Michelle Zatlyn is the Co-founder, President, and COO of Cloudflare, an internet infrastructure company that is making the internet a faster and safer place. On today’s episode, Jon Sakoda speaks with Michelle Zatlyn on her path to Co-founder and why you have to love what you do in order to succeed.
Michelle Zatlyn is the Co-founder, President, and COO of Cloudflare, an internet infrastructure company that is making the internet a faster and safer place. On today’s episode, Jon Sakoda speaks with Michelle Zatlyn on her path to Co-founder and why you have to love what you do in order to succeed.
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MICHELLE ZATLYN: I had a job offer lined up at this point at LinkedIn, and I went to meet my hiring manager. His name was Dan. I said, “Dan, thank you so much for the offer. But I started an idea in parallel to this job search, and instead of coming to work with you at LinkedIn, I’m gonna go give my idea a try.” And he said, “You are making the biggest mistake of your life.”
JON SAKODA: Welcome to the Decibel Podcast. I am so excited to welcome my friend Michelle Zatlyn. She is to co-founder, president, and COO of Cloudflare. Cloudflare is one of the fastest-growing internet infrastructure companies in our world. Roughly 20% of the internet runs through their network every day and makes our experience online a little bit safer and faster for billions of users every month. Michelle has been a longtime friend and is a great role model for many founders. And I am so excited to welcome her to our show.
Say hi to everybody, Michelle.
MICHELLE ZATLYN: Hi, Jon. Thanks so much for having me. It’s great to be here. Hi to all the listeners.
JON SAKODA: Yeah. If you don’t mind, I would love to start at the very beginning of your story, because I think it is such a special story. What was your personal journey? Where did you grow up? What was it like growing up in your house? What did your parents do? And eventually, when did you know that you might want to someday start a company?
MICHELLE ZATLYN: Ah, God. A walk down memory lane. I’m being nostalgic, you asking me that question. So, I grew up in Saskatchewan, Canada, the prairies of Canada. And I have a close family of two sisters and my parents. My grandparents were farmers, and my parents, we moved to the city, a big city of 30,000 people in pursuit of a better life. My dad was a lawyer; my mom was a teacher. And I grew up living in this big city, which was 30,000 people during the week, and during the weekends, we also went to the farm to help out my grandparents. And so, I grew up a lot with family and community, and a lot of hard work, because when you do farming, it’s a lot of hard work for everybody.
The importance of, I don’t know, showing up for your family members, I guess, is maybe the right way to say it. And that’s how I grew up. And my parents always really prioritized school and education for my sisters and I. They always really pushed us to do the best we could so we could go on to the lives that we wanted. And so, I studied hard and I got good grades, Jon.
JON SAKODA: Now, I believe a part of your story is that at some point in your life, you wanted to become a doctor. And was that something that your parents wanted you to do? Was that something that you wanted to do? How did that come about?
MICHELLE ZATLYN: Yeah. You know, my parents always pushed us to work hard and get a good education, but they really were super supportive of doing whatever we wanted to do. And I loved science. I loved science. I loved helping people. And so, medicine was a profession that I knew. It’s something that you see as a child. You see doctors. And what actually happened was I was in undergrad. It was my third year. I was doing a summer internship where I was working for three doctors doing a research project in Montreal, Canada. And I did this research project for them. And it was so interesting. I just remember we ended up submitting my research to some different—I don’t know, Association of Hematology. And the next thing I knew, I’d won an award where I was being flown to San Francisco to present my research project. And it was an award for PhD and MD students. And again, I was an undergrad. And so, I came out to San Francisco as an undergrad student with all these doctors. And these doctors were coming up to me at this conference saying, “Oh, I get faced with this all the time with my patients. What should I do?” And it was one of these things where I was like, “I am totally unqualified to be answering this.” But because I’d done the work, they were coming to me, because they were like, “You looked at all the data. What does the data say?” And I could explain it.
