The reason I focus on cloud infrastructure software companies is that they often have an outsized impact on the world around us, even if on paper they are "small" or a "niche industry." One of these examples is Cloudflare, a cybersecurity company that, while on paper is a cybersecurity vendor, has progressively grown into one of the critical backbones of how the Internet operates today.

Its influence is so significant that many see Cloudflare as the main opposition to the threat of the frontier AI model labs taking full control over knowledge distribution. On the other hand, it has a mixed track record with sales teams and investors.

The key takeaway

For tech sales: The 35% attainment rate is a feature, not a bug, because it it filters for missionaries who can navigate the complexity of selling a platform across NetOps, SecOps, and developer ecosystems. Cloudflare's growth comes from efficiency at scale, which inverts typical consumption-based sales motions. After years of GTM pain, we're witnessing the early stages of a predictable upward cycle that has played out at ServiceNow, Snowflake, and others at similar inflection points. I’m adding them as a soft Deal Director recommendation, as I think we are seeing the right (if not very inspired) correction on the GTM leadership side.

For investors: While sales reps worry about quota attainment, investors face a bigger question: will the open web survive AI consolidation? Cloudflare has proven remarkably durable (even poor GTM execution couldn't destroy their moat as critical internet infrastructure). This is a contrarian bet that the network layer (enabling safe, efficient connectivity) matters more than the data layer (storage and intelligence). The difference between today's $2B revenue and a potential $10B outcome hinges on whether distributed networks can resist centralization by AI platforms. Cloudflare's monopolistic position over the open web makes it either the last line of defense or the next acquisition target.

Building a better internet

Matthew Prince: If I'm at a party and someone asks me what I do and I don't want to talk to them anymore. Yeah. I say that Cloudflare makes the Internet faster and protects it from bad guys.
Okay. And they say, Oh, that's really nice.
Matthew Prince: And then they walk away. If I do want to talk to them more, I say, What we did at Cloudflare was we looked at what the Internet became. And it was never supposed to be this. The the Internet was the sort of academic side project. There was actually another project coming out of out of DARPA at the same time, which was the highly secure, you know, supposed to be the robust network.
Matthew Prince: Mhmm. Turns out like many of these things, the toy took off, the robust one died. But now we're stuck with all the mistakes that we made where if you look at the original papers describing how the Internet worked, there's often a section on security and it would say security is beyond the scope of this paper. Right? Or, you know, if they it would say, like, how how do we make sure these things are actually going to work together?
Matthew Prince: People didn't really consider that from the beginning. And so what we think of as sort of the problem space that we're working on at Cloudflare is if you could go back and reengineer the Internet to be how it should have been if we had known what it was going to become from the beginning, what would that look like? And that has kind of led us to all of the things that we've that we've that we've delivered at Cloudflare.

Most of us take for granted the idea of "the internet" as something that will keep working and somebody else can fix it for us. Most of my readers work for companies whose entire business model depends on the same level of access to the internet for both themselves and their customers.

The continued existence of the digital highways is not guaranteed. The biggest players in cloud infrastructure software (the hyperscalers and the frontier model labs) would actually benefit from consolidation within their own networks.

Matthew Prince: The reason we can have a free version of our service that doesn't actually impose that much cost on us is there's always somewhere on Earth where there's a computer sitting, one of our servers sitting, not running at its top kind of capacity. And so that that just that's like the space over the urinals in the bathroom.
Matthew Prince: It's it's an asset that you didn't think that you could sell, but it turns out that someone once said, well, we can put ads there, and then and it and it became a resource. We've got that excess capacity, so we built the ability to move code around or move load around in order to take advantage of that. That's why the utilization rates of our equipment are so much higher. It's why we can get so much more out of every dollar of CapEx spend than you can if you're one of the hyperscalers, which which are fundamentally in a different business.
They're in the business of buying a server and then basically selling it back over time for fivetimes what they originally bought it for.
Matthew Prince: We we're in the business of of running code super efficiently across across that. And so in the case of the hyperscalers, optimization is their client's problem. In the case of us, optimization is our problem. And so that's that's that's what we are doing. And to answer. your question, server is a I mean, it's a pretty beefy these servers are pretty beefy.

Now the obvious question here is, does this mean Cloudflare is some sort of a cybersecurity hyperscaler for the open web? Interestingly enough, it’s a lot more nuanced than that.

