01:51:06 路 Matthew Prince, Jordi Hays
[01:51:06] S13: Yeah. I think, you know, there are handful of things that that that that are, you interesting lessons for us. So first of all, like, I love being a public company. It's, you know, I I think that it's interesting. You know, the the the in in jurisdictions where, yeah, you don't have no fault divorce, spousal homicides are much higher, which is I think kind of an analogy to the difference between private market investors and public market investors. It's really hard to fire your VC. It's hard for your VCs to fire you. And so as a result, like, actually, it's kind of dysfunctional. Whereas public market, like, I love our investors because if I do something stupid, they call me up and they say, that was stupid. I sold your stock. And then we and we have a conversation, and sometimes they say, oh, actually, that makes sense now, and I bought it back. Right? But I think you can have actually a much more honest, much more real And that's felt actually just a lot healthier than what you see in the third Yeah. [01:52:09] S0: It's so true. I mean, every every everybody that's angel invested in any number of meaningful companies is gonna have portfolio companies where you've fully given up on the company and you just try to be try to be nice and yeah, help if but you at some point, you're just totally disassociated with the investment and you're just like and and that's that's that's the reality. But yeah. So it's it's very healthy to be like, yep. I'm disassociated, like, moving on. Moving on. And and and
01:52:09 路 Jordi Hays, Matthew Prince, Jeremy Strong
[01:52:09] S0: It's so true. I mean, every every everybody that's angel invested in any number of meaningful companies is gonna have portfolio companies where you've fully given up on the company and you just try to be try to be nice and yeah, help if but you at some point, you're just totally disassociated with the investment and you're just like and and that's that's that's the reality. But yeah. So it's it's very healthy to be like, yep. I'm disassociated, like, moving on. Moving on. And and and [01:52:39] S13: in both directions. Right? I mean, it's just a better it's a it's a better relationship. And and and so I I, like, I loved the process of going public. I think the thing that we did, like, it was a it was an opportunity for us to really kind of retell our story. Like, you don't get to reinvent yourself very often, but the process of writing the s one was incredibly just an opportunity to sit down and and really do it. And and we, you know, really dug in and and told the story in a in a way that to this day, we still refer to parts of that that that document to sort of explain what is Cloudflare and and how do we work. I think that the most clever thing that we that we did, and this was advice that I got from from Ryan Smith from Qualtrics, was he said, you know, he's like, what are you doing about friends and family? [01:53:24] S4: And I'm like, we're not gonna
01:53:24 路 Jeremy Strong, Matthew Prince, Sridhar Ramaswamy, Jordi Hays
[01:53:24] S4: And I'm like, we're not gonna [01:53:25] S13: do it. They because you can take 5% of a of a IPO and allocate it to friends and family. And I didn't wanna, like, get my aunt, like, over if it if it if the stock went down or something, I didn't wanna have explain that over Thanksgiving Yeah. Thanksgiving dinner. He said, no. No. No. You're thinking about it wrong. Think about the people who if they, you know, if you they owed you a favor, that they could make a meaningful difference in the future of of Cloudflare and then offer them to the ability to invest in in the IPO. [01:53:55] S8: Yeah. And I was like, is [01:53:56] S13: that, like, is that legal? He's like, check with your lawyers, check with the bankers, but the answer is yes. And I was like, some people are gonna have, like, conflicts. He said, it doesn't matter. Like, even if just the fact you offered it, even if they can't do it will will mean that, you know, that that that that they'll they'll always remember that super fondly. And it was incredibly good advice. And we made this crazy list of all of these, you know, people who, you know, who were like, you know, at some point, that might be an important relationship for us. And, like, 75% of them said yes, and and they all made, you know, a ton of money as a as a result of it. And it was it was it was one of those kind of Now [01:54:35] S0: your aunt doesn't talk to you anymore. [01:54:38] S13: No. My well, yeah, my aunt doesn't talk [01:54:39] S8: to me.
01:54:39 路 Sridhar Ramaswamy, John Coogan, Matthew Prince, Jordi Hays
[01:54:39] S8: to me. [01:54:40] S1: Say, I missed out on a 100,000 basis point basis point move. How could you? Yeah. [01:54:45] S13: I I I am always comforted that we actually so we we priced it. Yeah. $15.15 dollars a share and it went up to and and it that's actually the other thing that's interesting. Everyone like Bill Bill Gurley and I have fights about this from from time to time about IPOs. Like, you have a lot of control over how much the pop is gonna be. And we we sat with bankers and we were like, listen. We want it to go up about 20%. [01:55:07] S1: Yeah. [01:55:08] S13: And and and they were like, okay. If you want it go up 20%, you price it right here. So we priced it right at that point, and it closed the first day at 18, which is exactly up 20%. [01:55:17] S1: Okay. Okay. But just to steel man a little bit, is that is that a function of of your business? Not to like be rude or anything, but there are some businesses that are just like meme stocks out of the gate and like they're in some weird thing and there's some froth and like they have less control or is it always controllable? [01:55:32] S0: Well, and and part of that was like, did you think the fair value of your business was 18% or 20% higher than where you priced it and so you wanted like you basically wanted the market to to sort of reprice and you didn't care about not.
01:55:47 路 Matthew Prince
[01:55:47] S13: Yeah. I mean and they if we had priced it at like 13, it would have gone up more. Yeah. But but the problem again, you like, you you wanna you wanna play for the long term here. And so my my again, my fight with Bill Yeah. Is, you know, he he says, you know, that you should you should do, you know, some sort of system where you're where you actually, you know, price it at whatever the top price is. The problem with that is if you look at all the companies that that have done that, so the Airbnb's and and, and others that they basically you know, that that's that's great for your private market investors. That's great for the VCs. That's great for any of the the the founders that are taking money off the table. But you gotta keep running the company. Like, the IPO isn't the end. It might be the end for the the VCs, but it's not the end for the operators of the company. And you wanna be able to kinda build that relationship and build that over time. And so I think, you know, we worked incredibly hard to be very sort of choosy on who are kind of the who we gave allocations to, and we we we went through every single name on the allocation list. And and and I think as a result of doing that, you know, if you look at, like, who our top 10 shareholders are, it's been incredibly stable, over over time. And they're and they're they're folks who give us again great advice and and and and have been really just really, really great to work with. So I I I I'm sure that there are times you don't have it, but I was I was I was surprised at how the banks have a really good sense of if you price it here, here's what's gonna happen.
01:57:15 路 John Coogan, Matthew Prince, Jordi Hays
[01:57:15] S1: Mhmm. [01:57:15] S13: And and in our case, was it was, you know, to the to the penny. [01:57:21] S0: Last question. How are you thinking about long term planning as a CEO when we're on these exponentials, you know, the the example of like agent versus human web traffic, like Yeah. You have you had like more data than almost anyone on the planet and your prediction was still off your original prediction was still off by twenty eighteen months, twenty four months, something in that range. So how are you thinking about overall business planning when model capability is increasing and and you're just seeing sort of exponentials everywhere?