No Priors Ep. 126 | With Cloudfare CEO Matthew Prince

1. 0:00 – 0:37

   Matthew Prince Introduction

   1. SGSarah Guo0:00

      (instrumental music plays) Hi, listeners, and welcome back to No Priors. Today, we're joined by Matthew Prince, the co-founder and CEO of juggernaut Cloudflare, a company that quietly underpins a massive chunk of the internet. From stopping the largest cyberattacks to moving more compute to the edge, Cloudflare sits at the intersection of infrastructure, security, and the future of the web. We talked to Matthew about the economics of AI for publishers, how quickly chat is replacing search, the evolving architecture of the web, what's broken about how it's funded today, and what he wants to force Google to do. Matthew, thanks so much for being here.

   2. MPMatthew Prince0:36

      Thanks for having

2. 0:37 – 2:08

   Cloudflare’s Role in Securing the Internet

   1. MPMatthew Prince0:37

      me.

   2. SGSarah Guo0:37

      So I, I want to get, like, right into the, um, juicy topics, but make sure our listeners understand, like, the scale and, like, current role of Cloudflare first.

   3. MPMatthew Prince0:47

      Mm-hmm.

   4. SGSarah Guo0:47

      So, um, correct me if I'm wrong in any of this, $66 billion market cap company today, um, about 1.8 billion in trailing revenue, and then, like, the biggest CDN by far with a bunch of different products now in security in particular. Like, what else should our audience understand about the role Cloudflare plays?

   5. MPMatthew Prince1:06

      Not to nitpick on, on one thing, but we've never really thought of ours- ourselves as a CDN. We started out very much as a security company. The whole thesis was, could you put a firewall in the cloud? Um, we saw that servers were going in the cloud. We saw that software was going in the cloud. It seemed inevitable to us that the networking equipment would go to the cloud. And the big objection that everyone had was you were gonna slow things down, and so we worked very hard to figure out how could we not slow anything down, and the goal was just to get back to parity. Turned out we were a little too good at our jobs and everything got a lot faster. And so, so yes, we've ended up competing in the CDN space, but really what Cloudflare is, is we're what the network should have been, what the internet should have been had we known in the '60s, '70s, '80s how important it was going to be, so how can we make it faster, more reliable, more secure, more efficient, more private? And, and that fundamentally is what we're working on every day at, at Cloudflare.

   6. SGSarah Guo1:57

      Uh, how long has it been since you guys started the company?

   7. MPMatthew Prince1:59

      We launched in, uh, September of 2010. So we'll be coming up on our 15th, uh, year in, in September of this year.

   8. EGElad Gil2:07

      Amazing.

3. 2:08 – 3:20

   The Road to Cloudflare’s Dominance

   1. EGElad Gil2:08

   2. SGSarah Guo2:08

      And I, I don't think there's a way to ask this question without, like, somewhat trivializing the journey, but, like, how did you become so dominant?

   3. MPMatthew Prince2:14

      I don't know. I, I mean, I think we just focused on how did we do the right thing for our customers? How did we solve the problems that were there? And, you know, at some level, the story of Cloudflare is that our... we have been customer zero along the entire journey. So every, you know, thing that started from, could we take a firewall, put it in the cloud? How would we get the data to populate that firewall? We had to have a free service. Once we had a free service, all of a sudden we had to be able to figure out how to scale, um, you know, enormously across, you know, millions of customers, uh, in, in an efficient way. That meant that you had a whole bunch of, you know, weird stuff that was using us. We got attacked by every which direction.

   4. SGSarah Guo2:56

      Mm-hmm.

   5. MPMatthew Prince2:56

      We had to build a public policy team in order to deal with those issues. We had to build our own security. We... Like, uh, someone almost hacked or stole our domain at some point as a way of hacking into us, so the next thing you know, we built our own registrar. And so to some extent, Cloudflare has been about, you know, start with a relatively simple idea, um, make it as broadly available as possible, and then solve all the problems that become sort of inherent once you've done that.

   6. SGSarah Guo3:19

      Now you're

4. 3:20 – 6:34

   The Internet’s Shift from Search to AI

   1. SGSarah Guo3:20

      in the position that I believe you've described as like the internet's traffic cop.

   2. MPMatthew Prince3:24

      Mm-hmm.

   3. SGSarah Guo3:24

      I think a lot of people feel with the, um, sucking sound of attention toward AI assistants that the shape of the internet is changing. Um, what is your... Before we go to, like, point of view on what to do, what is your prediction for what's happening?

