, uh, tribute to the, the early success that we had and, and, and this, and the stability that we've had.

Harry Stebbings 22:08 Matthew, do you think co-founders should be friends? You have two people, two types of people, some that say every weekend, yes, every minute. You're like so into the friendship. And then others like, "No, I didn't particularly want to see my co-founder on the weekend." Not badly, but like, it's just we, we work together.

Matthew Prince 22:24 Yeah.

Harry Stebbings 22:25 But I don't want to spend every weekend with them.

Matthew Prince 22:26 I think that you... I think, um... I mean, the worst co-f- and people make this work, so there's an exception to, to every rule, but the worst is being married to your co-founder. Like, that's, that's really tough. Um, the... and, and early on people... you know, people thought Michelle and I were dating. We were... I was like, "I think she's like my sister, like, there's no way." Like that... it just was... that was, that was never, never, never a thing. Today, I mean, we're incredibly close friends. Like, if... you know, I'm, I'm turning 50 soon. She's going to be the first one on the, on the invite list, but it's because we've, we've had a lot that we've done together. But when we started out, like, we didn't hang out. We had totally different social circles, we did totally different things, and we were very... and we were very, very different. So I think you inevitably, if you do it right, become friends, um, but I think what you want to start out as is, is colleagues.

Harry Stebbings 23:15 And final one, and then I do want to discuss the Twitter disagreement. Um, you said about having hard conversations there with her and discussing pretty challenging topics.

Matthew Prince 23:23 Mm-hmm.

Harry Stebbings 23:24 How do you do that well? I'm never sure whether it's like, you know, um, minimize the time between, you know, action and discussion, you know, good conversation as one had now. How do you do hard

Harry Stebbings 23:35 conversations well?

Matthew Prince 23:36 I mean, I think the f- it's... I think it's... you have to start out that, you know, you, you have... you each have the thing that you're an expert in, and you're the decision maker for that thing. So, so today at Cloudflare, as, as we think about things, when we have a question of what product to build, ultimately, I'm the one who, who makes the decision on, on that. But Michelle has a ton of input and, and is, is helpful. But, but at the end of the day, it's my decision. On the other hand, you know, when we think about marketing or sales or go-to-market or support or HR, I mean, that, that side of the business...... um, those are all things where ultimately Michelle is the, the decision maker on, on those, those decisions. And she'll often come to me for, for advice. And again, sometimes we disagree, but, but she's the one that gets to make the, the call on, on those decisions. And I... and it's because she's better at those parts of the business that I am. And I think that recognizing that allows you to, you know, disagree, but then commit in a, in a really good way. And then, and then we don't revisit those things. We've had one fight in 14, 15 years, and it was... she, uh, she hosted a meeting that she invited me to, and I thought the meeting was stupid. And so I was sitting in the, you know, back playing on my phone and rolling my eyes, and, and all kinds of things. And at the end, she, uh, she pulled me aside and she said, "You don't have to come to my meetings, but if you ever behave like that in the meeting, uh, that we have again, you're not invited." And I was like, "You're right. I'm sorry." And that was the end of it. And we moved on and, and I... and I've, you know, (laughs) ended up, uh, trying to be much more respectful in meetings, um, ever since.

Harry Stebbings 25:17 (laughs)

Matthew Prince 25:17 So, I think that that's... again, I think, I think it comes back to don't pick the people who you had lockers next to in junior high school. Really assess yourself. Think about what your strengths and weaknesses are, and, and look for people who maybe, again, you don't want to socialize with, but that fill in the gaps, uh, that, that you have. Like I think this is where a lot of people get the diversity conversation wrong. I think diversity is something that they do because, you know, they look good in newspaper or, or some government report. That's not why to do diversity. The reason you do diversity is 'cause more diverse teams win. People who have different perspectives and have different ways of looking at the world are, are going to see the things that you don't see. And so, for the same reason that you want diversity in your stock portfolio, for the same reason you want diversity in a, you know, population of rhinos, you want diversity in what your original team was. And the fact that Michelle, Lee, and I were all such different people, I think has helped us, you know, build a team of different people. And I think that that's part of how we've, you know, reimagined the space that we've... that we've, uh, taken on, and, and had, had a lot of the success that we've had.

Harry Stebbings 26:30 Do you think it's the same in terms of marriage? How does finding a romantic partner differ?

Matthew Prince 26:35 Uh, (sighs) I, I... so I, I, uh, I'm definitely not a couple's, uh, therapist. And it's, and it's interesting. I... you know, I, I feel very fortunate to have dated some just incredible people, um, o- over, over the years, and, and especially during the time of, of starting, starting Cloudflare. And it could have worked out with almost any of them, um, but I, I think what, what happened was, you know, company came first. And, and I... and I screwed up a whole bunch of relationships, um, be- because of that. And then, I think finally when I got to a place where I felt like I had some stability and, and comfort, and, and met an amazing woman, that was the, the point in time where, where, you know, I- I sort of said, "Okay, I'm ready, ready to get married."

Harry Stebbings 27:23 What, what was that transition, Matthew? 'Cause I'm in the company comes first stage, and I haven't made the transition. What was that transition?

