Aligning purpose and strategy: Cloudflare goes nuclear on patent troll

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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Cloudflare had been fighting an FBI national security letter, under gag order since 2013, and even after the NSL was rescinded and no data was handed over, they continued to fight for the right to be transparent about the process:

“Early in the litigation, the FBI rescinded the NSL in July 2013 and withdrew the request for information.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.

Cryptocurrenices: the native business model of attention

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There has been lots of attention this week on cryptocurrencies and blockchains, what with Consensus conf and the Token Summit and lots of related announcements. And with like lots of new things (thinking back to Twitter circa 2010) I find myself spending a lot of time explaining to people what blockchains and cryptocurrencies are, and… Read more »

The Service Recovery Paradox

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I’m writing this from a plane.  I’ve been in the air for an hour and everything is fine, but for a few minutes before the flight, things weren’t fine.  At roughly the time we were supposed to board (on an already late in the evening flight), the gate attendant came over the mic to announce… Read more »

Complicity

I had an interesting experience today.  As I was in the air on my way to San Francisco, I got a text from my Airbnb host saying that they had made a mistake and accidentally double-booked my room.  I ended up taking their offer to cancel and booked a hotel room (at a steep increase… Read more »

Flexing the platform for good

Over the past few weeks, I’ve been touching base with many companies and individuals in the tech sector to understand how they are reacting to the current political environment. Every company and community (of users, customers) is different, with its own sensitivities, priorities, and goals.  So it’s been really interesting to understand the very wide… Read more »

Cycles

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It’s clear that right now we are in a moment of upheaval and turbulence, that seems to have come upon us very quickly.  Pretty much everyone I know has been wrestling to unpack this for the past several months. I’ve been trying my best to understand the worldview of Steve Bannon, who is clearly an… Read more »

The Public Data Layer

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I have been thinking a lot lately about the increasing importance of the “public data layer” — meaning, data that we will need (“we” applied broadly, meaning the general public, NGOs, government, scientists, journalists) to make sense of what’s going on in and increasingly busy, but increasingly quantifiable world. First, some of the drivers here…. Read more »

Experience ↔ Design ↔ Policy

People often ask me how I ended up working in venture capital, and more specifically in a role that deals with policy issues (“policy” broadly speaking, including public policy, legal, “trust & safety”, content & community policy, etc.).  Coming from a background as a hacker / entrepreneur with an urban planning degree, how I ended… Read more »

Unintended Consequences

I’ve been struck recently by the power and surprise of unintended consequences. For example, a recent Slate article digs into flip side of the life-saving potential of automated vehicles: our reliance on car crash deaths for organ donors: “An estimated 94 percent of motor-vehicle accidents involve some kind of a driver error. As the number of… Read more »

Going after it

I’m in SF this week with the USV team – once a year we all come out here together, do a bunch of meetings and social events w our portfolio. Yesterday struck me — and it’s amazing how much of a surprise this is to me, after doing this nearly 5 years — with just… Read more »

The new normal

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The week before last, my in-laws were hit by a truck while crossing the street after dinner. The time since has been a disorienting whirlwind of sadness, fear, hope and thankfulness.  My mother-in-law suffered a very serious brain injury, and while she has cleared the first hurdle of basic survival, the outlook won’t be clear for… Read more »

Getting out the vote

Yesterday, a fabulous new tool launched — HelloVote: HelloVote makes it easy easy easy to register to vote.  Sign up w your phone number and do the whole thing over text. This is great for a lots of reasons — from its immediate practicality, to its more general lesson that it’s possible to build new,… Read more »

Alternative Compliance

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Summary To better support small businesses operating in regulated sectors, we should develop “alternative compliance” mechanisms — parallel regulatory regimes that achieve the goals of existing regulations but take an alternative, data-oriented approach to achieving them.  Such an approach would be especially friendly to the smallest of small businesses, and would take advantage of available… Read more »

Regulating with Data

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At this year’s Personal Democracy Forum, the theme was “the tech we need“. One of the areas I’ve been focused on here is the need for “regulatory tech”.  In other words, tools & services to help broker the individual / government & corporation / regulator relationship. In a nutshell: we are entering the information age, and… Read more »

Cable boxes, ridesharing and the right to be represented by a bot

Here are two tech policy issues that don’t seem related but are: the FCC’s current push to open up the set-top-box, and the lawsuits challenging Uber’s and Lyft’s classification of drivers as independent contractors rather than employees. The way to see the connection is through the lens of control vs. competition.  More specifically, they are… Read more »

Crypto debate: separating Security from Control

For the past few weeks, I’ve been following the FBI / Apple phone unlocking case, and digging deep into the debate around encryption, security and privacy. This debate is as old as the sun, and the exact same arguments we’re going through now were fought through 20 years ago during the first crypto wars and… Read more »

The Freedom to Innovate and the Freedom to Investigate

Earlier this week, I was at SXSW for CTA‘s annual Innovation Policy Day. My session, on Labor and the Gig/Sharing Economy, was a lively discussion including Sarah Leberstein from the National Employment Law Project, Michael Hayes from CTA’s policy group (which reps companies from their membership including Uber and Handy), and Arun Sundararajan from NYU, who… Read more »

Internet meets world: rules go boom

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Since 2006, I’ve been writing here about cities, the internet, and the ongoing collision between the two. Along the way, I’ve also loved using Tumblr to clip quotes off the web, building on the idea of “the slow hunch” (the title of this blog) and the “open commonplace book” as a tool for tracking the… Read more »

Big innovation and small innovation

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Yesterday at one of our bi-monthly team deep dives at USV, we got into the conversation of essentially “Big Innovation” vs. “Small Innovation”.  Those who have followed USV for some time know that at the core of the investment thesis is a belief in “decentralized”, “bottom-up” innovation — the kind that really became possible with… Read more »

Beam should have a hardware API

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We’ve got a few Beam telepresence robots at USV, and use them all the time.  Fred has written about them here.  We had a team meeting today, and we had two beams going at once — Fred and I were the first to arrive, and we were chatting beam-to-beam — he in LAUtah, me in Boston,… Read more »