   4. MPMatthew Prince3:39

      Uh, so no matter what, um, the, the dominant kind of value creation model of the last 30 years of the web has been search. Search drove everything. It drove, uh, all of what you did online. Entire industries grew up around that. And the real three ways that you could derive value on the web in the past were you either sold a thing, whether that was a subscription or a product or something else, you sold ads against some content, or, and, and I didn't say the business model but I said the value creation model, 'cause the third part is really important, which is a lot of people just created content for the ego of knowing that other people were, were doing the... You know, the old adage is, there are only two reasons why people create content, to get rich or to get famous. A lot of people are just doing it to get famous. And, and that's a lot of what drove... I mean, that's what drives Wikipedia. That's what drives a lot of content creation that is on the web. I think that the web is shifting now to a new interface. It's shifting away from search and it's shifting to AI. And we can see that through, uh, the trends in terms of Google usage. We can see that in terms of, like, our own usage, um, where more and more people are turning to these AI systems where they used to turn to Google. Even Google itself is sort of morphing into an AI company kind of in their, in their interface before our eyes. And as we do that, the natural thing that's going to happen is we're gonna consume derivatives rather than consuming the original content itself. Um, study that just came out, uh, from, from Pew Research that says that i- if Google puts an AI overview on the top of search, it is much less likely that people click on the links. And that seems sort of like a duh. Um, but the, the data that we have also substantiates that and shows that, um, compared with 10 years ago, it's become 10 times harder for the same piece of content to get a click from Google than it was before. And that's because the answer box, that's because of AI overviews, that's because of the, the search, uh, interfaces has gone there. And that's the good news for content creators. In the case of someone like OpenAI, it's, um, it's 750 times harder than it was with the Google of old. With the case of Anthropic, it's 30,000 times harder than the content of old. And so what I worry about is that if the value creation model of the web has been all about, how do I get traffic, the new interface of the web isn't going to send you traffic. And if that's the case, if content creators can't get value from selling a thing or a subscription, selling ads, or just the ego that they get knowing someone is reading their stuff, I worry that people aren't gonna create content, and that's gonna really not only starve the web, but it's actually gonna starve even the AI companies that are using that content as effectively the fuel for their engines.

5. 6:34 – 9:44

   Role of Agents and Content on the New Web

   1. MPMatthew Prince6:34

   2. EGElad Gil6:34

      How do you think that evolves? 'Cause if you look forward, the other thing that people are talking about a lot right now is agents and the fact that you're not only getting information through an AI, it'll actually go and do actions on your behalf. So the time you actually spend on the web is gonna go down, effectively, or at least you're gonna be dealing with one interface, which is this agent that goes off and does things in the background for you. So do you think that ultimately the AI companies will start paying for content? Do you think there'll be other ways to monetize it? Do you think it's a completely different model starts to emerge in terms of how the web works?

   3. MPMatthew Prince7:00

      There are gonna be different solutions for different pieces of, of the equation. At some level, agent kind of...... commerce is going to be probably the easiest of these to solve, where there are going to be certain companies that say, "What, listen, we'd love your agent to come and, you know, buy a widget from us." There are gonna be others that right now are aggregators of information that, that the agents can actually disintermediate or disaggregate that content, and they'll be actually quite threatened by that. But ultimately, I think commerce agents and AI is probably ultimately pretty good for.

   4. EGElad Gil7:33

      So separate commerce from content, and content-

   5. MPMatthew Prince7:34

      Right.

   6. EGElad Gil7:35

      ... is what you're worried about.

   7. MPMatthew Prince7:35

      Content is a, is a different piece, where content the problem right now is the default assumption has been that you get content for free, and it's actually interesting, a lot of the content creators are looking to the law as the solution to this, and generally, I'm a recovering, uh, law professor, so-

   8. EGElad Gil7:52

      Yeah.

   9. MPMatthew Prince7:53

      ... you know, pardon me for going down this weird tangent, but it's actually, I think, really interesting, which is, um, in copyright law, the more that you are a derivative as opposed to a direct copy, the actually, the safer you are, the more likely you are to fall under fair use. And we've actually seen a number of court cases, um, two that happened here in California, uh, that happened within a week of each other, one of which basically said AI uses of content is, is fair use, the other one which said it wasn't. There's gonna be a whole bunch of things around that, but the, probably the more sensible one is the more that you're creating derivative content, the less likely it is to be a copyright violation. But kind of opposite of that, the more that you're creating derivative content, the more likely it is that someone isn't going to go back to that original source. And so I actually worry that a lot of the content creators are focused very much on what the law says today and on copyright law, which may not come out in their, in their favor, because it is, it is actually protecting those derivative uses. I think what we have to figure out is probably a different business model where content creators get compensated, and I think the good news is, as you talk to the big AI companies, and, you know, 80% of the major AI companies are Cloudflare customers, so we have good relationship with them, we talk to them about that all the time. What they all say is, "You're absolutely right, we should be paying for content." The, the devil is in the details though, because what they all are desperately worried about is how do you make sure that it's a level playing field? They all believe their technology is the best, they all believe that them on a level playing field they're gonna win, but they're really worried, "Well, if Google still gets content for free but we have to pay for it, that doesn't seem fair," or, "If I'm paying for it but somebody else gets it for free, that doesn't seem fair." So what we've been really working on is how can we create that really level playing field, and we think if that's the case that AI companies will actually be quite willing to pay for that content.

   10. EGElad Gil9:43

       What,

6. 9:44 – 13:05

   Reshaping the Content Market Online

   1. EGElad Gil9:44

      what are the approaches you've been taking to try and level the playing field here?