Matthew Prince 27:31 I don't know. I felt... I get... I think I felt... I felt like, "Huh. Okay, I've done it," like, and, and, and, and been successful enough, and, you know, made, made enough that I, I wouldn't worry about... you know, a- a- like, it's, it's one thing to, like, have... a- and when we started Cloudflare, I was dead broke. Like I... if we hadn't raised money in November of 2009, like, I wasn't sure how I was gonna pay my rent. Um, I'd already borrowed a bunch of money from my mom, and... I mean, it was... which was, by the way, as a 30-something-year-old, super embarrassing. And it was 2008, 2009, and, like, there was... there wasn't a really good other, other option. You know, over the years I'd had... I was a bartender, I was... I was a, you know, test prep instructor. I had a bunch of just odd jobs to just basically cover, you know, my living expenses. But, uh, you know, we, we had to... we had to close that first round so that we could, uh, (laughs) you know, set up payroll, so that, so that I could, I could, I could pay my rent. And, and I... and I remember it li- that when they, um... (laughs) VCs were like, "Yeah, we know, we have to... you know, we're... we've signed everything, but it's gonna take a few days for us to wire it." And I was like trying to stall my landlord so I didn't get... didn't get evicted.

Harry Stebbings 28:41 (laughs) A few days? Not, not a week, right? Just a few days. Like, a week would be really bad. (laughs)

Matthew Prince 28:46 It was. Yeah, it was... uh, it was, uh... my rent was due on the 15th of the month, and, uh, and I... and I remember we... I think we closed the, the round on like the 17th or something. We had everything wired up. We're... immediately it was like, "And here's our payroll."

Harry Stebbings 28:59 (laughs)

Matthew Prince 28:59 So it was...

Harry Stebbings 29:00 Matthew, are, are you ready to discuss this? I am.

Matthew Prince 29:03 I, I am. I think that this is-

Harry Stebbings 29:05 Okay.

Matthew Prince 29:05 I mean, this is almost like the Zuckerberg, um-

Harry Stebbings 29:11 (laughs)

Matthew Prince 29:12 ... Musk, like fi-... I mean, I will say I'm quite surprised how many people this morning have been, like, sending me notes on LinkedIn and, and things being like, "I can't believe you don't believe in the sort of niche..." I can't... there's even a term for this.

Harry Stebbings 29:26 I'm looking forward to this. This... honestly, I advise a lot of companies, and I advise them this.

Matthew Prince 29:31 Yeah.

Harry Stebbings 29:31 And so if you can teach me something else that's better, game on. But I tweeted for audience, "The single biggest mistake pre-product market fit that companies make is they don't focus on a narrow enough customer segment, target an almost impossibly small audience, earn the right to do the next thing." You then responded-

Matthew Prince 29:51 At what hour, by the way, was it when I responded?

Harry Stebbings 29:53 Uh, 2:38 AM. Uh, no, I'm joking. (laughs) I'm not too sure.

Matthew Prince 29:58 Oh, it was.

Harry Stebbings 29:59 But, uh, you responded, "Pretty strongly disagree with this." Full stop. Help me. Why do you disagree with this statement?

Matthew Prince 30:08 Yeah. So, so let's... so first of all, let's, uh... let's, let's see if we agree on a framework, and then we can... we can get to this. So, so you're a VC.

Harry Stebbings 30:16 Mm-hmm.

Matthew Prince 30:17 So, instantly that carves you out from, what I'm gonna, what I'm gonna call, like the, the entrepreneurs like my parents. Like, you know, bootstrapped entrepreneurs. And you can build incredible bootstraps, companies and businesses. And when you do that, um, the oftentimes focusing on, on a, on a niche is the right, right way to do it. But I, but, but, I, I, the context of the tweet, I think, from you, was in the context of you're an entrepreneur and you're going to raise venture capital, and that's a, that's a different, that's a different piece. Or is that, is that fair, um, to say?

Narrator 30:53 100% online, this is for startups going on a venture fundraising path.

Matthew Prince 30:57 Yeah. And, and so I think that the venture fundraising path, which again, is not the path for everyone. It's im- it's not even close to the path for most people. But it's a path that, um, that, that has a certain set of characteristics, and has a certain set of, of rules, and has a certain set of outcomes that can be good and bad. So, the next part of the framework I would suggest is, I think there are sort of three potential outcomes for businesses.

Narrator 31:23 Mm-hmm.

Matthew Prince 31:24 Um, one of which is amazing, right? You're wildly successful and you, you know, you sell the business, or you, or you take it public, or what ... And it doesn't even have to be Cloudflare. Like, you can, like it can be, it can be, it can be any number of things, but you have what people would call a success. And so let's, let's take that, that one, and that's, that's great but that's kind of the la- you know, it's hard to optimize for that. So, so let's look at the other two outcomes. If the wild success is the, is the best outcome, the second-best outcome, I would argue, is quick failure. It just doesn't work, right? And it falls on its face and, and dies. Um, that's actually a really great outcome. Um, 'cause, you know, yeah, you lose some VC's money but, you know, that's kind of the game. And, and it's, and it's fine. And it's, by the way, one of the reasons why I, you know, I talked to a bunch of folks in there, like ra- uh, having all these angels. They're like, "Oh yeah, I let my, you know, Aunt Marge invest." Like, that's th- the problem is that the second-best outcome is, is quick failure. And one of the, one of the ways to make that second-best outcome, um, more likely than the bad outcome is not have your Aunt Marge. You know, have professional investors who are, who are your investors. So, like at Cloudflare, we, we never raised like angel money. We never raised from friends and family. Um, uh, uh, literally until we were going public. Uh, and then we let, let folks like that invest in the IPO. But, but we, we didn't, we didn't do it otherwise. Um, in large part because we were like, listen, we were gonna be a one or a zero, and most likely we were gonna be a zero. And if we were a zero, like yeah, it sucked if we lost, lost Venrock's money, um, but like, that's their job. And, and it was, it was good. So that, so those ... I, I actually think the quick failure's a, a, a, again, it's not one you should play for but it's, it's a good outcome. The worst outcome by far is the slog.

