Good morning,<\/p>\n
Today\u2019s Stratechery Interview is with Cloudflare<\/a> co-founder and CEO Matthew Prince<\/a>. Prince took a fascinating path to Silicon Valley \u2014 which we explore in this interview \u2014\u00a0but is most well-known for Cloudflare, which he started at Harvard Business School in 2009. Cloudflare provides networking services for websites in the cloud, and has one of the most effective and fascinating freemium business models in tech<\/a>.<\/p>\n In this interview we discuss Prince\u2019s background, the original Cloudflare idea, and what Cloudflare is today \u2014\u00a0and the opportunistic way in which it became the company that it is. Prince\u2019s latest focus is the economics of Internet content sites; he is very worried about the impact of AI on the traditional traffic business model that Google created, and is using Cloudflare\u2019s power to try and create a new business model for content. We discuss Prince\u2019s motivations and concerns, and why Prince believes this is a legitimate use of Cloudflare\u2019s power, even if the ultimate decision-maker about the future of the web is Google.<\/p>\n As a reminder, all Stratechery content, including interviews, is available as a podcast; click the link at the top of this email to add Stratechery to your podcast player.<\/p>\n On to the Interview:<\/p>\n An Interview with Cloudflare Founder and CEO Matthew Prince About Internet History and Pay-per-crawl<\/p>\n This interview is lightly edited for content and clarity.<\/p>\n <\/p>\n Background<\/p>\n Matthew Prince, welcome back to Stratechery.<\/p>\n Matthew Prince: Thanks, Ben.<\/p>\n You\u2019re actually one of the earliest Stratechery interview subjects. In fact, I\u2019ve talked to you twice. In both instances, however, the interviews<\/a> were very focused<\/a>, primarily on content moderation issues. This was also before I released my recordings of the interview, the modern Stratechery Interview format. To that end, that means I have an opening to still do my regular question for a first-time interview subject: I\u2019ve never asked you your background like how did you get started, how you became interested in tech, take me back to the beginning.<\/p>\n MP: I grew up in the mountains of Utah and when I was six years old \u2014 I actually used to think it was seven but my mother corrected me \u2014 when I was six years old in 1980, my grandmother for Christmas gave me an Apple II Plus<\/a> and I took to it just like a duck to water. The University of Utah has a really actually world-class computer science department, and my mom used to take continuing education classes there and she would sneak me in basically as her precocious kid and she\u2019d pretend to do the work but I\u2019d really do all the homework.<\/p>\n Oh, she was actually registered for classes and you were just tagging along?<\/p>\n MP: That\u2019s right. And I did things that made you really popular in high school, I went to computer camp, there was a computer camp, we had Cate, the boarding school out in Santa Barbara and I wish I\u2019d stayed in touch with those people because I bet the people who were there with me have gone on to do pretty amazing things. And I went to college thinking I was going to study computer science and then having the hubris of an 18-year-old, I took Computer Science 105 or whatever it was and was bored out of my mind because I\u2019ve been doing this for quite some time.<\/p>\n I actually transferred my major to study instead English Literature which is a different direction, but I still knew a lot about computers. I started college in 1992, it\u2019s right as the Internet is taking off and they needed students who had some understanding. I was one of the student network administrators and that\u2019s how I learned how switches and routers and everything worked. I had a fiber optic line straight from my dorm room back to the university\u2019s router, had faster Internet for those first few years than I did for many years since.<\/p>\n Oh, yeah. At Wisconsin people generally, I\u2019ve said this before, but people usually only stay in the dorms one year, and me and some of my friends stayed in two years just because that was where you got faster Internet. But we didn\u2019t have fiber optic lines, they were T2s or something like that.<\/p>\n MP: Yeah, and that was that. I had offers at the end of college to go do a job that honestly I had no idea what it was but it was a product manager, which I was like, \u201cWhat does that even mean?\u201d.<\/p>\n I think it\u2019s 2025 and no one still knows what it means.<\/p>\n MP: And are having to reinvent themselves again. But I think that I had offers at Microsoft and Yahoo and Netscape and I said, \u201cNo, I\u2019m not going to do that\u201d, and instead I\u2019ll go to law school, and so I actually went to law school and thought I was going to be a lawyer for a while. And probably but for the dot-com bust, I probably would be.<\/p>\n That\u2019s not the answer you would expect, you would think, \u201cThe dot-com bust drove me out of tech\u201d, how does the dot-com bust drive you out of law and into tech? That seems backwards.<\/p>\n MP: Well, it kind of drove me into tech a little bit. I had found the type of law that I enjoyed was securities law, which is basically taking companies public and so the summer of 1999, I worked in San Francisco as an intern at a large law firm, we took six companies public over the one summer and it was amazing, it was so much fun. And my plan was go and work for the law firm for a while and then find a company that I thought was really great and help them in financing or whatever.<\/p>\n Yeah, be their GC or something.<\/p>\n MP: And I\u2019d eventually go in-house, and that was what I thought my journey was going to be. Then the dot-com bust happened in March of 2000 and the law firm called up and said, \u201cHey, good news, bad news. Good news, you still have a job. Bad news, we don\u2019t need any more securities lawyers. But bankruptcy law is basically the same thing and we think you can handle it\u201d. And again, as a lawyer I\u2019m like, \u201cIt kind of is the same thing\u201d.<\/p>\n A lot less fun.<\/p>\n MP: There\u2019s no in-house left after the company has gone bankrupt.<\/p>\n So there\u2019s a guy named Doug Lichtman who\u2019s a young law professor who would always come over to my apartment and we\u2019d share a bottle of wine and he\u2019s like, \u201cMy brother is starting a B2B company in the insurance space and they\u2019re looking for someone with your skill set, would you be interested?\u201d, and I was like, \u201cYeah, that sounds amazing\u201d, and maybe they\u2019d match your salary and they\u2019ll give you this thing called stock. I was like, \u201cYeah, sure\u201d, and so I did that and we raised about $6 million.<\/p>\n It was the same business model as almost like Rippling today but it was way before its time. And we were idiots and we blew it up in every possible way and so we blew through $6 million over the course of about 18 months and it was a colossal failure, but it was just incredible to see that a group of people could come together with an idea on a piece of paper, try to build something, fail, fail honorably.<\/p>\n Again, I think it just wasn\u2019t the right time and then no one went to jail, which was pretty amazing. We lost all this money from the investors and the investors were like, \u201cYeah, that sucks, if you guys start something new, let us know\u201d, and I was like, \u201cWow, this is some sort of magical world I didn\u2019t know existed\u201d. So I then spent the next eight years trying to find my way back to that, although largely wandered in the wilderness. I was a bartender, I taught LSAT test prep, I did a bunch of just odd jobs just to make ends meet.<\/p>\n This is when you started Unspam<\/a>, right?<\/p>\n MP: Yeah.<\/p>\n And you wrote a paper about the CAN-SPAM Act<\/a>, I think you were teaching a law course about that. What got you interested in spam of all things?<\/p>\n MP: I thought it was an interesting legal question. It is with a very few exceptions, until the Internet comes along, there aren\u2019t a lot of ways to be sitting in one place and commit a crime on the opposite side of the earth. There were some, you could do postal fraud and a couple of things, but all of a sudden that became a real thing that was happening at real scale.<\/p>\n And then secondly, it was the first time that you could be sitting in one place of the world, send an email to another place, potentially commit a crime and not even know you were doing it because you don\u2019t have any sort of jurisdiction which is attached to it and so I thought that the question of how you were going to apply jurisdictional laws to things like cyberspace was a really interesting question. Again, I was playing law professor largely, I was an adjunct which was the lowest tier of professor at a law school that doesn\u2019t exist anymore, that\u2019s how bad it was.