Joi Ito likes to say the Internet is a belief system. At Union Square Ventures, we believe in the Internet. We spend a lot of time thinking about how the Internet enables young companies to radically transform markets. We try to understand what it is about ubiquitous connectivity and permissionless innovation that leads to the emergent innovation we have all come to expect on the Internet. We have not, until recently, spent much time thinking about the Internet itself. Now, as more and more of our portfolio companies struggle to scale their services securely or fend off DDoS or malware attacks, we find ourselves thinking that the openness of the Internet - the characteristic that leads to so much innovation - is also a weakness. The question we grappled with is how can we preserve what is best about the Internet but recognize that there are bad actors out there that all of our portfolio companies should be aware of and protect themselves against.

Just about the time we began grappling with this question I met Michelle Zatlyn, one of the co-founders of CloudFlare. We were both serving on the FCC’s Open Internet Advisory Committee. I was the only venture capitalist on the committee and Michelle was the only entrepreneur. We found ourselves working together to defend the freedom to innovate on the Internet in a room full of telecom and cable network operators, who were more concerned about the freedom to operate in a way that minimized their costs, maximized their revenue and ensured their strategic control over their networks. I came to appreciate her values long before I fully understood her business.

Our first glimpse of the importance of CloudFlare came from Chris Poole, the founder of our portfolio company, Canvas, and before that 4Chan. He found CloudFlare at a moment of desperation. 4Chan was knocked offline by a denial of service attack and he was scrambling to find a solution. I am not sure how Chris learned about CloudFlare but I remember clearly, how big a difference it made in his life. Once he switched his DNS servers to put 4Chan behind the CloudFlare network, the DDoS attack was immediately mitigated. He also found that his site’s performance improved, but most importantly, it gave him the confidence that his site could be reliable, fast and secure, without a huge investment in his own internal site reliability team, something he could not afford.

Now CloudFlare was on our radar. We started spending more time with Michelle and her co-founder Matthew Prince. We started to learn just how interesting and important CloudFlare was. Matthew likes to explain CloudFlare by referencing the typical network implementation of a large institution like a bank or an Internet service. At scale these networks invest in equipment to improve 1) performance, 2) load balancing, 3) WAN Optimization, 4) secure the perimeter (firewalls), 5) fend off DDoS attacks and malware. This equipment defines the edge of any large network. CloudFlares contribution was to realize that all of this could be abstracted into the cloud as a service, and that by offering this set of services CloudFlare could open up the market to the millions of smaller sites who could never dream of deploying and managing this kind of infrastructure themselves. Once we understood that CloudFlare was democratizing access to these essential services in a way that preserves open emergent innovation on the Internet, we knew we should do everything we could to get Matthew and Michelle to accept an investment from us. We are thrilled today to be able to publicly announce that we led CloudFlares most recent round. We look forward to working with a great investor syndicate, a great team, and the million and a half sites already on the CloudFlare network to make these essential network services available to innovators large and small worldwide.

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