Matthew Prince: You know, I think I think there's space for both of us, I think we've actually kind of carved out lanes that are different. The way the way that I like to describe this is companies at some level resemble job functions that are kind of classic job functions. And I think it if you look at an AWS or a Google or a Microsoft, the the fundamental job function that they most closely resemble is that of the DBA, the database administrator. And if you look at the KPIs that everybody at those companies look to in terms of success beyond the financial KPIs, It's how much of a customer's data do we store ourselves. And so for them, the database is is central.
Matthew Prince: And even if you look at AWS sort of diagrams, it's always like the data store that sort of that that whatever that is, you know, s three or whatever is is the center. And that's the center and everything else kinda hangs off of it. And they're all about hoarding a customer's data. If any of you've worked with database administrators, they can be a prickly group. They are kind of like the database is central and nothing.
Matthew Prince: They're quirky. There's another quirky job function, also prickly group, which is the network administrator, and that is much closer to what Cloudflare is. So the KPI that we think about and that we all measure towards beyond the financial KPIs is, of our customers, how many of their endpoints are connected to our network? And so that's what we're trying to maximize for. And so the Amazons of the world will always build some network services, but they will always be secondary to their storage services.
Matthew Prince: Because if you think about it, there's a real tension between a network and a database. The database is all put the data in and don't let it leave. Right? The network is all move the data around as much as possible. Whereas Cloudflare, we will build storage services, and there are strategic reasons we do that, but they will always be secondary to our network services.

The vast majority of the world that we have built depends on how we store, move and ultimately transform data. Cloud infrastructure software has become the layer that is responsible for this. The biggest players have a strong incentive to maintain this data within their private estates.

Matthew Prince: And so I think fundamentally, we are the network, and that is prime primary for us. And as that network, we fundamentally have an advantage and can play well with all of the different hyperscalers because we are able to interconnect them together. And so if you imagine the future, a future that is bad for Cloudflare is a future where people say, We are all in on one hyperscaler. We're going to be 100% AWS, nothing else. I have yet to find any company at scale.
Matthew Prince: They might say that. Nobody actually does it. They always have. Yeah. But we bought this company and they were. using Google Cloud, so we maintained our Google Cloud instance over here.
Matthew Prince: As long as the if the more multi cloud the world is, the more the network matters. And the more the network matters, the more it's it's powerful for us. And so I think we will compete at the margins Mhmm. With the hyperscalers. But fundamentally, I think what's unique about us is we are this network, and that is something that you need in addition to any of the hyperscalers you might also use.

So what does that mean in practice and how has the product portfolio evolved to this point?

Matthew Prince: Bless you. At at some level, the whole story of Cloudflare is we started out with something that was a pretty simple idea, which was how could you put a firewall in the cloud? And the reason we thought that was important was we saw that, you know, software was shifting to the cloud. We saw hardware was shifting to the cloud. We thought eventually all the network services were gonna shift to the cloud as well.
Matthew Prince: That was the story we told at our IPO, it was really the foundation of what we're doing. Michelle and I, we were in business school together, we saw this, and being plucky business students, were like, That is a market opportunity, let's go run after that market opportunity. And and so we were putting the firewall in the cloud. The first problem that we had was in order to make that firewall kind of effective, we needed data. And so the question was, how do you get data?
Matthew Prince: And, you know, we knew eventually to be a big business, we had to sell to the big banks and things like that. But but they weren't gonna buy us unless we could actually provide some value to them, so we needed data to flow through the system. So we're like, well, if we create a sort of free stripped down version Mhmm. And make that make that avail we had no idea how wildly successful that would be.
Matthew Prince: But as a result of that, all of a sudden, we had just a huge series of problems where people were complaining that our performance wasn't fast enough. So we had to solve that, and we tried just to get back to performance neutral. We were a little bit better at that. So all of a sudden, we were making the Internet faster. So now we had a new feature we could sell.
Matthew Prince: We had all these hacker kids that would sign up because they liked the free service, then they would try and attack each other. We didn't start out as a DDoS mitigation service, but we needed to do it because we couldn't just fire customers when they got DDoS attacked or when it works, so we had to build that. We didn't want to build DNS. We went out to Ultra and Dine and said, is there some way we can do this? But we had all these free customers, and they all wanted to charge based on the number of domains. So. then we had to build that.

