Cloudflare announces Observatory

Observatory, CTO John G-Cummings

Graham-Cumming makes the case that Observatory is more streamlined than many of the solutions on the market.

“Almost all competitive platforms are overly complicated and have a steep learning curve, either through use of outdated technologies or confusing, muddled user interfaces,” he said. “We designed Observatory to simply and effectively help teams speed up a website for a global audience. We know there are very few companies out there with dedicated teams for each individual facet of the business like compression, webpage optimization and so on. [But] Observatory takes the learning curve away and makes it simple for customers to understand the real-world performance of their website.”

My take is that the best part is, Observatory is synergistic with the rest of Cloudflare’s web analytics and development tools, acting as a not-so-subtle funnel to its premium products and services.

20% Cloudflare,



I am starting to have serious doubts about this story in relation to the always-high valuation. So now they have to hire 100 new salespeople, get them all trained, and once they all sell and close new business in a tough environment, then their customers will use this “not-so-subtle” funnel to premium products and services.

And who is really checking his claim that “Almost all competitive platforms are overly complicated?”

According to Gartner they are competing against one of the scariest line-ups of competitors imaginable - MSFT, AMZN, GOOG and a host of smaller ones including Fastly, who notably has a higher score…

And all have strong scores. Of note, Fastly, whose new CEO preaches simplicity, and has for his entire career, put out an observability product in November…

Cloudflare does an exceptional job marketing to investors but do we really need to be investing in companies that require such a high volume of innovation? Don’t we want companies that already have products that are selling like mad with good margins, who don’t have to put out products with the same hysterical velocity as fast food chains forever crowing about their latest Dorito-crusted loco chicken nacho padookie fries?

I am not a techie and you know this space far better than I do so maybe it’s all entirely legit and they are building a monster for the next 50 years but I was struck by a fascinating moment in Fastly’s Investor Day presentation last week. During the Q&A, an analyst asked Fastly CEO Todd Nightingale about a Tweet Prince made earlier in the day, claiming Cloudlfare is faster in every country but Liberia. Nightingale seemed genuinely befuddled by what he claimed was a blatant and easily verifiable falsehood. He took the high road and encouraged analysts to simply check the stat with a third party. That strikes me as exactly how an honest and mature leader would respond. No fire, no trash talk, just a simple request to check the claim.

From day one Cloudflare has lied about their success. In this Twitter thread, co-founder Michelle Zatlyn fondly recalls the time they came in second to a company called Qwiki in a pitch competition at noted Tech Crunch Disrupt Conference - but the next day put out a press release claiming they won it.

In terms of Cloudflare’s marketing, here’s a post from a Fastly blog about Cloudflare’s playing with stats…

With growth declining and serious reasons to doubt their claims - “DScaler will beat ZScaler!” I think we have a tale of two Cloudflares - one tale is told to wow investors, the other has to wow execs who actually buy technology. The former props up the stock price. The latter may be sinking it.

For many here NET is in prove-it mode. If an army of new sales people come in and crush their numbers and then all those new customers are upsold and they get back to 50% growth I will applaud as loud as anyone and consider re-investing in NET. I respect and have always like Prince.

But for now…

The growth rates fell not long after Prince said they were doing fine.

The company has always made questionable claims - yet the market always seems to devour and bid up each one.

For years we have heard they only accept 0.000000001% of applicants or the like and had the greatest people. Then we find they apparently were infiltrated by a cabal of lazy do-nothing salespeople who just made sales where “the fish were leaping into the boat” and all are to be replaced by superstars as the recent spate of layoffs in tech have made for a great hiring market. So those companies laid off their top sales people? A VC once told me he is happy to allow top salespeople to make more than the CEO. That’s how highly valuable top salespeople are.

Tweeting about your top competitor to ridicule them on their investor day is a bad look especially if the claim is false or distorted. Strange to me that CEOs of multibillion-dollar companies have time to Tweet. And I think “Fin Twit” is a very different audience than highly paid execs whose careers rely on purchasing expensive network technology.

Their most noted competitor, Fastly is re-energized, re-focused.

And lastly there is immense confusion about what the heck NET and FSLY etc even sell and who they even compete with. Notably both companies resist the term “CDN” - I have heard “Edge Cloud” and analyst even seem a bit befuddled by who are their competition/partners/frenemies.

Bottom line is if there is fluff in the stock price, Prince et al seem in danger of losing the “narrative premium.” For the reasons listed above I’m not paying that premium any more.

As always around here, the numbers will tell the story. We’ll see.