Of course. The article frames it as “fixing” and “proper database support” but the scope is way beyond that.
Currently, there is no standard API for socket connections in JavaScript. We want to change that.
[…]
When we decided that we would add the ability to open and use socket connections from within Workers, we also agreed that we really have no interest in developing yet another non-standard, platform-specific API that is unlike the APIs provided by other platforms. Therefore, we are extending an invitation to all JavaScript runtime platforms that need socket capabilities to collaborate on a new (and eventually standardized) API that just works no matter which runtime you choose to develop on. […]
Once released, we expect Socket Workers to blow the doors wide open on the types of intelligent distributed applications that can be deployed to the Cloudflare network edge
(https://blog.cloudflare.com/introducing-socket-workers, November 2021)
They then – in partnership with Vercel, Shopify, and others – also went on and established a new working group focused on interoperable implementations of standardized web APIs in non-web browser, JavaScript-based development environments. Because, well… that didn’t exist either.
Flash forward to today, you can now use seemingly rudimentary a thing called connect(), which may or may not become de facto standard in the future. The initial focus has been on enabling more efficient ways to connect to databases on the backend.
It’s not like a situation where a certain other company still seems to be struggling to meet the basic requirement of full IPv6 support… (https://community.zscaler.com/t/ipv6-support-in-zscaler/6341/22) 
Regarding “But I’m still not clear why you are overweight in Cloudflare, except “hoping” for a turn around, I guess.”.
As the recipient of said inquiry, I found it to be neatly worded, and appreciated it. After all, it should be far from clear. The earnings release was quite a shocker and my first thought was “there better be a really good explanation for this”. Then came a jumbled mess of an earnings call. Alas, I didn’t have time, nor energy to lay out my take on the quarter.
Part of my reasoning is implicitly laid out here:
And - after spending a weekend deciphering an earnings call - here:
Then investor day came along, with a tremendous amount of information and color.
My conclusion was that the challenges faced weren’t specific to NET, and I ended up with lowered near-term expectations but simultaneously with increased confidence. I find them to be in a strong position - increasingly so.
There’s a slowdown across the board. Jamin Ball paints a good picture with several charts, showing growth, NRR, net new ARR, and more.
My take on some aspects of the quarter, in short:
-
Rapid and sudden shift in macro caused significant elongation in sales cycle, and with NET’s rapid sales cycles, effect and uncertainty shows up quickly. This is the reason for a downward revision in guidance.
- More specifically, larger deals involving larger projects seemed to come to a screeching halt. Described in their Q1 call as “large project around moving to a Zero Trust environment or something else that would be a larger initiative.”
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Go-to-market talent changes isn’t anything new, i.e. it was already factored in when giving guidance back in February. From their Q4 call: “In our guidance, we have not factored in any improvement in the macroeconomic environment or from our go-to-market initiatives.”
-
Improving their GTM is a positive (i.e. room for upside) and a project that began more than a year ago.
- From investor day (rough transcript):
(CEO) “…sales team, we owe a ton to Chris. Very few sales leaders go from zero to a billion dollars in revenue. But if we’re again, super honest, Chris, he got to the Peter Principle and was not making those changes. So we needed to change the person in order to change the team. And we spent a bunch of time, again, finding the right person […] Mark to do this. […] Very first thing that both Michelle and I said to Mark was there going to need to be substantial changes on the team. It’s going to take you a bit of time to of get your hands around it, but I want your kind of 120 day plan to be like, how are you going to execute it? And almost on his 120th day, we pulled the trigger on executing that.”
- From investor day (rough transcript):
-
Presenting these things together wasn’t the brightest idea, so they used part of Investor Day to
bring clarity on this and a whole lot of other things.- From investor day about why they brought up GTM on the earning call:
(CFO) “The transparency we share with you is also something we share internally. And we wanted to be in a position to talk to employees fast and not have rumors and information and misinterpretation out there. And we thought by making it public on a platform of an earnings call would give us the ability to do what needs to be done with speed and transparency in front of the employee. That’s why we put things together. Little did we know that it would be combined. If we had spent more time thinking about it, we might have come to that result. So that is clearly on us.”
“But it has two reasons we wanted to be fast on the execution. North America will happen a lot faster. So that might be executed by the end of next week already. Europe might take a little bit longer. And I think if you look at the model and how we build it, ramping up new AEs is very efficient. Within Cloudflare, we normally get a mid-market AE to full productivity in four months, an Enterprise AE in six months. That was another reason why we wanted to be fast, because if we do a good job managing through this upgrading talent, we might see impact, positive impact, before even the year is over.”
- From investor day about why they brought up GTM on the earning call:
I encourage anyone interested in NET to watch the Investor Day webcast(s), especially the investor session (https://customer-eq7kiuol0tk9chox.cloudflarestream.com/ade31ae2b5d9ddbea4b47c667cdaea05/watch). It touches on a lot of what’s been discussed here since earnings. It’s a long webcast, so to save some time:
- ~1:04:00: Marc Boroditsky - Go-to-Market
- ~1:26:00: Thomas Seifert - Macro, guidance, metrics, unit economics, and more
- ~1:48:00: Q&A session
I see NET as the canary in the coalmine, or a coalmine. Companies with longer sales cycles don’t see impact on revenue as quickly. So the question for me boils down to “what will macro do?”. Is this a temporary blip? Will it get worse? To which I have no answer.
Cloudflare is still my highest confidence holding, and that’s based on my assessment of how the company is doing, and not on whatever the stock is up to.