How Michelle Zatlyn Made $800 Million From Website Security

When reading about successful business ventures and their often-extraordinary founders, one can easily become discouraged by not having those same exceptional qualities. Success, however, can be achieved by all types of people, especially when they find a team that complements their abilities. Michelle Zatlyn, a Canadian entrepreneur and one of the founders of Cloudflare, knows the power of partnership better than many. Working together with her co-founders, Michael Knight and Alexander Lee, she built the company from a dream to an industry leader with a $17 billion market cap.

As a child growing up in Canada with a gift for science and math and a love for helping others, Zatlyn was told over and over that she would make a great doctor. After hearing it enough times, she decided that it was her calling. With that motivation, she went to McGill University to pursue a degree in chemistry with the intent of continuing to medical school afterward.

Michelle Zatlyn’s career path took an unexpected turn

In between her studies, Zatlyn participated in several extracurricular studies and contests for medicine. In one case, she even won a trip to San Francisco to present her research findings to a convention of doctors. Despite her talent in the field, however, she realized it brought her very little passion or joy. After graduating in 2001 from McGill University, she decided to try other avenues of work.

Her first forays into a new job field were with two small startup companies, where she worked in management, marketing, and finance. Although Zatlyn had no formal education in those areas, she discovered that her ability to apply scientific methods to business processes made her perform very well. Wanting to learn more about how large companies managed and scaled those processes, she transferred to Toshiba to work as a product manager and later briefly interned at Google.

By this point, Zatlyn realized that she had a deep love for tech and entrepreneurship. She applied and was accepted to Harvard Business School to pursue a master’s degree in business. There she first met her future cofounder, Michael Knight, and struck up a friendship. Knight and his friend Lee Holloway had a side hobby, a program called Project Honey Pot that they had started in 2004, and they often talked about it. Their conversations confused Zatlyn, who had very little knowledge of the internet and coding, but it intrigued her regardless.

Three heads are better than one

One day, she decided to have the two explain what Honey Pot was all about—software that tracked online malicious behavior such as DDoS attacks, spam, email harvesting, and other cyber threats. Zatlyn immediately saw a potential business opportunity: if they could track it, they could stop it.

Realizing that she had identified a viable market, the three began to formulate how they would build her idea into a business. While Holloway worked on the coding, Zatlyn created the business operation and scaling plans, and Knight developed pitches for investors. They named the concept Cloudflare, a cloud-based security product designed to make the internet a safer place for all. At the urging of a professor, they entered it into Harvard’s prestigious New Venture Competition, where it won first place.

Zatlyn applied for and received an Optional Training (OPT) visa to stay and work in her field of study for 12 months past her graduation in 2009, and the three packed up and moved to Silicon Valley. There, they hoped to raise funds from the numerous tech venture capitalists. At first, they had little luck, but Zatlyn’s gift for interpreting tech language into understandable and inspiring terms for the layperson soon brought results.

Early investors loved the concept behind Cloudflare

Once they figured out how to pitch their dream and could provide proof of concept, their first series of funding brought in an impressive $2.1 million from excited tech industry investors. As they used the money to hire eight employees and begin building the system, investors raised concerns about slower performance and latency issues due to the security features. To address these concerns, they carefully picked through the system, rewriting anything that could potentially cause avoidable latency. As a result, their finished product was not only far more secure than any other content delivery network (CDN) on the market, but also much faster—30% faster on average.

During this process, Zatlyn took on the role of the head user experience (UX) designer and worked day and night to learn the unfamiliar technical terms and concepts. With her OPT nearing expiration, the company applied on her behalf for an H-B1 visa for specialty-skilled occupations. Initially, her application was denied. After her cofounders and numerous investors sent appeal letters on her behalf, however, it was finally accepted.

Cloudflare launched officially in late 2010 at the popular TechCrunch convention in their startup battle event. Despite only taking second place, their presentation was strong enough to bring in thousands of interested customers. With both a free tier and a paid tier, their goal of making the internet faster and safer for all was closer than ever.

Cloudflare caught on like wildfire

Word of mouth spread Cloudflare like wildfire, and within only ten months, 10% of the world’s internet traffic was passing through their network at least once each month. Zatlyn, an outside-the-box thinker, continually found creative and effective ways to reach people and expand. By 2012, only two years later, the company had reached a valuation of $1 billion, making it a “unicorn.”

In 2014, when encrypted websites were still uncommon and specialized to large companies handling sensitive data, the three partners hit upon the idea to encrypt their entire network free of charge. Overnight, the number of encryption-secured webpages doubled. This move brought in a massive influx of customers and caused a paradigm shift in internet security.

Cloudflare’s prices varied widely based on the provided services, and they began to bring in customers who paid over a million dollars annually. By 2016, their annual revenue had increased to $85 million, a number that grew to $135 million in 2017 and $193 million in 2018. In 2019, the company was put up for an IPO valued at $3.5 billion and pulled in $287 million of revenue.

The 2020 pandemic and the dramatic increase in work from home has resulted in a massive boost for Cloudflare. With over 11.5 million websites utilizing their service and over 1,000 worldwide employees, they have come a long way from Zatlyn’s napkin-drawn business plan. In Q2 of 2020 alone, their revenue was $99.7 million. Additionally, they saw a user base growth of 24% and a market cap increase of over 48%.

Michelle Zatlyn’s net worth

Still the COO today, Michelle Zatlyn holds a net worth of almost $800 million based on current stock prices and her 4.8% stake in the company. She describes herself as the glue that holds the company together rather than one of the centerpieces, an assessment that certainly holds up based on her quiet innovation and marketing progress. Her talent for finding opportunities in unlikely places has brought her career and her company to truly astonishing heights.

Share this inspiring story: