Of note in the Cloudflare earnings release was that they highlighted a competitive win against ZScaler. I found Cloudflare’s marketing material comparing themselves to ZScaler, and it does make me think Cloudflare has something figured out. https://www.cloudflare.com/products/zero-trust/cloudflare-vs…
I don’t find a similar comparison on the ZScaler website, so to give them their due, I will state what I think they have going for them in competition with Cloudflare. The advantage I see for ZScaler is that they are fully Fedramp certified while Cloudflare is not quite there yet (correct me if I’m wrong), and ZScaler seems to have deeper partnerships with cloud hyperscalers (AWS, Azure).
Still, if Cloudflare is able to do what ZScaler does, only better, and Cloudflare also seems to have a greater depth of offerings and seems to be expanding into more and more markets when compared to ZScaler’s more narrow focus, not to mention their viral developer focus, I can’t help but think that investing in both ZScaler and Cloudflare is an exercise in diworsification relative to simply investing to Cloudflare on its own.
That said, I don’t have a technical background. So I make this post in the spirit of asking, why am I wrong?
Still, if Cloudflare is able to do what ZScaler does, only better, and Cloudflare also seems to have a greater depth of offerings and seems to be expanding into more and more markets when compared to ZScaler’s more narrow focus, not to mention their viral developer focus, I can’t help but think that investing in both ZScaler and Cloudflare is an exercise in diworsification relative to simply investing to Cloudflare on its own. That said, I don’t have a technical background. So I make this post in the spirit of asking, why am I wrong?
You are leaving out at least two things. First, Zscaler is growing faster (and accelerating recently) and second, Zscaler is making lots of money with Cash Flow Margins in the 30%'s, while Cloudflare is warning us that they will stay at breakeven or so indefinitely.
“when compared to ZScaler’s more narrow focus, not to mention their viral developer focus”
I haven’t researched Cloudflare vs. ZS (I own ZS), but in general focus wins! Trying to do too many things (in personal life or business) typically ends up with doing nothing great. On a related note, here’s a podcast with Snowflake CEO titled “Narrow the focus” If you own SNOW, I would recommend listening to this, Frank seems like a great CEO.
One thing to consider is the whole companies are not really apples and apples. ZS is a pure security edge network. Its a pure play for security. While Cloudflare is also in that game (newer; within the past 2 years), they also have a lot of other things going on.
Put another way (and obviously more drastic), I’d LOVE to just invest in MDB Atlas, but I have to weigh my money in MDB v the fact that its also invested in the on-prem open source piece.
If you’re goal with these investment dollars is JUST on security, and you ONLY want to invest in one of these, ZS might be the better option.
FF is happy to be a part owner of both. Very excited about the data storage and upcoming database within Cloudflare.
I love the idea “Its good to be great at one thing”. I think most successful businesses leaders understand this. Not taking anything away from Cloudflare. I admire Prince and his vision. I can see him developing a “ruthlessness” about him as he matures, which makes a great leader over the long term. But if a business can really hone in one thing (which seems to be Zscalers mission)and make it exceptional that’s what makes the term “mission critical” come to life.
“Still, if Cloudflare is able to do what ZScaler does, only better,…”
I am not in tech but I have followed the ZS/NET writeups by those who are into it and I have seen nothing to suggest this (have not kept up over the last month or two but doubt something cataclysmic has happened).
“I don’t find a similar comparison on the ZScaler website, so to give them their due, I will state what I think they have going for them in competition with Cloudflare.”
We will see this time around, but last time ZS CEO was asked about this, he dismissed NET as a direct competition and also claimed that technologically they are positioned differently in terms of where they “sit” in the network. Someone else can explain this part, I am sure. Chaudhry has been adamant that his tough competition have been traditional businesses offering what he calls pseudo ZT solutions. He is certainly right in $$$ because ZS has larger revenue (from zero trust) than NET has total revenue (of which ZT is a minor portion).
And this has been my problem with NET: they give just enough info to suggest they are on track to be a monster company in a decade or whatever, but the numbers don’t quite pan out, one never knows whether the anecdotes are tip of the iceberg of great stories or the sum total of things they can boast about, and the CEO certainly does not come across as having the ruthless edge of the likes of Green, Kurtz, etc. And on top of that, they have maintained a top valuation for over a year: the plus side of this has been maintaining strong buying pressure grades in Louis Navallier’s port grade which can only be said of a handful of companies (for example, SNOW the stock has not been able to). Therefore, it is not just people on this board who trust NET to deliver.
Since I own NET both directly (along with 6 other SaaS) and indirectly (in 401k SaaS etfs), I keep asking myself whether to keep NET or not.
If you own SNOW, I would recommend listening to this, Frank seems like a great CEO.