<\/p>\n (laughing) Was this University of Chicago Illinois or\u2026?<\/p>\n MP: It\u2019s not the University of Chicago, University of Chicago is terrific, it was John Marshall Law School in Chicago, which does not exist anymore. But it gave me an excuse to think about and write about things and I had a thing that was today we call blog but it was before that term had been even coined. I think the same way that you get to write and talk about things that you\u2019re interested in, that was a period of my life that I got to do that. My parents were deeply worried that I would never make anything of myself and I honestly was a little bit worried about the same thing, but I think it was actually really important for just having the perspective to then go on and start Cloudflare.<\/p>\n What was was Unspam specifically though?<\/p>\n MP: Unspam initially started out as being a cool domain that I had registered and I was like, \u201cWhat can I do with this?\u201d, and the first thing we tried to do is disposable email addresses, the same thing Apple does now where you can basically have an email address and then if people start sending you stuff you don\u2019t want, you turn the email address off and it goes away.<\/p>\n I started doing this in college in the 1990s where I still have this domain that I use for all these email addresses, it turns out it\u2019s actually a very difficult way to live.<\/p>\n MP: (laughing) I have that same problem.<\/p>\n There are so many assumptions built into having a common email address across different places that it\u2019s actually pretty tough. I\u2019m stuck with it now!<\/p>\n MP: Yes. Well, we should commiserate over this at some point because I have the same problem. And also just explaining to someone and you\u2019re talking to the customer service agent at Nordstrom, and they\u2019re like, \u201cOkay, what\u2019s your email?\u201d, and I\u2019m like, \u201cWell, it\u2019s nordstrom\u2026\u201d<\/p>\n Nordstrom@domain.com.<\/p>\n MP: And they\u2019re like, \u201cNo, no, no. What\u2019s your email?\u201d<\/p>\n And they\u2019re like, \u201cWait, do you work for us?\u201d<\/p>\n MP: And then, \u201cThis doesn\u2019t make any sense.\u201d So yes, I\u2019ve had many of those. That\u2019s where we started. We then got the Do Not Call list was coming along so the question was, \u201cCould you build something like the Do Not Call list but for email?\u201d, and so we ended up being strangely a government contractor where we worked with various states.<\/p>\n Originally, we started out actually with Chuck Schumer and the CAN-SPAM Act but the federal government never implemented it. But Michigan and Utah and a couple of other states implemented this thing that basically said if you put your email on a list, then they would maintain the list and then what we did was we just provided hashing technology where we\u2019d hash the marketer\u2019s list, we\u2019d hash the government\u2019s list, and we\u2019d compare the two. So neither side knew what was on the others list and it wasn\u2019t world-changing technology but the company is still around, it\u2019s profitable but it was never going to be a really, really big business.<\/p>\n You have an undergraduate degree in English, you go to law school, and then you decide, \u201cOh, I need to get an MBA as well\u201d, you go to HBS. Did you have an idea that you want \u2014 was that a, \u201cI don\u2019t know what to do with my life so I\u2019m going to go to Harvard?\u201d \u2014 which is a lot of people do things like that. Was it a, \u201cI specifically want to gain some sort of knowledge, I want to start a business?\u201d, what\u2019s the sequence of events here given that Cloudflare the idea started there in Cambridge?<\/p>\n MP: I started Unspam and Unspam was floundering along and not doing very well. And my dad \u2014 we\u2019d grown up upper-middle class and my dad owned a bunch of restaurants \u2014 not good restaurants \u2014 like Applebee\u2019s, Famous Dave\u2019s Bar-B-Que, he had the only Hooters in Utah.<\/p>\n An adventure in its own right.<\/p>\n MP: Yeah, and he was in his late 60s and he called me up and he said, \u201cSon, I\u2019ve taken care of you a lot of your life and it\u2019s time for you to come run the family business\u201d, and I couldn\u2019t imagine anything worse than running my dad\u2019s Hooters. So the idea of going to business school was, I was on my second bottle of wine trying to figure out, \u201cHow the hell am I going to get out of this?\u201d, because it was a good business and someone needed to run it and I thought, \u201cWell, I\u2019ll apply to business school\u201d. I applied to eight business schools, the night the applications were due, I ended up getting rejected from seven of them and then somehow got into HBS and called my dad and said, \u201cHey\u2026\u201d.<\/p>\n \u201cI really want to do it but I need to go get some training first!\u201d<\/p>\n MP: \u201cI really wanted to do it but I need two years to try and do this business thing, I think I should understand accounting a little bit better\u201d, and he was like, \u201cYeah, that\u2019s a really good idea, you should do that\u201d. So I went off and I had a Voice-over-IP phone that I was in the dorms, this tiny little dorm in Alston, in Cambridge, and I plugged my Voice-over-IP line in so I still was working for Unspam, the phone rang, I\u2019d pick it up, and then I was doing business school stuff. I was much older than the usual business student and I taught law, which it was like this total unlock where I was like, \u201cOh my gosh, everyone does grad school wrong and especially business school wrong\u201d.<\/p>\n How so?<\/p>\n MP: They think that the goal of the class is to think of the clever thing that no one has ever thought of before, which leads you down a bad path. Whereas really the goal if you\u2019re faculty is to take students on a Socratic journey to make a point, and you start at point A and end in point B and you can figure out what that arc is. So the way that I approached business school was I would just say \u2014 whenever someone would have some crazy point, I just try and get us back on the arc, and that made me every faculty member\u2019s closest friend.<\/p>\n Especially with the Harvard teaching style with the cases and things like that where they\u2019re trying to guide a discussion, it\u2019s not necessarily a lecture, I can see that appealing for sure.<\/p>\n MP: Yeah. It was funny, in almost every class because they\u2019d get descriptions of who the students were, the faculty about three lectures in would come up to me and they\u2019d say, \u201cSo you used to teach law school?\u201d, and I was like, \u201cYeah\u201d, and they\u2019d say, \u201cNothing like a lawyer to ruin a good conversation\u201d, and I said, \u201cYeah, that\u2019s true\u201d, he said, \u201cHere\u2019s the deal. I won\u2019t embarrass you if you don\u2019t embarrass me\u201d, and I said, \u201cDeal\u201d. So business school at that point became just a lot of fun and I did pretty well at it. But mostly I was spending that time just trying to figure out what can I figure out to do that won\u2019t have me go back and run my dad\u2019s Hooters?<\/p>\n The Cloudflare Idea<\/p>\n Where did the Cloudflare idea come from? Was that directly downstream from the Unspam work? You can certainly see the links there. What\u2019s the connection to Clayton Christensen and disruption? You\u2019ve talked about that in retrospect<\/a> but it\u2019s one of those things when you look backwards, you can paint this picture of I learned about disruption, I wanted to start this company that served an underserved market. Is that how it worked or what was the actual progression?<\/p>\n MP: These things all start with people. There were two people who were critically important, one was an employee at Unspam, this guy named Lee Holloway who we\u2019d hired straight out of college and was just \u2014 there are some people that are just real technical geniuses, and Lee was this incredible technical genius and we built the core technology for Unspam but we also had all these side projects.<\/p>\n One of those side projects was a thing called Project Honey Pot which actually built \u2014 Paul Graham<\/a>, the Y Combinator guy, before Paul did Y Combinator, he would host a conference at MIT called the MIT Anti-Spam Conference, and he invited me out one year to give a talk on how to write laws to throw spammers in jail, that went over pretty well. He\u2019s like, \u201cCome back, just do the same talk\u201d, I\u2019m like, \u201cI\u2019m not going to do the same talk, I\u2019m the lawyer, I\u2019m not going to do the same talk to a bunch of technologists, they were polite the first time\u201d, and he\u2019s like, \u201cOh, you\u2019ll come up with something\u201d.<\/p>\n So I went back to Lee and I was like, \u201cCould we build a system to track how basically bad guys steal your email address?