Narrator 33:16 Mm-hmm.

Matthew Prince 33:17 Where you have these companies that are growing just enough that it feels like success is just over the next hill. And they, and so they can't stop, but they're ... nobody cares about them anymore. And their investors are tuned out and dread every board meeting and they're ... And, and you've got, I would guess, a bunch of slogs. And, and I've got a bunch of friends who I love and admire and respect, and they're in the slog. And you can wake up very quickly, and 10 years of your life is gone like that. And you look back and, you know, a- again, you can talk about this from, you get deluded, you get all this. But it, but the real thing is, like you just aren't proud of anything that you've done and you've stopped learning about interesting things. That's the really bad outcome, and that's the outcome to, to try and avoid. Does that ... Again, as a framework, does that sound like it kind of makes sense?

Narrator 34:17 We are totally aligned on that. 100% agree.

Matthew Prince 34:21 Awesome.

Narrator 34:21 Yeah.

Matthew Prince 34:21 Okay. So with that context, so again, if you're a bootstrap founder, like this advice doesn't apply. If, if you're a- a- and if, if you're like, "Wow, that slog thing, that sounds like fun," then maybe the, the, you know, this advice doesn't apply. So then you start to look at, okay, what is the path to doing this? And I, and I think that the, the number one most important thing that you can do as a founder-

Narrator 34:48 Oh.

Matthew Prince 34:49 ... to g- to try to get to success, or at least to figure out which of those things you're in, uh, as quickly as possible, is hire and recruit incredible people. Like, companies are just collections of people. The hardest thing by far that you do early on, uh, is, is recruiting. Um, it i- it is, it is so incredibly difficult.

Narrator 35:10 Yeah.

Matthew Prince 35:10 And so, i- i- and does that, does that also track? Like that seems-

Narrator 35:15 Totally aligned with the group.

Matthew Prince 35:16 Okay. So, so now the question is, and, and maybe again this is gonna get down to somewhat semantics. But now the question is, let's say that you're Tobi and you're starting Shopify, and you have two different options. You can be like, "I'm going to build software that's really good for snowboard shops in Ottawa, Canada to sell snowboards." And you gotta go out, 'cause that's, that's again, that's the impossibly small audience, the impossibly niche product. And now you gotta go out and recruit people to do that. Versus, "I'm going to, um, build the th- I, I'm going to build the thing that is the replacement for Amazon, but allow anyone to have control over their brand and their identity, and give them the power to do that." Which of those pitches gets you better engineers?

Narrator 36:15 Honestly, I, I, I don't see it in that way.

Harry Stebbings 36:17 ... I think you have to show a journey from one to the other. But I think if you have an engineer that just sees a fluffy vision of, "We're going to take on Amazon," they'll go, "Pfft, yeah, good luck." And then if you have-

Matthew Prince 36:28 Well, and that's-

Harry Stebbings 36:28 ... someone who says, "Hey..."

Matthew Prince 36:29 ... you, you live in, you live in, you live in London, right?

Harry Stebbings 36:31 Yeah.

Matthew Prince 36:32 Yeah. And, you know, it's one of the really interesting things. It's like, why, why is the Bay Area still, you know, the best place to start companies?

Harry Stebbings 36:44 Oh, the unbridled optimism and the view that you can change the world and...

Matthew Prince 36:49 It's, it's, it's, it is... I mean, uh, when we were starting... And by the way, it's, it's, it's why it's the best place to start companies, but it's a terrible place to scale companies.

Harry Stebbings 36:57 Huh.

Matthew Prince 36:58 It's because early on, I mean, again, we, we were like, "We're going to run the internet."

Harry Stebbings 37:04 (laughs)

Matthew Prince 37:05 Uh, like, if you go and you watch the TechCrunch pitch, and, and there's a judge at the end of it, who... And I can't remember who the judge was, but Keith Raboya was on the panel. Uh, it wasn't Keith who asked the questions, it was, it was another guy. And, um, and he asked, "What's your vision?" And I was like, "Our vision is to run the internet." Mic drop, right? And, and it didn't, that didn't seem absurd, right? And, and early on, we would ask questions like, "If Cloudflare ran the entire internet, what would the right thing be?" Technically, from a policy perspective, from a product perspective. And because of that, we were able to attract incredible people. If we had said that what we were going to do was help, um, protect small business websites from-

Harry Stebbings 37:58 Cyber.

Matthew Prince 37:58 ... you know, cyberattacks, which is, even that's a pretty big vision, you know, uh, we would not have gotten the people that we got early on, uh, to-

Harry Stebbings 38:06 But, but I don't... But my point is, I don't think it's binary, Matthew, which is like, you can say, "We're starting here, and when we do this, this, and this, that leads to this unlocking, and we then have the greater chance to-"

Matthew Prince 38:17 Yeah, but then-

Harry Stebbings 38:17 ... "make it here."

Matthew Prince 38:18 So then, but then you're, you're, you're still-

Harry Stebbings 38:20 That's different.

Matthew Prince 38:20 You're still pitching them the big, the big, the big piece. And I would say also, it's really hard to know the thing that you're gonna, the, the thing that's gonna work initially. So, so for instance, when Cloudflare launched, we had a problem, which was, we knew in order for this to be a big business, we needed to sell to really big banks and governments and financials, you know, all, h- hospitals. We needed to sell like, milli- multimillion dollar contracts on a regular basis, and that's what we do today. But in order to do that, we had to, um, build models to give them some level of security. In order to do that, we needed to have data. In order to do that, we needed to have customers. So, in order to get customers, we had to have data. In order to get data, we had to have customers. We had this chicken and egg problem.