Cloudflare did not end up in the position that it has today by accident, but through a series of logical evolutions of the work that they were doing as it underpinned "the mission".

Matthew Prince: So the Act One products are all what technically would be called reverse proxy products. They're how do you protect or accelerate or make available those applications or services that you're exposing to the rest of the world. So we built all that, and then at some point, we're like, gosh, we're becoming a big company.
Matthew Prince: We have all these employees, they're doing things, and people try to hack them and infect them and do things. So we need something to be able to protect them. At first, we had a Cisco VPN that we using, but we were increasingly distributed around the rest of the world. And so we were like, we should do a cloud based version of this. So Zscaler was around, so we called them.
Matthew Prince: And we were like, These guys' security isn't very good, and they're actually not that fast. And so we demoed it, and they didn't perform very well.
Jackson Ader: The Zscaler you're talking about?
Matthew Prince: Yeah, totally. So our team was like, We're not going to use that. We'll just build it ourselves. So the next thing you know, we're building freaking a Zscaler competitor, which turns into and we built it for ourselves, and then customers would be like, wow, that's pretty neat. I mean, I can demo to you on stage how much more effective our version of that is than anyone else.
Matthew Prince: And people were like, that's cool. Can we buy that too? And so then that became a whole another class of products, are zero trust, SASE, CASB, DLP, all of those different things, but they were all because we needed that. In 2017, we hit a wall. It was I I remember I was actually here in Park City on on vacation, and my wife went out to the grocery store.
Matthew Prince: And she came back, and she was like, so strange. I went to pay for the groceries, and, like, all the cash registers were down. And I was like, yeah. It was my fault. And she's like, no.
Matthew Prince: No. There are lot of things in the world that are your fault, but you don't control the cash registers. I was like, actually, NCR is a customer. We had a big outage, it took them all down. And the reason we had an outage, that was not the worst story of that day.
Matthew Prince: The worst story of that day was getting a call from a very senior executive at FedEx who said, how much longer before you're back online? And I was like, we're getting back. I'm so sorry.
And I was like, but FedEx isn't a customer. They're like, yeah, but Garmin is, and all of our planes require Garmin to be able to land or take off, and some of them are running low on fuel.

So what started with essentially offering a firewall for the internet, over time evolved into a complex architecture for servicing queries and protecting against DDoS attacks. The logical step was to start offering this also for internal networking use cases, entering into Zero Trust as an enterprise offering. The logical step afterwards was to support application development.

Matthew Prince: The idea was you could sandbox things, could isolate it to individual customers, you could roll code out in progressive ways, would auto scale, had all these security guarantees that were in place super, super, super fast. Our team fell in love with it. Same story.
They then show it to our customers. Our customers are like, how do you guys innovate so fast? I'm like, oh, let's show us your developer platform. They're like, can we buy that? That turned into Act three.
Matthew Prince: So that's what Workers And is customer zero for all of these things always is Cloudflare. We create problems, and then we go and we solve them. And so that's temporally how these things work. When we are at our best, though, we don't talk about individual features with customers. And when we talk in in earnings calls about how we're doing these pool of funds deals, what that really is is a customer saying, I don't exactly know what I'm gonna use with Cloudflare, but I am confident I'm going to spend at least x million dollars with you.
Matthew Prince: So let me just put in place a commitment that I'm going to spend that with you. You give me a rate card. As you add new products, just put them on the rate card, and let's go. We're seeing more and more people saying, we want the entire platform. That's really powerful for us.
Matthew Prince: You can see today, we've announced we've got this new bundling where we're merging together act one, act two, act three into these really coherent bundles. The place that's going to be really powerful for us and where we've struggled is with partners.
Because we internally understand how all the pieces fit together and we can put that together. Now thatwe've got that understanding, we've been able to model it out. Now we can hand that playbook to partners.

So what does that look like today as an overall offering and market value prop?