And it was so—it’s something that I kind of forever imprinted on my brain. But the whole experience, which was amazing—I mean, again, it was the best possible outcome of that situation. What the biggest maybe realization was, which was kind of, at the moment, was a little bit sad, now happy after the fact, was I don’t love this. I mean, I was good at it, clearly. I got an accolade, and I thought, wow, I’m doing the best I possibly could at this given moment. And I’m not enjoying it that much. And I don’t know. I just think life is too short to do things you don’t like. And so, it was the first time—you know, I was in my early twenties—being like, maybe I don’t want to be a doctor. But then it’s a little bit of, well, if I’m not a doctor, what am I gonna do? And I really had no idea.
JON SAKODA: Can we drill into this just a little bit? So, I think it’s quite common for a lot of founders to start out on a traditional path, and then to realize that that path’s not for them, and to get a little lost. And I don’t know if you would consider this the case for you. But did you feel at this moment that there was some kind of personal crisis, that somehow your parents were asking you, “Gosh, Michelle, you’ve got this whole thing figured out, and now you’re just gonna throw it away and figure something else out,” I guess? Was your story very similar?
MICHELLE ZATLYN: Well, it is—you know, I think this is an interesting point, where telling people, especially ones that are close to you, that you’re like, actually, I thought I was gonna apply to medical school, but I’m not going to anymore. I mean, it made sense in my head. I think my parents were thinking, what is going on? And again, I was in undergrad, so I think that—I’m sure that they had a lot of crises at home. I never really asked them. Because I think for them, it came as a big shock and surprise. And again, I think a very natural thing to say is, okay, well, if you’re not gonna apply to med school, what are you gonna do?
JON SAKODA: And it feels almost like a restart, right, or a pivot of some sort. I can’t believe you worked so hard to get to this point, and you’ve got accolades, and you’ve got your future all set up for you, and yet you’re gonna change it all.
MICHELLE ZATLYN: Yeah. And you know, again, I maybe was smart or wasn’t sure, like saying, “Hey, I’m just gonna delay applying. I want to go work for a couple years first,” which lessens the blow a little bit. But still, it was like, well then, what are you, gonna go work? And I had no idea. And I had to apply for a lot of jobs to get that first job. I didn’t even know what I was looking for.
But yes. Yeah, you have to overcome that social network. And what’s interesting is, Malcolm Gladwell has really good research on this. I’m not gonna quote it quite right, so I apologize, Malcolm Gladwell, if you’re listening. What I recall about his research is a lot of founders or people who do really well in life are immigrants, because the social pressures aren’t there for them. And oftentimes, they’ve had to leave their families or their social networks in pursuit of what they’re looking for, and so, they can take greater risks, or they’re used to standing up for what they believe in more than someone who stays closer to home when they have that social pressure of having to re-explain all the single time why you’re doing something different. He says the same thing about left-handed people who have to constantly fight against the grain, how everything’s designed for right-handed.
And I think that there’s something to it, about to achieve extraordinary results, you gotta go against the grain. But when you’re really safe with people around you that love you, and you go ask people for advice, and really smart people can give you two totally different conflicting advice, and then you get really paralyzed, and soon you’re living a life that doesn’t look like yours, except for—isn’t the one that you think you wanna live. And so, I think you have to kind of stay true to yourself, to say, “Okay, well, this is what’s important to me.” And then after the fact, if you’re successful, everyone is your biggest champion.
JON SAKODA: So, this moment is probably one that many founders are going through right now, where they’ve decided to take this left turn. They’re now heading down this other path. They’re starting to wonder whether this is a good idea. So what was this path like for you? So, you make this pivot. You decide you don’t want to be a doctor, and then eventually find your way to Harvard Business School, and you start Cloudflare. So, I’m curious if you remember what that felt like.
MICHELLE ZATLYN: Yeah. So, I do, and I’ll try not to rewrite history, because there’s a lot good parts to it and there’s a lot of lowly hard parts to it too. And so, you know, not med school, then what? And I had a couple jobs before I went to Harvard Business School, which then I eventually started Cloudflare. And every job taught me something different. I worked at a really small partner-owned firm, and I had a lot of autonomy. It was really early in my career, but I had a lot of autonomy over what I was doing, so that was really interesting. And then I worked at Toshiba, where we were losing market share in consumer electronics as a product manager. So, we were losing market share. And so, it was the opposite of growth. And it turns out, when you’re losing market share, the sorts of things like cost reductions and making hard decisions become really, really important.
And then I also worked at a tech startup very early, where a team of less than 20 people were winning RFPs against big established competitors, because we were the newcomers who wore our hearts on our sleeves. We had a better technology solution, and we were winning big banks at the time against some of the incumbents because of all this. And it was growth, and it was fun. And I had all these different experiences. And at some point, I realized I wasn’t going back to med school. I thought, hey, I like business. I should get some more foundation. I’m gonna go do my MBA. And when you apply to do your MBA, everybody wants to know what you want to do after you graduate.
And what I’d learned from all those experiences, I want to be part of a team doing something that matters. Growth was more fun to me than stagnant growth or decline. And being part of a smart, passionate group of people, doing something that mattered. Because I had had jobs where I liked the people, but I didn’t really care what the business was doing. And then I had jobs where I really believed the business, but didn’t really like the people as much. So I was like, okay, I want to be at a growing place where I really believe in what the company is doing, like it mattered in the world, with people I liked. And that’s what I really set out to be. And I remember, my essays to business school were, at the time—again, this was back in ‘06, ‘07 when I was applying, was like, I want to join a company like Google before it was Google, or Starbucks before it was Starbucks, and win the hearts and minds of its customers and clients.
And so, I went to Harvard Business School. I moved down to the US to pursue my MBA. And it opened my eyes to so many different things after living in Canada. It was just a whole other level playing field. It was so much more intense. And now, 10 years later, 11 years later, what I’m most proud of is I think we are a company that does something that matters. We have a really great business with people that I really like to show up every day and work with, and I never take that for granted, because it is so hard to find all three.
JON SAKODA: So, you started Cloudflare in 2009. And I think many people know that was not a great time to start a company. You probably got a lot of advice saying, “Don’t start a company. This is a really challenging time to start a company.” I started my company in 2001. I got very similar advice. Do you remember what it was like in the early days? Do you remember, I guess, what it was like to start a company in a very difficult economic environment?
MICHELLE ZATLYN: Yeah. It was not a good time. And, you know, it was interesting—I had done my summer internship at Google. And it was an MBA summer internship at Google. It was back in the summer of ‘09. Things were great. And then the crash, that horrible financial collapse came, and Google extended no offers to their interns that summer. And I was devastated! Because that’s what the whole point of why you do a summer internship, is to set yourself up. And I was really bummed about that.
JON SAKODA: Wow. And a blessing in disguise in retrospect, right?
MICHELLE ZATLYN: Well, I was gonna say exactly that. Talk about thank God I didn’t get an offer, because I often think, if I had had a job offer from Google sitting in my life, would I have started Cloudflare? And I hope that the answer is yes, but I’m not sure. It’s hard to walk away from those things. Yeah, it was a hard time. And in parallel, Matthew and I and Lee started to work on this of Cloudflare. And it started as a school project. We did a business client competition at HBS. We ended up winning.
And what’s so interesting is that second semester at business school, I will say that mostly, your second year of second semester at business school, it was a two-year program, is a little bit of a coasting semester. And so, a lot of my friends at business school were hanging out a lot and having a lot of fun. And I will remember Matthew and I actually taking this business plan and business idea quite seriously, and we were working and talking to all these different folks. And I remember going out for a drink with one of my friends a few weeks before graduation, telling him about all the progress we were making. He was like, “You’ve been working really hard, and I feel like I’ve been sitting on the lawn hanging out with friends.” And I think if that doesn’t sum up startup life is I don’t know what does. It just takes a lot of work.
And I just remember I had a job offer lined up at this point at LinkedIn, and it was exactly—that was pre-IPO, it was a private company, it was growing, great people. And I remember going, and it May, it was a few weeks before graduation after we won. And I went to meet my hiring manager in the cafeteria at LinkedIn down at Mountainview, because we were out here for the month of May. And I said—his name was Dan—I said, “Dan thank you so much for the oppor—this is exactly what I want.” I said, “When I applied to HBS, this is exactly what I set out to do. But I started an idea, working on an idea in parallel to this job search. And this idea is kind of gaining steam. And I’m working on it with Matthew Prince and Lee Holloway, and we gotta see where it goes. So we’re gonna—instead of coming to work with you at LinkedIn, I’m gonna go and give my idea a try.”