Harry Stebbings 39:08 Sure.

Matthew Prince 39:09 And so, we set out and we said, "We're going to, you know, launch with a, a free version of, of the service, and we're going to, you know, just make it available to everyone." We didn't target who it was, but in the back of our mind, we thought that who would sign up for the free version of the service was gonna be a bunch of startups and, you know, individual developers and things like that. And that's not what happened at all. And if we had really said, "We're gonna focus on this and start there," and, you know, constrained, like... And, and our marketing copy said, "You know, Cloudflare is a service for startups and small businesses," and, and did all those things, eh, you know, if we'd started with the narrow funnel, then we wouldn't have figured out what happened, which is we made it... And, and the reason, by the way, why that worked is if you imagine an X, Y axis, and the, the X axis is sort of budget, right? Um, and the Y axis is, you know, how many cyber threats you face. There's almost a perfect line that is the smaller your budget is, the less cyber threats you'd face, the bigger your budget is, the bigger the cyber threats you'd face, with one notable exception, which is civil society and human rights organizations. We would have never thought to go talk to civil society (laughs) and human rights organizations. And yet when we opened it up, civil society and human rights organizations have no, almost no budget, but they have huge, huge, huge security risks. And so, when this company came along and said, "Hey, we're giving this free version of the service, you know, sign up for it," all of a sudden, they, they flocked to what we were doing. And because, again, we started with a really big vision and, and we, and we had (laughs) no idea who would initially sign up, but we... It was open to anyone. I mean, Yahoo could have signed up for, I mean, which would have been crazy. Um-

Harry Stebbings 40:50 Right.

Matthew Prince 40:50 ... but they didn't 'cause it didn't make sense. We really had no, no specific focus group. And, and, and that was what allowed us to find the market in a, in a way which was very different than, uh, than you would, than you would otherwise.

Harry Stebbings 41:05 But I, I think that's a very specific example related to Cloudflare, if we're being honest. I think that's even the examples you gave, so, so the eBay example, you're like, "eBay started with Beanie Babies." So, I've talked to the founders of eBay about that. That's complete and utter PR retrospective BS. And the reason that a lot of stories look like that is because almost nobody wants... If you're in the, in the, you know, the journalist that, that, that you said before we, we started that you, uh, that you don't like, nobody wants to tell the story of hugely ambitious entrepreneur sets out on hugely ambitious task and succeeds. What they like is the story of cute thing started small and then turned really big. So, the Beanie Baby story is a complete and total made-up PR- But I'm- Yeah, but, but I'm not saying that. You're conflating things, if we're being honest, Matthew. I'm not saying I'm against hugely ambitious founders. (laughs) I'm just saying that having a very targeted ICP to find your first 1,000 true fans is a core tenet to what it takes to build a successful business in many, many-

Matthew Prince 42:19 That's, that's if... That's, if that's all you're saying, fine. That, but that's, but that's a very, very, very narrow claim. And-... the risk of it is, again, if you start out with, "I'm going to, we're gonna build the snowboard shop in Ottawa," or the, the, the, "snowboard powered shop in Ottawa."

Harry Stebbings 42:39 Yeah.

Matthew Prince 42:39 Like, if you don't get that right, it, it, it could be the, the place you think. It could be that it's actually people selling teapots where you find that initial, initial task. And so y- i- i- if all you're saying is, "Cast a wide net, but then appreciate your early customers and double down and focus, and really, and really understand them," then, you know, that's, that's a r- that's, that's fine. Again, in our case, you know, w- it was, it w- the first thousand customers were all over the place and they, I, I, I can't tell any, like, discernible pattern, um, between them, except for that they were, you know, crazy enough to, to sign up for us. You know, early on. We spent a ton of time getting to know them and, and focusing on them, but, but it was always to just learn and improve the product. What we were trying to solve was still pretty ambitious for them. But if, if, if all you're trying to claim is, you know, focus on your initial customers and really love and respect them, that's great. But where it runs a risk is if you start, start to say, you know, "We've got to do X." First of all, you'll attract people that think X is... E- even though you say the journey is much longer, that they'll think that that's the, that's the end state. Um, and then secondly, it might be that you start to optimize for that end state, where you're like, "Yeah, we're gonna have the snowboard wax module and the bindings module, and we're gonna focus on those very niche-y things," which turn out to actually then hamper you, uh, i- in terms of building towards that, that generic larger vision. So again, if, i- i- i- if, if your claim is, is small as you're, it's sounding like, then yeah, but, but it, then it's impossible to disagree with. It is very hard to find an actual startup founder that, that started out saying, "We're gonna do this small, niche-y thing," and then it grew into this, S- this big task. Almost everyone early on, you know, and it's why founders, you know, can, can come across as so, so crazy, is because of the fact that, uh, that, that, that, that they, that they do have these wild, big visions.

Harry Stebbings 44:46 I get you, but they start off with a very specific ICP, which is not what I'm saying, which is a thousand true fans, which is if you look at any FinTech, often it's kind of remittance payments, it's cross-border transfers, it's hey-

Matthew Prince 44:57 Those are huge. Those are huge. (laughs) Not niche. Like you can't-

Harry Stebbings 45:01 No. But they... No. No. But they are when you, but they are when you look-

Matthew Prince 45:03 ... cross-border transfers. Like that's-

Harry Stebbings 45:04 They are when you look at European spending patterns in Eastern European countries for under 30.

