When you’ve got a huge customer base, how do you grow revenue and stickiness? One way is by leveraging network effects – Cloudflare shows how.
News today from Cloudflare about a new marketplace that will drive value for their own business, a bunch of third-party software vendors and end customers alike. Cloudflare is a company that provides a content delivery network, Internet security services, and distributed domain name server services, sitting between the visitor and the Cloudflare user’s hosting provider, acting as a reverse proxy for websites.
Now that Cloudflare has built a significant market presence, this news is a natural strategic move and leverages their footprint, as well as the existing relationship they have with their investors. The news has several aspects.
Building a marketplace
The new platform, Cloudflare Apps, will allow website owners (i.e. the end users of the Cloudflare product) to install third party services of a variety of types that will, in different ways, help improve the effectiveness and efficacy of their internet applications. Say you’re a website owner, for example, and you already use Cloudflare to speed up your service. You can now use Cloudflare Apps to install and provision services such as Twitter or Zendesk, from within the Cloudflare platform.
There are already over 50 applications available on the platform, including offerings from Oracle, Twitter, Pinterest, Spotify, and Zendesk. Below is a video detailing how Cloudflare Apps works.
Providing a distribution channel for new ISVs
For established SaaS vendors, like Zendesk or Spotify, this news is simply another distribution channel to add to the gazillion others they already have. But if you’re a startup ISV looking to gain a footprint in the market, listing on the marketplace will give you an opportunity to be seen by the over six million users that are already on the Cloudflare network. This approach isn’t new, of course, in the cloud world Salesforce and its AppExchange is probably the oldest and, arguably, most successful example of an approach like this. The AppExchange has been used as a go-to-market route for thousands and thousands of third-party applications and has spawned huge benefits to ISVs and customers alike, not to mention the platform provider, Salesforce.
The lure of investment cash
Alongside the launch of Cloudflare Apps, three of CloudFlare’s Investors: New Enterprise Associates, Venrock, and Pelion Venture Partners are announcing a $100 million investment fund to sweeten the deal. Qualified companies on the Cloudflare platform will have the opportunity to receive a cash investment plus marketing and technical support from the various participating VC partners.
MyPOV
The real question to ask about a platform as this is the likelihood, or otherwise, of end customers seeing the various services offered as being applicable to their state of mind around the platform provider. An analogous situation lies within the Salesforce platform – customers are highly likely to sign up for services that are related to their usage of Salesforce itself. Since Salesforce is all about the business side of the organization, and customer interactions in particular, then anything customer-facing, service related or business-centric at its core is likely to have high sign up rates.
Contrast this with the hypothetical idea of someone marketing a server load-balancing solution on Salesforce’s platform – that is so far from the roles and responsibilities of those using Salesforce that uptake is likely to be low.
So, in assessing Cloudflare Apps, the important thing is how many offerings on the platform can be thought of as having some sort of connection with Cloudflare’s core proposition. That is a question that remains to be answered – it will be interesting to see the success Cloudflare sees with this new initiative.
