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CloudFlare Is In Talks to Raise Funding At Near A $1 Billion Valuation

52 points by dwynings 15y ago

jayp 15y ago
$250,000 revenue. $1 billion valuation. W - T - F. This better be a bloody joke. The more I read the article, the more it seems that the article is definitely masterful PR from CloudFare. K.M. Cutler either took the bait hook-line-and-sinker (comparing vanity metrics for a proxy service to service sites, etc.) or the bubble is way worse than I imagined.
- _exec 15y ago
  Burst bubble, burst!
- loverobots 15y ago
  But it's "Cloud," very different from the .com a while back. I heard it on TV and read it in a blog.
  - gojomo 15y ago
    Has anyone filed the ~$200K ICANN application to get the .cloud TLD going yet? I can see the Superbowl ads already: "It's not really the cloud unless it's dot-cloud."
- nchuhoai 15y ago
  $0 revenue, $1 billion valuation? Anyone wants to guess who it is?
brianbreslin 15y ago
This article is littered with inaccurate comparisons. Getting to 400M uniques for them is completely different than facebook or twitter. It should be better compared to how long did it take google analytics to hit 400M uniques. I do like the idea of what they are doing, the DDOS protection alone makes their service worth at least $100/Month to most revenue generating sites. If they are signing up 30k new customers per month, and 1% pay $20/month, then you're talking about growing by $6k/revenue or more a month. compounding that adds up. I'd be surprised if they didn't break $1-2M in revenue in 2012. (pure speculation, no insider info. I do use their plugin on my blog)
- eli 15y ago
  Agreed. Think about how easy it would be for people to ditch Cloudflare for a competitor versus, say, Twitter. Very few of those 400M even know they're using the service.
- larrys 15y ago
  "Getting to 400M uniques" It's not even 400m uniques unless you consider delivery of a cached page a unique where the end viewer of the page doesn't even know he is served by cloudflare. Other than hijacking the 404 pages (which would be a percentage of the uniques) there isn't any value that I can think of to that. It's like serving up dns queries in a way.
  - brianbreslin 15y ago
    I was thinking exactly the same thing. The value is compared to the commercial DDOS protection services that many of these hosts offer like liquid web http://www.liquidweb.com/services/ddos.html http://www.liquidweb.com/services/ddos.html ($$$)
- ktothemc 15y ago
  Um. Read the WHOLE story. I point out that their comparisons are flawed.
sidmitra 15y ago
Cloudflare is a frigging nightmare if you're outside the US and on a dynamic ip(which includes pretty much everyone in India.) I keep having to enter a captcha on links from HN, because a lot of people apparently use them. Things like these(although probably helpful to the site authors) are actually breaking the internet unfortunately.
- dmix 15y ago
  This is a fair criticsm. Although I banned China, Russian and some eastern euro countries after getting hit heavy by spammers and using Cloudflare to see that they all came from there. Spam went down by 99% after that. The caveat is that none of my signups were coming from those countries (where Diabetes is less prevalent).
- eli 15y ago
  FWIW, Cloudflare lets you configure how aggressive you want it to be in blocking "threats." The default seems a bit strong, but there's an option labelled "essentially off"
  - kevingadd 15y ago
    I don't think that option was there initially, at least not for the free tier. It's nice that it's there now.
citricsquid 15y ago
I've had terrible experiences with cloudflare, a fellow HN user uses it and I constantly have problems connecting to his site (cloudflare telling me it's down) when it's definitely up and accessible by others. I definitely see the value in their product (idea) though.
- sainttex 15y ago
  They've caused me a fair amount of downtime on several sites too. The third time they made my sites unavailable for hours I cancelled the paid plan and switched off them.
- kevingadd 15y ago
  Their service is so flaky that at present I would never consider upgrading from the free tier to the paid tier. Theoretically it's a great idea and something I'd pay for, but not when it's so busted.
- xpose2000 15y ago
  Agreed. It also adds time connecting to your site, sometimes up to 100ms. Google crawlbot stats confirm it every time I switch on or off using Cloudflare. Not sure its worth the bandwidth/http request savings on a small site. If you run a big site, you'd be willing to pay for a top notch CDN. Cloudflare sits in a weird middle ground.
- girlvinyl 15y ago
  I've experienced terrible service as a customer as well. I think that place is a mess.
- adriand 15y ago
  Some big swings in the opinions on CloudFlare in this thread so far. I've used CloudFlare on a site with low traffic and I liked the results and so I just recommended that a publisher client who gets around 20,000 daily uniques should use it too. On reading some of the criticisms here, I'm concerned I made the wrong recommendation - but at the same time, I'm also seeing comments like "CloudFlare is fantastic". Can anyone weigh in with what I really need to know about CloudFlare in order to ascertain if it's a good choice for my client or not?
moe 15y ago
Is is April 1st yet again? That's 1/6th the Akamai market cap. You know, Akamai. That other little CDN. The one that happens to make 4000x the revenue of Cloudflare. Ah well, it's probably justified. Cloudflare insists they're not a CDN after all. They only happen to offer the exact same services by accident.
- dmix 15y ago
  Lets all wait until they actually get valued at $1 billion before getting all excited. This is from techcrunch and not confirmed...
- jarin 15y ago
  I agree that it's a pretty high valuation, but Cloudflare is fantastic.
- pbreit 15y ago
  With 100x the customers, maybe that's a bargain?