Jackson Ader: antitrust. Can you give us a rough sense of, like, how much of the Cloudflare business comes from act one, two, three?
Matthew Prince: I can say that that act two will surpass act one in the next few years. And I think act three around the same time will blow past both of them. And it's it is growing so much faster than I I would have ever expected.
Jackson Ader: So Workers and Workers AI, you've just recently, I think, sold it was a back to back quarters, the record record total contract value for those products?
Matthew Prince: Two quarters ago, announced the first $100M deal in Cloudflare's history, five year deal. Deal actually started from an off-site that we did with with developers, senior developers here in Park City in partnership with the US ski team at their facility. We do these all around the world. Someone was a customer. It was a single digit millions customer, but they knew us.
Matthew Prince: They came they were on a snowshoeing outing, and they were describing this project that they were working on. They're like, that's interesting. Let's go back and see if we can build a prototype of it. They were way down the line thinking they were gonna do this with AWS. They thought it was going to take them a year and a half to build.
Matthew Prince: We showed them how they could build a really robust proof of concept over the course of two hours with them and all bunch of other senior developers watching on as we did this, and that deal went from that snowshoe adventure to close in four weeks.

What does that look like if we translate this into actual financial performance metrics?

Cloudflare went public in 2019, nine years after being founded. The expansion since then has been steady, but not exactly painless. For a long time, the perception of the company was that it had best-in-class products and value proposition, but a weak go-to-market sales engine.

Building a sales team worthy of the mission

As far as they are concerned, most individuals that research the tech sales opportunity for Cloudflare will end up watching the now infamous layoff video back from Jan’24. RepVue is not particurarly welcoming either, with 35% attainment and some very clear feedback:

I think that it’s clear that the average tech sales rep at Cloudflare has not had a great experience over the last few years. I also think that Cloudflare is a soft “Deal Director recommends” org that you should seriously consider. Why is that?

Let's start with the obvious, Cloudflare's GTM had to change. Low sales productivity and repeatedly missing forecasts led to a massive stock selloff towards mid-2022, which wiped out the institutional investors' patience and trust in the leadership team. At the same time, product wise, the company was rapidly gaining adoption.

Matthew Prince: I think that I mean, the the the real journey that we've been going through over the last two years is transitioning from a product led growth company Mhmm. Where I mean, when you worked on our IPO, the knock on us was we didn't know how to do enterprise sales. I'd be like, look at all these enterprise customers. Of course we know how to do enterprise sales. We did not know how to do enterprise sales.
Matthew Prince: It was that enterprises would use us because we had great products, but then we would sort of be like, great. You bought that product, and we could put your logo on our on our deck. Right. But we never went and actually sold them anything more because we didn't build relationships with them. And they would come to, like, events with us, and they would say, if you just spent time understanding our procurement team, we would spend 10 times as much with you. We were like, what's a procurement team?
.Matthew Prince: And so we were were naive at at that. Now I I think that that's the right path that you take in order to build big, iconic, durable companies because if you start with product, you build great product, and then you, over time, layer in great sales. That's much better than starting with great sales and always be scrambling where you're selling essentially vaporware. We've had great product forever.
Matthew Prince: What we hadn't had is a really sophisticated go to market machine. And so when we brought on Mark Anderson, who is one of the lead will be in the hall of fames for enterprise sales leaders over time. He's brought in a really great team, we've just up leveled that team. I think that's what we always said we would see the upswing in the 2025. It came a little bit earlier than we thought.

The two key players in the current pivot are Mark Anderson (President for Revenue) and CJ Desai (President for Product).

Matthew Prince: I think that Michelle, who's my co founder, and I have largely divided the business up where the go to market side of the business has been Michelle has owned and support and HR and those things, and then I have tended to own product engineering, legal, finance. And we're not co CEOs because she hates being the center of attention, but that but she we've kind of operate that way. And she, over the last two years, I mean, is the unsung hero of Cloudflare, who has really rebuilt that whole org. And I if I look back at the history of Cloudflare, there's always something broken. Like, there's always something that's a mess.
Matthew Prince: I tend to think of it as like a triangle, each of these things, and the pucks or slides between those things, and after sales is one point in the triangle, the next thing that came was going to be shipping, which was how do you actually get products out the door, and we just needed to mature that organization. I was like, pardon the vernacular, but shit, that's going to be hard work for me to go upgrade that org. And one day the phone rings, and CJ decides, I want to come work for Cloudflare. And I was like, well, was easy.
Matthew Prince: And Michelle's like, come on. Seriously? And and so and he's just been he's been he's just been amazing. I think the places that it's shown up most actually are he is he has taken that sort of of wisdom of being a product engineering leader, but then he is the most sales driven, customer focused product engineering leader I've ever met. And he cares enormously and has a Rolodex.
Matthew Prince: He walked down the streets of New York with CJ, and he's like, hey, Bob. What else? He knows everyone. And he's trusted in these places because he's gone in and presented a roadmap and delivered on that roadmap when he was at Oracle, when he was at ServiceNow.And that was great.
Matthew Prince: I think the other thing with CJ is CJ's got a chip on his shoulder because what happened to him at ServiceNow, I tend to think was deeply unfair. And he's got something to prove. And he's like, I took a company from a billion dollars to $10B. I can do it again. I can do it faster.
Matthew Prince: And that's what we're doing at Cloudflare. And so he's just been great great to work with. And it made my job super easy.

