Fireside Chat with Paddy Cosgrave

Hi, everyone. Welcome to Cloudflare TV. And I'm just so excited to have Paddy Cosgrave here today. Hi, Paddy. How are you? Hi, Michelle. It's great to be here. Well, I mean, we go way back to Web Summit. So I'm super excited to talk about everything you've grown and scaled. I mean, it's just amazing what you and your team have accomplished. So let's start with maybe telling the audience it's Web Summit week. It's coming up. It's in Lisbon this year. Huge event. So maybe what's the mission of the Web Summit, Paddy? Yeah, it's to connect people in tech. It's become over 10 years the largest tech conference, according to Financial Times. And in the world, I'm sure in China, there's 12 conferences larger, tech conferences larger than than Web Summit. And when we started, you know, I think in the second year, when there were just 400 people that came to Web Summit, you guys were just a tiny startup, just a few people. And and you came and I've got to watch you guys grow from a tiny company to a multi multi billion dollar success story in an incredibly short space of time. And, you know, we do our best to try and find the next Cloudflare and get them on stage at Web Summit every year with a sprinkling of some of the established companies like, you know, like Cloudflare or Apple or Google or Amazon. And we just try and have, you know, tell great stories and try and make sure people have a great time at the conference by day. And of course, at night on the streets of Lisbon. Of course, that's great. Well, there's I think that you've accomplished that. And just to give the audience a sense of how large Web Summit has grown, how many how many speakers you're expecting this year and how many attendees come to this event? Because you said 400, but it's grown much past 400 from the early days. Great, great, great kind of question. You know, the first Web Summit about a decade ago was 150 people. And by 2019, it had grown to more than 70,000 people from almost every country in the world. It takes place over really a full week and it brings together not just the tech community, but over time it's begun to attract, you know, some very important policymakers, regulators. So that's the kind of you might call it the public sector as well as the citizen sector. So everybody from the UN secretary general to ministers for trade and innovation from countries all over the world to European competitions commissioner, the European Commission president. You know, you name it from, you know, from Elon Musk to Michelle Zatlin. They've all been at Web Summit. I'm not sure that I belong in the same sentence as Elon Musk, but I like it, Patty. So thank you. I'll just leave it at that. You know, it's interesting. So it is incredible that when when I first came to this Web Summit, it really was 400 people. And even then it was fabulous. I was in Dublin and bringing, you know, big like late stage companies together with the early stage companies. I was definitely the startup very early. We were very small at the time. And then we able to meet these people that were ahead of us. They were like my Hollywood celebrities that I got to meet and actually talk to and hear speak on your stage. And then over the years, as more policymakers and people have been part of this, you brought people along into this ecosystem. It is incredible everything that you and your team have been accomplished. And I was in Lisbon two years ago in 2019 when you had 70,000 people. And I just remember looking around and it was a little bit hard to fathom. I'm just like, I remember what it was, 400 people. And now we have 70,000 people in this beautiful city of Lisbon. Yeah, I think like what have like, wow. Like, do you ever look back and think, how did I do this? Yeah, well, I mean, it's like anything. It's like, you know, Cloudflare initially starts as an idea that a few people have. And the only way you scale an idea is with, you know, with people. And I think over time, we've both been very fortunate that we've been able to recruit exceptional people, retain them, develop people as well. You know, some people started at the very kind of bottom of the company. And over the last five, six, seven years have grown up to run different parts of of the company. And the achievement is always, you know, is always going to be a group effort. You can't scale a you can't scale a company without scaling your people. And that means not just growing headcount. It means growing the capacities of the people that are already working for you. And I always think that's the most fundamental challenge of, you know, of any startup. You know, people are, of course, fixated with the Elon Musk's or the Steve Jobs. But like Elon doesn't actually weld the cars together. And he doesn't really come up with most of the the kind of innovation. It's it's it's a massive collaborative effort. And you know what? You guys have obviously been very good at what we've tried to be good at. But, you know, many of the most successful companies are good at. It's just it's just attracting, retaining and developing the best people. So if there's if there's if there's any success, there's an Indian proverb, I think, which is, you know, it takes a takes a village to raise a child and it takes it takes a team to raise a raise a startup. And, you know, I think that's the the core. There's a Venn diagram, you know, right at the epicenter. That Venn diagram of startup success is you need a team. So recruitment is probably the single most fundamental is recruitment and development of your existing people are the are at the core of all success. I could not agree more. Actually, in fact, people who know me, I say this all the time at Cloudflare. Best part of my job are the people I get to work with, because it's amazing what a group of smart, passionate people growing in the same direction can accomplish, which is a little bit of what you're what you're saying. It's just like it's amazing. You have great people to come and then you point them in the right direction. And you're like, wow, that was awesome. What we