   2. MPMatthew Prince9:46

      So in order to have an economy, you have to have a market. In order to have a market, you have to have scarcity. Like, no markets exist without some level of scarcity, and the problem right now with content is that content, there is no scarcity. They're giving it away for free, and so we spent the last year working not across, only across Cloudflare's existing customers, but then going across the entire publisher ecosystem writ large, not just print publishers but video, audio, music, you know, across, you know, uh, film, across the entire spectrum and saying, you know, "We think that there's a problem with AI, that it's starting to actually take value and not give you anything back." And across the board for every publisher from the Associated Press to Ziff Davis and everything in between, we've seen just incredible resonance with that message where they're all saying, "You're absolutely right, our business is getting astronomically harder over just the last six months, and we're seeing less and less of our existing business model working, so we need to do something about that." And so what we did on July 1st was we announced what we called the, uh, Content Independence Day where you could actually have independence from these AI companies and we, for free, across all of our customers whether they paid us or they didn't pay us, we started blocking by default any training that was being done by any AI companies that was there, and it was really important that we focused on that because that meant that we could treat Google the same as everyone else. Um, now what we're doing is we're working with the IETF and other standards organizations to say let's define how you have to s- announce how your, what your crawler is doing as it, as it behaves online, and we're really encouraged by the early work that's there. As that happens, we think we'll be able to set in place, um, really fine-grained permissions for content creators or anyone else-

   3. EGElad Gil11:27

      Mm-hmm.

   4. MPMatthew Prince11:27

      ... to say h- you know, humans can get my content for free, but robots have to pay for it, and then, and then figure that out. That first step of creating scarcity is what you have to do in order to figure out what the market is, and then after that, I think figuring out the market, that's gonna be what takes, you know, some time, and I think we're still experimenting with different things.

   5. EGElad Gil11:44

      That's super interesting 'cause if you look in the, the sort of search precedent, we had a robots.txt file and that's where you'd kind of specify whether a search engine could come and crawl the content, and it sounds like you're really extending some of those concepts on through to the AI layer.

   6. MPMatthew Prince11:57

      Yeah, that's, that's right, and I think, you know, robots.txt was a relatively simplistic and blunt tool where today, um, you know, it basically says you can either allow something or disallow something-

   7. EGElad Gil12:09

      Mm-hmm.

   8. MPMatthew Prince12:10

      ... and you can, you can basically do it either, you know, you can do it on a directory on, on your site or, or to the entire site, um, but, but there's not that sort of fine-grain control. And so we think robots.txt is, is sort of like the, the street signs that are, that are on the, on the road, a lot of people don't necessarily follow the speed limit though-

   9. EGElad Gil12:30

      Mm-hmm.

   10. MPMatthew Prince12:30

       ... and we actually see plenty of examples, in fact some really prominent companies that do some very, very, very shady things-

   11. EGElad Gil12:38

       Mm-hmm.

   12. MPMatthew Prince12:38

       ... where they basically say, "Absolutely we follow the rules of the road," but when push comes to shove if it turns out they're blocked then all of a sudden they're doing a bunch of things that look not dissimilar to what we see Russian hackers or Iranian hackers do-

   13. EGElad Gil12:49

       Mm-hmm.

   14. MPMatthew Prince12:49

       ... in order to try and get around those blocks. At, at Cloudflare we're really good at, at identifying that and stopping it, and we're also really good at embarrassing those companies that do that, so, you know, watch our blog and I have a feeling that some prominent, um, AI companies that are misbehaving are gonna get called out pretty soon.

7. 13:05 – 18:04

   De-emphasizing Traffic as a Proxy for Value

   1. MPMatthew Prince13:05

   2. SGSarah Guo13:05

      What do you think that, um, you know, should the idea of a marketplace for, like, contributing to training work out, um, what do you think that does to the landscape of, like, the types of content companies that win or lose? Like, I can't imagine it's gonna look like it does today because there's, there's some notion of, like, incrementality.

   3. MPMatthew Prince13:24

      I mean, this is, this is gonna take us down a, a little bit of a tangent, but I think a lot of the things that are wrong with the world today are ultimately Google's fault.They're not the worst actor, but they-

   4. EGElad Gil13:34

      I'm glad we started with, "We're all friends here," and that it's-

   5. MPMatthew Prince13:37

      We're all friends here.

   6. EGElad Gil13:37

      ... all Google's fault.

   7. MPMatthew Prince13:37

      Yeah, it's all Google's fault.

   8. EGElad Gil13:38

      Yeah, yeah.

   9. MPMatthew Prince13:39

      I think Google has been a, a net force for good in the world. I think that they actually believe in ecosystems. I think they're trying to do the right thing. But they taught everyone to worship, if they're content creators, sort of a deity which is traffic, right?

   10. EGElad Gil13:52

       Mm-hmm.

   11. MPMatthew Prince13:52

       And that was the proxy for value, is how do you generate the most traffic? And that led to Facebook as the next iteration, it led to TikTok, led to folks like The Huffington Post, which would literally write a piece of content and then A/B test headlines, trying to figure out which one generated the largest cortisol response to get the most clicks.

   12. EGElad Gil14:13

       Or if you guys remember Demand Media.

   13. MPMatthew Prince14:14

       Demand Media.

