
Cloudflare S-1 - tpw212
https://www.sec.gov/Archives/edgar/data/1477333/000119312519222176/d735023ds1.htm
======
rvz
> Today, our network spans 193 cities in over 90 countries and interconnects
> with over 8,000 networks globally, including major ISPs, public cloud
> providers, SaaS services, and enterprises. We estimate that we operate
> within 100 milliseconds of 98% of the Internet-connected population in the
> developed world, and 93% of the Internet-connected population globally (for
> context, the blink of an eye is 300-400 milliseconds). We intend to continue
> expanding our network to better serve our customers globally and enable new
> types of applications, while relentlessly driving down our unit costs.

This right here is a real tech IPO that has a strong portfolio behind it with
a viable business model too and with an impact that affects millions of
websites. Throughout this year it is just loss-making companies floating
everywhere on the markets here and have boarded the hype-train into the red.

I hope CloudFlare with these numbers here don't board the wrong train here.

~~~
ksec
>We estimate that we operate within 100 milliseconds of 98% of the Internet-
connected population in the developed world,

Am I missing something here? For Reference; A one way New York to Hong Kong
connection takes roughly 110ms.

~~~
xboxnolifes
I'm assuming User -> Cloudflare, not User -> Cloudflare -> Endpoint

~~~
tehsauce
I guess is not a very impressive number in that case

~~~
fastball
It is, considering the majority of the internet-connected population is not on
fiber.

~~~
read_if_gay_
Fiber does not impact latency

~~~
fastball
From a physics perspective, perhaps not.

From a real-world perspective, fiber buildouts almost always include newer
hardware and better routing, resulting in lower ping times on average.

Additionally, fiber (along with copper) is going to be faster than anyone on
satellite internet.

------
the_duke
The free tier of Cloudflare has been really amazing for small to medium
websites.

It gives you a basically unlimited CDN, SSL, HTTP/2, DDos protection and fast
DNS servers with almost 0 effort... for free ...

Thus increasing the stability and speed of many web properties that otherwise
wouldn't pay for it.

I'm afraid this could easily change once the company is public and is under
the pressures that come along with it, which is a shame.

(I also try to get them paid business when I can by nudging companies to use
them)

~~~
JohnAtCC
How so? If the service is WORTH paying for, then it SHOULD be paid for. The
world of service, if proven magnetizable, should always be monetized.
#FreeMarkets

~~~
whatshisface
Markets don't equilibrate at the value to the customer any more than they
equilibrate at the cost of production. They compromise between the two.

~~~
dragonwriter
> Markets don't equilibrate at the value to the customer any more than they
> equilibrate at the cost of production. They compromise between the two.

No, they don't compromise between them, nor do they reflect one more than the
other: the basic law of supply and demand is that markets clear at the
quantity and price where the marginal cost to produce equals the marginal
value to customers which also equals the sale price.

~~~
throwaway2048
assuming a huge number of perfect circumstances which is not how reality
works. Assumptions made for what you said to play out include: perfect
competition, perfect information, perfect rationality of actors, 0 barrier to
entry, that value and cost is strongly bounded and defined on either end, and
much more.

Common examples that violate each one in term: Facebook, Used cars, Veblen
goods, Utilities, Healthcare.

A market that has one large player that completely dominates certain
segment(s) is not likely to be a healthy one that is providing value at near
cost, why would it be? The incentive is always to charge as much as possible.

~~~
dragonwriter
> assuming a huge number of perfect circumstances which is not how reality
> works.

I don't think there is actually an equilibrium price defined as some kind of
compromise between supply and demand curves absent those circumstances,
either; there's an _actual_ price at any given time, but it's not an
equilibrium (particularly, without rationality—which incorporates perfect
information—you don't have any expectation of an equilibrium even if all the
other factors are present, at any price.)

Once you are discussing equilibrium—as the post the grandparent addressed
did—you are implicitly discussing at least some of the ideal circumstances
you’d like to negate.

~~~
throwaway2048
The market can still reach equilibrium even with non optimal conditions, just
not the "efficient market" equilibrium.

Additionally, irrational does not mean unpredictable, after all advertising is
extremely effective.

------
koolba
Here's the meat and potatoes:

> We have experienced significant growth, with our revenue increasing from
> $84.8 million in 2016 to $134.9 million in 2017 and to $192.7 million in
> 2018, increases of 59% and 43%, respectively. As we continue to invest in
> our business, we have incurred net losses of $17.3 million, $10.7 million,
> and $87.2 million for 2016, 2017, and 2018, respectively. For the six months
> ended June 30, 2018 and 2019, our revenue increased from $87.1 million to
> $129.2 million, an increase of 48%, and we incurred net losses of $32.5
> million and $36.8 million, respectively.

