Cloudflare

Klarna

Cloudflare

Cloudflare operates on a freemium model with usage-based pricing. The free tier provides basic CDN, DDoS protection, and SSL for any website — this is how millions of sites use Cloudflare without paying a cent.

Paid plans start at $20/month (Pro), $200/month (Business), and custom enterprise pricing for large organizations.

The free tier is the growth engine, not charity. Every free website that routes through Cloudflare adds data to the network — more traffic patterns to analyze, more attacks to learn from, more threat intelligence to feed the machine learning models.

Free users make the paid product better.

Enterprise contracts are where the real money lives. Large organizations pay six and seven figures annually for advanced security, performance, and compliance features.

Revenue exceeded $1.7 billion in 2024, growing 30%+ year-over-year. The company has been approaching profitability with improving margins.

Klarna

Klarna makes money from merchant fees and consumer interest. Merchants pay Klarna 3-6% of each transaction — they're willing to pay because Klarna increases conversion rates by 30%+ and average order values by 45%.

On "Pay in 4" (interest-free installments), Klarna makes money purely from merchant fees. On longer financing (6-36 months), Klarna charges consumers interest up to 25% APR.

Klarna also earns revenue from its shopping app (affiliate commissions when users discover and buy from merchants), and from its Klarna Card.

Cloudflare

The origin story starts with Project Honey Pot, a free open-source project that Matthew Prince created in 2004 to track online spammers and hackers. The project grew to track millions of malicious IP addresses, and the Department of Homeland Security started using the data.

But Prince noticed something: he had all this threat intelligence and no good way to help website owners actually use it.

At Harvard Business School in 2009, Prince teamed up with Michelle Zatlyn for a class project exploring how to turn that threat data into a product. Their professor gave them a B — which Prince has jokingly called the most expensive B in HBS history, given what the company became.

They brought in Lee Holloway, a brilliant but unconventional systems programmer Prince had worked with previously, as the third co-founder and technical architect.

Cloudflare launched publicly at TechCrunch Disrupt in September 2010 with a bold pitch: sign up for free, change your DNS, and Cloudflare will make your website faster and more secure. No hardware to install.

No software to configure. Just a DNS change.

In the first day, thousands of websites signed up. The simplicity was the product — in an industry where security meant expensive appliances and complex configurations, Cloudflare said "just point your domain at us and we'll handle it."

Klarna

Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson were students at the Stockholm School of Economics. In 2005, they entered a startup competition with an idea: let people buy things online and pay later.

At the time, online shopping was still new and most people were terrified of entering their credit card details on the internet. The idea was simple — Klarna would pay the merchant immediately, and the customer would get an invoice with 14-30 days to pay.

The competition judges hated it. The idea was dismissed as financially irresponsible and the team didn't win.

But Siemiatkowski pressed on. Swedish e-commerce was growing fast and merchants were desperate for any way to reduce cart abandonment.

Klarna's "pay after delivery" model was a hit because it shifted the risk — customers could receive the product, try it on, and only pay for what they kept.

The first customers were Swedish e-commerce merchants selling fashion and home goods. Klarna handled the invoicing, fraud detection, and collections.

Merchants saw conversion rates jump because customers were more willing to buy when they didn't have to pay immediately.

Cloudflare

Cloudflare grew by being free. The free tier removed every barrier to adoption.

A blogger in India and a Fortune 500 company could both sign up in five minutes. This created a massive installed base that generates word-of-mouth, training data, and upsell opportunities.

The developer community became the second growth engine. Cloudflare Workers turned the company from a security vendor into a cloud computing platform.

Developers build entire applications on Cloudflare's edge network, which creates deep technical lock-in. Once your application runs on Workers, migrating to AWS Lambda is a significant engineering effort.

Strategic pricing warfare accelerated commercial adoption. When Cloudflare launched R2 storage with zero egress fees, it directly attacked Amazon S3's most hated pricing model.

The "Bandwidth Alliance" partnered with cloud providers to eliminate data transfer fees. These moves positioned Cloudflare as the anti-AWS — the cloud company that doesn't nickel-and-dime you.

Klarna

Klarna grew by being embedded at checkout. The strategy was to sign up the biggest online retailers and become a payment option alongside Visa and PayPal.

Once Klarna was at checkout, consumers discovered it organically. The "Pay in 4" button became ubiquitous across fashion, electronics, and home goods retailers.