just did. Good job. High five. And it is really rewarding to be part of that and then to be the leader. You know, be one of the leaders on the team creating all that, which is pretty, pretty neat. So that's great to hear. So why Lisbon? I mean, it's such a beautiful city. We have a big office in Lisbon. It's one of our fastest growing offices. And not only to attract net new talent, like net new people, all these great people who want to come work at Cloudflare, but also internally within the company. A lot of people want to go spend time in Lisbon because it's a beautiful city on the water, great food. The people are wonderful. English is widely spoken, but it's kind of not the obvious choice for a 70,000 person tech conference that you know that you've created. So how did that happen? How did you make that decision? It's a great question. And, you know, three years ago, we ran a process. The German government, the French government, the British government, the Italian government, the Spanish government all wanted to take Web Summit out of Lisbon, and they made, you know, huge and incredible offers. And in the end, we decided to stay in Lisbon. And some of the underlying reasons why we stayed in Lisbon were amongst the reasons we moved to Lisbon in the first place five years ago. And it's it's very difficult to explain. Lisbon was very much an overlooked city over the last, you know, I think several decades. But there's something about it. First of all, I think it's the west coast of Europe. It has unbelievable weather. It's hot, but it's on the Atlantic coast. So you get amazing sun, but you get the cooling effect of the Atlantic. The quality of life is literally unparalleled in Europe. And over the last three years in particular, the number of people moving from San Francisco, from New York, from London, from Berlin, from all of these major centers, relocating families, partners, solo travelers is it just continues to accelerate like the number of people now in Lisbon. It has become the hottest city in Europe. And, you know, I'm sure when you guys made the decision to open up an office here, it was clear Lisbon was directionally going in this really, you know, it's going in a very interesting direction. But what it has now become today is, you know, is incredible. Smart people can work from anywhere. So I increasingly think they get to choose. They get to vote with their feet. They're not tied anymore to working in a particular dull and dreary northern European city. I'm sorry. They can just up sticks and they can move and so they can work from Portugal. They can work from Lisbon. And, you know, lots of footloose talent is moving here. And I don't think it's going to I don't think it's going to slow down. You know, anyway, I don't know if that answers the question, but I just felt November, Europe, huge tech conference. You know, it's an unbeatable kind of location and people people love it. And it has become, I think, Europe's kind of hottest city, at least if a lot of journalists are to be believed in Germany and France and the UK, they're looking enviously at, you know, there's just something about Lisbon. And it's it's the cool kid on the block right now. And hopefully it lasts for many years to come. It's great. Well, obviously, it's it's it also sounds like they are welcoming to you. They the the the the city partnered with you and said, yes, this sounds great. This is something we want to hear with you on, which is I think also says a lot about the city and the country. And again, for us, I think when you said the word is overlooked. I remember when we were looking for where do we continue to go in Europe? We're in London. It was wonderful. We've been able to build a great team, but we need another location in Europe. And we did the we did, you know, the whole survey across the across the continent and and all the usual suspects bubbled up. But Lisbon kept being like, what about Lisbon? What about Lisbon? And ended up being the place where we chose. And we are so happy with the decision for all the reasons you just said. So as I as a American company deciding where else to expand in Europe. And I would say that it's it's interesting. My experience has been it's been a little bit harder to explain. I guess maybe those news articles of it's a cool kid on the bot has not made it to the American press, because I feel like I find myself explaining these people. Everyone's like, why did you pick Lisbon? It's for all the reasons you just said, Patty. So it's and the talent has been wonderful. And I think we've been we've been growing that office to hundreds of people and both great people within Europe who want to go spend time there within Portugal, who are very proud to to to to stay home and for their country and then others who want to go spend time there. Like you said, I think we've seen all three happen. And I think as well, just to add, you know, I am Irish. So I'm acutely aware that for a generation, tech companies just basically chose low tax locations in Ireland. But, you know, I don't know for sure. I think you were thinking ahead that look, this kind of tax arbitrage that some of the big tech companies have been playing for a number of years is pretty much past its kind of sell by date. And I think that's now that's now abundant. That is the case. And so increasingly, I think you're going to see more and more companies follow in the wake of Cloudflare and open up serious operations in in Portugal, not just, you know, in the past. It's been, you know, lots of kind of call centers, but serious engineering operations are going to become, I think, an increasing part of of of Portugal over the coming years. I love that. I like that prediction, Patty. That's great. You know, OK, so when we're just looking back, then we'll look forward to predictions because I want to hear a couple others. But just, you know, as you think about scaling Web Summit, one of the questions I get asked a lot as as a leader is, hey, what were some pivotal points of decisions you made along the way that were able to kind of tilt the risk reward into