Compared to the numbers we've seen for recent tech IPOs, being on track to
lose about $72M for 2019 seems reasonable.

Also, haven't read through it all but I'm curious how strong this clause will
be for future control:

> The dual-class structure of our common stock will have the effect of
> concentrating voting control with those stockholders who held our capital
> stock prior to the completion of this offering, and it may depress the
> trading price of our Class A common stock.

~~~
zaroth
What the heck happened to their OpEx in 2018?!

They went from growing at 60% YoY in 2017 with an 8% Operating Loss, to
growing 43% YoY with an Operating Loss of 44%.

To put it another way, in 2018 they grew their revenue 40% (+$58m) and grew
expenses 100% (+$115m).

I mean, apparently they raised a huge round and felt the need to increase
spending massively. And then saw slowing growth as a response?

Was there a massive boost in R&D output? Entering entirely new product lines?
My uneducated impression is that they offer largely the same product this year
as they did last year.

The only thing I can think of is that they went from “scrappy startup” to
“bloated unicorn” status?

~~~
the_duke
My guess: new development-intensive products like the 1.1.1 DNS, Wireguard,
WAF etc plus general scaling and growth on one side, and increased competition
from established cloud services on the other.

After all, if you are already on eg AWS, just using Cloudfront is temptingly
easy. (even if bad from a redundancy perspective)

~~~
zymhan
> just using Cloudfront is temptingly easy

IMO this is giving way too much credit to AWS

~~~
stingraycharles
Assuming you’re already integrated on AWS, just using Cloudfront _is_ a lot
easier than Cloudflare. You’re likely already using S3, maybe use
CloudFormation as well. Then it’s often much more straightforward to use AWS
services rather than a third party provider.

------
erikig
Both CloudFlare and Zoom are pretty great products and as much as I applaud
their team's IPOs, I'm worried that the vagaries of being a public company
will result in the GOOG syndrome. That's where a company with a great product
is forced to expand every quarter to the point that it becomes a frankenstein-
ish hulking version of itself.

~~~
whatshisface
Why not just pay a dividend? That's what stocks are supposed to be, shares of
ownership in legitimately valuable enterprises _with return on investment._

~~~
tolmasky
Well, at least prior to 2003 there was a strong incentive to prefer gains from
stock sale since it could get long term capital gain tax rates (15% now, 20%
at the time) vs. dividends which would be taxed as normal income. Since then
however, _qualified dividends_ are taxed the same as long term capital gains.

~~~
jjeaff
There's more to it than that. In order to pay dividends, you have to pay
corporate tax before you can pay out the dividends. And that is almost 40% on
the top end. So the effective tax of qualified dividends is more like 60%.

Alternatively, if you can stash money overseas in tax free accounts or invest
the money back into the business to avoid taxes, then you only have the long
term capital gains tax.

~~~
ac29
"After the passage of the Tax Cuts and Jobs Act, on December 20, 2017, the
corporate tax rate has been changed to a flat 21% starting January 1, 2018"

~~~
jjeaff
You are right. So only double the taxes instead of triple by receiving a
dividend.

------
groundlogic
Finally an IPO I want to buy into. Technical fundamentals matter.

Edit: I mean that in the software/service way, not the economical way, in case
there was any confusion.

~~~
dsl
> Technical fundamentals matter.

Centralization of the entire internet behind a single entity is a _bad_ thing
for people who care about technical fundamentals.

~~~
est31
> Centralization of the entire internet behind a single entity is a _bad_
> thing

They do the opposite. They enable small website owners to survive on the
internet without having to use vertically integrated services like cloud
offerings.

~~~
dsl
I'm not sure you fully understand the problem. If I hit the big red button and
just shut Cloudflare off, millions of websites drop off the Internet. It is a
massive single point of failure, and as you point out, a vertically integrated
service (DNS, DDoS protection, WAF, proxying, etc).

~~~
_bxg1
DNS is far from centralized and DDoS protection is something that small
websites would have no ability to do on their own. It isn't just a convenience
thing, it's a literally-impossible-without-scale thing.

~~~
tracker1
DNS for sites protected by cloudflare are on cloudflare's DNS afaik.

~~~
llama052
That's optional and has been for awhile now I believe, you can CNAME from your
own DNS provider. While that does rely on their DNS for that one record, it
means you still have control to changeover if need be.

