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CloudFlare, the Startup That Thwarts Hackers

One in four Web users benefit from its tools to optimize websites

Matthew Prince is a restless guy. After earning a law degree and starting a company to track spammers, he enrolled in Harvard Business School in 2007. During the winter of his second year, he found himself on a class trip to Silicon Valley, listening to a presentation from a not-very-smart-sounding entrepreneur. A classmate, Michelle Zatlyn, turned to him. “If this guy can get funding, so can we,” she told him.

Their idea—a Web security service that watches over clients’ sites and can protect all when one is attacked—became CloudFlare, which won HBS’s 2009 Business Plan Contest and went on to raise $20 million from venture capital firms, including New Enterprise Associates. CloudFlare is far from a household name, but its services—which have expanded to include speed enhancements, analytics, and other tools for Web administrators—are used by hundreds of thousands of sites, from food blogs to Metallica’s fan page. About 25 percent of global Web visitors pass through CloudFlare’s servers each month, according to the company, and revenues are increasing 40 percent each month as the startup prepares to expand from its niche servicing smaller sites to wooing bigger commercial customers that are also pursued by large companies including Akamai and Symantec. The markets for Web security and so-called website optimization, which include a variety of services meant to make sites run more efficiently and safely, have “exploded,” says Paul A. Palumbo, founder of Accu-Stream Research. “There’s an opportunity for a startup to carve out a meaningful business, of between $20 million and $100 million, in the next few years.”