\u201d, that turned into something called Project Honey Pot<\/a>. Gave the talk, it was wildly popular, put it in the corner, and over the course of the next few years, over 100,000 people signed up for this service. And Lee was there, Lee at the time, while I\u2019d gone off to business school, he continued to do technical work at Unspam. But it was not the highest, most interesting technical work, and he had called me and said, \u201cHey, you\u2019ve always been really good to me but\u2026\u201d, and at that point in the conversation, I was like, \u201cStop right there, give me some time, I\u2019ll figure something out\u201d. Because Lee was one of those people you just wanted to have on your team, he had offers at Google and Facebook and that.<\/p>\n On the other side, a lot of people in business school are obnoxious, but there was this one woman who was really just genuinely trying to find the right answer and had no vanity about the whole thing, and that was Michelle [Zatlyn]<\/a>. Michelle was clearly the opposite of me, and I\u2019m not the most organized person, I\u2019m not the most disciplined, I\u2019m not about process. Michelle was a Six Sigma Black Belt and she\u2019s just all of those things and with Unspam, I had started with two other friends and we fought like crazy and so I was really trying to look for people that had real difference from who I was, and Michelle was just this all of the things that I was bad at, she was amazing at. So I was always pitching her on various ideas.<\/p>\n Most of my ideas were \u2014 they were really, in retrospect, terrible ideas. But one of them I was telling her about Project Honey Pot, and she was just perplexed by the thing. She was like, \u201cWhy do people sign up for this?\u201d, and I was like, \u201cBecause we track the bad guys\u201d, and she\u2019s like, \u201cYeah, but it takes effort, do you give them anything?\u201d, and we\u2019re like, \u201cWell, they get recognition for what they\u2019ve done\u201d, she\u2019s like, \u201cThat doesn\u2019t make any sense, why would anyone do this?\u201d. And I, frustrated at an Ethiopian restaurant in Central Square in Cambridge, I said, \u201cMichelle, someday they want us to stop them\u201d, and she said, \u201cThat\u2019s it, that\u2019s the idea, let\u2019s build that\u201d.<\/p>\n And literally that night I called Lee and I pitched, \u201cHey, here\u2019s how it\u2019s going to work, we\u2019re going to do it this way\u201d, and I spent 30 minutes just walking him through the entire idea that Michelle and I had sketched out. At the end of it, he stopped for about five minutes, to the point I thought the line had gone dead, and at the end of it he was like, \u201cYeah, that\u2019ll work, let\u2019s do that\u201d, and that was the start.<\/p>\n So it was Lee, Michelle and I were the original three co-founders of the company, it started as a school project. The original idea was, \u201cCould you take a firewall and put it in the cloud?\u201d, so Cloudflare is us playing with firewall in the cloud. And for at least the first five years, what we kind of outlined over the course of the next few days turned out to be a almost perfect roadmap for what happened over the next five years.<\/p>\n So you have this service that is super beneficial for tiny websites, you can sign up for Cloudflare for free to protect you from Distributed Denial of Service (DDoS) attacks. It has this really virtuous cycle where ISPs are grateful that you exist because you consume a lot of bad traffic, that they\u2019re happy to have you on board, this gives you a better service. It\u2019s really the growth story, which I\u2019ve written about<\/a>, is really compelling and interesting.<\/p>\n And as you\u2019ve articulated, there is this disruption angle where you\u2019re approaching the problem from a completely different approach of say, a public cloud or certainly on-premise software. You couldn\u2019t be more different than that. Is this a thing where you had the agreements with your professors? You\u2019re not going to make a fool out of them. So did you walk in to Professor Christensen<\/a> and be like, \u201cOh yeah, I\u2019ve already done this\u201d, or what is the connection there?<\/p>\n MP: I was taking, I have to remember, I think I had just finished Clay\u2019s course when we started working on Cloudflare so it was coming really fresh out of that and Clay and I had, I think, a really very strong relationship and I just loved the course and got to take it from him. Early on, I think that it gave us the confidence. We knew it\u2019s really hard to build businesses unless they\u2019re consumer, but even then it\u2019s really hard, but it\u2019s really hard to build big businesses in a B2B space on 20 bucks a month fees.<\/p>\n There\u2019s a reason everyone ends up getting sales forces and selling to big companies.<\/p>\n MP: That\u2019s right. So we knew the only way it would work is if we got to the point where we\u2019re selling for tens or hundreds of millions of dollars, which we do today, to big enterprises. But the question is how do you get from here to there?<\/p>\n I think because of the nature that we had to build this network out because we needed data and because I\u2019d come out of Clay\u2019s class, I think that all gave us the confidence to say, \u201cOkay, we\u2019re going to start focusing on how do we provide a service for free that\u2019ll be stripped down and limited in a bunch of ways, but make it better than anything else that\u2019s out there and then continue to move up market\u201d. And at some point, we would cross the point where the features that we had would be more than what people could get from the alternatives, which were companies like Akamai and the on-premise hardware folks. Then the hyperscalers were sort of emerging at that point and that\u2019s exactly what happened.<\/p>\n It\u2019s interesting today because at some level we just had the belief that if enough of the Internet flowed through us, we\u2019d find some way to make a business around it and we really did believe in the mission of helping build a better Internet and I think those two things together have allowed us to have the success and get the scale that we have today.<\/p>\n Is it ironic or maybe intentional that this sort of boutique interest you had in crimes being committed across the world, no longer limited by geography, basically you need some sort of push to get people into your business and so the criminals were actually your most important, they were your salespeople, they created the market for you?<\/p>\n MP: Yeah, we\u2019ve never thought about it that way, and there have been various times that there have been hackers who have been like, \u201cI\u2019m reformed, I want to get a job\u201d, and we\u2019ve been like, \u201cYeah, not so sure\u201d.<\/p>\n But I think that the Internet is a complicated place. Early on people would say, \u201cWho\u2019s your competition?\u201d, and I said, \u201cFacebook\u201d, and I actually still believe that\u2019s really true. I think had Cloudflare not come to exist, much more of the Internet would\u2019ve existed on Facebook because it was becoming too difficult as a small website owner to put up with the hassle of it and so people were racing behind the walled gardens that were out there. What we tried to do is say, \u201cHey, let\u2019s give you still the freedom to innovate, but help you have the kind of protection that you don\u2019t have to worry about all of the nasty things that are out there\u201d, and so I think in the same way that Amazon is to Shopify, Facebook is to Cloudflare. Not a perfect analogy, but I think we try to be the minimum amount and then let just any type of creativity or uniqueness happen behind the scenes, whereas the walled gardens are a different thing.<\/p>\n Cloudflare Today<\/p>\n What is Cloudflare today and how would you contrast that to the idea 10, 15 years ago? And is this a path that is about the path you expected to walk down with some obviously diverges along the way, or have you ended up in a different spot than you expected?<\/p>\n MP: I think the real story of Cloudflare is that we wanted to put a firewall in the cloud, and we knew that in order to sell to JP Morgan and governments and big hospital groups and things like that, we had to start small and work our way up, so we made the service free.<\/p>\n What we didn\u2019t expect was the number of problems that that would create. All the world humanitarian organizations were sort of our first customers because they had big security problems and small budgets, and so they all signed up and then people would try and DDoS attack them or hack them in various ways.<\/p>\n Not ideal customers.<\/p>\n MP: Well, again, in some way, perfectly ideal customers because we learned a ton, but then we would stop them. But then all the hacker kids are like, \u201cWow, these guys are pretty good, I\u2019m going to sign up because all my friends are trying to hack me\u201d. So then all the hackers are on us, but then the hackers try and push us in every possible way.