~~~
tracker1
And, that doesn't change the point... the website protected by cloudflare
still controls the effective dns for that site. The lookups are controlled,
and CF is a mitm vector.

A client deployment of an app, that the client had behind cloudflare was
making 80ms API requests take 8 seconds. It's not always great.

I'm not saying that there aren't alternatives, and that people have to use
Cloudflare... but there really isn't much in the way of an alternative at even
a similar level of support and price on the low/introduction side of things.
The issue regarding recaptcha can be REALLY annoying, especially on a non-
google browser.

------
concert-gilled
Activities of our paying and free customers or the content of their websites
or other Internet properties, as well as our response to those activities,
could cause us to experience significant adverse political, business, and
reputational consequences with customers, employees, suppliers, government
entities, and others.

... We also received negative publicity in connection with the use of our
network by 8chan, a forum website that served as inspiration for the recent
attacks in El Paso, Texas and Christchurch, New Zealand. We are aware of some
potential customers that have indicated their decision to not subscribe to our
products was impacted, at least in part, by the actions of certain of our
paying and free customers. We may also experience other adverse political,
business and reputational consequences with prospective and current customers,
employees, suppliers, and others related to the activities of our paying and
free customers, especially if such hostile, offensive, or inappropriate use is
high profile.

------
cm2187
It’s odd to have these IPOs in the middle of August, in the middle of a super
volatile market. I can’t help thinking that there must be a sense of urgency,
based on the perception that this is the last opportunity before a bear market
and much more modest (realistic?) valuations.

~~~
dsl
> It’s odd to have these IPOs in the middle of August

Read my other comment further down. It is from doing your private SEC filings
in December to use a loophole to avoid disclosing a bunch of information.

These companies didn't just wake up in the morning and plan to IPO, it a good
18 months of planning that end with a public filing.

~~~
cm2187
That's all well, but I am more familiar with bond issuances than equity, and
the issuer always has the option to delay until the right market conditions,
and I don't know any banker who would ever advise issuing in the middle of big
market correction, in the least liquid part of the year.

~~~
rapht
You actually have that option but there is a limit to how much you can delay -
I'm not familiar with US regulation but in most jurisdictions I know about you
could delay for max 3 months after your public submission (mostly due to the
fact that you present quarterly numbers on the prospectus, which means you
need to update it X days after closing the quarter).

------
tinbucket
I adore, and extensively use, Cloudflare's free services for a couple of hobby
projects. I hope they don't substantially change them post-IPO.

~~~
zaroth
But _tinbucket_ , I’m pretty sure you just loudly proclaimed you would be
happy to pay at least $5/month!

~~~
SkyPuncher
I'd happily pay $5/month if it covered all of my hobby projects.

I'm not interesting in paying to run just a single project.

~~~
tinbucket
I'd be the same as you. All of my hobby sites combined probably get 1,500
views a month. I'd happily pay the $5 to cover that.

------
craze3
This is perfect timing considering they made headlines all of last week for
banning that one site from their platform. But Google Trends seems to reveal
that the banning incident was only 1/4 of the search volume they got for their
big service outage on July 2nd:

[https://trends.google.com/trends/explore?date=today%203-m&ge...](https://trends.google.com/trends/explore?date=today%203-m&geo=US&q=cloudflare)

I wonder how the IPO news will compare in terms of global search volume

~~~
judge2020
This is noted in their risk factors:

> Following the events in Charlottesville, Virginia, we terminated the account
> of The Daily Stormer. Similarly, following the events in El Paso, Texas, we
> terminated the account of 8chan. We received significant adverse feedback
> for these decisions from those concerned about our ability to pass judgment
> on our customers and the users of our platform, or to censor them by
> limiting their access to our products, and we are aware of potential
> customers who decided not to subscribe to our products because of this.

Within the next week we'll see the trends that represent how much nouse their
IPO made (IPO news is generally slower moving):
[https://trends.google.com/trends/explore?date=today%201-m&ge...](https://trends.google.com/trends/explore?date=today%201-m&geo=US&q=cloudflare)

Side note: you can see that an outage makes about 4x more noise than PR about
DDOS protecting a website like 8chan:
[https://trends.google.com/trends/explore?date=2019-06-25%202...](https://trends.google.com/trends/explore?date=2019-06-25%202019-08-08&geo=US&q=cloudflare)

------
jrockway
Am I reading this right when it looks likes they spend twice as much money on
sales as engineering?

There was also a very strange spike in stock compensation in 2018, $27,000,000
compared to $2,755,000 in the previous year and $1,849,000 in the next. What
happened there?