And I think starting a company back in ‘09 was not as popular of a choice as it is now. I think in part maybe from the financial situation, but also just, I think, entrepreneurship has changed a lot the last 10 years. It’s much more known that you can start companies, and how to do it, and how to get funding. And there’s been so many great venture capitalists, and YC, and Techstars, and lots of different almost democratization of tech entrepreneurship, and plus a lot of other tailwinds. And again, great person. He looked me straight in the eye, and he said, “You are making the biggest mistake of your life.” Because he had a rocket ship. And frankly, LinkedIn went on to do great things. My career would have been just fine if I had done that. Probably more than fine. In fact, my roommate went to work there, and he’s now the CEO of a company. So, definitely was not a bad choice—I just had two good choices, and I had to go see where this went.
And, you know, you just never know. I guess it was back to, if you’re looking to know that you’re making the exact right decision, you’re never gonna get all of that. You’ve gotta have some conviction. Some people say betting on yourself or believing in yourself. But there was something. And everyone’s experienced that in different ways. And for me, I just wanted to see where this idea of Cloudflare went. And I kind of played through the worst-case scenarios. If it went nowhere, what would happen to me? And I figured I’d land on my feet in either case. And so, that was a little bit of how that experience went. And it took months and months and months before I really felt like I made the right decision, because you just kind of doubt yourself. But I just kept going, and wow, really happy I made that decision way back then.
JON SAKODA: Can I explore for a second how you built that self-confidence? Because I think you said something that’s very important—that somehow, you played through all the scenarios, and you concluded that no matter what happened, success or failure, you were gonna land on your feet. And I think a lot of people struggle with that. They’re a little afraid of the risk. They’re a little afraid of the “What if things go wrong?” But somehow, you got really comfortable with that in 2009, when everyone’s telling you, “Things are risky,” and the world is not exactly feeling as comfortable as it is with itself today. So, where do you think that that self-confidence came from?
MICHELLE ZATLYN: Yeah. I agree. And I’m not sure I would call it self-confidence at the time. I’ll tell you what my thought process was at the time. And I think everyone experiences this differently. I was always very envious of the folks, of my friends who knew exactly what they wanted to do with their lives, because again, I hadn’t had that. I thought I’d do, and then I kind of changed paths, and I meandered a lot, had a windy career. And again, in retrospect, it’s been great. But that’s uncertain and stressful too at the same time. And so, I always looked at these people who knew exactly what they want to do and be like, “Oh God, I wish I had that. That’s not me.”
And so, if you have that, that’s amazing. But there’s a bunch of people in the world that don’t have that. And so, then you’re faced with these decisions all the time. And so, for me, what I realized when I was making this decision is I went through and I played out, okay, if Cloudflare doesn’t work out, what would happen? What could be the worst-case scenario? And as soon as I got comfortable with the worst-case scenario, then I was comfortable making the decision.
And so, the worst-case scenario for me was the following. And I actually had a lot at risk, in retrospect. I was in the US on a student visa that I could stay for one year and one year only, I think one of the greatest parts of the US immigration system, doing whatever I want, which allows you to work on an idea if you wanted. So I was on—it was called OPT at the time. It was occupational training. So I thought, okay, so I can stay and do this. If Cloudflare doesn’t work out and I can’t get a job in the US because I can’t get anyone to sponsor my visa, I’ll have to move back to Canada. And my boyfriend at the time was living in Vancouver working. So I guess I’ll move in with him, because I’ll have no money. And if we ended up breaking up. I was like, well, I could always go back to Saskatchewan to live with my parents in their basement. And they’d moved to a slightly bigger city, Saskatoon, which was about 200,000 people. And I was like, all right. And so, I’d have to look for a new job living out of my parent’s basement in Saskatoon. Not ideal, but I figured that was the worst-case scenario. And I was like, I don’t want that to happen, but I could live if that happened.