   14. EGElad Gil14:15

       (laughs)

   15. MPMatthew Prince14:15

       I mean, uh, BuzzFeed. I mean, there's a whole bunch of folks that were just trying to figure out, how do we actually stimulate rage and get people stirred up so they'll click on the thing, so that I can either sell them a subscription or sell ads against, against a piece of content? And, uh, again, I think that that led to a lot of Me Too-ism, that led to a lot of people writing the same story with sort of a slightly different bend. I don't think it led to a lot of us actually figuring out how to advance human knowledge. And so what I think is interesting is if you, if you think about the AI companies en masse, they're a relatively good approximation for the sum of human knowledge. Not perfect, but probably the best we've ever had, right, where they come together. And, and the reality is that they are in s- in aggregate, they're like a giant block of Swiss cheese, where, yeah, there's a whole bunch of cheese there, but there are holes in the cheese as well. And their very algorithms, as they, as they come across a piece of content, they prune off that content which is already kind of part of the meaty part of the cheese, whereas the parts that are in holes are actually super valuable to them. And so I actually think that if we could create a market where you're rewarding content creators not for who stimulates the most cortisol-

   16. EGElad Gil15:36

       Mm-hmm.

   17. MPMatthew Prince15:36

       ... but who fills in the holes in the cheese, and you actually pay people for that, that that is a better outcome, and that's actually advancing human knowledge. And, and that's really amazing if we can-

   18. EGElad Gil15:48

       Is, isn't-

   19. MPMatthew Prince15:48

       ... if we can do that.

   20. EGElad Gil15:48

       ... that kinda arguably companies like Murkor or Surge or Scale? As, as they do data labeling and they hire human experts to basically fill out content areas for AI companies.

   21. MPMatthew Prince15:57

       Yeah.

   22. EGElad Gil15:57

       So do you basically view this as, like, a distributed model of that, or sort of a web-based...

   23. MPMatthew Prince16:01

       I've spent the last year talking to a lot of, a lot of people. One of the more interesting conversations, um, that I had, um, was, was with Daniel Ek. I flew up to Stockholm-

   24. EGElad Gil16:10

       Mm-hmm.

   25. MPMatthew Prince16:10

       ... and, and saw, saw Daniel. And I think there's really nobody who has compensated content creators at scale-

   26. EGElad Gil16:16

       Mm-hmm.

   27. MPMatthew Prince16:17

       ... like Daniel has. And it's, it's amazing. The, the day before iTunes launched, the music industry was about an eight, $8 to $9 billion, uh, industry. Spotify on its own today-

   28. EGElad Gil16:27

       Mm-hmm.

   29. MPMatthew Prince16:28

       ... pays out over $10 billion a year to the music industry. And so done right, these can be very much pie expanding. You know, there's, there's plenty of cheese to go around-

   30. EGElad Gil16:37

       Yeah.
8. 18:04 – 20:01

   Will We Run Out of Quality Human-Generated Content?

   1. EGElad Gil18:04

      do you think that plays out as, um... So if you look at some of these, um, labeling companies that also then hire experts in to sort of provide some of-

   2. MPMatthew Prince18:10

      Yeah.

   3. EGElad Gil18:10

      ... the at least expert content that you mentioned. Um, if you look at some of the models like Med-PaLM 2 from Google, which is a couple years old now, it outperformed human physicians, the average human physician, in terms of output. So if you rated its output-

   4. MPMatthew Prince18:21

      Yeah.

   5. EGElad Gil18:21

      ... against people, at what point do you think we run out of good content from people? In other words, there, there is some limit.

   6. MPMatthew Prince18:28

      I don't think that's true. I mean, I do think that there, there will be some, like, there's always going to be people running new experiments and new tests and finding new things and, and new discoveries. And yeah, maybe we can imagine some distant future where it's all robots that are, that are doing this in, in, in the labs. But that's, that's a long ways off.

   7. EGElad Gil18:46

      Sure.

   8. MPMatthew Prince18:47

      And so in, in the meantime, you know, I think we can do that. My, my Black Mirror kind of version of the future, though, is, is actually one where we're not gonna get rid of journalists, we're not gonna get rid of scientists, we're not gonna get rid of researchers. You're going to still need that work. What I worry about is we don't figure out how to compensate broadly content creators who are independent, that we actually go back to almost a time of the Medici, where the web had historically been this incre-... incredible, sort of, um, distributor of value creation and, and knowledge creation. You could imagine a world in which all of a sudden you have five big AI companies. You have the conservative one, and you have the liberal one-

   9. EGElad Gil19:26

      Mm-hmm.

   10. MPMatthew Prince19:26

       ... and you have the European one and the Chinese one, and, and they all actually hire and run their own team of journalists, researchers, academics, the experts that fill in the chee- the s- sort of holes in their cheese. And, and again, that's not too hard to imagine that in some not so distant future that becomes a thing. What I hope is that we figure out a way to compensate independent content creators-

   11. EGElad Gil19:52

       Mm-hmm.

   12. MPMatthew Prince19:52

       ... and share that knowledge across all of them, as opposed to creating these silos of knowledge behind each, you know, variation of, of, uh, of an LLM.

   13. EGElad Gil20:00

       Do you

9. 20:01 – 22:32

   Scaling the Value of Content in the AI Age

   1. EGElad Gil20:01

      feel like the large labs agree with you on how much can be paid out to creators to fill those holes? Because, you know, you look at the scale of ad revenue, you know? I mean, even ignoring things like commerce and whatever from the open web.

   2. MPMatthew Prince20:14

      Sure.

   3. EGElad Gil20:14

      But, you know, in aggregate, like, what's been paid to labeling companies? Like, $10 billion less? We're, like, really far off if people are starting with a very large free, free today base.

