CEOs often say they believe in being transparent and honest. But Matthew Prince, CEO of top-performing cybersecurity firm Cloudflare, doesn’t just say it — he lives it.
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For Prince, shining a light on problems — and even personal embarrassments — strengthens his stewardship of Cloudflare (NET). Cloudflare is a San Francisco-based internet infrastructure company. And one of the firm’s core values is radical transparency, Prince says.
“That’s the opposite of many tech companies that (favor) secrecy,” said Prince, Cloudflare’s co-founder and chief executive.
Prince understands why some CEOs prefer to withhold information. They bury bad news or keep secrets if they fear blowback from negative news. But Prince says holding back information comes with too high a price.
Hacker Tests The Cloudflare CEO
In 2011, a hacker put Prince’s commitment to transparency to the test. A 15-year-old who called himself Cosmo the God accessed Prince’s personal digital information. And the hacker used the information to take control of Prince’s phone, hack his corporate email and post his private messages.
“I was mortified,” said Prince, 48. “It was incredibly embarrassing.”
Prince conferred with Cloudflare’s leadership team. They decided to open up about the hack. At the time, Cloudflare was tiny — Prince co-founded it in 2009 — and he figured that others might learn from his painful experience.
His team created an infographic that tracked “all the stupid things we’d done to allow this to happen,” Prince recalls. He thought that the company might lose customers by confessing its blunders.
“But the exact opposite happened,” he said. Customers admired Prince for dissecting what went wrong. And it solidified their trust in Cloudflare.
Be An Open Book Like Prince
Prince adopted the same open-book approach in 2020 when disclosing how the company handled an internet outage.
Prince’s embrace of transparency carries over into his communication with staffers. In the company’s early years, some engineers asked him, “What happens in board meetings?”
“Oh, it’s boring,” Prince replied. But they wanted to see his slides, so he agreed to share them. More than a decade later, he continues to level with his roughly 3,500 employees.
Since Cloudflare’s IPO in 2019, Prince waits until just after earnings calls to host all-hands meetings to update the workforce on the latest corporate news and financials.
And results have been spectacular since then. The company’s stock is up 295% since its first day of trading following the IPO, says data from S&P Global Market Intelligence. That laps the S&P 500’s 50% rise in that time. Cloudflare is now valued at $23.6 billion.
And Cloudflare is on track this year to make 34 cents a share on revenue of nearly $1.3 billion. That reverses a loss in 2019 on revenue that would be up nearly 350% from that year.
For Cloudflare CEO, Blunt Talk Boosts Morale
Prince’s willingness to discuss problems head-on reinforces his credibility. In a recent earnings call, he addressed a sales execution issue that required fixing.
“I was struck by how candid he was,” said Jonathan Ho, a research analyst at Chicago-based William Blair. “I cover many companies, and I thought it was unusual the level of detail that (Prince) provided. It was more than we typically see.”
Ho admired Prince’s directness in calling out underperformers. In some companies, such blunt comments from the CEO might alienate the remaining salespeople.
“But we later learned that the sales force liked that he held (underperformers’) feet to the fire,” Ho said. “It takes a certain level of courage to do that and reflects on the culture of the organization.”
Mix Empathy With Honesty Like Prince
Prince seeks to craft a culture of curiosity and empathy. He prizes continual learners who want to acquire new skills. And he has found that empathetic workers acknowledge and overcome their blind spots by seeing situations through others’ eyes and respecting diverse views.
Many companies hire people based on “IQ, education or their Rolodex,” he says. But Cloudflare prioritizes candidates who exhibit curiosity and empathy. To assess their curiosity, Prince pays attention to the questions they ask in the job interview.
“It’s whether they’re really listening to the answers they get — and following up — or just asking rote questions,” he said.
Recently, he was struck by the technical phrasing of a candidate’s question. He asked the interviewee, “Did you by chance use ChatAI to come up with that?”
The candidate nodded. Prince appreciated the honesty.
Core Values Come With A Cost For Cloudflare CEO
Curiosity is one of Cloudflare’s core values, along with acting on principle. For Prince, the most meaningful core values come with a cost.
“If they’re free, they have no value,” he said. For example, curiosity can lead innovators to invest in fruitless pursuits. And being principled can mean walking away from short-term enticements to preserve your long-term reputation.
A curious mind analyzes today’s data in search of tomorrow’s trends. Prince keeps an eagle eye on synthesizing the latest bits of information to get a better read on the future. This lets him engage in what he jokingly calls “panicking early.”
In late 2021, for instance, he detected signals that the nation’s economy was slowing down. Examples included the beginnings of a downshift in e-commerce and business-to-business transactions.
He checked with other CEOs and they shook him off. They kept telling him, “No slowdown here. It’s pedal to the metal.”
Nevertheless, Prince continued to see signs of real softness. So he decided in early 2022 to slow Cloudflare’s hiring.
“It was a deeply unpopular decision,” he said. “I felt like Chicken Little” while other tech firms were racing to attract more talent.
By the fall of 2022, Prince was proved right. While many tech firms announced layoffs, Cloudflare did not.
Cloudflare CEO: Focus On Bouncing Back
Prince’s parents modeled entrepreneurship. His father launched restaurants and a brokerage firm, among other business pursuits. His mother owned gift stores.
“I didn’t know any other way,” Prince said. “Watching my parents go into ventures that worked, and that failed, taught me about risk.”
He recalls how his father hosted the grand opening of a restaurant “and it just bombed.” But what struck Prince was his dad’s resilience.
“As a kid, you see something your parents are excited about and it can fail,” he said. “And life went on.”
When Prince’s first tech startup — an anti-junk-email product — fizzled in 2001, he recovered and moved on to his next endeavor.
Cloudflare CEO’s Time Management Tip: Divide Your Day Into Thirds
As much as he learned from his parents’ example, he’s also a student of other successful leaders. When he heard how JPMorgan Chase (JPM) CEO Jamie Dimon organizes his time, Prince decided to follow a similar routine.
“I spend one-third of my time in internal affairs, such as setting strategy and working with our product team,” he said. “I spend one-third of my time on external affairs, like meeting with analysts and customers. And I spend the remaining one-third on (employee) recruiting and retention.”
His entrepreneurial edge gives him the confidence to act quickly and innovate boldly. He doesn’t let the perfect become the enemy of the good.
“Cloudflare has a willingness to engage in rapid product development even if it’s not fully baked,” Ho said. “A lot of companies get scared and don’t like putting out a product if it’s not (perfect).” But Prince leads his engineers to release imperfect versions of products, collect customer feedback and make improvements.