your favorite again? And Web Summit's been a huge success, Patty, you and your team. And there's lots of other other umbrella conferences that I've been to all over the world as well. So you whether it's Collision in Toronto or Rise in Hong Kong. I mean, there's lots of different other offshoots. But I'm just curious, like, as you think back, as you're on your leadership journey, and I think that a lot of people who are tuning in are interested in hearing about the leadership journey. What are maybe one or two stories or moments where you felt like you had to make a hard decision or an important decision that ended up tilting the risk reward in your favor? And again, now we know that's become a huge success. But it wasn't that was not obvious when you had 400 people. I mean, you had to make a lot of decisions along the way. Yeah. I mean, you know, one of the best decisions we ever made. It was a very tough decision. We had to made it. We had to leave Dublin. And the event was outgrowing the infrastructure in Dublin. And in making that decision, we brought the ire of a, you know, of a national government that proceeded to, you know, really to protect themselves. They had to attack us. And I think that was very hard for many of the people working there at the time at Web Summit. But in the end, it was a hard decision to leave our own country. But in doing so, we were able to scale Web Summit beyond what was possible in Ireland. My I'll just talk through my kind of process for trying to kind of, you know, educate myself. I don't read business books and I do not read biographies. I strictly avoid all autobiographical or biographical interviews, books or articles. I just stick exclusively to using Google Scholar metrics, which. Allow you to surface some of the most cited papers that are being published within certain fields or subfields. So just Google, Google Scholar metrics, you can go in, you can look at the 20 fields that they categorize academic research into. And you can go to business, for example. So say you want to learn about kind of sales. It's a very efficient way to look at actually efficacious studies on different sales strategies and most academic papers. You don't you know, you just don't need to you don't need to read the thrust of the paper, because a lot of it is quite, you know, it's unnecessary fluff where there's the outline, the methodology, they do the literature review. You just need to read literally the last three sentences of the abstract, which most of the time you can access for free without needing to pay Elizabeth or Springer any amount of money. And every morning, basically for an hour, I just relentlessly read the abstracts of, you know, you can go into marketing, you can go into sales, you can go into operations, you can go into finance. For me, that's an efficient way to stimulate your thinking about different sales strategies that you're, you know, your head of sales or your salespeople may be coming to you with whether, you know, are there actual observable differences in different types of commission based structures? Should it be team based commissions, individual based commissions? What are the levers that you can pull that can have a measurable impact on on sales performance? You know, as a leader, as a leader, you sort of need to need to eat and nibble on a little bit of everything. And so if you can just go a mile wide on, you know, and read 20 papers on commission sales, commission based sales strategies, you at least can just get a bit of a whiff for what actually works, because I think one of the most challenging things running a business is things are often fashionable to do and everybody talks about them and there'll be some blockbuster business book. But the actual underlying evidence can oftentimes be incredibly weak for pursuing a particular modifications or sales marketing or whatever strategy it might be. So Google Scholar metrics go to the business section. And then from there, you can go into various subfields and you don't need to pay to read the academic papers. Just read the last three sentences of the abstract. And in 30 minutes, you can literally just you can pick any subnation, just devour all of the latest papers that are bubbling up that have been published in the last half a decade. So that's that's my advice. I love this. I have never I've known you for a long time, almost a decade. And I did not I just I just learned something new, Patty. So thank you so much. And, you know, I often say like the rate at which you learn as a leader is really is your greatest asset. Like you don't need to know everything, but how fast can you learn? And so this is a very actionable, accessible tip that you just gave all of us. So thanks for sharing that. That's that's great. You know, one of the things that's interesting, just going back to your decision to leave Ireland, and I'm sure there's a lot of haters and or negative. And I just think in today's society where it's hard to stand up against that, especially some of the unpopular decisions I've seen and the retaliation or the backlash that can happen. Any as someone who's kind of gone through a different version of that, like besides kind of keeping your heads down and moving forward, any other lessons learned you can share? Because I think it's hard to go against the grain. Make those tough. Well, you know, I you know, I think the most important opinions are actually probably the opinions of the people working for you. And about three or four years ago, we started using an internal tool called Office five that allows you to measure internal sentiments across a whole different range of categories anonymously. I think one of the you know, you know, there's a there's a there's a very severe limitation on gathering non-anonymous feedback from teams and from people working for you because, you know, people are guarded about the negative things they will share with their line manager or with their, you know, skip report type meeting. But if you enable people to share their actual honest feelings anonymously in a very secure way, you can gather