slig 15y ago
I've been using CF for a few months, and thus far it's been great: I use it to server static files and my bandwidth bill is 100 USD cheaper. I host on linode, and their bandwidth is pretty expensive. Few users complained about being blocked. I contacted the support, but their answers didn't solve my problem. Finally, I figured out how to add my country to the "trust list" and never heard about blocks ever since.
- arn 15y ago
  Seems likely that there are other users that are blocked and never complain, and just leave. I had similar problems with blocked users and site-is-down false positives, so I had to drop it.
cypherpunks01 15y ago
I can't speak much for Cloudflare's CDN features, but they're one of the best free DNS providers I've ever come across - Anycast, web management, and API-wise. I use them mostly for that.
blantonl 15y ago
Either this is total BS or some VCs are trying to ride the Instagram wave. What else could justify such a valuation for a Web security proxy provider?
axiom 15y ago
http://www.youtube.com/watch?v=I6IQ_FOCE6I http://www.youtube.com/watch?v=I6IQ_FOCE6I
patrickgzill 15y ago
What is the barrier to entry for CloudFlare? Putting a few servers in different colos, buying quality bandwidth, set up BGP anycast, get the IP Geolocation database from MaxMind. We are talking a service that could be duplicated with open source software and about $100K to $250K investment.
- pbreit 15y ago
  One of the least informed opinions I've seen on HN.
  - patrickgzill 15y ago
    Enlighten me... a 1U server can handle nearly 1Gbps of traffic. BGP anycast - a solved problem. How many different locations do you need? For USA - Chicago, NYC, WashDC, Boston, LA, Phoenix, Dallas. In Europe - Amsterdam, Frankfurt, Berlin, London, Paris, Moscow/StPete, probably a few I have missed. Australia, Singapore, Taiwan, HongKong. Half a rack (20U) in each location would more than cover most, though possibly the USA would require more.
    - nl 15y ago
      http://fastly.com http://fastly.com does that: Varnish on SSDs. But Cloudflare isn't just a CDN, it has an application firewall/security thing built in too. That's important because suddenly you can't get away with just Varnish, and rolling Apache+mod_security out to each node is probably insufficient as well. Edit: fixed url, thanks.
      - macros 15y ago
        http://fastly.com http://fastly.com
      - stickfigure 15y ago
        CloudFlare also provides basic analytics, DNS, url rewrite rules, and a fairly decent UI. The idea of rebuilding it for $250k is ludicrous.
larrys 15y ago
The other thing to realize about cloudflare is unless you play with your apache logs any hits coming in will show cloudflare Ip's as accessing pages as opposed to the end users. There are workarounds for this (if you know enough to play with apache etc. config) but the default state when you sign up gives you the cloudflare ips. https://www.cloudflare.com/wiki/Log_Files https://www.cloudflare.com/wiki/Log_Files
- xxdesmus 15y ago
  That's how any proxy service works. It's not just CloudFlare.
james33 15y ago
I'm surprised at a lot of the negative posts about CloudFlare. We serve around 100 million impressions monthly through CloudFlare, and have been doing so for the past year with no issues.
- robryan 15y ago
  The negative posts don't seem to be directed at the company, which probably is a solid company doing great things. Just the crazy $1 billion dollar valuation figure being thrown around.
mkramlich 15y ago
not a bubble, not a bubble, not a bubble, not a bubble... no but seriously. sounds like a CDN for your static URLs and maybe combined with a web throttler and web firewall in front of your dynamic URLs. I do see some revenue potential there, especially in providing service to companies with weak/no tech staff.
nl 15y ago
People who are looking at the revenue and think this valuation is outrageous probably have a fundamental misunderstanding of the CDN market. $1 billion is high, but not outrageous. Akamai is the market leader, and currently valued at ~$7 billion. They recently bought the most innovative player in the CDN market (Cotendo) for $250 million. CloudFlare may not have huge revenue, but they have something that all the other non-Akamai CDN players would kill for: a huge, quickly growing customer base. Their lack of revenue is a byproduct of their freemium business model. It's not a big problem, because CloudFlare can change the parameters in that model at anytime, and provided they are keeping customers happy it should be a fairly easy conversion to a paid customer. People are used to paying for webhosting, and Cloudflare are already building reseller agreements with companies like Dreamhost to build these relationships further. The biggest problem I see with CloudFlare is that they don't have strong (any?) video CDN offerings. At the moment that isn't a big problem for them (not many of their customers need it since most use SaaS platforms for video) but I would imagine it is an area they are looking hard at.
- moocow01 15y ago
  That may be true and they could have out of this world potential but I can't think of any sector or business model where a P/S ratio of 4000 is anywhere close to sane.
  - nl 15y ago
    I can't think of any sector or business model where a P/S ratio of 4000 is anywhere close to sane. Drug dealers, if you measured the P/S ratio right after they have given out that first, free hit :) Seriously, though: that's how freemium business models work. They deliberately delay revenue to build adoption.
decadentcactus 15y ago
I've also had issues with CF. Saying the site is down while I'm logged into the server. Does anybody have any solid alternatives to the bot blacklist? It gets hard to keep up with htaccess ip blocks, and it's more or less all I'm using it for now (apart from DNS which can be changed anyway).
antihero 15y ago
Did anyone else originally hear about them because the lulzsec page used them?

