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

1. 0:00 – 0:43

   Intro

   1. MPMatthew Prince0:00

      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.

   2. HSHarry Stebbings0:09

      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.

   3. MPMatthew Prince0:16

      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.

   4. HSHarry Stebbings0:38

      And you strongly disagreed, Matthew. (laughs)

   5. MPMatthew Prince0:42

      Yes. (laughs)

   6. HSHarry Stebbings0:42

      Which is

2. 0:43 – 2:31

   Personal Origins and Experiences

   1. HSHarry Stebbings0:43

      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?

   2. MPMatthew Prince0:53

      A magician, I think. Um-

   3. HSHarry Stebbings0:56

      Why?

   4. MPMatthew Prince0:56

      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.

   5. HSHarry Stebbings1:42

      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.

   6. MPMatthew Prince1:49

      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.

   7. HSHarry Stebbings2:26

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

3. 2:31 – 23:35

   Professional Insights and Company Milestones

   1. HSHarry Stebbings2:31

      the company, we're doing this."

   2. MPMatthew Prince2:32

      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.

   3. HSHarry Stebbings5:11

      Wh- why did you think it was a dumb idea?

   4. MPMatthew Prince5:13

      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-

   5. HSHarry Stebbings5:43

      That does sound pretty daunting.

   6. MPMatthew Prince5:43

      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.

   7. HSHarry Stebbings6:27

      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?

   8. MPMatthew Prince6:43

      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.

   9. HSHarry Stebbings7:44

      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?

   10. MPMatthew Prince7:59

       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."

   11. HSHarry Stebbings8:35

       (laughs)

   12. MPMatthew Prince8:35

       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.

   13. HSHarry Stebbings10:05

       Do you think it's tied to identity? And I, it's something that I struggle with.

   14. MPMatthew Prince10:09

       Totally. Yeah, absolutely.

   15. HSHarry Stebbings10:09

       I never go, I, I never go on holiday because I never know what to do with myself.

   16. MPMatthew Prince10:14

       (laughs) .

   17. HSHarry Stebbings10:14

       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.

   18. MPMatthew Prince10:24

       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.

   19. HSHarry Stebbings11:28

       Has Cloudflare become you, Matthew? You mentioned being with Benioffs and your Gates and your-

   20. MPMatthew Prince11:32

       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.

   21. HSHarry Stebbings12:50

       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.

   22. MPMatthew Prince13:08

       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?

   23. HSHarry Stebbings13:15

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

   24. MPMatthew Prince13:23

       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.

   25. HSHarry Stebbings15:10

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

   26. MPMatthew Prince15:15

       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.

   27. HSHarry Stebbings15:43

       Oh. Well, I mean, that, that's wonderful. I'm two-thirds of the way there. Um-

   28. MPMatthew Prince15:46

       (laughs) .

   29. HSHarry Stebbings15:46

       (laughs) I'm, I'm very glad to hear that.

   30. MPMatthew Prince15:48

       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 ...
4. 23:35 – 46:00

   Entrepreneurial Challenges and Lessons

   1. HSHarry Stebbings23:35

      conversations well?

   2. MPMatthew Prince23:36

      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.

   3. HSHarry Stebbings25:17

      (laughs)

   4. MPMatthew Prince25:17

      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.

   5. HSHarry Stebbings26:30

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

   6. MPMatthew Prince26:35

      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."

   7. HSHarry Stebbings27:23

      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?

   8. MPMatthew Prince27:31

      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.

   9. HSHarry Stebbings28:41

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

   10. MPMatthew Prince28:46

       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."

   11. HSHarry Stebbings28:59

       (laughs)

   12. MPMatthew Prince28:59

       So it was...

   13. HSHarry Stebbings29:00

       Matthew, are, are you ready to discuss this? I am.

   14. MPMatthew Prince29:03

       I, I am. I think that this is-

   15. HSHarry Stebbings29:05

       Okay.

   16. MPMatthew Prince29:05

       I mean, this is almost like the Zuckerberg, um-

   17. HSHarry Stebbings29:11

       (laughs)

   18. MPMatthew Prince29:12

       ... 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.

   19. HSHarry Stebbings29:26

       I'm looking forward to this. This... honestly, I advise a lot of companies, and I advise them this.

   20. MPMatthew Prince29:31

       Yeah.

   21. HSHarry Stebbings29:31

       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-

   22. MPMatthew Prince29:51

       At what hour, by the way, was it when I responded?

   23. HSHarry Stebbings29:53

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

   24. MPMatthew Prince29:58

       Oh, it was.

   25. HSHarry Stebbings29:59

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

   26. MPMatthew Prince30:08

       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.

   27. HSHarry Stebbings30:16

       Mm-hmm.

   28. MPMatthew Prince30:17

       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?

   29. NANarrator30:53

       100% online, this is for startups going on a venture fundraising path.

   30. MPMatthew Prince30:57

       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.
5. 46:00 – 1:02:49

   Reflections on Startups and Investment

   1. MPMatthew Prince46:00

      "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.

   2. HSHarry Stebbings47:01

      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

   3. MPMatthew Prince47:09

      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.

   4. HSHarry Stebbings47:38

      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.

   5. MPMatthew Prince48:18

      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?

   6. HSHarry Stebbings49:21

      Yeah, yeah, yeah.

   7. MPMatthew Prince49:22

      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.

   8. HSHarry Stebbings49:42

      I didn't disagree with that.

   9. MPMatthew Prince49:44

      Cool. We agree.

   10. HSHarry Stebbings49:45

       Yeah. No. I, I...

   11. MPMatthew Prince49:46

       I just, I think it's-

   12. HSHarry Stebbings49:47

       I-

   13. MPMatthew Prince49:48

       ... 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-

   14. HSHarry Stebbings50:22

       I, I think he's, I think he's picking bad markets. There are some markets that are just shit, Matthew.

   15. MPMatthew Prince50:27

       But that's-

   16. HSHarry Stebbings50:27

       You know, if you were-

   17. MPMatthew Prince50:27

       ... 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.

   18. HSHarry Stebbings50:54

       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"?

   19. MPMatthew Prince51:02

       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.

   20. HSHarry Stebbings53:06

       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-

   21. MPMatthew Prince53:13

       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-

   22. HSHarry Stebbings53:34

       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.

   23. MPMatthew Prince53:42

       I mean, may-

   24. HSHarry Stebbings53:43

       100 to 150...

   25. MPMatthew Prince53:44

       ... 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-

   26. HSHarry Stebbings54:01

       Oh, yeah.

   27. MPMatthew Prince54:01

       ... which is a mud race.

   28. HSHarry Stebbings54:03

       Oh, yeah, it's famous.

   29. MPMatthew Prince54:04

       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.

   30. HSHarry Stebbings54:49

       Does money make you happy?
6. 1:02:49 – 1:07:12

   Quick-fire Round

   1. HSHarry Stebbings1:02:49

      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.

   2. MPMatthew Prince1:03:03

      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.

   3. HSHarry Stebbings1:04:02

      Hmm.

   4. MPMatthew Prince1:04:03

      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.

   5. HSHarry Stebbings1:04:26

      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?

   6. MPMatthew Prince1:04:38

      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.

   7. HSHarry Stebbings1:06:45

      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.

   8. MPMatthew Prince1:07:04

      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.

Episode duration: 1:07:12