~~~
nacs
Stock compensation spiking a year before their IPO doesn't seem unusual. It's
likely an employee incentive.

------
OedipusRex
Of all of these IPOs, this is the one with the most "product" behind it IMO.

------
billpg
> We have applied to list the Class A common stock on the New York Stock
> Exchange under the symbol “NET.”

Pardon?

~~~
mcintyre1994
I guess someone beat them to CLOUD?

~~~
concert-gilled
I don't think NYSE has 5 letter tickers.

~~~
chx
[https://www.cnn.com/2019/08/12/investing/ticker-symbol-
confu...](https://www.cnn.com/2019/08/12/investing/ticker-symbol-
confusion/index.html)

> Bankrupt electronics retailer Tweeter Home Entertainment soared nearly
> 1,000% in 2013 after Twitter (TWTR) filed to go public. That's because
> Tweeter's ticker was "TWTRQ" and Twitter had registered for "TWTR."

~~~
concert-gilled
That is NASDAQ not NYSE.

~~~
trazire
The maximum, as provided by general consensus are 4 letters. The fifth letter,
when applicable, signifies company status. "Q" for bankruptcy, "A" or "B" for
class names, "E" for delinquent, "J" and "K" for voting and non-voting
respectively, and so on. See
[https://www.investopedia.com/ask/answers/06/nasdaqfifthlette...](https://www.investopedia.com/ask/answers/06/nasdaqfifthletter.asp)
(doesn't just apply to NASDAQ)

------
ignoramous
Cloudflare has excellent offerings in the networking space, their tech stack
seems solid. The customer base seems loyal: Once you're a customer, free or
paid, there's very little reason to move out. Their revenue has been growing
43% and 59% for past 2 years: The business side of things seem to be kicking
along at a good pace. They seemed to have figured out a perfect balance at
offering services to freelancers, to small to medium businesses, to
enterprises, to Fortune 500s. The diversity is astounding.

A few acquisitions and the next thing you know they are in the video-streaming
business, in the ISP business, in the mobile carrier business as 5G rolls in
and what not: The possibilities are endless? Esp as the world becomes more and
more connected (IoT and proliferation of smartphones) and business move
online, security and speed at scale are going to be of paramount importance
and Cloudflare is primed to seize that market, imo

From running a honeypot network to winning techcrunch disrupt to this. What an
amazing journey. One the few tech IPOs I'm genuinely excited about.

Congratulations eastdakota et al.

~~~
the_duke
They already are in the video streaming business. ;)

[https://www.cloudflare.com/products/cloudflare-
stream/](https://www.cloudflare.com/products/cloudflare-stream/)

~~~
leesalminen
And we’ve been very happy with their Stream product for about 6 months now. No
complaints.

~~~
judge2020
Curious: are you using the default player, the player but customized (as per
the docs), or the trick to get the HLS manifest via
`videodelivery.net/{video_id}/manifest/video.m3u8`?

------
sexy_seedbox
Fun fact: Matthew Prince had to borrow money from his mother when Cloudflare
was just starting out.

They've come a long way.

[https://twitter.com/eastdakota/status/1129929178382446592](https://twitter.com/eastdakota/status/1129929178382446592)

~~~
yumraj
No offense, but borrowing from a parent is not really _borrowing_ , at least
in most cultures.

~~~
ksec
No Offence, but care to explain which part of this is not borrowing?

Edit: And not sure about the down vote.

------
saagarjha
Completely unrelated: the font that they chose to use in their marketing
material looks _a lot_ like San Francisco. I didn't know you could use it for
promotional material that wasn't software for Apple's platforms.

~~~
mantap
I could be wrong here but my understanding is that the letter forms of a font
are not subject to copyright, only the font file itself. This is why Microsoft
was able to create Arial which is a virtual clone of Helvetica without it
being a derivative work.

~~~
slim
you mean I could copy a font as long as the resulting font file is different
from the original one?

~~~
gen3
Yes. The file is the only thing with legal protections.

~~~
big_chungus
Actually, not necessarily. Drawing font glyphs is certainly protected by
copyright (even if not filed, an implicit one) as artwork. You probably
wouldn't get prosecuted because they _probably_ couldn't prove if you copy-
pasted, but it's still the work of an artist.

~~~
amaranth
Typefaces are not covered by copyright in the US. Bitmapped fonts aren't
either as that's just a computerized version of a typeface. Other types of
fonts are covered by copyright as they're computer programs that tell the
computer how to draw the typeface. This means unless a typeface was created
for and used in a trademarked logo there is no protection on it and you can
freely recreate it by tracing the output of an existing font.