   4. MPMatthew Prince20:27

      Well, a- again, I'm not sure labeling companies is the right... I, is, is labeling companies the right, the right model or is it, you know, GPU spend or is it, uh, is it, is it employee spend? You know, I actually think, you know, first of all, the amount that's paid to labeling companies will go up. Um, the amount that's pen- paid to employees and then, and then GPUs is, is continuing to go up. And so the question is, how much value is content actually giving you? And, and the answer is, you know, somewhere between 0 and 100%, right? And is it more or less than another unit of GPU time? Uh, that, I mean, there's a market that can, that can figure that out.

   5. EGElad Gil21:07

      From that first principle's view, I see it.

   6. MPMatthew Prince21:09

      Yeah, and so you-

   7. EGElad Gil21:09

      Yeah.

   8. MPMatthew Prince21:09

      ... and so you've got... So there is some value which is there. I think the mistake that a lot of content creators did was they actually did deals that don't scale as the, as the business models-

   9. EGElad Gil21:21

      Yeah.

   10. MPMatthew Prince21:21

       ... of the AI companies scale with them. So if you do a deal that's like, "$20 million and you get all my content," I mean, that's a incredibly naive deal, right? It might seem like a great deal to the content providers day one, but it's exactly the opposite of what you want to do. What you really want to do is say, okay, you know, if you imagine that there were a way to... for all of the content that is available, you say, "Here's how much that is creating value," that's going to be some percentage of whatever the subscription fee is for your AI model or if you're an ad-supported AI in the future, it's going to be some, some percentage of that. And then as the AI companies grow, then, then... and which will inherently then mean the ad revenue shrinks, that you share in that upside as your, um, downside gets, gets diluted. And that, that... I, I think that that's... You know, there's still going to be advertising out there. There's still going to be subscriptions. There's still going to be tentpole content that people just have to consume, even if they're AIs. But what you also want to do is allow that content to get into the AI systems, and, and the content creators should get compensated for that. And again, a market will deter-... If there's scarcity, a market's going to determine how, how valuable that actually

10. 22:32 – 24:55

    Cloudflare’s Approach to Inference

    1. MPMatthew Prince22:32

       is.

    2. EGElad Gil22:32

       One of the things that Cloudflare is known for, to your point, is really speeding up web pages in the internet. And as we shift from, uh, serving pages to sort of models being run, you're kind of shifting from a world of, like, caching and serving pages to, like, inference.

    3. MPMatthew Prince22:46

       Mm-hmm.

    4. EGElad Gil22:47

       How do you think about that in the context of Cloudflare or some of the directions that you all are going?

    5. MPMatthew Prince22:50

       Well, I mean, I think we, we leaned he- in heavily... And nobody remembers this, but back in 2020, we partnered with this, you know, graphics chip company in order to put, uh, GPUs at the edge of our network in order to allow people to do inference. And by the way, it was crickets. Like-

    6. EGElad Gil23:07

       (laughs)

    7. MPMatthew Prince23:07

       ... we launched this product. No one responded. There wasn't a single, like, sales inquiry, uh, to use it. And so we apologized to the partner who happened to be NVIDIA, and, uh, and kind of went on our way. Now, four years later, the market was ready for it. We, we basically just took out the same press release and issued it again, and then, you know, it's taken off like gangbusters. I think that we've leaned in heavily to, you know, we believe that a lot of inference is going to happen on your end device-

    8. EGElad Gil23:33

       Mm-hmm.

    9. MPMatthew Prince23:33

       ... but there will always be some model which is too big or too resource-intensive. And in that case, the next best place to run it is going to be on... at the inside the network at the edge, and that's, that's what we're, we're delivering. More importantly, I think that if you look at whether it's MCP or whatever the next protocol that connects agents to, you know, services and, and allows these, these things to connect, inherently because of how much of the internet we sit in front of, they have to pass through us. And so we're investing heavily behind those protocols, making sure that they have all of the security, uh, the, the underlying rails and payments infrastructure and everything else that you need. And my hunch is that what we solve in the content space and the rails that we create for the payments there very naturally then become one of the models, uh, to, to do sort of agent to agent over MCP or whatever the final protocol becomes payment infrastructure to be able to, um, to handle that as well. So Cloudflare fundamentally is a network. Um, and I remember, you know, when, you know, when cryptocurrency and bit- blockchains and everything were, were getting big, people were like, "What are you... You know, aren't you worried about this?" And I'm like-... they still need a network.

    10. SGSarah Guo24:44

        Yeah.

    11. MPMatthew Prince24:44

        You know, as AI gets big, it, like, still needs a network. And so I think we sit in the center of this and as you especially have more agent-to-agent communication, um, I think the network actually becomes more and more important.

11. 24:55 – 26:04

    How Cloudflare Responds to Market Demand

    1. MPMatthew Prince24:55

    2. SGSarah Guo24:55

       Is there a bet you're making on, like, what changes in terms of models or, you know, compound systems that, like, drive more model traffic to the architecture you described, where it's in network versus, you know, in large data center today?

    3. MPMatthew Prince25:10

       Well, I wish I would, could say we were that strategic. I mean, I think we, we go, we, we, we go to wherever the market demands that we go. And so-

    4. SGSarah Guo25:17

       Including build-

    5. MPMatthew Prince25:18

       ... today-

    6. SGSarah Guo25:18

       ... a neo cloud.