The Klarna app became a growth engine beyond checkout. By building a shopping app where users could browse products, discover deals, and track deliveries, Klarna turned from a payment method into a shopping destination.

The app has 35+ million monthly active users who start their shopping journey inside Klarna before even visiting a retailer.

International expansion was aggressive. Starting in Sweden, Klarna rolled out across Europe, then into the US, UK, and Australia.

The US became the biggest growth market — American consumers were especially receptive to Pay in 4 as an alternative to credit cards. By 2023, Klarna had 34 million US users.

Cloudflare

AWS, Google Cloud, and Microsoft Azure are simultaneously partners and competitors. Cloudflare's network sits in front of these clouds, which makes the cloud providers uncomfortable.

As Cloudflare expands into compute (Workers), storage (R2), and databases (D1), the competitive overlap grows. The cloud providers could theoretically build or acquire similar capabilities and bundle them for free.

Profitability pressure is real. Cloudflare has prioritized growth over profits, spending aggressively on network expansion and R&D.

Operating margins have been negative for most of the company's public life, though they've been improving. Investors have tolerated this during growth-stock mania but patience may not last forever.

Content moderation controversies arise periodically. As a company that provides infrastructure to millions of websites, Cloudflare occasionally faces pressure to terminate service to controversial or harmful sites.

They removed 8chan after the El Paso shooting in 2019 and the Daily Stormer in 2017. Prince has described these decisions as uncomfortable, arguing that infrastructure providers shouldn't be arbiters of online speech but sometimes have no choice.

Klarna

The valuation collapse was humiliating. Klarna raised at a $46 billion valuation from SoftBank in 2021.

One year later, they raised a down round at $6.7 billion — an 85% haircut. It was the most dramatic valuation drop in fintech history.

Employee stock options were underwater. Siemiatkowski had to lay off 10% of the workforce.

The entire BNPL category went from hot to radioactive in months.

Credit losses are the existential risk. Klarna is lending money to consumers who want to buy things they can't afford to pay for right now.

When the economy slows, defaults rise. Klarna's credit losses hit $1 billion in 2022.

The company had to tighten underwriting significantly and pull back from riskier markets. The tension between growth (approve more loans) and profitability (reject risky borrowers) defines every quarter.

The IPO in 2025 was a comeback story but with caveats. Klarna went public at $15 billion — a major recovery from the $6.7 billion trough but still less than a third of its 2021 peak.

The company finally turned profitable by slashing costs with AI (replacing hundreds of customer service agents with AI chatbots) and tightening credit standards. But investors remain cautious about the BNPL model's long-term sustainability.

Cloudflare

Cloudflare CDN — a content delivery network spanning 330+ cities in 120+ countries that caches and serves web content from the nearest location to each user, making websites dramatically faster. Cloudflare DDoS Protection — automatic detection and mitigation of distributed denial-of-service attacks.

Has blocked some of the largest DDoS attacks in internet history, including a 71 million requests-per-second attack in 2023. Cloudflare Workers — a serverless computing platform that lets developers deploy code to Cloudflare's edge network, running applications in 330+ locations worldwide with millisecond latency.

Cloudflare Zero Trust — a complete security platform replacing traditional VPNs and firewalls with identity-based access controls for remote workforces. Cloudflare R2 — object storage that competes with Amazon S3 but with zero egress fees, saving companies thousands on data transfer costs.

Klarna

Pay in 4 is the signature product — split any purchase into four interest-free payments over six weeks. Pay in 30 lets customers receive the product first and pay within 30 days.

Financing offers longer-term payment plans with interest for larger purchases. The Klarna App is a shopping destination — browse deals, track orders, manage payments, and earn cashback.

The Klarna Card is a physical Visa card that lets users Pay in 4 anywhere. Klarna Creator is a platform for influencers to earn commissions sharing products.

Klarna AI is their customer service chatbot that handles two-thirds of support queries.

Cloudflare

New Enterprise Associates (NEA) led the Series A. Venrock, Pelion Venture Partners, and Union Square Ventures invested early.

Fidelity, Microsoft, Google Capital (now CapitalG), and Baidu all invested in later rounds — notably both Google and Baidu investing in the same company. The September 2019 IPO raised $525 million at a $4.4 billion valuation.

The stock has since grown significantly.

Klarna

Sequoia Capital, SoftBank, Silver Lake, GIC, Atomico, Commonwealth Bank of Australia, Heartland