<\/p>\n So why did we build a domain name registrar<\/a>? It\u2019s a terrible business, it is a commodity, why would we do it? Because we looked at everybody else and no one else was secure, and we came this close for cloudflare.com getting hacked, and that would\u2019ve been a disaster. So we were like, \u201cThe only way we can solve this is to bring it in-house\u201d. Why did we build our VPN replacement series of products<\/a>? Because we looked at all of the other folks that were in the space and we\u2019re like, these guys, they just can\u2019t deal with the scale and complexity of everything that we have, so we\u2019ve just got to go build it ourselves. Why did we build a developer platform<\/a>? It wasn\u2019t because we thought we were going to sell it, we built it, we needed it ourselves, we needed a sandbox environment so we could build things.<\/p>\n Now, all of those things turned into substantial kind of product lines for us. But really Cloudflare is the story of we create a series of problems and then we solve them ourselves, and in the process that turns into products.<\/p>\n I would\u2019ve never imagined \u2014 the very first meeting we had with venture capital, this guy named Ray Rothrock<\/a> who was the first money into Cloudflare, and we pitched him and he says, \u201cGreat, I only have one question\u201d, and we\u2019re like, \u201cOkay, what?\u201d, he\u2019s like, \u201cWhat are you going to do about the death threats?\u201d, and I was like, \u201cDeath threats?\u201d, and Michelle was like, \u201cWhat are you even talking about?\u201d.<\/p>\n (laughing) The uncertainty that the black belt six sigma does not want in their life.<\/p>\n MP: And he\u2019s like, \u201cIf you\u2019re going to do this, you\u2019re going to piss a whole bunch of people off\u201d, and so I would\u2019ve never imagined that I\u2019d be personally sanctioned by the Russian government and supposedly on some Putin kill list, that wasn\u2019t what I was signing up for and so I think that we have done something which is very different. I think because of the fact that we\u2019ve made it available so broadly, we end up touching a bunch of content, that then means from time to time \u2014 although it\u2019s interesting, you said the two times we\u2019ve talked before were all about content moderation.<\/p>\n I was going to ask you, is the topic dead? It doesn\u2019t seem to come up much anymore.<\/p>\n MP: Well, so we\u2019re 15 years old in September. We\u2019ve had three major incidents of this where there\u2019s stuff that\u2019s illegal, we take down all the time, but for the kind of stuff that\u2019s immoral but not illegal, there\u2019s this sort of gray line that\u2019s there, three incidents over 15 years. So the mean time to incident is five years, we\u2019re due for another one. There\u2019s going to be something, I don\u2019t know what it will be.<\/p>\n But inherently, if you sit behind enough of the Internet \u2014 right now, we\u2019re being sued in Italy, Spain, a bunch of other places and it is largely because people who own football teams, soccer teams, they don\u2019t like people illegally streaming their content. We don\u2019t like people illegally streaming their content, it burns through a bunch of bandwidth. We try and shut it down, but they\u2019re very clever, so they find different ways to do it. So we\u2019re in these fights where we\u2019re kind of like, we\u2019re trying to not have this happen, and so I think that the nature of what we do is going to always have some controversy that\u2019s around it. But frankly, that\u2019s kind of what makes it so interesting as well because we do find ourselves in the middle of some really interesting policy debates.<\/p>\n I do want to come back to that in a little bit, but one thing that I think defines Cloudflare, and this is always interesting, you have these product weeks where you have 47 announcements, it\u2019s hard to parse them all. What I like about companies that do that, this was like Nvidia back in the day, they knew they had something with GPUs and CUDA and they would throw so much spaghetti against the wall, every single GTC, they\u2019d have it twice a year and people would ask me, \u201cHow do they do this?\u201d, I\u2019m like<\/a>, \u201cWell, because it\u2019s all the same platform, it\u2019s just everything is sort of software defined, so they\u2019re actually just releasing these libraries that are marginally different from each other, but they can frame them as being different things\u201d.<\/p>\n That\u2019s sort of like Cloudflare, you have this common architecture on commodity hardware. Was that very purposeful from the beginning or is that a similar function of, \u201cWe\u2019re a scrappy little startup putting a server in an ISP, we can\u2019t afford anything more than a Pentium or whatever it might be\u201d, and it turns out that actually ended up being the way to build out infrastructure?<\/p>\n MP: Yeah, I think we were really inspired by the Google story of, if you think of who was the leading search engine before Google launched? It was AltaVista. And who built AltaVista? Digital Equipment Corporation. What was Digital Equipment Corporation\u2019s business? They sold mainframes. Why did they launch a search engine? It was a demo on how powerful their mainframes were.<\/p>\n And so then Larry [Page] and Sergey [Brin] come around as Stanford students, and the key innovation of Google isn\u2019t actually search, it\u2019s their ability to store and process data much more efficiently than anyone else, being cheaper and faster than anyone else, and that they could scale the mainframe to be infinitely large effectively and they did it by just taking a bunch of commodity hardware.<\/p>\n We, from the beginning I think, I was firmly in this camp, Lee was firmly in this camp. There\u2019s some people on our team who were not firmly in this camp, and so there were fights early on about whether we should have specialized hardware to do various functions, or we should take commodity hardware and then write the clever software to do scheduling and everything else that you needed. Again, that\u2019s one of those debates. We were eight people above a nail salon in Palo Alto, and it could have gone either way. If it had gone a different direction, we wouldn\u2019t be the company we are today.<\/p>\n Today still, almost every server that makes up Cloudflare, is one of a different generation. I think we\u2019re on generation 13 now and we\u2019ll buy the servers in bulk. The servers now have five major components. So they\u2019ve got network, CPU, GPU now, long-term storage and then short-term storage, so SSDs and then RAM. We\u2019re constantly asking ourselves, and this is where a lot of innovation, there\u2019s a once a quarter meeting that our infrastructure team and our product team have that they call a hot and cold meeting and they ask the question everyone asks, which is, \u201cWhere are we running hot?\u201d, and then the question is, \u201cCan we do engineering to make that more efficient or do we have to deploy more hardware in those places?\u201d.<\/p>\n But they ask the equally important question of, \u201cWhere are we running cold?\u201d, and that I think is the more interesting thing, which is, \u201cWhere are those opportunities where we\u2019ve already paid for a resource, it exists in the wild, but it\u2019s not being utilized enough, what can we go build on that resource?\u201d. My somewhat distasteful maybe analogy to this is if somebody came up with the idea of selling the advertising space above urinals in bathrooms and bars, I can tell someone thought of doing that, it wasn\u2019t worth anything, the minute someone did it, you\u2019re all of a sudden generating a new stream of revenue from that.<\/p>\n Cloudflare is asking that question all the time, which is, \u201cWhere is that kind of extra space, extra capacity?\u201d, and then if we can sell that, then we have higher margins and it allows us to continue to do all the things we do.<\/p>\n What\u2019s the split then of business that\u2019s opportunistic versus very intentional and you\u2019re pointing to it for a long time?<\/p>\n MP: We are not the place where we come up with hundred page business cases. I mean, again, we built Cloudflare Workers<\/a> because we needed it and now it\u2019s the fastest growing part of our business.<\/p>\n Cloudflare\u2019s Niche<\/p>\n You\u2019ve talked about being a fourth cloud in the past, I wrote about that<\/a>, I feel like I haven\u2019t heard as much about it as late. Did the public clouds respond faster to that than you expected, whether it be Lambda<\/a> and things like that or what?<\/p>\n MP: I think what\u2019s happened is that we\u2019ve each carved out our lanes and while we compete at the margins, we are very distinct in those lanes.<\/p>\n The analogy is, I think that companies have personalities just like employees that do various jobs functions have. The hyperscalers, so AWS, Google, Microsoft Azure, their job function personality is the DBA, the database administrator. And if you\u2019ve ever worked with DBAs, they are brilliant, but they\u2019re oftentimes kind of rigid. They see the database as the center of the world, the entire thing they\u2019re doing is all the data has to be in the database.