    7. MPMatthew Prince25:19

       I don't even know what a neo cloud is, but sure. Um-

    8. SGSarah Guo25:22

       It's very important.

    9. MPMatthew Prince25:22

       So, so-

    10. SGSarah Guo25:23

        (laughs)

    11. MPMatthew Prince25:23

        ... I think we're, we're fundamentally, um, you know, always just trying to say how do we respond to whatever either our own team needs as customer zero or what our customers need. And the fact that, again, 80% of the AI companies are using us, they are, um, constantly pushing us to, "Can you do this? Can you do that?" And, and I think our team is, uh, has been uniquely good at being able to execute and innovate and stay at least, you know, up with whatever the trends are. And that's, again, I think, uh, I- I'm proud of the fact that we have ended up in a lot of these, these conversations and that so much of the internet, you know, does flow through us that, you know, one way or another, I think that we end up being in the center of a lot of these transactions.

    12. SGSarah Guo26:03

        Does

12. 26:04 – 27:21

    Open vs. Closed Models

    1. SGSarah Guo26:04

       that imply any particular belief around, like, open or closed models as, you know, people continue to develop capabilities?

    2. MPMatthew Prince26:10

       You know, we have closed models that run on us. Um, we have a lot more open models that run on us. Um, I, I tend to, um... We, we have historically been a, a company that believes very much in open source and we, most of the things that we build internally, um, as long as, as long as we can, we try to open source all of that technology. And so I, I tend to be in the pro-open models, um, you know, we work very closely with the Meta team and LLaMA and, and everything that they're, they're doing. But again, I think there's gonna be different, different flavors of, of this. And, and I, you know, again, I, I'm, we're, we're happy to have customers in either end of, of that, that spectrum. I'm, I'm a little bit skep- I'm actually quite skeptical of the if we allow open source models, the world is going to end arguments. That seems histrionic to me. There are things we should worry about, like it is, you know, I, I think some of the, um, you know, uh, synthetic pathogens and other things that can be created. But it, it seems to me like the, the place to regulate that and control that is in the machine that can actually print the pathogens, not in the AI model that can come up with, with, uh, with, with what it is. That, that seems like a, a, a pretty flimsy argument for why we shouldn't have open source.

13. 27:21 – 30:58

    Path to the New Marketplace for Content

    1. MPMatthew Prince27:21

    2. SGSarah Guo27:21

       What needs to happen for your view... Sorry, I'm, I'm still going back to, um, like, shape of the web.

    3. MPMatthew Prince27:27

       Yeah.

    4. SGSarah Guo27:27

       What needs to happen for your view of, like, a marketplace for content to emerge, right? Like, what are the next-

    5. MPMatthew Prince27:34

       Yeah.

    6. SGSarah Guo27:34

       ... signs that this is actually, like, happening?

    7. MPMatthew Prince27:36

       Well, I think the, the very tactical next step is we've got to get Google to not be a special snowflake. Because Google has had such a dominant position in search, um, they almost believe that it is their right to have access to content without having to pay for it. And so the conversation that we have with them is, "We get it. The deal that you made with content creators in the past was they give you their content and you send them a certain amount of traffic. You, over time, have taken just as much of their content, but you've sent them one-tenth of the traffic that they have. And if we just plot those trends out going forward, it's gonna become, you know, a, a smaller and smaller part." At some point, the content creators will say, "We're just gonna block Google," right? Now, that seems un-... That was unthinkable 10 years ago. It seems radical six months ago. It is what people are talking about today. Why Google is so important is when you talk to all of the other AI companies, Google is the one company that they're the most afraid of. And that the reason that they're most afraid of them is because they think that they have privileged access to content in a way that is much more difficult for them to do. And so what I think we have to be able to do first of all is to, to say to Google, "Listen, you can do, still do search indexing, but if your bot is taking content and then transforming it in some way, making it into the answer box, making it into AI overviews, turning it into Gemini, that's different action, that's a different deal, and you have to be in the same bucket as everyone else." And Google's gonna resist that. Now, I think the good news is they really do believe in the ecosystem. I think they are trying to do the right thing, uh, that's out there. And, you know, maybe not this is the good news for Google, but it's the good news, I think, for the web, which is that they have a ton of both regulatory and legal and legislative pressure which is coming down on them. So one way or another, I think we will flatten that out. Once that happens, I think that's when we can actually start to say, "We're gonna shut off access to content unless you pay for it." In the beginning, most of the deals that are done, the actual money being changed, will be between large content producers and large AI companies. That's happening right now, where Condé Nast or Dotdash Meredith or The New York Times or Reddit is doing a direct deal with a large model company. That'll happen, uh, a bunch. Where I think we can play a role is when you have either a large content provider trying to make a deal with all of the AI startups that are out there, which they really do want to do, and they want to do it in a way that scales, but they can't do one-off deals in those cases. Or you have the long tail of content with all of the different AI companies. In both of those cases, I think Cloudflare can play a role in helping set what are sort of basic rates that are there. And how that model looks, you know, I'm not sure. It might be that we negotiate basically on behalf of a number of the content providers with all of the different AI companies, uh, basically a pool of capital, much like how Spotify does, and then distribute that out. It might be micropayments every time you access a piece of content. It might be that training is actually a different payment rate than search. That's, I think, something that we'll have to figure out. But step one is we've got to get Google to play by the same rules that every startup, every new, every, you know, uh, other company is playing by. And the minute we do that, I think the rest of the marketplace will actually happen a lot faster than you think.