Matthew Prince 45:10 But look all the, I mean, all the comp- uh, yeah. But it's a, eh, the, eh, the bigger challenge that, that I see is that typically, um, founders actually s- like set the box that they're shooting for much too small. Where, you know, you th- I just got a pitch from, from someone who I have a ton of respect for, um, you know, is building something. And you think about it, like, even if you're wildly successful at this, it's still, it's just not that big a market.

Harry Stebbings 45:40 Does it unlock something else? Does it open the door for them to be able to do another product?

Matthew Prince 45:45 Maybe. But it is, it is, um, you know, there's, there's a... Ray Rothrock is one of the, one of the, um, early investors in, in Cloudflare. And he said, "You know, usually, you start a company," um, that, that he backs. He's like,

Matthew Prince 46:00 "Usually you start with this big vision and it just gets narrower and narrower and narrower, and it, and it, you end up in this smaller box." I, I think it's actually very hard. And, and I, and I spent some time, you know, this morning trying to, trying to think of an example. I think it's really hard to find the, the counter-example of you start with, you know, what is a, a, a more limited vision. And, and what you're gonna say is, well, your vision and where you start, those are different things. I, I, I think you've, you gotta be careful though, because it turns out where you start, people start to optimize for that and you can find just local minimums, and you can spend a whole bunch of time on that local minimum. I, I think you really do have to articulate what that bigger vision is. I think it's very rare to find someone who said, "I started out just trying to build, you know, the, the platform for, you know, people to sell snowboards, and I, and I, you know, and, and I ended up building, building Shopify." Or, or, "I started out, you know, building that small thing." I think it's a, that's a very, very, very rare case.

Harry Stebbings 47:01 We're aligned there. I think, I think, I think we're totally ali- and I have, you know, when you're fundraising, you have to present the big picture. You have to present why you

Matthew Prince 47:09 When you're fundraising, you have to present a big picture. When you're recruiting, you have to present a big picture. When, when, e- even, even when you're just trying to keep your m- your mental health of, "Why is this so hard?" You have to believe in that big vision. So again, I think that the being overly focused is... And, and the, the curse is that founders try and do all the things. They, they try and understand all four corners of the problem that they're trying to solve.

Harry Stebbings 47:38 But, uh, so I'm totally with you there, but you do have to show a tie back to where you are today. And the proof points and milestones that you think you unlock over time that will get you there. And just put, just run with me on this one. And on the customer acquisition side, we talked about funding acquisition and talent acquisition. Customers actually, generally, they do care where you're going long term, but they do also want to know about the efficiency that you've driven for existing customers. They want to resonate with your messaging today. If you resonate, if you have super horizontal product messaging, it is much harder to resonate with people. They want to resonate with your go-to-market. It's got to be a channel fit with them and how they engage with their product buying. And so actually, the here and now does matter there.

Matthew Prince 48:18 Yeah. Uh, but if your claim is as narrow as, as you're making it, then yeah, sure. You're, you're right. But, but, but, uh, but then just any entrepreneur who's, who's listening to this...... recognize that Harry's claim is extremely narrow. And that really, again, that VCs want you to shoot for very big outcomes. They want you to take on tasks that if they're successful, um, are, are, you know, can get you sanctioned by Russia, and, and, you know, a- a- and find you in, in, in incredibly, you know, world-changing, uh, opportunities. And, and sure, there's, there's a journey along the way. But the goal is not... A- and it is very rare that you build the small thing, uh, and, and then it's like, "Wow," and then we realize we could build this bigger thing after that. When Zuckerberg starts Facebook, you know, and everyone was like, "Well, he was just trying to build something for, for, for Harvard," you know, again, I, I think he, he has to be on your bingo card of... or I don't know if... You don't play bingo in London, but, uh, you, do you know how that game works?

Harry Stebbings 49:21 Yeah, yeah, yeah.

Matthew Prince 49:22 Um, they... H- he has to be on the bingo card of people that you have on the show simply to ask like, "Okay. You know, sure you were building the thing for Facebook, but what was, what was, d- in the back of your mind, how early on did you think, 'Wow, some day we could connect everyone online?'" And my hunch is, it was within the first week.

Harry Stebbings 49:42 I didn't disagree with that.

Matthew Prince 49:44 Cool. We agree.

Harry Stebbings 49:45 Yeah. No. I, I...

Matthew Prince 49:46 I just, I think it's-

Harry Stebbings 49:47 I-

Matthew Prince 49:48 ... it's really important, again, for when, when VCs say something like, "You need to focus," they, they, people can mishear that as, like, it's, it's important to start with a small thing and be very successful in that, that small thing. And then from that, you know, and, and, and, you know, stay within the four corners of what you do. I think that that's the biggest mistake that, um... uh, uh, uh, no. The biggest mistake that entrepreneurs make is picking bad co-founders. Um, the second-biggest mistake that they make is not setting their sights on an ambitious enough target. And, uh, and, and I think that that's-

Harry Stebbings 50:22 I, I think he's, I think he's picking bad markets. There are some markets that are just shit, Matthew.

Matthew Prince 50:27 But that's-

Harry Stebbings 50:27 You know, if you were-

Matthew Prince 50:27 ... for sure, that's... I guess, that's an ambitious enough, that's an ambitious enough target, right? It's like, if, if all of a sudden you, you know, have cornered the market on y- p- providing services to sell, you know, people like, you know, like me, um, you know, a new car, like there just aren't that... I mean, that's just a, that's a bad market. Like, 'cause it's, even if you're wildly successful, it's just not, not a big enough thing.