~~~
CriticalCathed
So, it's legal to make a business that consists in copying all of the pay
fonts and selling them for half the price under a different name?

------
muhammadusman
As a long time Cloudflare user, I wish them luck on this! They've been a great
service to use.

I usually don't buy stocks individually, especially around the IPO but once it
settles down, I might buy some of these.

------
superkuh
Now they'll have even more incentives and pressures for censorship.

~~~
leetrout
That’s an interesting opinion. What about being publicly traded makes you
think they’ll me more incentivized to censor?

Facebook’s performance suggests that playing fast and loose is preferable

~~~
superkuh
So far the CEO has twice bowed to public pressure and unilaterally removed
completely legal websites from the service because he perceived hosting them
made Cloudflare's brand look bad.

As a publicly traded company the company is now _actually accountable_ (rather
than just in his head) to a slice of public opinion and to keep the brand as
profitable as possible. That means not providing services for anything
controversial.

~~~
minimaxir
> completely legal websites

Are you referring to The Daily Stormer and 8chan?

~~~
luckylion
Not parent, but probably. If they weren't legal, there wouldn't be an issue:
Cloudflare complying with the law to block illegal websites would be a non-
story.

~~~
mffnbs
Cloudflare making the decision not to serve specific customers in a legal
fashion that does not discriminate against any protected groups is a non-story
as well.

You don't often see private businesses making decisions like this on the front
page of the new york times, but this one is a hot topic. They have no social,
moral, or ethical obligation to serve these customers, and one's disagreement
with that does not mean we should be forcing individuals to cater to everyone.

~~~
moojd
Something doesn't have to be illegal for it to be a story and it's not
ideologically inconsistent to agree that Cloudflare has the right to not serve
these customers while also scrutinizing them for it. What is legal/illegal is
not a substitute for a personal value system.

A company as large and important as Cloudflare disconnecting a client for
moral or public outrage reasons is a big story and they should be watched with
a careful eye even if you agree with the outcome.

------
CharlesDodgson
As a non-expert in the specific industry, but a tech person who reads S-1s
with interest, I like the look of Cloudflare. It is providing a global
infrastructure product and clearly building something that other companies
will use and integrate in way that makes it sticky to leave.

I can't remember who said it, but I definitely subscribe to the idea that
cloud providers are essentially a tax on businesses that use the internet to
drive their business.That makes CF attractive.

My feeling is that the risk that will affect it in the long run are macro:
global downturns, over reliance on a specific sector, regulation, freezing out
of markets due to unfair competition from local players and spikes in energy
costs (curious why this wasn't mentioned in the S-1 specifically)

They also have no outlined plan for the capital they will raise, this may be a
good sign, no bold bets, just keep the marketing spend going and achieve
greater scale.

It's getting harder and harder to judge if something is a good bet these days.
Nobody is actually making a profit, the dual stock structure is troublesome,
and the access to capital feels too easy. Ir frustrates me that it's
impossible (for a mere mortal with €500 a year to invest) to get in at an
early stage when you can watch the value rise and feel a connection with the
company.

------
treelovinhippie
Cloudflare is amazing but in the long-term they're incredibly dangerous to the
future of the internet as they further consolidate traffic and power via their
network.

------
PatrolX
I like this S-1, and in my opinion CloudFlare aren't even scratching the
surface of their full potential. Their future growth opportunity is unicorn x
10.

------
fastbeef
I mentioned it in the We S-1 thread, but it really weirds me out that the S-1
is the first chance the public has a chance to see a company’s financial
status.

~~~
matthewowen
why would the public have a chance to see the financial status of a privately
held company?

alternatively, would you like to share your financial status with the rest of
us?

~~~
fastbeef
I don’t want to post my own company since it can be traced to me IRL, but
yeah, all tax returns are public in Sweden, personal and companies alike.

Here is Spotify’s financials from its inception to today:

[https://www.allabolag.se/5567037485/spotify-
ab](https://www.allabolag.se/5567037485/spotify-ab)

You can find the same data for all companies.

~~~
gamblor956
Spotify is publicly traded. Do you have an example for a privately owned
company?

~~~
fastbeef
Spotify didn’t go public until a few years ago, but sure, I get your point.