14. 30:58 – 32:47

    Advice for Content Creators

    1. SGSarah Guo30:58

       For, uh, any content company or individual provider since, you know, that used to be a big part of the web, uh, that cannot predict today ... Like, there's no business model for them today to make money off of content going into these AI experiences.

    2. MPMatthew Prince31:13

       Yep.

    3. EGElad Gil31:14

       Yep.

    4. SGSarah Guo31:14

       And they can't, uh, it's not easy to predict what is incremental to models. What advice would you have for them?

    5. MPMatthew Prince31:20

       So I think the first thing is you've got to, you've, you've got to get back to controlling your content. So you have to sc- sc- create scarcity, uh, from the beginning. So how do you make sure that you're not just giving your content away for free? And again, we've made that easy. There are other companies, uh, that are working to try and make that easy, um, as well. And so one way or another, create scarcity, and then start to have conversations. You can see which AI companies are the most likely, uh, to, to deal with it. So we're, you know, just today there was news that Google is starting, uh, a pilot project to start to pay news providers, something they swore they would never do. Um, but again, I think that they can see e- and because they do believe in the ecosystem, they can see that this has to happen. If the incentives for creating content go away, if you can no longer sell something, if you can no longer sell ads against something, if you can no longer even get the ego hit, because if people aren't going to the original source, you don't even know if you write some incredibly influential piece that ends up in, you know, millions of AI responses. You don't actually ever even know that happened. You're, you're yelling into the void. We've got to figure something out around that, uh, around that piece. So I think the first step for content creators is recognize that y- you have a ... that the business model of the web is changing. Second, recognize there is something you can do about it, right? You can actually create this scarcity. And then third, actually participate. Start to go out and say, based on the data, "Hey, you keep trying to crawl, crawl my stuff. Like, let's figure out a way that we can have some fair exchange of value for that."

15. 32:47 – 40:07

    Exploring the Timeline for Running Models Locally

    1. MPMatthew Prince32:47

    2. EGElad Gil32:47

       One other thing that you mentioned sort of, um, a little bit as a side note when we were talking earlier was around how you felt that a lot of the models would actually be running on device.

    3. MPMatthew Prince32:54

       Mm-hmm.

    4. EGElad Gil32:55

       And running locally, and then obviously there'd be things on the edge or in the cloud that would be the bigger models perhaps doing, um, more complex tasks. When do you think that'll happen? Do you think that's based on when the devices advance in certain ways? Is it model size? Is it something else?

    5. MPMatthew Prince33:08

       Well, I think a lot of it's happening, um, today. Um, you know, on your phone, um, there's a lot, uh, that your phone is doing locally without it having to go out.

    6. EGElad Gil33:17

       Sure.

    7. MPMatthew Prince33:17

       And, and there are, there are certain places, certain applications where it has to be local. If, if you have a driverless car and there's a red ball bouncing through a yard with a little, you know, girl running after it-

    8. EGElad Gil33:28

       For sure.

    9. MPMatthew Prince33:28

       ... whether to hit the brakes or not can't be dependent on network condi- conditions, right?

    10. EGElad Gil33:32

        Mm-hmm.

    11. MPMatthew Prince33:32

        So that has to run, uh, locally. I think that the big place where, you know, I, I ... There, there ... Where I think it, there's going to be exciting innovation that does not feel like it will be today is really in just how do you take, especially on the inference side, making it significantly more power efficient. That ends up being the biggest limiting factor. Um, Apple has, has shown that it's possible and that you can actually have relatively power efficient GPUs and TPUs that are out there. And when we talk with the folks at NVIDIA, it feels a little bit like talking to Intel back, you know, in our case in 2010 or-

    12. EGElad Gil34:06

        Sure.

    13. MPMatthew Prince34:06

        ... Apple's case in 2005 where they were like, "You're doing it wrong if you care about power efficiency." I, I remember sitting in, um, out- in, in Intel's research lab outside of Portland in 2011, um, with all ... And we were a tiny little startup. And, and ... But we were doing interesting innovative things and so ... And we were using their chips and so they brought, brought me in and I was like, "The only thing we care about is cores per watt."

    14. EGElad Gil34:31

        Mm-hmm.

    15. MPMatthew Prince34:31

        "And we just need as many cores per watt as you can possibly deliver." And they just kept saying, "You're doing it wrong. You should be water cooling your systems, doing these things."

    16. EGElad Gil34:39

        Yeah.

    17. MPMatthew Prince34:39

        And we kept trying to explain like, "We don't have that luxury."

    18. EGElad Gil34:42

        Mm-hmm.

    19. MPMatthew Prince34:42

        "We have to go into what are oftentimes the oldest, most legacy data centers in the world where there is a relatively limited power envelope and we've got to fit within that." I think the same thing is going to happen in the AI space and I'm very hopeful. NVIDIA has been a-

    20. EGElad Gil34:56

        Sure.

    21. MPMatthew Prince34:57

        ... terrific partner to us but it's been sometimes frustrating to see how, you know, more, more, uh, GPU capacity comes along with, you know, having to stand up your own mothballed nuclear power facility.

    22. SGSarah Guo35:11

        (laughs)

    23. MPMatthew Prince35:11

        Like that can't be the solution.