<\/p>\n To be fair, the database is kind of the center of the world, in their defense.<\/p>\n MP: It can be. Again, that is one way you are showing your colors, I guess. The other version, which is more us, is the network administrators.<\/p>\n It\u2019s funny you mentioned that, actually for the business of Stratechery and Passport, the stuff that I work on, I think a lot about databases. It\u2019s actually really important!<\/p>\n MP: I think a lot about networks, you think a lot about databases. But the functions of those two things are actually really, they\u2019re not diametrically opposed, but there\u2019s tension between them, because the purpose of the database is to hold onto the data and store it no matter what. The purpose of the network is to move the data and get it off your system as fast as you possibly can and those are two very different things.<\/p>\n So if you\u2019re really good at databases, you\u2019re probably not going to be really good at networks and if you\u2019re really good at networks, you\u2019re probably not going to be really good at databases, and I think that\u2019s true. I think that the networking products of the hyperscalers kind of suck because they don\u2019t actually want data to leave and our database products, honestly, aren\u2019t as good as the hyperscaler products. Again, they have certain advantages, there are times when you want to use them and you don\u2019t want to use theirs, but they\u2019re definitely tertiary to what it is that we are doing as a business.<\/p>\n I think that a bad outcome in the future for Cloudflare is one where the world becomes more unicloud where everyone says, \u201cI am a hundred percent all in on AWS\u201d, in that case, there\u2019s not a lot for us to do. A good outcome for Cloudflare in the future is a world where you are more multi-cloud, in which case then the network becomes the things that rationalizes between the different cloud providers.<\/p>\n Is this the area where AI has actually been positive for you? Not so much in building AI products, but in the fact that it\u2019s given a motivation for companies to be more multi-cloud?<\/p>\n MP: Yeah, I think that\u2019s true. And I think also, yeah, and you\u2019ve got big data sets that you have to move around in ways, we\u2019re really good at that. There\u2019s just a lot of things where for one reason or another \u2014 if you\u2019re building an agent today, probably Cloudflare Workers is the best place to build it. You can spin it up, you can spin it down, it can connect all around. It\u2019s got to pass through us anyway because we\u2019re such a large portion of the Internet and so that has been, I think that actually the sort of AI and AI agents has been the killer app for Cloudflare Workers, but it\u2019s less about how \u2014 we\u2019re never going to be the right place to run SAP HANA<\/a>, but we\u2019re definitely the right place to run the agents that have to interact with the rest of and move around the Internet.<\/p>\n Pay-per-crawl<\/p>\n The reason to talk now, and we\u2019ve talked offline about this a few times, both this year and last year, is your push for this pay-per-crawl concept<\/a>. Why don\u2019t you give me the high level overview, the pitch from your perspective, which I think has evolved? I would like to think partially based on some of my feedback, but what\u2019s the pitch in September 2025?<\/p>\n MP: Let\u2019s take Cloudflare out for a second and just talk about\u2014<\/p>\n Talk about Matthew, the English student? The student newspaper editor.<\/p>\n MP: This is me channeling inner law professor. Let me give you the history of the Internet and why the Internet exists the way that it does and what\u2019s changing.<\/p>\n This is usually my job, but go ahead.<\/p>\n MP: And you can tell me where I\u2019m wrong, but this is my quick history of the Internet, and apologies to Michelle who hates history lessons.<\/p>\n For the last 25 years, the interface of the Internet has been search, and Google has dominated that space, and Google, their incentives as a company were to have the Internet grow as much as possible because if you have chaos, then the search becomes the organizer of the chaos. But you need incentives for people to actually create content and so Google not only had to create the thing that organized the Internet, but they then had to take the thing that took the traffic of where people went and then helped people monetize that, largely through advertising, although they also helped with subscriptions, and Google was the great patron of the Internet for the last 25 years. The web would not exist the way it does if there were not something like Google out there to create the incentives around.<\/p>\n There were a lot of problems with incentivizing around traffic, we created systems where people would just literally try and create rage-baity headlines to get people to click on things so that they could put ads against them and so not perfect, but we don\u2019t have the Internet that we have today unless we have Google and search funding that.<\/p>\n That is changing. The world is shifting where the interface of the web is shifting from search engines and search engines give you a treasure map and say, \u201cHey, go figure out what your answer is by clicking on these 10 blue links\u201d, to what are effectively answer engines. So if you look at OpenAI, if you look at Anthropic, if you look at Perplexity, even if you look at modern Google, they are not a search engine, they don\u2019t give you a treasure map. Instead, they give you an answer right at the top of that page. That answer, for most users, 95% of the users, 95% of the time, it\u2019s a better user interface. I\u2019m not anti-answer engines, I\u2019m not anti-AI, I think it\u2019s better in every possible way for that to be what the interface is that we all interact with.<\/p>\n But the problem is that if you get the answer and you don\u2019t get a treasure map, then you don\u2019t generate traffic and if you don\u2019t generate traffic, then the entire business model of the web, which has been based on traffic starts to break down and you can see that, not so much in e-commerce sites, not so much in things that actually sell you the physical thing because if you asked what\u2019s the best camera to buy, even if you get an answer, you\u2019ve still got to go buy it from somewhere. It\u2019s going to take the e-commerce and the people who are selling things that\u2019s going to work but the person who wrote the review\u2014<\/p>\n The great thing about physical products is by definition they are scarce and the problem with text on the Internet is it is not scarce.<\/p>\n MP: It\u2019s not scarce, that\u2019s exactly right, and Google set this expectation that everybody can scrape the Internet for free, but it was never free. The Internet has never been free. Google paid for it for a really long time and the quid pro quo with the content creators was, \u201cWe get a copy of your content and in exchange we\u2019ll send you traffic and help you monetize that traffic\u201d.<\/p>\n That quid pro quo breaks down as we shift from search engines to answer engines and so something is going to change. I see three possible outcomes for that. And again, none of this involves \u2014 if Cloudflare disappeared tomorrow, this is still happening, one of these three things will happen. One, all of the journalists, academics, and researchers in the world will starve to death and die. And it\u2019s crazy, like when you post this stuff on Twitter, how many people were like, \u201cWell, we don\u2019t really need journalists anymore, we have drones\u201d, and I\u2019m like, \u201cI think we still need journalists\u201d.<\/p>\n This is the point that I make a lot because people will hold up Stratechery as a model for journalism in the future, and subscriptions and the whole small scale subscription model. I\u2019m very proud of Stratechery\u2019s role in figuring that out, but I\u2019ve always said, look, my Articles are generally completely fresh content, but my Updates, how do I always open them? By quoting from a journalist like, \u201cOkay, now I\u2019m going to analyze this piece of news that someone actually collected\u201d, so I\u2019m with you on that point.<\/p>\n MP: And how would you know what to write about, you\u2019re derivative of those things. That\u2019s great, and I think that adds an enormous value, and I think as you\u2019ve said in the past, there will still be tentpole content that\u2019s out there that people will have to have. But there\u2019s a whole bunch of other stuff like what happened in the world that somebody has to report on, and again, there is a real risk that if the business model completely dies, that that goes away, and I think that would be a loss. I don\u2019t think that\u2019s going to be the outcome.