52 points by dwynings 15y ago

jayp 15y ago

$250,000 revenue. $1 billion valuation. W - T - F. This better be a bloody joke. The more I read the article, the more it seems that the article is definitely masterful PR from CloudFare. K.M. Cutler either took the bait hook-line-and-sinker (comparing vanity metrics for a proxy service to service sites, etc.) or the bubble is way worse than I imagined.

_exec 15y ago
Burst bubble, burst!
loverobots 15y ago
But it's "Cloud," very different from the .com a while back. I heard it on TV and read it in a blog.
- gojomo 15y ago
  Has anyone filed the ~$200K ICANN application to get the .cloud TLD going yet? I can see the Superbowl ads already: "It's not really the cloud unless it's dot-cloud."
nchuhoai 15y ago
$0 revenue, $1 billion valuation? Anyone wants to guess who it is?

brianbreslin 15y ago

This article is littered with inaccurate comparisons. Getting to 400M uniques for them is completely different than facebook or twitter. It should be better compared to how long did it take google analytics to hit 400M uniques. I do like the idea of what they are doing, the DDOS protection alone makes their service worth at least $100/Month to most revenue generating sites. If they are signing up 30k new customers per month, and 1% pay $20/month, then you're talking about growing by $6k/revenue or more a month. compounding that adds up. I'd be surprised if they didn't break $1-2M in revenue in 2012. (pure speculation, no insider info. I do use their plugin on my blog)

eli 15y ago
Agreed. Think about how easy it would be for people to ditch Cloudflare for a competitor versus, say, Twitter. Very few of those 400M even know they're using the service.
larrys 15y ago
"Getting to 400M uniques" It's not even 400m uniques unless you consider delivery of a cached page a unique where the end viewer of the page doesn't even know he is served by cloudflare. Other than hijacking the 404 pages (which would be a percentage of the uniques) there isn't any value that I can think of to that. It's like serving up dns queries in a way.
- brianbreslin 15y ago
  I was thinking exactly the same thing. The value is compared to the commercial DDOS protection services that many of these hosts offer like liquid web http://www.liquidweb.com/services/ddos.html http://www.liquidweb.com/services/ddos.html ($$$)
ktothemc 15y ago
Um. Read the WHOLE story. I point out that their comparisons are flawed.

