jacob jacob 11 months ago

Cloudflare & Fastly  

In 2020, COVID-19 forced the world to go through many years’ worth of digital transformation in a span of a few months. Unsurprisingly, most human activities normally done in person have shifted online, ranging from work to entertainment. In the US, online news consumption grew by 215%,  E-commerce 44.4%, streaming entertainment 57%, and most importantly 42% of the entire U.S. labor force work from home full-time. It is an indisputable fact that we spend, work, and play online significantly more than in person. Recent earnings from related companies like Walmart, Netflix, and Slack have clearly reflected those changes. And they are not temporary and will outlast this pandemic. This is the precursor of how the world will operate in the coming decade. 

Supporting the dramatically increased online activities also poses difficult challenges. The first is security. For instance, the number of DDoS attacks increased in direct correlation to the increased internet usage. Hackers target high-stakes entities like vaccine makers and important events like elections. The second is latency. Consumers have a high expectation for the quality of their digital experience, yet their activities are more data-heavy and distributed than ever before. More concretely, 2 seconds can cut conversion rate by half. This equals lost revenue. 

It is imperative for companies to solve these challenges even though they are not directly related to their core business problems as they have legal and economic consequences. However, building out a secure and performant infrastructure is a non-trivial problem and most companies cannot afford to solve it because it is too costly and time-consuming. We know this personally because we spent a lot of time optimizing performance on our own site and it took time away from working on our core problem. Therefore, outsourcing this task is inevitable. 

This is why we believe that CDN providers will play a key role in facilitating business operations in virtually every major industry and directly benefit as a result. They essentially own the highways, railroads, and airports in the digital world. In particular, there are two companies that stand out to us: Cloudflare and Fastly.

Cloudflare provides security-first CDNs. They help other companies run their applications on a secure and reliable network. Currently, their network handles more than 10% of all global traffic and 16% of Fortune 1000 companies’ traffic. Their notable customers include but are not limited to IBM, Shopify, Zendesk, and Hubspot. The numbers are growing fast based on their recent Q3 earnings which grew 57% year-to-year. With the biggest market share in CDN, they are already a part of the pantheon of Big Cloud (AWS, Google Cloud, Azure). They also provide a unique value proposition to enterprise customers who want data sovereignty from the public clouds. 

Fastly stands out with their emphasis on edge computing. Newer applications, especially with IoTs and deployable machine learning models, are becoming increasingly complex and require more computation power. The traditional way of relaying the requests between the central server and clients is slow and not sustainable. And their solution to this problem is top-notch and received a 95% customer satisfaction score. They charge a fee based on traffic and service some of the most recognized internet businesses such as Stripe, Pinterest and Reddit that are growing rapidly. 

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