statistically significant information on how people are feeling, how they think they're rewarded, what they think of their relationship with their manager and their peers. And then you can observe that over time and you can actually measure the impact of changes that you make in terms of how your organization is structured. And as your organization scales as a leader, you can't possibly, you know, when it's five people, you have a good sense for how everybody's feeling. Literally five minutes after everyone gets to work. But when it's 50 people, that's basically impossible and stuff breaks. And you have to rebuild structures for communications and how meetings work and the cadence of goal settings and the rolling out of goals. So I think OfficeVibe, and I'm sure there are other tools, is one of the most profoundly powerful tools I've come across that enables weekly surveying of everybody that works for you in a very efficient and a very statistically kind of efficacious way. And, you know, those are the opinions of the people working for you and not just your direct reports, but all the people across your organization. You know, they matter most. And then, of course, your your customers after that matter. Maybe equally so. Some would say some would say more. And you just have to, you know, listening to rants on Twitter or Facebook, I think, is a slippery slope. I think, again, where possible, if you can measure satisfaction in a statistically significant way, that's important. So hire hire a statistician with a Ph.D. and in statistics, hopefully with some sort of focus on polling and surveying so that you actually are properly measuring over time changes in satisfaction with your with your product. I love that. There's a new job creation category getting happy there, or you could just adopt my office vibe, which is basically patched up in a slick, slick way. I'm saying this. So, you know, in a previous life, I edited some academic journals and I happened to end up living with one of the leading statisticians, certainly in Europe, he'd be regarded within the field of political polling as the leading political pollster in the world, academic political polls. He's ultimately a political scientist, but he is a statistician by by training. So I live with him for a decade. So I'm particularly biased when it comes to, you know, randomized survey surveying. There's there are huge limitations in gathering data from your customers by emailing them because there's massive sampling issues. You have to you know, you have to construct surveys, you know, in in ways that ensures your sample is representative of your actual kind of customer base. So talk to a statistician who specializes in polling and they can sort that out for you. So that's just I'm biased, obviously, in that regard. I live in a household of academics and was involved in academia in some kind of tangential way. So I'm very all for academic research and I'm all for hiring academics. We have a lot of former academics that work for us. And even in the world of conferences, they can make stellar impacts on what you do. That's I love that. That's great. That's great insight. But I do I do love this other insight that you just shared about how at the end of the day, it's the what does your team, where is your mind, your team? How do they how do they feel about this and then your customers? And it helps. It does give you conviction in making some of these whether these tough decisions over time. So that's thanks for sharing that. OK, so we've talked a lot about kind of where we've come from. Let's look ahead. What are you most excited about this year at Web Summit? I mean, you have an amazing lineup and lots of people coming. Yeah, yeah. There's lots of I mean, there's, you know, Web Summit is essentially 20 different themes. You know, there's 20 different stages. People kind of come and they think, oh, it's a conference. There's the stage. And then they don't realize the venue stretches for a kilometer, which is European language for three quarters of a mile or something like that. And, you know, so there are many different kind of focus areas. Our I mean, you pick up almost any paper in the world today was the New York Times or the Financial Times. And Francis Hogan, the Facebook whistleblower is front and center. It is within tech. You know, it's arguably the most important story of the last month. The first time Francis will appear on stage outside of the U.S. Congress and UK Parliament will be at Web Summit on the opening night. I think there are there's really interesting and important discussions and debates that need to happen around the future of these kind of content or social media platforms. Facebook will be represented in the form of Nick Clegg, who is I don't know his exact title, but Mark Zuckerberg's mudguard, I think, is his unofficial title. And he goes around the world trying to take the heat off Mark. But it'll be nevertheless very interesting to hear from Nick Clegg, former deputy prime minister of Great Britain. And then some of the really interesting areas. There's more than 200 startups who are focused on the UN SDGs. You know, look, Facebook is important, but it's it dwarfed by climate. And as a species, the single biggest issue is not mean posts about the president on Facebook. It's just it's the destruction of our environment. And as a consequence, the planet that we live on and Web Summit's happening at the same time as COP26, which will bring together political leaders as well as many of the world's largest polluters. Web Summit will bring together many of the people driving the fundamental innovations that will allow us to hopefully move towards a more sustainable world. And many of those companies will be on stage. They'll be pitching, presenting. And I'm particularly interested in that personally. But I think many of our attendees are as well. And then you name it after that, from issues around encryption to data privacy to it's all it's it's all covered. You can find somebody that will talk about NFTs till the cows come home. As is a saying in Ireland, that