sidmitra 15y ago

Cloudflare is a frigging nightmare if you're outside the US and on a dynamic ip(which includes pretty much everyone in India.) I keep having to enter a captcha on links from HN, because a lot of people apparently use them. Things like these(although probably helpful to the site authors) are actually breaking the internet unfortunately.

dmix 15y ago
This is a fair criticsm. Although I banned China, Russian and some eastern euro countries after getting hit heavy by spammers and using Cloudflare to see that they all came from there. Spam went down by 99% after that. The caveat is that none of my signups were coming from those countries (where Diabetes is less prevalent).
eli 15y ago
FWIW, Cloudflare lets you configure how aggressive you want it to be in blocking "threats." The default seems a bit strong, but there's an option labelled "essentially off"
- kevingadd 15y ago
  I don't think that option was there initially, at least not for the free tier. It's nice that it's there now.

citricsquid 15y ago

I've had terrible experiences with cloudflare, a fellow HN user uses it and I constantly have problems connecting to his site (cloudflare telling me it's down) when it's definitely up and accessible by others. I definitely see the value in their product (idea) though.

sainttex 15y ago
They've caused me a fair amount of downtime on several sites too. The third time they made my sites unavailable for hours I cancelled the paid plan and switched off them.
kevingadd 15y ago
Their service is so flaky that at present I would never consider upgrading from the free tier to the paid tier. Theoretically it's a great idea and something I'd pay for, but not when it's so busted.
xpose2000 15y ago
Agreed. It also adds time connecting to your site, sometimes up to 100ms. Google crawlbot stats confirm it every time I switch on or off using Cloudflare. Not sure its worth the bandwidth/http request savings on a small site. If you run a big site, you'd be willing to pay for a top notch CDN. Cloudflare sits in a weird middle ground.
girlvinyl 15y ago
I've experienced terrible service as a customer as well. I think that place is a mess.
adriand 15y ago
Some big swings in the opinions on CloudFlare in this thread so far. I've used CloudFlare on a site with low traffic and I liked the results and so I just recommended that a publisher client who gets around 20,000 daily uniques should use it too. On reading some of the criticisms here, I'm concerned I made the wrong recommendation - but at the same time, I'm also seeing comments like "CloudFlare is fantastic". Can anyone weigh in with what I really need to know about CloudFlare in order to ascertain if it's a good choice for my client or not?

moe 15y ago

Is is April 1st yet again? That's 1/6th the Akamai market cap. You know, Akamai. That other little CDN. The one that happens to make 4000x the revenue of Cloudflare. Ah well, it's probably justified. Cloudflare insists they're not a CDN after all. They only happen to offer the exact same services by accident.

dmix 15y ago
Lets all wait until they actually get valued at $1 billion before getting all excited. This is from techcrunch and not confirmed...
jarin 15y ago
I agree that it's a pretty high valuation, but Cloudflare is fantastic.
pbreit 15y ago
With 100x the customers, maybe that's a bargain?

slig 15y ago

I've been using CF for a few months, and thus far it's been great: I use it to server static files and my bandwidth bill is 100 USD cheaper. I host on linode, and their bandwidth is pretty expensive. Few users complained about being blocked. I contacted the support, but their answers didn't solve my problem. Finally, I figured out how to add my country to the "trust list" and never heard about blocks ever since.

arn 15y ago
Seems likely that there are other users that are blocked and never complain, and just leave. I had similar problems with blocked users and site-is-down false positives, so I had to drop it.

cypherpunks01 15y ago

I can't speak much for Cloudflare's CDN features, but they're one of the best free DNS providers I've ever come across - Anycast, web management, and API-wise. I use them mostly for that.

blantonl 15y ago

Either this is total BS or some VCs are trying to ride the Instagram wave. What else could justify such a valuation for a Web security proxy provider?

