Travis built RedSwoosh (https://en.m.wikipedia.org/wiki/Red_Swoosh) and then went on to build Uber. Now someone saw Uber and claims it inspired them to rebuild RedSwoosh. ¯\_(ツ)_/¯
11,162 karma · joined December 6, 2010
https://blog.cloudflare.com/a-relatively-easy-to-understand-...
Maybe this image if the URL doesn’t get munged:
https://blog.cloudflare.com/cdn-cgi/mirage/551bd7d005a1232db...
https://www.seatguru.com/airlines/Lufthansa/Lufthansa_Boeing...
https://blog.cloudflare.com/introducing-cloudflares-automati...
The success of that convinced us we should do something to improve the Internet every year to celebrate our “birthday.” Over time we ended up with more than one product that met that criteria and timing, so it went from a day of celebration to a week. That became our Birthday Week. Then we saw how well bundling a set of announcements into a week was so we decided to do it other times of the year. And that’s how Cloudflare Innovation Weeks got started, explicitly with us delivering IPv6 support back in 2011.
Another perspective is that the connection of an IP to specific content or individuals was a bug of the Internet’s original design and thankfully we’re finally finding ways to disassociate them.
1. How much and at what valuation?
The answer to this is harder to think about with convertible notes, so I’d tend to think about it the way the VC in your first priced round will think about it. For them, today, they’ll want to, after the round, own ~20% of the company. “Today” is important because that number will fluctuate. A year ago, when money was flowing freely, that number may have been as low as 10%. In a few months, if things tighten up further, it may get as high as 30%. But my sense of the market today is 20%.
While it seems wacky, everything else in your first question then flows from this. If you raise $1M, and the VC wants 20%, then your valuation after the round closes (post-money valuation) is $5M. Raise $2M and it’s $10M. Raise $3M and it’s $15M. Etc… to some rational limit.
So the two numbers you’re really trying to figure out are: 1) how much the VC you want to talk to targets owning in your company; and 2) how much you need to get to the next milestone. If for #1 the answer is greater than 20% then it means either VCs aren’t as excited about you or venture markets have even further seized up. For #2, once upon a time I’d probably have said think about what you need for the next 18 months. Today, as I think we’re headed into tough times, I’d probably be thinking about what you need for 24 – 30 months.
By the way, at Cloudflare we raised our first round in 2009, the last period where venture markets were really seized up. In our first round we raised $2M and sold the VCs ~30% of the company. But 10 years later when we went public, in spite of raising another $200M+, the founding team still owned 25%+ of the company and held super voting shares giving us full control. So sweat these fund raising questions a bit, but mostly just focus on building a great business.
And, again, this is assuming venture not angels. And assuming a priced round, not a SAFE (convertible debt). But it can provide a good mental model to think about what you’ll do when you get to your first VC-led round.
2. Financial projections?
Focus on costs, not revenue. Assume you’ll generate no revenue. Think about how long, with that assumption, whatever you raise will last you. Today (again, winter is here or coming soon) think 24 – 30 months until you can raise again.
3. EU or US investors?
10 years ago the answer probably was US. Today venture is much more distributed. I’d think less about where and more about who. And think about the individual, not the firm. It’s so much easier having conversations with people who “get” your space. At Cloudflare, we made a list of the top 10 cyber security investors. We then found ways to meet those 10 people. The number two person on our list offered us a term sheet within 15 minutes of the start of our conversation. Rest is history.
The original way you signed up for Cloudflare was to give us your GoDaddy username and password and we’d login, slurp the DNS records, then update the name servers. It was magic when it worked. But it was almost too easy so if something broke people didn’t know how to undo what we’d done. Worse: sometimes we’d miss a DNS record like an MX record and be unable to even contact the user.
The crazy thing is we emailed people basically with the content on this page and asking Project Honey Pot users to give us their user names and password. A scary number of people just did without asking any questions.
We put this page up to prove this was a legitimate project after a (scary) few people asked us: “How do I know this isn’t phishing??”
Fun to find it still kicking around 12+ years later.
Our decision today was that the risk created by the content could not be dealt with in a timely enough matter by the traditional rule of law systems.
That’s a failure of the rule of law on two dimensions: we shouldn’t be the ones making that call, and no one else who should was stepping up in spite of being aware of the threat.
Encourage you when these issues arise to think of them in the rule of law context, rather than free speech, in order to have a more robust conversation with frameworks that have an appeal and applicability across nearly every nation and government.
In addition to that, controlling the registrar also allowed us to take advantage of features like registrar and registry locks managed by policies we had full control of. Auditing the policies of other registrars, even the supposedly secure ones, freaked us out enough to spend the money to build our own.