    24. EGElad Gil35:12

        Yeah.

    25. MPMatthew Prince35:13

        And there's no physics reason why it needs to be. And so I think that we're actively looking around, around the ecosystem trying to figure out who can deliver the most, you know, tensor units per watt or what, whatever, whatever the, the sort of GPU equivalent is. And, and that I think is, is going to be the big unlock that allows you to have more running on your device, w- whether that's your phone or your driverless car or frankly at the edge of the network. Because again, we, we, we also have to live within a power envelope which is not the same as if we were, you know, standing up a, you know, 100 megawatt, um, data center.

    26. EGElad Gil35:49

        Yeah. I was, I was kind of thinking of it, I guess from two or three perspectives. I mean to your point there's the actual chips and in the context of mobile obviously there was ARM and then Qualcomm has other approaches-

    27. MPMatthew Prince35:57

        Yeah.

    28. EGElad Gil35:57

        ... to basically get to some of the things that you're mentioning for devices. Separate from that, there's actual model size.

    29. MPMatthew Prince36:02

        Yeah.

    30. EGElad Gil36:02

        And inference time and a few other things that are kind of overlapping but different.
16. 40:07 – 44:52

    The Future of Agentic Infrastructure

    1. EGElad Gil40:07

       there's a lot of really interesting next gen models around physics and materials and other things-

    2. MPMatthew Prince40:10

       Sure, yeah.

    3. EGElad Gil40:10

       ... that might actually be interesting. Obviously, a few really od- uh, future-looking things on the infrastructure side of that I think will be important. You've probably been following a lot of the sort of, um, agentic-related infrastructure that-

    4. MPMatthew Prince40:21

       Yeah.

    5. EGElad Gil40:21

       ... actually is necessary for multi-step agents. So, I think there'll be a few big companies there, and then there's all the vertical op things, so.

    6. MPMatthew Prince40:28

       We will probably compete in that agentic infrastructure space. Um, the- the- the... We'll probably not be one provider. It will be something where you're gonna have to have a whole bunch that actually work together in some way. And so, figuring out the standards behind that, I think, is gonna be important.

    7. EGElad Gil40:42

       That's super interesting, yeah.

    8. MPMatthew Prince40:42

       And it's... You know, I think that the... whether it's MCP-

    9. EGElad Gil40:45

       Mm-hmm.

    10. MPMatthew Prince40:45

        ... or, you know, Google did their own flavor of it (laughs) -

    11. EGElad Gil40:48

        Yeah, yeah.

    12. MPMatthew Prince40:49

        ... which was, which was sort of just like it felt very Microsofty, kind of embrace and extend. Um, but- but that, all of that space is going to be-

    13. EGElad Gil40:56

        Sort of like Temporal LangGraph.

    14. MPMatthew Prince40:57

        Yeah.

    15. EGElad Gil40:57

        All those things are kind of early indicators of like new agentic infrastructure that's coming.

    16. MPMatthew Prince41:01

        Yeah, that's right.

    17. EGElad Gil41:02

        So, yeah. I think there are like an- entire very large domains, um, where a lot of the architectures probably apply.

    18. MPMatthew Prince41:09

        Yeah.

    19. EGElad Gil41:09

        And, like, the data collection. Like, efficient data collection is the question 'cause we're like, "We're not gonna get robots from Common Crawl."

    20. MPMatthew Prince41:16

        Yeah.

    21. EGElad Gil41:16

        Um, but we're, like, probably gonna get them. We just have to figure out how to pay for the data.

    22. MPMatthew Prince41:19

        Yeah.

    23. EGElad Gil41:20

        Um, and- and so, I think figuring out if there are interesting models to get to generalization in these other domains is like something I'm looking at.

    24. MPMatthew Prince41:27

        Yeah. The other thing that's gonna be really interesting is... I was, I was actually kind of a pretty much a- a- a skeptic around like the blockchain, cryptocurrency. It- it may be that this shift is the f- is the thing, 'cause now we're looking at this and we're thinking, "Okay, okay, let's say we got to a place where it was actually micropayments for every-

    25. EGElad Gil41:47

        Yeah.

    26. MPMatthew Prince41:48

        ... page view." I mean, we do something like 15 trillion requests every day. Um, and-

    27. EGElad Gil41:54

        It's an obvious use case, yeah.

    28. MPMatthew Prince41:55

        ... and but h- but how you then scale these things to be able to- to work that way, I mean, you ca- you can't do that with Bitcoin, right? There, there's-

    29. EGElad Gil42:03

        Yeah.

    30. MPMatthew Prince42:03

        And you can't even do that with Solana or other things. I think it's gonna be interesting how, how all of these things that sort of... that have developed over the last ten years, how they kind of come back together-
17. 44:52 – 45:16

    Conclusion

    1. EGElad Gil44:52

    2. SGSarah Guo44:52

       I think that's what we have time for. Thanks, Matthew.

    3. EGElad Gil44:54

       Thank you so much for joining us.

    4. MPMatthew Prince44:55

       Thanks for having me.

    5. SGSarah Guo44:56

       (techno music) Find us on Twitter @nopriorspod. Subscribe to our YouTube channel if you wanna see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way, you get a new episode every week. And sign up for emails or find transcripts for every episode at no-priors.com.

Episode duration: 45:16