axiom 15y ago

http://www.youtube.com/watch?v=I6IQ_FOCE6I http://www.youtube.com/watch?v=I6IQ_FOCE6I

patrickgzill 15y ago

What is the barrier to entry for CloudFlare? Putting a few servers in different colos, buying quality bandwidth, set up BGP anycast, get the IP Geolocation database from MaxMind. We are talking a service that could be duplicated with open source software and about $100K to $250K investment.

pbreit 15y ago
One of the least informed opinions I've seen on HN.
- patrickgzill 15y ago
  Enlighten me... a 1U server can handle nearly 1Gbps of traffic. BGP anycast - a solved problem. How many different locations do you need? For USA - Chicago, NYC, WashDC, Boston, LA, Phoenix, Dallas. In Europe - Amsterdam, Frankfurt, Berlin, London, Paris, Moscow/StPete, probably a few I have missed. Australia, Singapore, Taiwan, HongKong. Half a rack (20U) in each location would more than cover most, though possibly the USA would require more.
  - nl 15y ago
    http://fastly.com http://fastly.com does that: Varnish on SSDs. But Cloudflare isn't just a CDN, it has an application firewall/security thing built in too. That's important because suddenly you can't get away with just Varnish, and rolling Apache+mod_security out to each node is probably insufficient as well. Edit: fixed url, thanks.
    - macros 15y ago
      http://fastly.com http://fastly.com
    - stickfigure 15y ago
      CloudFlare also provides basic analytics, DNS, url rewrite rules, and a fairly decent UI. The idea of rebuilding it for $250k is ludicrous.

larrys 15y ago

The other thing to realize about cloudflare is unless you play with your apache logs any hits coming in will show cloudflare Ip's as accessing pages as opposed to the end users. There are workarounds for this (if you know enough to play with apache etc. config) but the default state when you sign up gives you the cloudflare ips. https://www.cloudflare.com/wiki/Log_Files https://www.cloudflare.com/wiki/Log_Files

xxdesmus 15y ago
That's how any proxy service works. It's not just CloudFlare.

james33 15y ago

I'm surprised at a lot of the negative posts about CloudFlare. We serve around 100 million impressions monthly through CloudFlare, and have been doing so for the past year with no issues.

robryan 15y ago
The negative posts don't seem to be directed at the company, which probably is a solid company doing great things. Just the crazy $1 billion dollar valuation figure being thrown around.

mkramlich 15y ago

not a bubble, not a bubble, not a bubble, not a bubble... no but seriously. sounds like a CDN for your static URLs and maybe combined with a web throttler and web firewall in front of your dynamic URLs. I do see some revenue potential there, especially in providing service to companies with weak/no tech staff.

nl 15y ago

People who are looking at the revenue and think this valuation is outrageous probably have a fundamental misunderstanding of the CDN market. $1 billion is high, but not outrageous. Akamai is the market leader, and currently valued at ~$7 billion. They recently bought the most innovative player in the CDN market (Cotendo) for $250 million. CloudFlare may not have huge revenue, but they have something that all the other non-Akamai CDN players would kill for: a huge, quickly growing customer base. Their lack of revenue is a byproduct of their freemium business model. It's not a big problem, because CloudFlare can change the parameters in that model at anytime, and provided they are keeping customers happy it should be a fairly easy conversion to a paid customer. People are used to paying for webhosting, and Cloudflare are already building reseller agreements with companies like Dreamhost to build these relationships further. The biggest problem I see with CloudFlare is that they don't have strong (any?) video CDN offerings. At the moment that isn't a big problem for them (not many of their customers need it since most use SaaS platforms for video) but I would imagine it is an area they are looking hard at.

moocow01 15y ago
That may be true and they could have out of this world potential but I can't think of any sector or business model where a P/S ratio of 4000 is anywhere close to sane.
- nl 15y ago
  I can't think of any sector or business model where a P/S ratio of 4000 is anywhere close to sane. Drug dealers, if you measured the P/S ratio right after they have given out that first, free hit :) Seriously, though: that's how freemium business models work. They deliberately delay revenue to build adoption.

decadentcactus 15y ago

I've also had issues with CF. Saying the site is down while I'm logged into the server. Does anybody have any solid alternatives to the bot blacklist? It gets hard to keep up with htaccess ip blocks, and it's more or less all I'm using it for now (apart from DNS which can be changed anyway).

antihero 15y ago

Did anyone else originally hear about them because the lulzsec page used them?