Aligning purpose and strategy: Cloudflare goes nuclear on patent troll

Last week, I was in Amsterdam at the Next Web conference, giving a talk about “Purpose, Mission and Strategy” — how companies can strengthen the connection between these to align efforts and make tough calls more easily (will post video when it comes online).  From that talk:

The idea here being that there are tough, tough calls to be made every day, whether that’s what feature to prioritize, who to hire, what market to enter, what policies to enact, or whether to back down in the face of conflict or stand up and fight.

When I think about the connection between purpose, values and strategy, one of the companies that always stands out most brightly is Cloudflare.  Anyone who operates a website or app probably knows Cloudflare but regular folks may not — they provide performance and security services for millions of websites, and currently handle over 10% of global internet traffic.  Sitting in that privileged position, they must have a strong sense of their purpose and values, and strong backbone when it comes to living up to those.

This comes up in all kinds of ways.  For example, it was recently revealed that Cloudflare had been fighting an FBI national security letter, under gag order since 2013, and even after the NSL was rescinded and no data was handed over, they continued to fight for the right to be transparent about the process:

“Early in the litigation, the FBI rescinded the NSL in July 2013 and withdrew the request for information. So no customer information was ever disclosed by Cloudflare pursuant to this NSL.

Even though the request for information was no longer at issue, the NSL’s gag order remained. For nearly four years, Cloudflare has pursued its legal rights to be transparent about this request despite the threat of criminal liability.”

I call that dedication to purpose and values.  At the USV CEO summit a few weeks ago, Cloudflare CEO Matthew Prince made the comment that one way to “tell the story” of your company, both internally and externally, is to talk about things that you do or did, that others wouldn’t.  In this case, the story is that Cloudflare is willing to stand up and fight, even when it’s well beyond their short-term corporate interests.

Today, this is playing out again in the context of patent trolls.  Those outside the tech industry might not be aware of the detrimental impact of this activity on the tech ecosystem and startups in particular.  In a nutshell, these Non-Practicing Entities (NPEs), aka “trolls”, will buy the rights to patents purely for the purpose of shaking down operating companies for settlements.  The claims are almost always specious, and the strategy is to get startups to settle for just below the cost of litigating.  Pay me to go away.  It’s a huge problem: at best an expensive distraction and at worst a company-killing scenario.

That’s why I am so proud to see that Cloudflare, in the face of an assertion from a patent troll, has decided not to settle, but instead is standing up to fight.  And they are not just doing the bare minimum, they are going fucking nuclear.   Rather than do what many or most companies would do, just to get the troll to go away, they are standing up, not just for themselves, but for the whole ecosystem.

For more on the story, first read this, and then this.  Cloudflare is not only going to litigate this case the full distance, but are also:

  • crowdfunding research to invalidate **all** of blackbirds patents
  • investigating blackbird’s business operations to expose some of the opaque and untoward inner-workings
  • filing ethics complaints in IL and MA regarding the unusual and likely unethical structure of blackbird (more detail in the posts)

To tie this back to purpose and mission, here is Matthew’s take on why they are digging in here:

“Cloudflare’s mission has always been to help build a better Internet. So it won’t be surprising to frequent readers of this blog that Cloudflare isn’t interested in a short term and narrow resolution of our own interests. We’re not going to reach a settlement that would pay tens of thousands of dollars to Blackbird to avoid millions in legal fees. That would only allow patent trolls to keep playing their game and preying upon other innovative companies that share our interest in making the Internet work better, especially newer and more vulnerable companies.”

Kudos to Cloudflare for standing up here and doing more than they need to.  If more companies follow their lead, we stand a chance to make a dent in this issue.

   

  • LE

    Greetings (see those links at AVC are already working).

    Rather than do what many or most companies would do, just to get the
    troll to go away, they are standing up, not just for themselves, but for
    the whole ecosystem.

    I am not sure I agree with this. It’s a distraction. There has to be a clear business reason for Cloudflare to fight this battle. It’s not only money it’s time, attention and degradation of the thought process which is needed to succeed at their core business. It doesn’t have zero impact. Time does not grow on trees.

    While there have been a few exceptions (Rackspace comes to mind but hey how did things work out for them business wise? Not well actually…) the market has decided that it’s more cost effective to simply be practical and pay the vig of the patent trolls.

    The thing is this. Anytime you let emotion into a business decision you are probably heading in the wrong direction. That is what I have observed over time.

    Now I am not saying there aren’t reasons to not settle or fight patent trolls. You don’t want to be a target for other trolls bla bla bla. But that is maybe not the case with Cloudflare each case is different.

    Iirc back in the day Microsoft lost out big on some coming trends as a result of their long battle with the justice department instead of settling.

    And they are not just doing the bare minimum, they are going fucking nuclear.

    That sounds like a big weapons program. Big expense big time.

    • Fair point – fwiw the Microsoft case was much, much, much bigger

      I think it’s fair to say that this is as much a shot across the bow of future trolls as anything

  • Steven Roussey

    Have a look at https://unpatent.co/. Maybe they can help.

    • yep, thanks. I know these guys. Amazingly, they have pivoted away from unpatent and are now doing this: http://aragon.one/

      • Steven Roussey

        Interesting! That is quite a change… I’ll have a look. Thanks!