Here’s Delaval, privately owned maker of milking robots:

[https://www.allabolag.se/5560123928/delaval-international-
ab](https://www.allabolag.se/5560123928/delaval-international-ab)

------
rainyMammoth
How can you get into this IPO at the listing price ?

~~~
vechagup
You generally need to be an institutional investor or a preferred customer of
one of the brokers that is issued shares by the IPO underwriter. Here's a good
general writeup [https://money.usnews.com/investing/stock-market-
news/article...](https://money.usnews.com/investing/stock-market-
news/articles/2018-06-14/how-can-i-buy-a-stock-at-its-ipo-price) and
Fidelity's eligibility requirements [https://www.fidelity.com/customer-
service/how-to-participate...](https://www.fidelity.com/customer-service/how-
to-participate-in-an-ipo).

Note that even if you meet the eligibility requirements, if the IPO is
sufficiently popular you may still not get a chance to participate, as the
institutions and people in line before you may have already bought all the
shares.

------
minimaxir
The risk factors directly address the questions behind whether taking down
8chan and other sites was related to an upcoming IPO:

> Even if we comply with legal obligations to remove or disable customer
> content, we may maintain relationships with customers that others find
> hostile, offensive, or inappropriate. For example, we experienced
> significant negative publicity in connection with the use of our network by
> The Daily Stormer, a neo-Nazi, white supremacist website, around the time of
> the 2017 protests in Charlottesville, Virginia. We also received negative
> publicity in connection with the use of our network by 8chan, a forum
> website that served as inspiration for the recent attacks in El Paso, Texas
> and Christchurch, New Zealand.

> Following the events in Charlottesville, Virginia, we terminated the account
> of The Daily Stormer. Similarly, following the events in El Paso, Texas, we
> terminated the account of 8chan. We received significant adverse feedback
> for these decisions from those concerned about our ability to pass judgment
> on our customers and the users of our platform, or to censor them by
> limiting their access to our products, and we are aware of potential
> customers who decided not to subscribe to our products because of this.

------
CriticalCathed
I've intentionally avoided using Cloudflare's services when I can get away
with it. I am afraid of what we are giving away to entities like this in the
region of security. One gaping MITM vector.

------
jdorfman
Circa 2011 I was doing support for MaxCDN and from time to time there were
recurring issues with Cloudflare and our service being used together with a
WordPress plugin. They ended up reaching out and we all got on a call not
knowing what to expect. Long story short, call went great and we worked
together on a solution that helped our shared customers. Cloudflare has made
the CDN industry better. They've made huge contributions to the open source
and webperf communities and I'm really happy for them.

------
zemo
"we may maintain relationships with customers that others find hostile,
offensive, or inappropriate" these dudes would be neutral in the face of
Sauron.

~~~
SanchoPanda
They discuss this very thoughtfully in the blog post from when they kicked the
daily stormer to the curb.

[https://blog.cloudflare.com/why-we-terminated-daily-
stormer/](https://blog.cloudflare.com/why-we-terminated-daily-stormer/)

~~~
zemo
yes, a long post defending neutrality. What I'm accusing them of is exactly
what this post espouses: that they think that neutrality is de facto virtuous
no matter the stakes and no matter who is endangered, so I don't see how this
post is counter to my claim that they would be neutral in the face of Sauron.

> we have followed the law and remained content neutral as a network.

This blog post essentially says "if Sauron wanted to set up shop to recruit
and use our services, that would be fine unless Sauron said that we liked him,
if we were under public pressure to drop him, or if it were literally illegal
for us to front his network":

> The tipping point for us making this decision was that the team behind Daily
> Stormer made the claim that we were secretly supporters of their ideology.

It doesn't say "we would be opposed to Sauron using our services because he
intends to enslave Middle-Earth and we don't think we should help him do
that". I think that having no regard for the consequences of your actions
reflects poorly on the tech industry.

I don't think that being neutral is values-agnostic, I think that neutrality
benefits the oppressive and those already in power, and that adhering to
neutrality at all costs is a form of fundamentalism.

------
verisimilitudes
Surely I'm not the only one who finds it suspicious that Cloudflare, as a
_startup_ , somehow invested so much money and other resources into an
infrastructure that other corporations would struggle with.

That Cloudflare is a giant MitM hostile to Tor and previous cooperation with
the government in a past business leads me to believe Cloudflare is nothing
more than a US government operation in the guise of a business.

------
cremp
> We have a history of net losses and may not be able to achieve or sustain
> profitability in the future.

I never got this... Why go public if you literally say you won't make money?

Who would buy stock in something that will not return a positive?

Are they starving for money and hope some public trading gets them a boost?

Edit: It seems to be following the same pattern as the other tech IPOs
recently, just to cash out the early investors.