JON SAKODA: Yeah. No, and I think so few people think this through. They sort of just stare into the abyss of “What if things don’t work?” And it just looks like an abyss. But as we all know, each of us has our own personal and professional safety nets. And I think, in a lot of cases, that risk is not as terrifying if you actually stare it in the face. I remember I called my dad in 2001, and I said, “Dad, if I take this job and things don’t work out, or if I go start this company and things don’t work out, what do you think the difference will be?” And he was the one that said, “Just go start the company.”
MICHELLE ZATLYN: Aw. That’s awesome. I know, that’s amazing.
JON SAKODA: So, let’s dive a little into the Cloudflare story. Some of the things that you were doing today have become best practices. But at the time, they were nontraditional. And I think conventional wisdom would have said, do it differently or do it the exact opposite way. So, I want to maybe focus on some of the things that you did early on that were really special and unique, and in some ways, debunked conventional wisdom.
So, early on, Cloudflare offered a free service. And you also built an internet-wide infrastructure. And those two things, generally speaking, don’t go hand-in-hand. So, offering something for free can be expensive, and also, building out infrastructure can be expensive. So, talk to me a little bit about the decision process, the clarity that you guys had that this was this right approach and that this was going to work.
MICHELLE ZATLYN: Ah, gosh. This is such a walk down memory lane. I love it! Okay. So, I do these because I want to be helpful to other founders, so I really help this is hopeful to those listening, because I used to go to a lot of events back when we could see people in person safely, and listen to a lot of these sorts of conversations, and drew a lot of inspiration. And your question’s bringing me back.
So, I think understanding why you’re doing something is super important, because then it makes it much easier to explain. And so, early on, the whole premise of Cloudflare was, can we make the internet faster, safer, and more reliable for customers’ traffic? That’s basically what we set out to do from day one. And the way that we were gonna do it is we were gonna crowdsource threat data across customer types so we could provide more security, and then at the same time, make everything faster and more reliable. So, there was definitely a big data element to our initial vision. We articulate it much better now than we did upfront. But that was this idea.
And so, early on, if we needed to have a lot of data points to have the best cybersecurity data pool, we actually needed not to dissuade customers from putting traffic on our network. And so, of course you’d have a free tier, right? It’s like, hey, we want to offer this to everyone. And often, the people who need it most are the small businesses that don’t have big budgets. And if you can give them some basic level of protection, and all of a sudden use that data to build an immune system for the internet, that then you can go offer the Fortune500, and Global 2000, and governments who do have big buckets to pay, it also becomes very symbiotic.
And so, that was an initial thesis that we had. And what you’re saying, Jon, is exactly right. A lot of people, a lot of investors, are like, “Get rid of the free tier. Just charge for this.” And we really felt strongly that, no, you don’t want to increase friction for having more bytes of traffic through our network, because you want to use that to create a better product for everybody, small and large—small companies, big companies, startups, schools—and that was really important to us. So, that was a little bit of our thinking back in the day. And we had to explain it. And again, some people thought that was amazing. Some people thought that was the stupidest thing they’ve ever heard. And what I like to remind founders is, when you have people say, “That’s the stupidest thing I’ve ever heard,” you’re probably on to something.
JON SAKODA: That’s right.
MICHELLE ZATLYN: Because they just are using assumptions from things they had seen. And now, of course, as you said, there’s an expense to having traffic through your network. And so, the second piece, I think, of what was really interesting of our early strategy around this assumption was, okay, if we want to make our service available to everyone, including free customers, all the way up to high-paying customers, then we have to be incredibly efficient around processing a byte of traffic. We have to be able to move it faster, and more securely, and more efficiently, at the lowest price point—cost point possible. And we just obsessed over cost.
