US company Cloudflare has a decidedly international profile, with 194 data centres across every world region – including 17 in mainland China – as well as 14 offices worldwide. It is among the world’s leading providers of data centres, especially in terms of ‘edge networks’ that are close to end users.
Internationally, the company has spent roughly $8.5bn since 2012, with 2018 seeing its largest and most numerous expansions in terms of announced greenfield foreign investments, according to greenfield investment monitor fDi Markets. In 2018, Cloudflare was the world’s 10th most active foreign investor across all sectors, in terms of the number of greenfield projects it undertook, ahead of Enel and Microsoft.
Behind Cloudflare's rapid expansion is the fact that the way people interact, work and play is digitalising exponentially. “People are building and deploying their applications online and this is putting an emphasis on everything being pushed out onto the internet. What used to be inside a company is now turning to something that is on the internet,” says John Graham-Cumming, chief technology officer at Cloudflare.
Such digitalisation drives a demand for a whole suite of services to support everything that is now online, and make it more reliable. Providing this is what separates Cloudflare from its competition, according to Mr Graham-Cumming, because customers are increasingly looking for one source for all their solutions.
When a website was loaded in the early days of the internet, a request was made from a computer to a server that would then return the requested web page. When a server would receive too many requests at once it would crash and become unresponsive and unsafe. In essence, Cloudflare was created to ease these difficulties.
One way it does this is through ‘edge networks’ that store content as close as possible to a requesting client’s machine, thereby reducing latency and increasing the rapidity of web page loading. This is why Cloudflare has opened 194 data centres across the globe to move content and computation closer together.
The dark arts
Apart from web infrastructure for the fast operation of data, Cloudflare provides cyber security against malicious activity such as denial-of-service attacks. This is offered free to organisations working on behalf of democracy, human rights and civil society, through initiatives known as Project Galileo and the Athenian Project (which offers some of the highest levels of internet protection for voter registration and elections).
Twelve years ago, the iPhone and Amazon’s cloud service fundamentally changed how people interacted with the internet, and therefore, companies’ online networks, according to Mr Graham-Cumming. The Internet of Things and Industry 4.0 now mean that the internet is no longer fixed to a desktop computer at home or in the office. What was once hardware and software inside a business has been pushed outside, into the cloud.
This means security is a growing problem for small and large businesses. “From tricking small businesses into paying money or knocking a competitor offline with an attack, it is actually surprising how much this goes on,” says Mr Graham-Cumming. In mid-2019, the company's service blocked 44 billion cyber threats from 20 million internet properties, daily.
Cloudflare has an enormous market to grow in, another reason for its highly international presence. “The customers of Cloudflare are everybody on earth with access to the internet,” says Mr Graham-Cumming. “We need to be near the people are who are using the internet, which means being everywhere. [This is] fundamental to what we do, in terms of performance and security, which makes it very important to be physically close to people.”
The company's international expansion also extends to office space. It invests heavily in R&D and recruits highly qualified engineers across the globe, leading it to invest in locations such as London, Singapore and Lisbon.
The investment rationale for new locations differs between data centres or office expansion. Wherever there is a large number of people using Cloudflare servers, data centres are located, thereby making it a largely data-driven decision and, to a lesser extent, a cost-based one, according to Mr Graham-Cumming.
Setting up offices abroad involves different considerations. For example, while examining 48 cities across Europe for Cloudflare’s new European office, political stability and a pool of qualified tech talent were two of the main reasons why the company chose Lisbon early in 2019. “Attractiveness is also determined by how welcoming the country is to foreigners in terms of visa policies and in terms of its history. This is an important thing since our offices will mix locals and foreigners,” says Mr Graham-Cumming.
Other key considerations include good infrastructure that allows for fast mobility between Cloudflare’s other international offices, a good quality of life, affordable real estate prices and high-quality school options for employees with children. Lisbon’s time zone was attractive because it is one of the few countries in Europe whose working day hours cross over with those of San Francisco, the location of Cloudflare’s headquarters.
Meanwhile, Cloudflare’s European headquarters are located in London. The company has experienced a slowdown of EU nationals coming to the city due to the uncertainty surrounding their residence status caused by Brexit, but it has no intentions of leaving.
“I see Brexit as a problem but not a giant problem for our business. It does create uncertainty – we obviously operate around the world and we have to think about how [regulatory changes will impact us]. But once we know what the situation is, we will be able to handle it,” says Mr Graham-Cumming. “We have not slowed down hiring in London because of Brexit. If we don’t find someone from the EU, people are coming from elsewhere such as Russia, Ukraine and countries that require visas. We continue to invest in London, we continue to expand.”
With 1100 employees globally, Cloudflare shows no sign of slowing its rapid international expansion, especially after its very successful IPO on the New York Stock Exchange in September 2019.