<\/p>\n Don\u2019t you think that that\u2019s already happened to a certain extent though? People worry, complain about there\u2019s lots of national coverage, but say on a local basis, the local newspapers being decimated by the Internet and don\u2019t make any money, don\u2019t have reporters, who knows the City Hall is doing, et cetera.<\/p>\n MP: I think that that\u2019s the Google model of paying for traffic doesn\u2019t support local media in the same way. My wife and I bought the local newspaper in our hometown, it actually turns out to be a pretty good little business, surprisingly.<\/p>\n I\u2019m a big advocate<\/a>. I think that local news actually could be.<\/p>\n MP: Well, I think it\u2019s going to become massively more valuable and so we\u2019ll get to that. The second possible outcome \u2014<\/p>\n Sorry, you didn\u2019t make the agreement that you made with your professors, you had to tell me to let you cook and not keep interrupting you and being a pain. Sorry, continue.<\/p>\n MP: No, it\u2019s fine.<\/p>\n Sorry, continue.<\/p>\n MP: It\u2019s your newsletter and show.<\/p>\n Continue, continue.<\/p>\n MP: I\u2019m just the entertainment! The second option is that \u2014 and I don\u2019t think this is outlandish, but I think it is a Black Mirror option, which is that, can you imagine Sam Altman announces tomorrow he\u2019s standing up his own version of the Associated Press?<\/p>\n Yes, I can.<\/p>\n MP: See what I\u2019m saying, can you imagine he announces he\u2019s bought Gartner? It\u2019s not insane. It could be that we don\u2019t go back to a media time of the 1900s, we go back to a media time of the 1400s, and it\u2019s like the Medici\u2019s, you\u2019ve got five powerful families that control and pay for all of the different content creation which is out there, in which case it is likely that there\u2019s a conservative one, there\u2019s a liberal one, there\u2019s a Chinese one, there will be an Indian one. The Europeans will try to build one and then it won\u2019t work, and they\u2019ll use the liberal US one and that could very well be what happens with content.<\/p>\n I think that that\u2019s not inconceivable, and it\u2019s not actually that many far degrees away from what Scale AI was doing where you\u2019re sorting and organizing content for people and tokenizing it. There are a lot of unemployed journalists, it\u2019s not that expensive to stand up a bunch of bureaus, but I think that\u2019s a really dangerous outcome because it\u2019s incredibly regressive where the Internet was this great leveler, this great distributor of knowledge. If all of a sudden we\u2019re all spending thousands of dollars a year on whichever AI system, even the wealthy will probably pick one, and if the knowledge that you get all comes from that one, all of a sudden we\u2019ve siloed things again and that seems really, really risky, but not totally inconceivable.<\/p>\n What\u2019s number three?<\/p>\n MP: Number three is we figure out a new business model, and it has to be some version of the revenue that is generated by the AI companies, the answer engines that are out there, some portion of it goes back to the content creators. And how that works again, I think is what we\u2019re trying to figure out.<\/p>\n But I think that there are really three things today that you need to be an AI company. You need access to GPUs and OpenAI spends over $10 billion a year on that, but it\u2019s silicon and like all silicon over time it will become more and more of a commodity, it just will because there\u2019s never been a silicon shortage that hasn\u2019t turned into a silicon glut. Everyone in the world is racing to compete with Nvidia, Nvidia might stay in the lead for a really long time, but you\u2019re going to have AMD and Qualcomm and Apple and all the hyperscalers come up with new things.<\/p>\n We just need to keep Taiwan intact.<\/p>\n MP: We do need to keep Taiwan intact. And you moving, you were the front line of defense as far as I heard.<\/p>\n Family reasons\u2026<\/a><\/p>\n MP: The only thing that kept the Chinese away was Ben.<\/p>\n The second thing is talent \u2014 today we have an enormous shortage because frankly, if you were getting a PhD in AI five years ago, you were a laughingstock. It was a dead space. Today it\u2019s the hottest space, everyone\u2019s turning up a new thing and so we\u2019re going to go probably not from a shortage to a glut, but you\u2019re certainly not \u2014 the days of a billion dollars to come work at Meta if you\u2019re a great AI researcher, those days are limited and it\u2019s not going to be that way forever. We\u2019re going to have a lot more people who are flocking to this because education markets and employment markets are efficient.<\/p>\n The third thing that you need is content. And again, we have this expectation because of Google, that content should be available to all the robots for free, but that\u2019s not sustainable. You end up in either everyone dies of hunger or we live in the time of the Medicis in those models, so in some way we\u2019ve got to figure out a new quid pro quo.<\/p>\n You could think about it as $1 per monthly active user per year for any of the AI companies goes into a pool that then gets distributed to content creators. If you do the math, that\u2019s about $10 billion today in terms of content, that would entirely replace all of the ad revenue that is generated by the non-walled garden Internet today, so take Instagram and Facebook and TikTok and those-<\/p>\n Like the Google networks, TradeDesk, etc.<\/p>\n MP: But include the Wall Street Journal, The New York Times, the FT, Reddit, everything else, it\u2019s about $10 billion a year. That\u2019s a lot of money, but that\u2019s not a crazy amount of money. And if we can figure that out, we can actually then create a better business model, which if we do it right, I think it actually encourages better media and better content to be created at the same time.<\/p>\n You talked about earlier the question of getting from here to there, which is certainly the question that applies here. There\u2019s also the issue of what we want to happen versus fighting economics and the fact that text is infinitely replicable and can be spread and you put years into worrying about spam, spam is still a problem.<\/p>\n MP: Sort of. Not the problem it used to be. Honestly, if you\u2019re \u2014 I remember when Bill Gates was like, \u201cWe\u2019re going to solve spam in the next five years\u201d, and I was like, \u201cNo, you\u2019re not, this is an intractable problem\u201d. Actually, they largely did.<\/p>\n It all comes out on the backs of people like me just trying to send an honest newsletter to people\u2019s inboxes.<\/p>\n MP: It makes it harder for you, yes.<\/p>\n When you think about this and what you can do, how do you separate the, \u201cOkay, this is what I want to happen\u201d, versus, \u201cThis is what is possible to happen and there are actually levers that I can pull to make it happen\u201d?<\/p>\n MP: I think the first thing is that all markets require scarcity, you can\u2019t have a market if you don\u2019t have scarcity, there has to be some scarcity that exists in that market.<\/p>\n But that\u2019s the problem with the Internet is 45% of the people might decide to buy into this concept, but then the 55% just run the table.<\/p>\n MP: Potentially, but if they don\u2019t have access to the content, then it becomes harder. And so what we\u2019ve just seen is that for content creators that are out there, especially if they create scarcity, they actually are able then to do deals.<\/p>\n So you look at Reddit. Reddit has been very aggressive at stopping bots from scraping their content, including Google. They said, \u201cGoogle, you don\u2019t get access to this unless you pay for it\u201d, and as a result Google and OpenAI struck a deal with Reddit where they pay \u2014 we know from their public filings that this isn\u2019t anything that is confidential \u2014 but in 2024 they got $120 million for 2024 and I\u2019m told that the deal in 2025 was even better. I think that you\u2019ll see that going up.<\/p>\n What I think is actually really interesting is if you count up the number of tokens in Reddit and the number of tokens in the total catalog of The New York Times, it turns out about the same within an order of magnitude, and yet Reddit got seven times as much. The question is why? And I think answer is because The New York Times \u2014 you might love The New York Times, but the difference between The New York Times, the Wall Street Journal, the FT, the Washington Post, and the Boston Globe from the perspective of an LLM is actually not that much. The facts are the facts are the facts. And so yes, there\u2019s some color and there\u2019s different slants, and the opinion pages might be slightly different, but it\u2019s kind of the same.