And so, I mean, the first five years of CloudFlare’s history, we were so relentlessly cheap. And I mean, costs from actually a gross margin standpoint. But that carried into every single thing we did. I mean, we just were so allergic to spending money, to a fault. It was too much. So then we kind of corrected. And I think there’s a good way to be disciplined but also invest where you need to invest. So, we’ve gotten better at that over the years. But one of the first five metrics we tracked for many years, first slide of every board slide, was just how much it cost us to process a byte of traffic. And every single month, every six weeks when we were doing board meetings, it just kept coming down precipitously. And we were just obsessed about it. And no one told us to be obsessed about it. It just—it came hand-in-hand with our strategy. And now, fast-forward to today, we’re a public company with gross margins of over 75%. And a lot of other—that is, I would say, world-class.
JON SAKODA: No. And I think one of the things that you did early on was you really framed the narrative for yourself and for your customers and for your investors about what mattered. And it wasn’t necessarily trying to extract the most money as quickly as possible. It was trying to provide the easiest to use and the lowest-cost service. And again, in some ways, this has become more common, if not really table stakes, in some parts of the software business, to allow people to run software and use software for free for some period of time. But back then, I think this was a much more controversial idea, and certainly started out as potentially even a very expensive idea. But I thought you guys really commanded the narrative and kind of brought everyone through that in a really powerful way. And I think it’s, again, become a best practice for a lot of people.
MICHELLE ZATLYN: I think, you know, it’s interesting, Jon, because you’re right. This freemium business model kind of was born while building Cloudflare, so of course we’re learning for others, and we’re all still learning as an industry. Subscription-based businesses, SaaS, having different price points and tiers, and how do you price. And so, freemium was—there were many blog posts written in the years 2010 to 2020 about how to do freemium businesses. And I think what just—kind of back to my point of why we had a free service, it was never there to convince them to pay us someday. We have a free service for six different reasons, and one of them can be because then one day, they turn into a paying customer on our pro plan, which $20 a month or $200 a month. But there are actually five others reasons why we had that plan type. And I think that if you’re offering—if you’re thinking about your pricing and packaging—and again, there’s lots of blog posts on how to do this—I think that if you just have a free tier because you want them to pay you someday, that’s very expensive because it’s a high marketing cost. But if you can have other reasons to have it—and again, for us, there was a lot of cybersecurity data that helped us build better products, and performance data that helped us build better products, that then we could go package and build for both our free customers, as well as higher-paying customers, to fuel revenue growth for a long time. That was very powerful.
Another one that’s not obvious for us was, we kind of took what Google and Facebook did, where you take 1% of your traffic to testing, so then when you finally roll it out to the Fortune 1000, it’s battle-tested. We do something really similar at Cloudflare. And that’s been a huge source of innovation for us. And we can launch products faster because of that.
JON SAKODA: So, you said something that is so important. And I always like to remember what it was like years ago. 20% now, nearly 20% of the world’s internet traffic goes through Cloudflare in some way. And I think many people know how Cloudflare works. But just to remind people, Cloudflare effectively is the on-ramp for a lot of people to the internet. I remember looking back, you guys as a team had many critical junctures where it may have felt like life or death, and had to survive a lot of moments of crisis that might have killed weaker companies. And when you look back, what advice do you give to founding teams who are going through those kinds of moments, and where did you find the inspiration to work through some of those tough times?
MICHELLE ZATLYN: You know, I… When you’re a founder—actually, you know what? When you’re a founder, you end up becoming a leader. And you find yourself in situations where you are deciding where you wish somebody else was deciding. Because there’s just no one else to decide, so you are put in situations that you could never anticipate, some self-inflicted, some not, about what you need to be able to do. And I think that, back to, again, there’s lots of things I’m really proud of. There’s lots of things we’ve learned and fixed along the way. There’s lots of mistakes we made. I have tons of scar tissue. So I don’t want anyone to think we’re perfect.
But I do think I look back, and I look back to Matthew, Lee, and I, we cared. We tried to do the right thing. We were long-term-focused. We tried to be thoughtful in what we were doing. We weren’t short-term greedy. What’s the right thing for the internet, the right thing for our customers, the right thing for our team? And often, if you come back to that, then it becomes pretty clear what you do. And again, if you get it wrong, you can quickly adjust. And we never threw each other under the bus. We were always in there together. We never threw someone on the team under the bus. We were always in there together. And we kind of just stepped up to the plate. And I think that we don’t talk enough about that in entrepreneurship, about the importance of leadership.