means until very late. And yeah, this tax. So if you want to go here about tax, the architect of the first global tax deal in the history of our modest species and homosapiens, we finally have a global tax accord that will be implemented over the next 12 to 24 months. The author of that is Pascal Saint-Amand, who leads the OECD's tax unit. And people thought he was crazy about a decade ago when he started talking about this. He was roundly ignored for over half a decade. And as Thomas Piketty and Gabriel Zucman, these are economists, all actually French, started, you know, writing and showing statistically how much taxable revenues was being lost because of tax havens and low tax jurisdictions. It's gained pace. And because I think in a large part, Joe Biden, Janet Yellen, we've now reached kind of a historic tax deal. Humanity has never had a global tax deal ever. So I think the architect of that is an interesting person. And he'll be speaking. I'm saying all of this because my firm belief, I'm a bit of a state capitalist. I believe that, you know, taxation funds innovation. Private companies commercialize breakthrough innovation. But from the Internet to the semiconductor, the microprocessor, GPS, all of these breakthrough technologies were developed over several decades involving levels of funding and risk that the private sector historically has been completely unwilling to take. And it's sort of for that reason. And, you know, Silicon Valley is a communist dream as far as I'm concerned. It was 50 years of deranged levels of Department of Defense, Pentagon, National Science Foundation funding to try and combat the Russians. And along the way, some absolutely transformative technologies emerged. And, you know, five, six, seven generations in, they could be commercialized. And, you know, and in turn, Silicon Valley then became, you know, kind of mana for private enterprise. And, you know, the most successful, largest, most profitable companies in the history of the world were created, but they were created on the top of never before seen investment of taxpayers dollar taxpayer dollars in innovation. So I'm a big proponent of, you know, those those that can should pay their fair share of tax. And I think most companies ultimately are happy to do it in the end. I don't think any of the major tech companies objected to any of the OECD proposed changes. And that's, you know, that's great to see. It's great. Wow. I mean, that is a breadth of topics, as you said, of content to that that Web Summit. And so it's a great example of it. Somebody wants to come and listen or get involved. I mean, it's kind of turns out we need all of these things. We need experts in all these areas to make the industry go forward. And so I love that you are showcasing all of that. All right. Any or we have we have one. We have two minutes left. And so that that's been incredible. What about any predictions for the for for the listeners around any other predictions that you can kind of share with the audience before we sign off, Patty, you just obviously are a big thinker, academic. You speak to so many different people. Yeah, I generally think that, you know, the the largest companies of the next two decades are broadly going to be companies focused on building the core infrastructure that, you know, on top of which technology kind of functions or the full multiplicity of of technologies kind of functions. So whether it's Starlink or Stripe or Cloudflare, you know, I don't know. You know, I don't think anybody likes to be called a boring infrastructure company, but boring infrastructure companies are this this, you know, as almost everybody in the planet has skate. It has to skate on top of this core infrastructure. And so if you're running some of the most effective and important infrastructure that that enables commerce, enables the Internet to function, enables people to communicate in places where they can never communicate before. In the case of Starlink, I think you're going to build gigantic, gigantic companies. And sometimes these seem like unsexy things to do. But in truth, they're just massive opportunities. And I'd encourage any entrepreneurs, you know, it's as a as an entrepreneur, you're kind of like a fly buzzing around and you go to the sparkly, nice, shiny things to do, like photo sharing apps or something like that. But actually, in truth, I think many of the most spectacular companies, 100 billion trillion dollar companies that we've built over the next decade will be in in building the best underlying infrastructure to enable commerce or the the mere Internet itself to function better. So that's my I think that we I 100 percent agree, especially as somebody who works in infrastructure, Internet infrastructure. We see it's just it's a huge shifts are happening. And I agree that when I used to tell people when I used to come to the Web Summit and tell people that what is cloud for do and I tell them and they're kind of like boring and it's like now I think that people are like, that's actually really cool what you do and needed. And and we need more great people, not only to start companies in this space, but also to come work in this space, because sometimes I need stuff. You know, people go like, oh, what's the time? What's the total address of the markets? Like, yeah, like five, six billion people at this point. And, you know, the actual bandwidth, the number of bits that are going to be passed across this infrastructure is going to grow 100 fold in the next five. To 10 years, just gargantuan. So, yeah, it's an exciting time to be alive. Very exciting time. All right, well, let's end on that. Patty, this was such a pleasure. Thank you so much. All the best to you and your team and everyone coming to Web Summit this week. It's going to be so exciting and excellent. Can't wait to see all of the the the insights that get generated and all the connections that get made. And congratulations on all your success. Thanks so much for tuning in today. Thanks, everyone, for joining us for TV. We'll see you soon. Thanks, Patty. Patty Cosgrave, everyone.