<\/p>\n So I actually think the thing that\u2019s really encouraging is we already see that where scarcity exists and where content is unique, like if you don\u2019t have Reddit, you don\u2019t have Reddit, so you need to have that content. I think that if we can create scarcity in these cases, what the market will show is that it\u2019s actually that local, unique, differentiated content, which is the most valuable and as this market for content exists and comes on to being, again, regardless of Cloudflare, if Cloudflare disappears, I still think that it is inevitable that publishers will say, \u201cOkay, we\u2019re going to shut down the access of the bots to have access to our stuff, and then we\u2019re going to create a market for the most unique stuff\u201d. And the more unique it is, the more you\u2019ll get paid for it, I think that that\u2019s just inevitable.<\/p>\n I think that this is one of those seminal moments where we\u2019re shifting the business model of the web and I\u2019m actually super encouraged that the future of content is going to be much more like early Internet than, and again, with all due respect to my friend Ben Smith, BuzzFeed.<\/p>\n Cloudflare\u2019s Power<\/p>\n If it\u2019s inevitable though, then why does Cloudflare need to be so aggressive? You\u2019re instituting these policies of doing your best to block bots, putting together protocols for recognizing what it\u2019s worth, payments, etc., all very nascent to be sure, a lot to be figured out. But you are not taking the posture of a company that this is inevitable and it\u2019s going to be great, you are being pretty forceful in trying to make something happen.<\/p>\n MP: Well, I think if we weren\u2019t doing it, someone else would. But what I think we have a unique ability to do is we\u2019re really good at stopping things like bots because we do it every day.<\/p>\n So again, it wasn\u2019t like we were sitting around being like, \u201cHey, what should we do next? Let\u2019s go change the business model of the web\u201d, it was our customers who were publishers were coming to us being like, \u201cWe\u2019re dying and we don\u2019t have the technical wherewithal to step in front of it, but we need to stop this, please help\u201d. And honestly, when Neil [Vogel]<\/a> at Dotdash Meredith was telling me this, I rolled my eyes and I was like, \u201cPublishers, they\u2019re such Luddites, they\u2019re always complaining about the new technology, they\u2019re always complaining about the next thing, this isn\u2019t a big deal\u201d. And Neil and a bunch of others finally said, \u201cJust go pull the data\u201d, and it was only when we actually saw the data, when we saw that over the course of the last 10 years, it\u2019s become 10 times harder to get a click from Google for the same amount of content on that same kind of basis, it\u2019s now 750 times harder with OpenAI, it\u2019s 30,000 times harder with Anthropic.<\/p>\n The business of traffic on the Internet as being the currency is going away and so something either again, either content creation is going to die, it\u2019s going to become futile, or we\u2019ve got to create a new business model. Again, if our mission is to help build a better Internet, this seems squarely in the line with what we should be working on.<\/p>\n So why does Garry Tan say<\/a> that you are an axis of evil with Browserbase and you should legalize AI agents?<\/p>\n MP: I really don\u2019t understand. I mean, I\u2019m confused by Garry, I think part of it might be that he\u2019s an investor in Perplexity.<\/p>\n Every story needs four characters, you need to have a victim, you need to have a villain, you need to have a hero, and you need to have the village idiot or the stooge. And if you think about it, any news story has those four characters. Right now, the people who have most been the villains have been Perplexity<\/a>, where they\u2019re doing just actively nefarious things in order to try and get around content company.<\/p>\n I\u2019ll give you an example of something that we\u2019ve seen them do, which is that if they\u2019re blocked from getting the content of an article, they\u2019ll actually, they\u2019ll query against services like Trade Desk, which is an ad serving service and Trade Desk will provide them the headline of the article and they\u2019ll provide them a rough description of what the article is about. They will take those two things and they will then make up the content of the article and publish it as if it was fact for, \u201cThis was published by this author at this time\u201d.<\/p>\n So you can imagine if Perplexity couldn\u2019t get to Stratechery content, they would say, \u201cOh, Ben Thompson wrote about this\u201d, and then they would just make something up about it and they put your name along it. Forget copyright, that\u2019s fraud, just straight up and that\u2019s the sort of bad behavior of some tech companies that again, I think needs to be called out and punished.<\/p>\n The Google Problem<\/p>\n You go back to 2024 though, so I think, I don\u2019t remember if it was you or someone else calling out Perplexity for ignoring do not crawl things on websites, and people got really up in arms about it. My pushback at the time was<\/a>, \u201cDo we want Google competition or not?\u201d, because what Google is doing is yes, OpenAI pioneered their own web bot and protocol and you can ask OpenAI to not crawl your website and they respect it. Google did the same, but the Google same one is Googlebot-extended, the actual Googlebot is like, \u201cWell, you want to be in search\u201d, and it turns out AI Overviews is governed by Googlebot. So why does Google get to do it and Perplexity can\u2019t?<\/p>\n MP: I think we should have an open bet, and I\u2019ll take whatever bet you want. It can be a basketball game at some point. It can be whatever is is, that 12 months from now, will Google provide publishers a way of opting out of AI Overviews? And I\u2019ll say yes, and I think you\u2019ll say no.<\/p>\n I don\u2019t know, I have to think about this, I\u2019m not committed, I\u2019m not committing yet.<\/p>\n MP: Okay. But I agree, and you wrote about it, is Google is the problem. We were very careful when we did this. We actually blocked training, which is what they use Gemini for and so we can block that and we\u2019ve blocked that across the place. We have not blocked RAG, we\u2019ve not blocked search for anyone including Perplexity, even though they are doing naughty, naughty things. And by the way, OpenAI is evidence that you can do the right thing, you can be good actors and you can still have actually a better product as a result, and be a viable competitor to Google.<\/p>\n So I think that Google will, and I am hopeful that they will, because they are a company that has really believed in the ecosystem, and they see what\u2019s happening in the ecosystem and they understand that if something doesn\u2019t change, that the ecosystem is going to suffer. I think that they will voluntarily give publishers a way out of AI Overviews within the next 12 months. I\u2019m actually optimistic it will happen faster than that and if they don\u2019t do it voluntarily, I know that there are a number of regulators that would be happy to force them to do it.<\/p>\n Do you feel encouraged or discouraged by the Google case this week<\/a>?<\/p>\n MP: Well, so first of all, it\u2019s like 280 pages long.<\/p>\n It was really long, I was up until 5:00 AM, I had to read through the whole thing.<\/p>\n MP: I\u2019ve read summaries and I\u2019ve had my team who are going through it. So I\u2019m not sure that forcing them to sell Chrome is the right remedy.<\/p>\n No, I thought that it was dumb. I think the big thing is, my whole thing with Google is they\u2019ve basically paid off everyone<\/a>, and then the justification for allowing them to continue payments is that everyone\u2019s dependent on Google payments. It\u2019s like this circular justification, which isn\u2019t wrong, but that\u2019s basically the nut of it.<\/p>\n MP: Again, I\u2019m not an expert on the \u2014 as we\u2019re recording this, that came out yesterday, and so I\u2019m not an expert on it yet \u2014 the thing that worries me the most is that some of what the judge suggested was that Google had to share data with the rest of the ecosystem, and so a horrible outcome for this that will actually destroy the ecosystem, and the most depressing sentence in the ruling that I\u2019ve seen so far was the one that was like, \u201cIt seems like this might have bad impacts on the publishing industry, but not a single publisher testified\u201d, and I\u2019m like, \u201cOh guys, you got to get on the field if you\u2019re going to win the game\u201d.