And I know MBA programs get a really bad rap, and HBS gets a bad rap. But when I applied to HBS, I remember their website, I don’t know if it still says this, was like, “We’re educating the world’s next generation of leaders.” And so, I feel like I was put in a lot of situations through my MBA program about how to be a leader, and how you show up for these things. And so, it’s interesting. I think leadership matters a ton. And we are definitely in a world where I think people flock to good leadership. And sadly, there’s not enough of it everywhere.
JON SAKODA: Yeah. So, looking back on what has been more than a decade of success now at Cloudflare, what are some of the highest highs that you can remember of the early years, and what were some of the lowest lows?
MICHELLE ZATLYN: Well, there are so many. I mean, the lowest lows, like early on, for the folks listening, a lot of them are probably really early, there was highs and lows 10 times a day. I just remember the roller coaster of good things, then bad things, then more bad things and more good things. And I’d kind of come home at the end of the day just emotionally exhausted. Somebody you really thought was gonna join not showing up for work, or a critical member of the team leaving. And it’s just like a punch to the gut early on. It was for us, anyhow. We just cared so much. We were so invested. We were like, “We’re not done yet! How can you be going? What could be better?” It felt like tricky not taking that personally early on, people joined, founders—those are not fond memories at all for us. We let our customers down a couple times during the years where our service fell over for whatever different reasons, and if our mission was to help make the internet better, we made the internet a lot worse for a lot of people over those 23 minutes or 47 minutes as we built our company.
And so, those were some of the low, low, low points. Also, just on a personal note, there was three of us that started Cloudflare—Matthew, Lee, and I—and we were all in it together and rowing in the same direction. And about five years in, I guess, Lee just wasn’t rowing quite in the same direction and was playing video games in company meetings. And we thought, well, maybe he just doesn’t like the more process and systems, although we thought we were pretty light on the process and systems, and why aren’t you taking this seriously? And so, long story short, Lee eventually left the company. It took a long time. And it wasn’t because he was checked out. It’s because he had a serious neurological disease, and he’s very sick. It’s awful. And we all worked so hard those first two to five years. I still work hard, but it’s different. And he didn’t get to enjoy any of the fruits of all those labors. That continues to be a low point. There’s a really good and sad article written in Wired about his story.
JON SAKODA: I know. I remember that.
MICHELLE ZATLYN: Yeah. So, those were some of the low points. And again, it kind of brings tears to my eye. Matthew’s usually the teary one. But it’s just like, you know, you just think it’s—man, startups are hard. And so, I’m all happy and smiley here, but I know why there’s depression among founders. And it is lonely and hard, and just hiring those first 200 people, it’s like, why come work for you when they could come work for Cloudflare? And not because I’m so great, but just, they get paid better, it’s less risky, they get more resources. It’s just—it’s very hard. So, that’s that.
High points. The best part of my job today. So today, we’re about 2,500 people. We’ve been public for about two-and-a-half years. And the best part of my job are the people I get to work with. I mean, Matthew is a truly exceptional person. I know he’s part of this conversation. I mean, he’s just—he’s exceptional. And I think there are several exceptional people in tech, including Matthew Prince. And I just feel so lucky to get to work with him. But it doesn’t matter how exceptional you are. You might be someone truly exceptional yourself. I find a lot of really talented tech founders are. It doesn’t matter how good you are. It’s can you assemble a team of really great people working together. And I feel like we have.
I think people could work anywhere. They choose Cloudflare. They stay for a long time. They’re smart. They try hard. They try and do the right thing. We play as a team, we win as a team. I often escape reality, like the terrible headlines of COVID, and what’s going on with the elections, and all this drama we see in the news on a daily basis, by going to work, because I actually like what I’m doing at work and the people I do it with.
JON SAKODA: Yeah, yeah, yeah.
MICHELLE ZATLYN: And I hope more people have that and create companies with that, because that’s—the world needs more of that, not less. The second high point is having customers who like what you do. Like the other day, one of our customers said to me, “Michelle, we really don’t work with a lot of outside vendors. And really truthfully, we know you’re a vendor, but we really think of you as an extension of our team.” I mean, there’s just—more stories like that should be told, because that’s really rewarding, and it makes all the hard blood, sweat, and tears that you put in every day matter.
