One thing that stood out to me was Matthew’s response when asked about his college thesis that the internet was a fad, and it was going to fail. Then, in light of new information, he admitted that he was wrong and that’s what pushed him to create Cloudflare to cover for his stupidity, as he put it. Some argue that management should not get into the equation when searching for a company to invest in, but we need to remember that actual people (who manage the company) drive revenues based on their decisions and someone who can admit mistakes and reevaluate should be of great importance to any team.
One last topic that I want to cover with you before we call it an episode is, back in college, you had a thesis that you have done an excellent job of effectively eliminating from the internet. And the theme of this, to my understanding, was that the internet is a fad. And I am so aligned with that because I’m someone who has said for years that emerging technologies are fads. I’ve said it about cloud, about virtualization, about containers. And I just skipped Kubernetes. And now I’m all-in on serverless, which means, of course it’s going to fail because I’m always wrong on these things. But tell me about that.
When I was seven years old in 1980, my grandmother gave me an Apple computer for Christmas. And I took to it like a just absolute duck to water and did things that made me very popular in junior high school, like going to computer camp. And my mom used to sign up for continuing education classes at the local university in computer science, and basically sneak me in, and I’d do all the homework and all that. And I remember when I got to college, there was a small group of students that would come around and help other students set their computer up, and I had it all set up and was involved. And so, got pretty deeply involved in the computer science program at college.
And then I remember there was a group of three other students—so they were four of us—and they wanted to start an online digital magazine. And at the time, this was pre-web, or right in the early days of the web; it was sort of nineteen… ninety-three. And we built it originally on old Apple technology called HyperCard. And we used to email out the old HyperCard stacks. And the HyperCard stacks kept getting bigger and bigger and bigger, and we’d send them out to the school so [laugh] that we—so we kept crashing the mail servers.
But the college loved this, so they kept buying bigger and bigger mail servers. But they were—at some point, they said, “This won’t scale. You got to switch technologies.” And they introduced us to two different groups. One was a printer company based out in San Francisco that had this technology called PDF. And I was a really big fan of PDF. I thought PDF was the future, it was definitely going to be how everything got published.
And then the other was this group of dorky graduate students at the University of Illinois that had this thing called a browser, which was super flaky, and crashed all the time, and didn’t work. And so of the four of us, I was the one who voted for PDF and the other three were like, “Actually, I think this HTML thing is going to be a hit.” And we built this. We won an award from Wired—which was only a print magazine at the time—that called us the first online-only weekly publication. And it was such a struggle to get anyone to write for it because browsers sucked and, you know, trying to get students on campus, but no one on campus cared.
We would get these emails from the other side of the world, where I remember really clearly is this—in broken English—email from Japan saying, “I love the magazine. Please keep writing more for the magazine.” And I remember thinking at the time, “Why do I care if someone in Japan is reading this if the girl down the hall who I have a crush on isn’t?” Which is obviously what motivates dorky college students like myself. And at that same time, you saw all of this internet explosion.
I remember the moment when Netscape went public and just blew through all the expectations. And it was right around the time I was getting ready to graduate for college, and I was kind of just burned out on the entire thing. And I thought, “If I can’t even get anyone to write for this dopey magazine and yet we’re winning awards, like, this stuff has to all just be complete garbage.” And so wrote a thesis on—ehh, it was not a very good [laugh] thesis. It’s—but one of the things I said was that largely the internet was a fad, and that if it wasn’t, that it had some real risks because if you enabled everyone to connect with whatever their weird interests and hobbies were, that you would very quickly fall to the lowest common denominator. And predicted some things that haven’t come true. I thought for sure that you would have both a liberal and conservative search engine. And it’s a miracle to this day, I think that doesn’t exist.
Now, that you said it, of course, it’s going to.
Well, I don’t know I’ve… [sigh] we’ll see. But it is pretty amazing that Google has been able to, again, thread that line and stay largely apolitical. I’m surprised there aren’t more national search engines; the fact that it only Russia and China have national search engines and France and Germany don’t is just strange to me. It seems like if you’re controlling the source of truth and how people find it, that seems like something that governments would try and take over. There are some things that in retrospect, look pretty wise, but there were a lot more things that looked really, really stupid. And so I think at some level, I had to build Cloudflare to atone for that stupidity all those years ago.
There’s something to be said for looking back and saying, “Yeah, I had an opinion, and with the light of new information, I am changing my opinion.” For some reason, in some circles, it feels like that gets interpreted as a sign of weakness, but I couldn’t disagree more, it’s, “Well, I had an opinion based upon what I saw at the time. Turns out, I was wrong, and here we are.” I really wish more people were capable of doing that.
[This sums up the top, in my opinion, rule of successful investing. Whenever new info comes in, we need to quickly reevaluate and if we were wrong to take appropriate measures. This is why we don’t just buy, hold and pray.]
It’s one of the things we test for in hiring. And I think the characteristic that describes people who can do that well is really empathy. The understanding that the experiences that you have lead you to have a unique set of insights, but they also create a unique set of blind spots. And it’s rare that you find people that are able to do that. And whenever you do—whenever we do we hire them.
To that end, as far as hiring and similar topics go, if people want to learn more about how you view things, and how you see the world, and what you’re releasing—maybe even potentially work with you—where can they find you?
[laugh]. So, the joke, sometimes, internal at Cloudflare is that Cloudflare is a blogging company that runs this global network just to have something to write about. So, I think we’re unlike most corporate blogs, which are—if our corporate blog were typical, we’d have articles on, like, “Here are the top six reasons you need a fast website,” which would just be, you know, shoot me. But instead, I think we write about the things that are going on online and our unique view into them. And we have a core value of transparency, so we talk about that. So, if you’re interested in Cloudflare, I’d encourage you to—especially if you’re of the sort of geekier variety—to check out blog.cloudflare.com, and I think that’s a good place to learn about us. And I still write for that occasionally.
You’re one of the only non-AWS corporate blogs that I pay attention to, for that exact reason. It is not, “Oh, yay. More content marketing by folks who just feel the need to hit a quota as opposed to talking about something valuable and interesting.” So, it’s appreciated.
[Another parallel I find with this board is that nobody is directly getting paid to contribute their personal time and efforts that drive the success of this fine board. I think this makes it the single most important place on the web for discussing hypergrowth investing.]
The secret to it was we realized at some point that the purpose of the blog wasn’t to attract customers, it was to attract potential employees. And it turns out, if you sort of change that focus, then you talk to people like their peers, and it turns out then that the content that you create is much more authentic. And that turns out to be a great way to attract customers as well.
[Correct me if I’m wrong, but this is how I see this board too. The more critical readers it attracts, the better it gets as a lot more people can contribute their own ideas/thoughts and get the discussion going.]