<\/p>\n So I do think that regardless of what Cloudflare is doing, the economics of the Internet are changing, they\u2019re changing because there is a better interface that is coming along that is being provided by a lot of people including Google and if the ecosystem is going to thrive and survive, we have to change the economics of the compensation to content creators. We can do that in a way which I think is very reasonable, and my prediction will be that over time, AI companies will look more like YouTube or Netflix, where they compete on what original content they have access to as opposed to the algorithms. We already see the algorithms are largely commodities, they\u2019re leapfrogging each other all the time, I think that\u2019s going to continue for quite some time. I am in the there will be thousands of different AI interfaces we\u2019ll pay for or they\u2019ll be ad supported in various ways, but what will cause you to choose one versus the other is whether or not they have access to whatever it is that you particularly care about.<\/p>\n I do think, by the way, I think I agree with your bet just because the core Google strategy that paid off massively in this case is basically paying everyone off.<\/p>\n MP: That\u2019s right.<\/p>\n So that\u2019s why this is a scheme to pay everyone off.<\/p>\n MP: Exactly. Now I think it\u2019s really important \u2014 so again, I don\u2019t know exactly what this is \u2014 but we have to make sure that whatever the payment scheme is that it takes into account that if you\u2019re smaller, you pay less, and if you\u2019re bigger, you pay more. So again, my straw man on this is $1 per year per MAU, and you pay it into a pool and then how we distribute it out to the content creators, that\u2019s a whole other can of worms.<\/p>\n Potentially a very profitable can of worms if someone can sit in the middle and be the market maker.<\/p>\n MP: Potentially.<\/p>\n Could that be Cloudflare?<\/p>\n MP: Whether we\u2019re that or not, again, if it\u2019s profitable, there\u2019ll be a lot of people that will be competing to do that and if we can add value, then we\u2019ll capture some of the value. But I think that the most important thing is how do we figure out some way where the vast majority of that is actually going to the people that are doing the work of creating content? And ideally, do it in a way where what we\u2019re rewarding is not who is rage baiting people, but who is actually filling in human knowledge.<\/p>\n Cloudflare\u2019s Motivation<\/p>\n I wrote this a few months ago<\/a>, you know we\u2019re on the same page, it\u2019s just what\u2019s striking about you doing this is like, well, maybe someone has to actually break some eggs to make it happen.<\/p>\n MP: Of course.<\/p>\n But this leads to my final question that ties together when we talked about content moderation and now we\u2019re talking about this, is there a dichotomy between the power you\u2019re seeking to leverage to push through this new standard for content, and then the power you claim to not want when it comes to content moderation? \u201cWe don\u2019t want to be involved\u201d, well, do you want to have power or do you not?<\/p>\n MP: We still want to stop when cyber attacks are coming. That\u2019s where we built a fairly valuable business in having the power of doing that. I think where we get nervous is in saying, is this content good or bad?<\/p>\n And so for instance, I think that the right way to figure out who gets paid as content providers is not Cloudflare coming up with an algorithm that says, \u201cThis is important content, you should have it and this is unimportant content, you shouldn\u2019t\u201d. Each AI company should come up with their own algorithm and be able to plug it into, whether it\u2019s our system or our competitors, whoever it is, and say, \u201cHere\u2019s our system, you see content, rank it for us based on our algorithm and OpenAI\u2019s rank will be different than Anthropic\u2019s, will be different than Perplexity\u2019s\u201d. You should have that ability and that ranking should I think be scored on two different axis, which is how reputable is this, and then how novel is it? How much does it actually further that? If you do that correctly and you have a real variety of different \u2014 if you have tons of different AI companies and you have tons of different content creators, then again, I think sure, we\u2019re playing the role of being the technical facilitator there, but the actual decisions on what content matters and doesn\u2019t, that still is something that, again, I don\u2019t think it\u2019s the right place for us to be making those decisions.<\/p>\n You want to be a market maker, not a picker.<\/p>\n MP: We\u2019re not an editor.<\/p>\n That\u2019s the word.<\/p>\n MP: Yeah. Again, I think the one thing that we are very good at right now is creating scarcity and every market depends on that. Whether we or someone else then figures out how to monetize that scarcity, it\u2019s fine and by the way, I think the vast majority of this will be large publishers doing direct deals with large AI companies.<\/p>\n But that sucks for all the small guys.<\/p>\n MP: That\u2019s where again, we can be kind of a piece of it where we say, \u201cOkay, we now on behalf of the small guys, let\u2019s work with you to figure out how you can participate in this market as well\u201d. Small guys on both sides \u2014 small AI companies, startups. We have to make sure that as we design this, that it\u2019s working in this way, and then small content creators.<\/p>\n I guess my ask would be, since you have a relatively influential list, if you\u2019re an academic and you\u2019re reading Ben\u2019s stuff and you think that this is really interesting, the reason Google ended up figuring this out, and I think being a great force of good in the world, Google did a lot of good in the world. The reason they did that is they thought very carefully about how these market dynamics are and so we\u2019re trying to work with the leading academic economists and market theoricians to figure out, \u201cHow should this market look like going forward?\u201d, and so reach out if you\u2019re reading this because we\u2019d love to talk to you about it.<\/p>\n We spent a lot of time at the beginning \u2014 we\u2019ve gone a little long, I appreciate you sticking on \u2014 talking about your background and how you got to where you were, it\u2019s really interesting. It\u2019s not the traditional tech path, is that actually integral to this final topic? If you are just a traditional, came up through computers, went to Stanford, started a company, would you be picking this fight, or is this downstream from teaching out of law school that doesn\u2019t even exist anymore, just to get away from Hooters?<\/p>\n MP: Just to get away from running my dad\u2019s Hooters.<\/p>\n I don\u2019t know. I think that the most valuable \u2014 so I have an English major, I have a computer science minor, I\u2019ve got a law degree, I\u2019ve got a business school degree, there were lots of times where I thought those three years at law school where completely wasted. It is incredibly valuable. I can sit and read the Google judge\u2019s ruling and understand what\u2019s important and what\u2019s not in that, those things have been incredibly important. I think that the ability to speak and write and communicate and appreciate how much work creating great content is, I think that that\u2019s been really helpful. I think I\u2019ve tried, when we\u2019ve talked about content moderation in the past, we struggle with those issues and struggle with what the right thing to do is.<\/p>\n It went back to what side of the bed did you wake up on, right?<\/p>\n MP: Yeah, totally.<\/p>\n (laughing) That\u2019s a reference<\/a> for people that don\u2019t remember previous controversies.<\/p>\n MP: How angry your girlfriend at the time, wife now, is at you at that particular moment.<\/p>\n But going back and literally reading Aristotle, I think that that\u2019s great. And so today I get invited, there\u2019s a handful of AI companies that have invited me to be on their board and things, and I always say no. But I talk to them and I must be one of the top non-academic buyers of Aristotle\u2019s Politics<\/a>, because almost every AI CEO has gotten a signed copy from me saying, \u201cWhat you\u2019re doing is incredibly important, but you\u2019ve got to think about the ethics and how to create trust\u201d.<\/p>\n I do think that, I hope that the people that are building these incredible systems that are going to be incredibly transformative, that they do spend some time in the liberal arts, that they do spend some time actually stopping and reading and thinking about like, \u201cOkay, if we\u2019re successful\u201d \u2014 I think there\u2019s been a lot of, \u201cIf we\u2019re successful, it\u2019s some version of James Cameron and Terminator\u201d. But I think there\u2019s another version which is, \u201cOkay, if we build these powerful systems, how do we make sure that they\u2019re trustworthy over time?\u201d, and those are issues that people have struggled with for a long time and I feel very lucky to have gotten the time to sit and think about them and I do think that that\u2019s been helpful and instructive to the company that Cloudflare is today.<\/p>\n Well, I feel happy and lucky to have had your time in this interview. Thanks for coming on.<\/p>\n MP: Ben, thanks for having me.<\/p>\n