~~~
meesles
This comment is on every S1 thread. And every time someone mentions that it is
essentially standard copy for all S1s, because you can never guarantee
anything on the market.

~~~
6cd6beb
>We have incurred net losses in all periods since we began operations and we
expect we will continue to incur net losses for the foreseeable future.

The admission that "we've never made money and there's a good chance we never
will" being boilerplate S-1 copy is monstrously troubling.

When no one needs to see that a company can made a dollar before investing
because profit is for suckers and this company's probably going to be a
unicorn, maybe that's the stock tip from the shoeshine boy.

~~~
notfromhere
You can't legally guarantee a return unless you actually guarantee a return

~~~
6cd6beb
Fair enough, but there may be a small middle ground between "guaranteeing a
return" and "never made a dime in profit and in fact is burning through
millions or billions of dollars annually with no expectation to stop any time
soon"

~~~
notfromhere
that's why you should learn how to read financial statements before making
investments in instruments like stocks.

------
peterhadlaw
Man what if the government just sporadically decided to shut down Cloudflare
one morning based on a feeling. That'd be unfortunate.

~~~
knd775
How would "the government" go about doing that?

------
jakarta
why would the cohort expansion rate be so much lower than Fastly's?
[https://www.sec.gov/Archives/edgar/data/1477333/000119312519...](https://www.sec.gov/Archives/edgar/data/1477333/000119312519222176/d735023ds1.htm)
^ cloudflare data on p. 80 shows a rate of 10-15% expansion

[https://www.sec.gov/Archives/edgar/data/1517413/000119312519...](https://www.sec.gov/Archives/edgar/data/1517413/000119312519137435/d702138ds1a.htm)
^fastly data on p. 66 shows cohort expansions that are much faster

~~~
judge2020
This is a shot in the dark, but maybe the fact that there's a free tier is a
deterrent for (old-school) established enterprises?

------
poidos
(I don't know a lot about IPOs...) When would I (i.e. a "normal" stock buyer)
be able to buy some shares of Cloudflare?

~~~
trazire
It's unclear, but as we've seen in normal IPOs of this calibre (e.g. Slack,
Pintrest, Fastly), probably next month.

------
bfrog
Finally an S1 I can buy and not have the distinct feeling of the last guy in
the pyramid scheme. Should easily be profitable.

------
gok
"Sure, this is another company that hemorrhages money, but that free DNS
service _is_ super cool!"

------
kaushikt
Wow. This looks great. They have 75000 paying customers. Any idea how many
total users they have got?

------
jlarocco
Wow... it's good to be a CFO. $40k to relocate and a salary 62% higher than
the CEO's.

------
WMCRUN
Contrast with the WeWork S-1

------
Havoc
Cloudflare ipo...I like

Buying into IPO at top of market...not so much

So I've got mixed thoughts on this

------
yetanotherme
I love the term "band-aid boxes". Hah! What a lovely thought.

------
greatjack613
Another unicorn strikes. Is it just me, or have all of these companies decided
to do IPOs around the same time? I mean uber, lyft, we work, and now
cloudflare. I wonder who's on the menu tommorow

~~~
heavyheavy
Maybe trying to get ahead of the impending recession?

~~~
mergy
That was my first thought too.

------
martin1975
It's too bad that Matthew Prince consistently violates 1A rights by hiding
behind the "we're a private company" excuse... other than that, they're poised
to succeed.

~~~
owenmarshall
> 1A rights

> private company

...?

------
marmada
Are any people in agreement with me that Cloudflare's emphasis on neutrality
is actually a bad thing?

I see several comments admiring how Cloudflare is willing to serve alt-
right/nationalist/racist content in the name of avoiding censorship.

I never understood why this is a good thing. The argument seems to be that
not-censoring things is valuable because who knows when Cloudflare censors
something that is actually valuable/not racist or nationalist.

