Should Cloudflare prioritize expanding its global network or improving existing service performance?

Introduction

The trade-off between expanding Cloudflare's global network and improving existing service performance is a critical decision that will shape our company's future. This scenario involves balancing growth with optimization, a common challenge in the tech industry. I'll analyze this trade-off by examining our current position, potential impacts, and key metrics, then design an experiment to inform our decision-making process.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about our current market position. Could you share our current market share and how it compares to our main competitors?

Why it matters: Helps determine if expansion or optimization is more critical for competitiveness. Expected answer: We're a strong player but not the market leader. Impact on approach: If we're close to the leader, optimization might be more impactful; if we're far behind, expansion could be key.

• Business Context: Based on our revenue model, I assume most of our income comes from enterprise customers. Is this correct, and how does it break down between SMBs and large enterprises?

Why it matters: Different customer segments may value network reach vs. performance differently. Expected answer: 70% enterprise, 30% SMB. Impact on approach: If heavily enterprise-focused, performance might be more critical; if balanced, expansion could be more beneficial.

• User Impact: I'm curious about our customer churn rates. Have we seen any patterns related to network coverage or performance issues?

Why it matters: Identifies which factor is more likely causing customer dissatisfaction. Expected answer: Some churn due to performance issues in high-traffic regions. Impact on approach: Would lean towards performance improvement if churn is significant.

• Technical: Regarding our current infrastructure, what's our average server utilization rate across the network?

Why it matters: Helps determine if we have capacity for optimization or need expansion. Expected answer: 70-80% utilization on average. Impact on approach: High utilization would suggest expansion is needed; lower rates might indicate room for optimization.

• Resource: Can you give me an idea of our current engineering team's capacity? Are we staffed more for network expansion or performance optimization?

Why it matters: Determines our ability to execute on either option effectively. Expected answer: Team is balanced but slightly more experienced in optimization. Impact on approach: Might favor optimization if that's where our expertise lies, unless we're willing to hire or train for expansion.