Harry Stebbings 50:54 Matthew, is there any other BS that you hear from investors you see on Twitter that you're like, "God, I wish these guys would just not"?

Matthew Prince 51:02 Oh, I mean, there's a, there's a, there's a ton. Like, it's just, it's... Michelle and I went, just went back to, um, to, uh, TechCrunch Disrupt, you know, and, and w- which was, uh, which was a few weeks ago. And I remember we were like, "I wonder if anyone still comes to Disrupt, because we don't really think about it anymore." And you walked in, and it was, you know, record attendance and, and, you know, everyone, everyone's there, and everyone's sort of... There's, there's a, there's a lot in the, in the early stage, um, you know, startup and VC ecosystem that's a lot of sort of the court intrigue of, oh, you know, what, what does Harry think about this, or what does, you know, I don't know, Keith Rabois think about, you know, this? Or... And I have to confess I haven't thought about that in a really, in a really, really, really long time. And, um, I think part of Cloudflare's success was, we were nobodies. Like, we didn't know anyone, and we didn't, we didn't s- we didn't get invited to all the fun parties, and we weren't part of the cool kids crew. And I think as a result, there was... we just focused on, how do we, you know, build, build, build a, build the company? And so I- I just haven't, I haven't spent a ton of time thinking... I, I didn't spend a ton of time thinking about it early on, and I didn't spend a ton of time, um, you know, thinking about it today. And, and yeah, every once in a while I'll see, you know, a tweet from someone like you, and I, and I actually think there's a duty as a, as somebody who has been successful, and, and again, you can, you can be wildly successful as an entrepreneur and have an outcome which is... You don't, you don't have to go public. You don't have to... It doesn't have to be a billion-dollar idea. But, but I think that you, you can, you can have an amazing bootstrapped, you know, business that gets to... Actually, Michelle, um, my, my, my business partner, her husband, h- he's got two other guys, and the th- and the three of them just churn out bootstrap businesses, and they try to get each of them to cash flow basically $3 million apiece, 'cause then they can basically each take a million dollars, you know, out, and then they just do it with the next one and they do it with the next one. That's a- amazing. In some ways, that's like the best possible business.

Harry Stebbings 53:06 Do you not think, in that case, "Huh, I wonder what they could do if they actually focused?" I'm not saying they'd do better. I'm just saying a thought experiment. Clearly very talented-

Matthew Prince 53:13 Again, I think, gosh, I think, I, I, it's... If you can, if you can have reliably, you know, from a SaaS business that you don't have to spend that much time on, a million dollars that comes off of it, and then you can, with two other people who have different skill sets and you work well with, can go off and build a second one, a third one, a fourth one, that's, that's pretty good. Like, I, I, you know, I, I think that-

Harry Stebbings 53:34 It is, but why didn't you just build the first one, or, or a second one to something much bigger? Things compound over time and get easier, generally speaking.

Matthew Prince 53:42 I mean, may-

Harry Stebbings 53:43 100 to 150...

Matthew Prince 53:44 ... again, it also can be... ag- again, that's the place where, like, focusing on a niche makes a, makes a ton of sense. I, the... there's a guy, um, you know, I went to business school with, uh, we were in the same business plan competition. So you have Cloudflare on one side, and then the other person, you know, Will Dean, who started Tough Mudder-

Harry Stebbings 54:01 Oh, yeah.

Matthew Prince 54:01 ... which is a mud race.

Harry Stebbings 54:03 Oh, yeah, it's famous.

Matthew Prince 54:04 Um, and it's... And, you know, like, I think it's an open question whether, you know, they've been more successful or we've been more successful. Like, they have no costs. Um, they've got this thing that's just a machine that just kicks off a ton of cash, and he can go and focus on, you know, other things that he, that he cares about. Whereas, you know, I think, well, I gotta show up every, every single day. And yes, on paper, you know, i- i- you're, it's much less likely you're gonna have Will on your show. I- I'm not sure that that's optimizing for, you know, what, what, what real success is. You know, success will be when you're walking through an airport...... and, uh, and you see someone wearing a Tough Mudder, uh, uh, T-shirt. And, and every time I walk through an airport now, there's someone wearing a Tough Mudder T-shirt, so they've done, they've done really well.

Harry Stebbings 54:49 Does money make you happy?

Matthew Prince 54:51 Not having money sucks. Like, when I couldn't pay my rent, um, that was, that, that made me very unhappy. The, it was a certain level of, of, of wealth that you get to where i- i- it turns out that cars are cars, and I've never really been that into cars, so like, you know, I drive a fine car but I, I've never optimized for that. Houses are basically houses. And so once you can, you know, afford a car, you can afford a house, you can live in a place which, you know, you, you enjoy. You can, you can know that your, your kids are gonna, not only eat, but be able to, you know, go, go to school wherever they are. That the, that the marginal value from each additional dollar is, I think, not the thing that mo- motivates, uh, uh, many people. I think some people use it as a way to keep score. You know, hy- hyper-competitive people want to keep score, and that's never been kind of how I've, um ...

Harry Stebbings 55:41 How do you keep score then?