Considering tech companies tend to censor right-wing extremist content, I
consider the probability of that happening to be very low.

~~~
ksec
I quite like the way how Cloudflare has managed things so far. It is like
Apple being the GateKeeper, they have the power, but they wont use it unless
they absolutely have too.

If they started to actively banning and censoring content then at some point
they are highly likely to corupt themselves and misuse that power.

------
ptah
i'm not familiar with these filings. where does it state the date of the IPO

------
kd3
Here's what Cloudflare's CEO wrote on their blog:

"In the two years since the Daily Stormer what we have done to try and solve
the Internet’s deeper problem is engage with law enforcement and civil society
organizations to try and find solutions. Among other things, that resulted in
us cooperating around monitoring potential hate sites on our network and
notifying law enforcement when there was content that contained an indication
of potential violence. We will continue to work within the legal process to
share information when we can to hopefully prevent horrific acts of violence."

Monitoring?? Sounds a lot like surveillance and spying to me. This is why they
want to MITM the entire Internet. All encryption becomes useless. Breaking
privacy and security just like Facebook. They even co-opted Wireguard
recently. If you understand and see where this is going, stay away from them.

~~~
_bxg1
They specifically talk about violence. Intent to incite violence isn't
protected under the first amendment:
[https://en.wikipedia.org/wiki/First_Amendment_to_the_United_...](https://en.wikipedia.org/wiki/First_Amendment_to_the_United_States_Constitution#cite_note-90)

~~~
kd3
Yeah that is where it always starts. Think of the children. Childporn.
Terrorism. Until it becomes "hate speech" and whatever else the masters
dictate.

~~~
_bxg1
Advocation of violence has been unprotected speech since 1940. Have we been
living in a dystopia this whole time?

People who intentionally oversimplify free-speech endanger it, just like
people who intentionally oversimplify capitalism endanger it. There is no
hardline ideal, in any context, that works. Ideas must be flexible to the real
world, or perish.

~~~
henryfjordan
It's not that hate speech and violent rhetoric should be tolerated, it's that
using the fact that some people say bad things does not justify monitoring all
of the internet.

Free speech is a right in the US and having an overlord listening to
everything you say is obviously dampening on that right.

~~~
_bxg1
I think whether "hate speech" falls into that category is a more complicated
question, mostly because the term can be applied so broadly, but a handful of
specific things have been illegal enough to get pulled from the public
internet by law enforcement from the beginning, and I think it's naive to
suggest that we don't need a category like that _at all_. Also, it doesn't
require man-in-the-middle attacks or weakening of encryption to find public
websites that host illegal content.

~~~
henryfjordan
That's fair, it would be very easy and appropriate for someone to monitor HN
for example.

I don't think the worry is that Cloudflare is helping police public websites,
it's that they have the ability to police private ones that use their
services. Their stance of proactively helping to police sites (instead of
merely responding to warrants) makes the slope they are on very slippery.
Would they be willing to decrypt traffic from a certain IP address to a
private site if that same IP was used to post something violent on 8chan? Is
that acceptable? Those are tough questions for sure, and ones best decided by
a judge and not someone in the private sector.

~~~
kd3
Not only that but it looks more like they intend to actively monitor traffic
in real time to check for things that are problematic according to them and
their friends. And people need to realize this is not just for https traffic
but also Ipfs and Wireguard. I'm sure it won't stop there either. Defeats the
whole point of those technologies to have Cloudflare spying in the middle.
This is China 2.0.

------
hooande
cloudfare has way too much power over the internet at large. there have been
days where twitter and other major sites all go down at once because (i
suspect) some one tripped over a cable at cloudfare

Their S-1 looks financially strong and it's a great company. But it's rapidly
becoming a single point of failure.

------
yosefzeev
So cloudflare basically fucks over 8chan over some skimpy mass shooting
evidence, and now has a public offering as a corporate company? Get rid of
free speech as internet police and sell stock and make millions?

~~~
8bitchemistry
The Free Speech Clause of the First Amendment prohibits only governmental, not
private, abridgment of speech. [1]

A CDN is hardly the Internet Police.

[1]
[https://www.supremecourt.gov/opinions/18pdf/17-1702_h315.pdf](https://www.supremecourt.gov/opinions/18pdf/17-1702_h315.pdf)

~~~
yosefzeev
Irrelevant. The Supreme Court is wrong in its decision in that case, and that
interpretation of the First Amendment is equally incorrect.

~~~
thenewnewguy
The supreme court is by definition correct, at least in a legal sense. Their
interpretation literally is the law.

------
asatterfield54
Probably a good one to hop into for a quick gain due to hype and usage, but
long-term the price will fall.

Will continue to monitor, but looking like it will be the standard 7/11 IPO
strategy - get in and immediately start the sell off if price drops 7% day-to-
day or 11% consecutively, then short to price where losses are matched.

~~~
quickthrower2
How is that better than just putting 11% of your investment on black or red?