So what does that look like from a management perspective?

Sales productivity has been steadily increasing.

Capacity issues are being addressed, as the organization shifts from a PLG and SMB/Mid-Market focus to a predominantly Enterprise go-to-market motion.

Matthew Prince: We try to get the consumption to we try and design the deals in such a way that they burn through the consumption well before the end of the deal and then re up that. We're constantly in there educating the customers on what they can do with this. And effectively, that they become it's like it's like I mean, again, we didn't invent this. We're just borrowing what Microsoft invented and taking that. But we have the breadth of products that we're one of the few companies that I think has the permission of customers to actually come in and say, you should just buy our platform.
Matthew Prince: And then over time, it becomes easier for us to say, okay, let's replace Zscalerand pull you into our Zero Trust offering. Let's find ways that you can, you know, kick AWS out of some of your functions, pull that into a workers offering. Let's make sure that you're protected from denial of service attacks no matter what. And that that whole bundle is extremely valuable, and it's it's the biggest thing that is is driving growth at Cloudflare.

The shift towards a consumption model has been critical in being able to drive account growth from large customers. Relative to its peers, Cloudflare is actually still to capture the majority of its Enterprise growth potential. It's important to note that in pretty much any big tech company that went through shifting towards consumption as a business model, quota attainment dipped for a while until the reps were able to start filling up their monthly billings.

This used to be a bearish chart, but it's showing what the growth potential is for the top tier reps that can push through.

Cloudflare is not a pure-play cybersecurity vendor anymore and the demands from the reps in terms of technical depth/ability to communicate clearly to a wide range of IT roles is critical to success. The flip side of this is that if you can make it by selling Cloudflare, you can make it anywhere in cloud infrastructure software.

The management strategy besides introducing a lot of rigidity and structure around the sales reps' day-to-day, is on a big bet with partners. Historically (and structurally), developer oriented tools are not a great fit for partners due to the knowledge gap.

Still, management wants to make this a success, so there is a significant focus around extending the teams with key large partners across the ecosystem. This doesn't seem surprising, as Mark Anderson is essentially applying the old-and-trusted cybersec vendor scaling playbook, something he has already done at F5 (more than a decade ago).

Keeping in mind the poor market response to the more "cowboy" conditions of '19-'22, I think that he is the right leader to put the basics in for an organization that has exceptional product positioning. I don't think that running the old playbook long term is sufficient, but that's where Cloudflare's track record of building mission critical products across the ecosystem will likely bail them out. At the end of the day, there are two reasons why Cloudflare is worth joining:

High growth curve driven by previously undersold PMF.
The mission.