Matthew Prince 55:44 Do I feel like we're making the world better? You know, and I hope that we're then generating enough wealth across the entire company where the people who have come on this journey with us, um, can, can do it. Ano- another late night tweet, I was in, I was in DC, um, meeting with some of our team and one, one person on our team was like, he got emotional. He was like talking about, "I, I was able to buil- buy the house of my dreams, um, because, you know, I, I came and worked at Cloudflare." And I was like, "That's what's really cool about being an entrepreneur is it's not about you. It's the fact that the people who are around you are, are able to be successful." And, and that's true, you know, the, the broader ecosystem. And I think it's actually really important as you think about who even your partners are from, you know, a financing perspective. You know, everyone who bet on us pre-IPO made at least 10 times the money that they, that they invested with us.

Harry Stebbings 56:38 Do VCs add value, Matthew?

Matthew Prince 56:40 Of course. Yeah, for sure. VCs are great. Public market investors are, are, are even better in, in a strange way, but, but it's, uh, yeah, for sure.

Harry Stebbings 56:48 Why do pub- why are public markets investors better?

Matthew Prince 56:50 For the same reason that in places, uh, where you have, um, no fault divorce, you have fewer abusive marriages. There's tons of research into, into that. It turns out that being able to get divorced is, is really, um, makes for a better relationship. The hard thing with VCs is it's really hard for them to fire you or you to fire them. Like, it's gotta get really bad, um, before that, before that happens, you know, assuming, assuming everyone is acting in, in good faith. Um, and so it's harder then for each side to tell each other the truth, and it, it ends up often becoming, um, it, it risks becoming a really unhealthy, healthy marriage, which is part of the reason why it's so important to, um, you know, really think not about the firm, but about the people who you're gonna bring on and, and, and be a part of it 'cause you're stuck with them for a really long time and there's really no good, easy, clean divorce from VCs, and, and, and vice versa is true as well. Public market investors are great because if, e- e- they'll tell you the truth, 'cause, you know, if they don't like what you're doing, they sell your stock. You know, everyone's like, "But, you know, they're, they're so short term focused, they're so short..." Like Baillie Gifford who's, you know, one of Cloudflare's, you know, top investors, a Scottish firm, their average holding period is 16 years. That's the average, right? So that's way longer than any VC that's out there. And so again, if you can find the right public market investors, they're super smart, they'll tell you the truth, and it's in part because of the fact that if they don't like you, it's, it's easier for them to get divorced.

Harry Stebbings 58:31 Baillie Gifford are amazing. Uh-

Matthew Prince 58:32 They are.

Harry Stebbings 58:32 ... so much respect and love for them. Uh, I want to move into a quick fire round, Matthew. So I say a short statement and you give me your immediate thoughts. Does that sound okay?

Matthew Prince 58:40 Sure.

Harry Stebbings 58:41 So tell me, what's your biggest regret?

Matthew Prince 58:43 I mean, so, uh, that, uh, I'll, I'll get choked up if I talk about it. So Lee, who's the third co-founder, um, uh, unfortunately isn't, isn't at the company anymore, but, you know, someone... I knew Lee longer than, um, than I knew Michelle. At some point, uh, in sort of 20, the 2014, 2015 timeframe, he just started becoming a jerk. And it was hard 'cause it was like he was just being a jerk, and at work, and, and i- and it was incredibly disruptive. We, we, we burned through a lot of, of great people, um, because of, of his behavior. I assumed that it was because, um, you know, he'd made some money and he'd ba- basically been married, had a kid, and then he got divorced, and you know, mar- married someone from, from work, and, and, and e- and I, I figured he just was sort of like, you know, he d- some, some people, some people do, are successful and then they become jerks. Uh, and I, and I figured that was what was happening with him. Um, i- i- instead, it turned out he had a, a pretty rare neurological condition called frontotemporal dementia. It's the same thing that Bruce Willis, um, has, but, you know, Lee was in his, in his 30s, which is, which is extremely rare for something like this. I, I have tons of regrets around that. I regret being as angry as I was at him when, when like I ... 'cause I basically had to, you know, fire him 'cause he was just being... And he, and then, and that was a super hard decision for me, and then he, um, uh, where I was a mess, he was like, "Yep, you're probably right. Time to leave." And the reason why is the frontal lobe of your brain is the thing that is what helps you process and have empathy and, and have human relations, and he, j- if you look at the brain scans, the, he's, he's there missing those. And so I have a ton of regrets around how that all went down. Um, and, and I try now when, when people, um, you know, their behavior changes dramatically, to, to ask, you know, is there something going on in their personal life? Is there, is there something going on with their health?... is there something else that's, that's out there? And that was, um, and that was a, that was a really, that was, that was an incredibly hard thing. Lee's still alive. Um, but, you know, it's, but, but is, is can't speak anymore. He's just a, a hollow shell of the person he used to be.

Harry Stebbings 1:00:43 I'm sorry. That, I mean, that's really tough. Um, yeah.

Matthew Prince 1:00:46 Yeah. If you search, if you search online for, um, what happened to Lee, there's a Wired story that, that tells the, the story of it. But it's, I have tons of regret around, around how, how we, how we handled that.

Harry Stebbings 1:00:56 What have you changed your mind on in the last 12 months, Matthew?

Matthew Prince 1:00:59 Oh, I think I changed my mind a lot. Um, I, I really like the sort of Amazon, you should have, um, uh, strong opinions that are weakly held. What I've found is hard, um, about, about that is that as, you know, a successful CEO, you, you will say something and everyone thinks, well that, that must be right. The relationships that I value the most are the ones where, um, people say, "Okay, let's, let's, let's, let's think about that. Let's test it and let's," you know, and, and, and I, and I try to be, have strong opinions that are, that are, um, weakly held. So I, I, there's, the list is, the list is long and everything I'm thinking of is, would be material non-public information that I can't, can't disclose. But I'll, I'll think if there's something else.

Harry Stebbings 1:01:41 What one word would you most want to be on your tombstone and why that word?

Matthew Prince 1:01:45 Internet with a capital I.

Harry Stebbings 1:01:49 (laughs) Okay.

Matthew Prince 1:01:49 Um, and why, 'cause, 'cause I, I think it's, I, I wrote my college thesis on why the internet was a fad in '96, uh, 1996. And I, and I feel like I have a penance to, uh, to, to, to, to, uh, undo that, that early wrong.

Harry Stebbings 1:02:06 I was born in '96, Matthew. (laughs)

Matthew Prince 1:02:09 Yeah. Well, and so and then and so where, where are you gonna- (laughs)

Harry Stebbings 1:02:12 Uh, well, mine be reliable.

Matthew Prince 1:02:14 A-g- again, I'm, I, I'm 48, so I'll be 49 in November. It's only in the last like few weeks that there, there have been a handful of times where I felt really old and that was just one of them. So thanks for that, Harry.

Harry Stebbings 1:02:26 Listen, I'm always here to, you know, just bring you up, give you that positive boost. You've got a dinner party. Okay?

Matthew Prince 1:02:31 Were you named after the, the prince or is that a, like 'cause it like it was a... I thought you were maybe be like contemporaries, but you're much, much younger.

Harry Stebbings 1:02:39 No, I'm much more... I don't, I don't look that old. I'm, I'm 27, Matthew. Like I'm Speaker: your Twitter profile, your Twitter profile makes you look much older than you are. Yeah,

Harry Stebbings 1:02:49 I know. I'm just, you know, devastatingly good skincare routine, um, which, you know, is secret to success in all things. You've got a penultimate one, you've got a dinner party, you can have one guest. Who do you have dead or alive? Who do you have and why them? You can ask them anything.

Matthew Prince 1:03:03 So alive, um, I really, I really admire, um, Tim Cook. I think he's a very principled person every time I've, I've interacted with him. They, he's just, you know, it's easy to poke at the, at the, at, at Apple as, as the most successful company, you know, in the world right now. But Tim just as a human, I think is, is really interesting and having grown up as a, you know, gay, uh, man in the South, uh, and, and having had the success he has, you know, I, I... Way before Apple was sort of leaning into privacy, I heard him speak about, um, about how important privacy was for hi- his life and his career. And I really admire how principled he is. Dead, probably somebody who's thought really deeply about the sort of principles of rule of law. So maybe, maybe Aristotle, maybe, um, Madison. The interesting thing is that for, for us is that when you get to a certain size, um, you know, we're all in the game of tru- the trust game.

Harry Stebbings 1:04:02 Hmm.

Matthew Prince 1:04:03 How do you, you know, fundamentally it's how do, how can I prove that we're trustworthy? That's also the problem, um, that's the fundamental problem of governments is how do you, how do you continue to be, you know, trustworthy? And I think people who have thought about, um, those challenges and really thought through how you put in place systems that, that create trust, that's, I think those are really interesting, uh, people and I'd love to have conversations with them.

Harry Stebbings 1:04:26 Final one for you, Matthew. If you look at where we are today, which is circa 20 billion market cap, give or take depending on the day, 10 years time, what needs to happen for Cloudflare to be a 200 billion dollar company?

Matthew Prince 1:04:38 I was hanging out with, um, Parker Harris, who's the other co-founder of, of Salesforce. And this was right before the pandemic. It was, uh, January of, of 2020. And I was reflecting on the first 10 years of Cloudflare and every single day that, um, that including weekends and holidays, um, I did the math and at that particular time we had generated something like $7 million in shareholder value every day since, since we had launched, including again, weekends and holidays. And I was like, I wonder how that benchmarks against, against other, other firms. And so I, I looked at Salesforce, what they had done over that same 10-year period, which was the second 10 years of, of their, of their life. And I did the math and every single day, including weekends and holidays, um, over that same period of time, they had generated something like $48 million of shareholder value, which is extraordinary, like if you think about it. And I told, I told Parker, uh, that, and he's like, "Wow, that's so cool. I've never thought about, I never thought about it that way." There is something really incredible about subscription businesses. I think it was Einstein, although it might be miscredited, who said that, you know, the most powerful force in the u- universe is compounding interest and SaaS businesses have that natural compounding, um, effect to them. And so, you know, I think that as we look forward, you know, we're on a path from a billion dollars of revenue to $5 billion of revenue. That's inevitable that we'll, that we'll get there. It's just a matter of how long. And I think that, you know, if you're solving big problems, uh, if you're, if you're, and, and as big as possible, um, unlike what Harry suggests, and, and if you're, um, working on things and if you have a business model, which is again, SaaS business models are amazing 'cause they, they inherently compound. Those are the ways to build very large iconic companies. And I think you're gonna see us and, and many others over the years to come get, get to, you know, $200 million. And, and by the way, that's still not success. We have a lot to go after that.

Harry Stebbings 1:06:45 Listen, Matthew, I'm so thrilled that you did comment back on the tweet, regardless of agreement or not. I've loved doing this Speaker: and being your cheap date, like everyone else, you got a email like 10 times, but me, I'm just like, "Sure, I'll come on." Benny all 53 times. Unbelievable. He made me wait. But Matthew, thank you so much and this has been amazing.

Matthew Prince 1:07:04 Uh, and I'm spilling all over myself now, so it's good, good, good that, good that we're at the end. Anyway, great to, uh, great to meet you. Next time I'm in London, we'll have to go, go grab a beer.