CloudFlare is tackling a long-standing goal and bringing its internet security and performance service to Mainland China next year. The U.S. company will open 12 data centers on Chinese soil over the next six months in a move that gives overseas websites and services improved performance on the ground, not to mention will increase its business in China.
“One of the biggest requests from our customers is to be fast in China,” Matthew Prince, CloudFlare CEO and co-founder, told TechCrunch in an interview. “We’ve been working on this problem for three years. It has a number of regulatory and technology challenges, but we finally cracked that problem.”
Prince said China is already CloudFlare’s second largest market based on traffic and customers, behind only the U.S.. That’s despite the fact that it has done no local marketing or sales, and it offers no local customer support. The CloudFlare website and services aren’t even translated in Mandarin at this point, but Prince sees vast demand in the country, from both local and international companies.
Being In China Better Than Not Being In China
China is obviously a sensitive market when it comes to the internet. Prince explained that CloudFlare and its customers will adhere to domestic regulations and rules, all of which will be managed by its local partner — a company which he cannot reveal at this point.
If a customer on the CloudFlare network has content that is censored by the Chinese government, for example, it will be blocked in China but will remain visible to anyone outside of the country. But Prince — who spoke at our Disrupt Beijing event this year — is focused on the argument that doing something in China is better than nothing.
“We don’t have the hubris to think we can change Chinese internet policy, nor do we think we can put illegal content in China,” he said, going on to explain that content being censored in the country “won’t make the problem any worse” since that is already the status quo.
Beyond helping websites load and run faster inside China, CloudFlare’s presence can mitigate the risk of cyber attacks on customer sites and also offset threats to CloudFlare’s own global network.
“Many of the very bad attacks [on our network] originate from inside China. Right now, they can affect parts of our network that are not inside China. Now we can start to absorb those attacks inside China, so it doesn’t hit our global network,” Prince explained.
CloudFlare’s new China service is expected to go live in January, during which time a first batch of beta customers — including TechCrunch and Crunchbase — will have their sites put on the service.
Regulations require customers to hold various state approvals before they can be on the CloudFlare China network, though CloudFlare and its partner handle that and have found a way to streamline the process it can still be time-consuming. So if you want in, time is of the essence.
“We’ve been identifying existing customers that care about the Chinese market [as launch partners]. Any others interested in being part of this beta should contact us sooner rather than later,” Prince said.
CloudFlare has sales offices in Japan and Sydney but its next phase in Asia will be the opening of a regional office. Prince said the initial plan was to base that in Singapore, but the company’s recent experiences supporting a pro-democracy site in Hong Kong have caused it to rethink that assumption and consider an office in Hong Kong instead.
‘Awe-Inspiring’ Experience In Hong Kong
Through its Project Galileo initiative — which offers support to “public interest websites that cover political or artistic content” and may be vulnerable to cyber attacks — CloudFlare worked with PopVote, an unofficial referendum voting site in Hong Kong, this summer.
In the lead up to and during its vote, the site battled huge DDoS attacks.
“The voting started at 9pm, but by 6pm we were seeing some of the largest attacks we’ve ever witnessed. It was very sophisticated — it felt like a team of very smart hackers was on the other side. Our team worked around the clock to ensure the site would stay online. All one million votes were handled by the system which was behind CloudFlare’s infrastructure,” he explained.
Hong Kong’s democracy protest took off after the referendum, with many citizens occupying parts of the city in protest at their belief that China reversed a promise to grant them universal suffrage.
CloudFlare continues to work with PopVote, and it has other customers in the pro-democracy space in Hong Kong, but Prince admitted that going into the project he had no idea that it would be so demanding. In addition, CloudFlare’s efforts during the vote — which were reported with negativity by pro-Beijing media in Hong Kong — came at a tricky time when it was dealing with prospective Chinese partners and regulations to bring its service to the mainland.
Yet, Prince said the experience was an “awe-inspiring” one that created a special bond between CloudFlare and Hong Kong — to the point that Prince himself gets stopped and thanked by citizens when walking the city-state’s streets wearing a CloudFlare t-shirt.
Prince also recalled that CloudFlare received more than 1,000 inbound applications for jobs from people based in Hong Kong and, beyond the emotion of the experience, he believes that helming the company’s Asia presence in Hong Kong could provide excellent access to talent.
The decision on location is still to be finalized, but CloudFlare plans to open its Asia office in the first half of 2015.
No IPO Plans Yet
As for the longer term future of the company, Prince is candid about potential exits.
“We’re not in the camp of no [IPO], but we’re also not in camp of building for such an exit. There’s no pressure to be public, and I can’t imagine that we’d do it in 2015 — 2016 is earliest we’d consider, but my hunch is that it will be longer than that,” he revealed.
He claimed that CloudFlare is already profitable on a GAAP basis, and that it still has its most recent $50 million funding round from 2013 in the bank.
“We’re in a pretty good place to choose our own destiny, it would be awfully expensive for someone to buy us,” he remarked, helpfully suggesting that one signal to watch for is new hires.
“We have a four person board, so when you see us build out our board that means we’re on that path — but there’s no rush.”