And then this is something that I’ve ventured to talk more about over the last 12 years than I did maybe 12 years ago. But just, I think being a woman building a pretty technical enterprise company, I appreciate that that doesn’t happen as much as it should. And what I love is that over 30% of people at Cloudflare are women, and they come because they see other women being successful at Cloudflare. They feel like they’re included. They feel like they’re welcome. They feel like they can do great work here and supported by that. And I’m proud of that. And not just at Cloudflare, but just broadly in the industry, helping each other out. And so, I hope we see more of that going forward, because technology is not going away. We need more women in the industry.
JON SAKODA: I’m so glad you brought that up. You personally have made a huge difference, and Cloudflare has also made a huge difference. So, I’m so glad that you brought that up. I think you really are an inspiration for so many people and so many female founders.
May I wrap up with just one more question? And that is, what advice would you give to your younger self? When you look back, is there anything you would’ve done differently or something you would have pushed yourself to do?
MICHELLE ZATLYN: So many things. There’s two things I wish I had had the a-ha moment earlier. The first is, we’re a technical company. We make internet traffic faster, safer, more reliable. We literally build infrastructure for the internet. For us, it’s all about the tech and the products and the differentiation. It took me longer than I should have, and it’s kind of ironic I’m about to say this, is because we did have a business school background, of appreciating how important the business metrics are. Where really special companies get born is when you have amazing technology with really good business metrics. And then I think if you add in awesome mission and great people, then you got like a super, super special situation.
And I just remember, when we brought in our first head of sales, he actually still is our president of field operations today, Chris Merritt. We brought him in, and we were doing about $5 million in ARR. And I just gave—everything he wanted to do, I gave him such a hard time. Just, everything. I was like, “That’s not cool. That’s not how we do it here. No way.” I mean, I was an idiot. So at some point, I realized, you know, founders have to put on your business hat, and you gotta keep all the great things about Cloudflare, your company, but then also really appreciate the business metrics, and they matter too. And revenue growth is great, and good gross margins is awesome. Those are good things.
And then just, the second one was—it’s so interesting. I mentioned about how the first two to five years of building Cloudflare was a lot of work. I mean, it was great. We were a huge success story. But a little bit like my medical school research project that I talked about at the beginning, where I was doing so well, but I wasn’t having fun. And I remember I had coffee with someone who I kind of knew, didn’t know very well. And I read something, and kind of the light bulb went off in my head. And what I met to meet this person for coffee, he’s actually Chris O’Neill. Some of you might know him. He’s in the Valley. He was the CEO of Evernote at the time. And I didn’t know him very well. So it was just kind of one of those things of serendipity. And he’s like, “How’s it going?” And I was like, “You know what? I made a decision yesterday, and you’re the first person I’m telling, that I’m gonna enjoy the journey more. I’m gonna start to enjoy this more. Even the hard things, I’m just gonna enjoy.”
And honestly, since that day, coffee with Chris O’Neill, and he has checked in on me a couple times, I have enjoyed it a lot more. And even—you know, we had our sales kickoff yesterday, and someone said, “What’s your hopes and dreams for our team?” I said, “All of us have a lot of work to do, but I hope you all enjoy it.” Because you can’t go back. And we should feel good solving hard problems and working with people we like, and find joy in the moment. And I think that’s something that I wish I had learned earlier in my career.
JON SAKODA: Well, Michelle, this has been such an amazing conversation. You have, I think, debunked a lot of the conventional wisdom about what it takes to start a company. You’ve also just been a really big inspiration to a lot of entrepreneurs out there. So, I can’t thank you enough for being a part of this podcast. And I hope to see you really soon.
MICHELLE ZATLYN: Thank you so much for having me, Jon, and just want to say thanks for being such a great friend and partner to Matthew and I and Cloudflare over the years. You’re always one of our greatest champions. Your career is all about people, and I feel really lucky that I get to work with people like you. So, thanks so much for having me on, Jon.