Matthew Prince: Well, so Michelle hates it when I give history lessons. She's like, no more history lessons, Matthew. And I'm a recovering law professor, so I like history lessons. She's not here, so you get a history lesson. The Internet has never been free.
Matthew Prince: For the last twenty five years, the largest patron of the Internet was a little company you may have heard of called Google. And Google invented a engine, a search engine that when you type things into it, it gave you a treasure map, and then you would click on the links in the treasure map, and you would go scour across this this web thing. And then Google built actually all the the technology, all the infrastructure to take that traffic and turn it into revenue. Right? They built the whole ad ecosystem in order to do that.
Matthew Prince: They also built a lot of the publisher subscription ecosystem in order to do that. And that Google is the major patron that has paid for all of the web. Mhmm. And it exists.
All the independent web exists because of Google.
Matthew Prince: Starting about ten years ago, the user interface of Google began to change. In the past, again, you type it. It was treasure map. Larry and Sergey used to brag about our job is to get people off of google.com as quickly as possible. Ten years ago, they introduced something that kept people on a little bit longer, which is the answer box.
Matthew Prince: So if you type into Google right now, when did Cloudflare launch? You'll get a little box at the top that says 9/27/2010, which is right. How did they get that information? Well, they went out across the treasure map themselves. They gathered that up.
Matthew Prince: They did a bunch of machine learning on it. They distilled to that particular answer, and then they populated it in the box. And the minute that they did that, it became three times harder for a content creator to get traffic from Google than it had been previously.
Jackson Ader: Mhmm.
Matthew Prince: So it changed.
Matthew Prince: It changed the deal. My analogy is once upon a time, was sort of like the content creators of frogs. Google had his pot of water, said, frog, you like water? Get in the pot. Frog was like, I do like water.
Matthew Prince: I'm gonna get in the pot. And the frog swam around, and Google, over a period of time, slowly turned up the temperature, but the frog kind of was like, oh, this is a little less comfortable, but I'm still here and, you know, thanks Google.
Jackson Ader: Mhmm. And There's nowhere else to go.
Matthew Prince: Nowhere else to go. It's the only pot.
Jackson Ader: Walls are pretty hot.
Matthew Prince: Yeah. And so here we are. That changed dramatically in the last year.
Jackson Ader: Yeah.
Matthew Prince: Where Google feeling pressure from Perplexity and OpenAI and Anthropic and others made a dramatic change where I would argue they shifted from being a search engine to being what I'd call an answer engine. And the difference between a search engine and answer engine is the search engine gives you a treasure map, and the answer engine gives you the answer. And then there's no incentive to go click on anything that's out there. And what that did for everyone across the universe was it made it another three times harder. So nine times harder than it was ten years ago to get actually traffic, and it's getting worse over time.
Matthew Prince: And that's the good news for anyone that is still dependent on the sort of business model of the web over the last twenty five years. The bad news is at OpenAI, it's 750 times harder. At Anthropic, it's 37,000 times harder to get traffic. And so as the world shifts from search engines to answer engines, the business model of the web will change, period. Full stop.
Matthew Prince: And it's gonna change, I think, into one of three paths with the first being kindof the bleakest, which is anyone who is creating media that is supported by ads or subscriptions is gonna starve to death and die. And there's a whole bunch of people that think that's what's gonna happen, that journalists will cease to exist. It'll all just be social media posts. There won't actually be anything like that. I don't think we're gonna get there, but there is a real risk that the that if you are selling just pure media content, it goes away because everyone consumes the derivative.
Matthew Prince: No one consumes the originals. The Black Mirror, slightly less bleak, but still freaking bleak version is we don't go back to the media that we, you know, might fondly remember of the nineteen eighties. We go back to the media of the fourteen hundreds, the time in the Medicis, right, where it's not that, you know, there are a it's it's there are five families that employ all the journalists and researchers except instead of being families, it's five AI companies. Can you imagine OpenAI standing up a version of the Associated Press with bureaus around the world covering what was going on and feeding it back into their engine and doing that? It's not that far a distance from what they were doing with Scale AI.
Matthew Prince: And if that happens, there will be a conservative one. There will be a liberal one. There will be a Chinese one. Europeans will try to create one and fail, and then they'll use the US liberal one. There'll be an Indian one.
Matthew Prince: The Brazilians will pretend to build one, but it won't ever actually work. Like but that's what's gonna happen if we don't find some other path. And you can really imagine that knowledge will be created in these individual silos, and you will subscribe to AI companies spending probably thousands of dollars a month to have this assistant that has a personality and is fed by all of the information gathered by this and knowledge will be siloed.
I think that's such a pretty bleak outcome too.

Cloudflare is an important part of our digital world because it serves as the backbone of the open network. If their GTM team fails, the key technology (and more importantly, autonomy) will be sold for parts to the AI-powered landlords of the digital economy.

I think that's a worthy mission to be a part of for those of us who see the opportunity in tech as more than a mercenary gig to pay the bills.

The Tech Sales Newsletter #109: It’s time to talk about Cloudflare

The key takeaway

Building a better internet

Building a sales team worthy of the mission

The Tech Sales Newsletter #108: Situational Awareness revisited