CloudFlare’s CEO On Expanding In Key Markets Like China And Brazil

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As Web security startup CloudFlare grows internationally, it plans to take a slow and steady approach to dealing with the challenges of expanding in key markets like China and Brazil. In a discussion with TechCrunch senior editor Jonathan Shieber this week at TechCrunch Beijing (organized with TechNode), CloudFlare co-founder and CEO Matthew Prince talked about dealing with laws and regulations in different countries and the challenges of finding a partner in China, its second-largest market.

CloudFlare, which has raised a total of $71.2 million in funding, currently has data centers around the world and Prince said about five percent of Web requests now flow through its networks.

According to a report by Arbor Networks, the size and volume of DDOS attacks have ramped up this year. Not surprisingly, the size of the attacks that CloudFlare handles are growing rapidly, said Prince.

“We’re seeing an increasing number of performance threats, as the world moves from mobile to mobile. Attacks range from hacking attacks to DDOS attacks that are launched on us. We stop on a daily basis, over a 100 DDOS attacks, including ones that are 100GB per second, which is impossible for any one organization on their own to mitigate.”

Prince said that CloudFlare is looking for a partner in China, which is its second-largest market after the U.S.

Beijing, in a particular, is a fast growing market, said Prince.

“We believe that we will never internally develop the expertise to truly understand and service the China market. It’s a very special market and it has special concerns. We wanted to make sure we are careful as we enter the market.”

But CloudFlare still hasn’t find one “that we felt met our quality standards,” said Prince, adding that “when we do work with someone in China that will mean that the company is the best technically and has the best resources to provide that around the world.”

CloudFlare is taking a slow and deliberate approach to finding a Chinese partner because “almost all U.S. [tech] companies that have entered China have failed. We may fail as well, but we hope to fail in a smarter way, but if we are fortunate, we will succeed.”

Finding a partner in China will help CloudFlare deal with the country’s bureaucratically and technically complicated Internet regulations and laws, including censorship policies that differ from province to province.

But China is not the only major market where CloudFlare has to deal with major issues. In Brazil, for example, the company also has to deal with labyrinthine regulations.

“We are looking closely at Brazil and what they are doing with data localization. You have to keep it local. A lot of companies are turning to CloudFlare because we have data centers all over the region, so we can help them solve those regional problems and deal with different law enforcement regimes there,” said Prince.

The key to entering different markets is taking a pragmatic approach.

“The challenges in China, in Europe, in America, as we go into various markets, is that we make sure that in those regional markets we follow and respect their laws,” Prince said.

“A number of U.S.-based companies like Google thought ‘we know better, we are going to change the way things go.’ We don’t have that same attitude. We try to be a respectful partner to whatever region we work with.”