As someone who never understood Cloudflare either, I’ve taken some time to research the company in attempts to hopefully provide one possible answer to the market’s exuberance of late. In full disclosure most of this information is taken directly from Cloudflare’s website, which I broken out into basic examples.
What does Cloudflare do?
In its simplest form, Cloudflare is a content delivery network (CDN). The purpose of such acts as the middle-man between say, the Netflix master servers, and your local internet servers. For example, lets assume the master Netflix servers exists in Denver, but you live in Los Angeles. A Los Angeles based server attempting to reach and stream 4K or HD quality video all the way from Denver is still, even in 2021, a big task. To combat this large workload, a company such as Cloudflare would place geographically distributed servers closer to your area that speed up the digital information transmission.
How is this beneficial?
Speed. Using the example above, instead of pinging a server 1500 miles away, you are doing so at perhaps less than 100 miles away. Now say there just happen to be two servers in your area, and 10,000 people are all watching Netflix. Instead of overtaxing one server for 10,000 people, a CDN can recognize and flex high workloads across multiple servers, thus ensuring a smooth stream for all.
Reliability. The internet is nothing more than a string of Christmas light wires connected to machines all around the world. When a few bulbs go out, do you want to trace the problem through a run of twenty daisy-chained light strings, or three? Not only will you find the problem faster, but the other seventeen strings will still act normally while you troubleshoot. Think of this like redundancy on a commercial airplane. If one engine stalls, the plane can still fly until the engine is restarted, or repaired later upon landing.
Cost Savings. This core principle is a bit harder to explain. Essentially, each time the master Netflix server is asked to perform a task (stream your movie) it costs money to do so. A CDN located much closer in your area however can ping the Netflix server one time and store (cache) all that data. So when you go to watch Netflix you aren’t asking the master server to do any work, you are asking the CDN that already has the data ready to go. Its much cheaper asking the CDN to perform your request than asking the master server.
So why the exuberance?
Without going on for thousands of words, think about the Facebook outage that happened on October 4, 2021. For six hours or so, no one could access Facebook, Instagram, Messenger, etc. Now this means very little to people like you or me, but I have extended family members living in the Phillipines that only communicate using Facebook Messenger. They wouldn’t even know how to text, much less have the means to pay for a long-distance phone call to the United States. What if during that time there was a family medical emergency where major decisions needed to be made? People legitimately RELY on Facebook, and get to use the service for FREE.
Flipping the coin, and looking at this from Facebook’s point of view, how much advertising money did they lose because their service was off-line during that time? Millions? Billions? How many users (and I’ll admit, probably close to zero) decided to switch to another competing social media site during that time? But what if outages kept happening, and Facebook was always down? People would certainly flock away, which of course would be devastating to Facebook’s REVENUE and VIABILITY.
The Facebook outage happened on October 4th. Looking at the stock chart for Cloudflare, that’s the exact day it began its run up from 115 to where it stands today. Not a coincidence, and no clearer sign of the importance of companies like Cloudflare.