Cloudflare

Snowflake

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.

Snowflake

Snowflake charges based on consumption — you pay for the compute time and data storage you actually use. Compute is measured in "credits" consumed by virtual warehouses (their term for compute clusters), and storage is billed per terabyte per month.

This model is beautiful for Snowflake because customers rarely shrink their data — they only ever accumulate more.

The key insight was separating compute from storage. Customers can scale compute up or down independently, spin up multiple compute clusters against the same data simultaneously, and auto-suspend when not in use.

This means a company can run a massive analytics query during the day, shut down the warehouse at night, and pay nothing until tomorrow. Try doing that with Oracle.

Snowflake also makes money from data sharing. Their Data Marketplace lets companies buy and sell datasets directly through the platform — weather data, financial data, demographic data — without any copying or ETL.

Snowflake takes a cut of marketplace transactions and benefits from the network effects: the more data on the platform, the more valuable it becomes for everyone.

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."

Snowflake

Snowflake was born from frustration with Oracle. Benoit Dageville and Thierry Cruanes were senior engineers at Oracle for over a decade, and they watched traditional data warehouses struggle with the cloud era.

The old approach — giant on-premise appliances that cost millions and took months to set up — was clearly dying. But nobody had built a data warehouse from scratch specifically for the cloud.

In 2012, Dageville and Cruanes teamed up with Marcin Żukowski, a Dutch computer scientist who'd built a high-performance analytical database engine called VectorWise. The three of them started building in San Mateo, California, with a radical idea: completely separate storage from compute.

In traditional databases, storage and compute are locked together — if you need more processing power, you have to buy more storage too, and vice versa. Snowflake said that was insane and decoupled them entirely.

They spent two years in stealth mode before launching in 2014. The product was immediately different from anything on the market.

You could spin up compute clusters in seconds, run queries across massive datasets without managing any infrastructure, and only pay for what you used. Companies that had been spending six figures a year on Teradata appliances could suddenly do the same work on Snowflake for a fraction of the cost.

The product-market fit was almost violent.

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.

Snowflake

Snowflake grew through a relentless enterprise sales motion combined with a product that genuinely sold itself. Early on, they offered free trials that let data engineers experience the speed difference firsthand.

Once someone ran a query in 10 seconds that took 20 minutes on their old system, the sale was basically done.

They also invested heavily in a world-class sales organization. Frank Slootman, who became CEO in 2019 after running ServiceNow, brought an aggressive operational playbook that dramatically accelerated growth.

Under Slootman, Snowflake went from $265 million to over $2.8 billion in annual revenue in four years. He was famous for saying "growth is oxygen" and running the company with military precision.

The Data Cloud strategy was the long game. By encouraging data sharing between organizations on the platform, Snowflake created network effects — the more companies use Snowflake, the more valuable it becomes for everyone.

Over 9,000 customers now share data through the platform, creating a gravity well that makes leaving increasingly painful.

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.

Snowflake

Databricks is the existential threat. What started as a data engineering company has built a competitive SQL analytics product (Databricks SQL) that goes directly after Snowflake's core business.

The two companies are converging fast — Snowflake is pushing into data engineering and AI, Databricks is pushing into analytics. Both are spending billions to win.

Margins are also a constant battle. Snowflake runs on top of AWS, Azure, and Google Cloud, which means a significant chunk of revenue goes right back to the cloud providers as infrastructure costs.

Gross margins hover around 70% — good for most companies, but the cloud providers themselves operate at higher margins on the same underlying infrastructure. There's always the risk that AWS or Google could build "good enough" alternatives and undercut Snowflake on price.

So far, Snowflake's ease of use and ecosystem have kept customers loyal, but it's a fight they can never stop fighting.

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.

Snowflake

Snowflake Data Cloud — the core platform that stores, processes, and shares data across organizations with near-infinite scalability. Snowpark — a developer framework that lets engineers build data pipelines and ML models in Python, Java, or Scala directly inside Snowflake, without moving data out.

Cortex AI — their generative AI and machine learning layer that lets users build AI applications directly on their Snowflake data using LLMs and vector search. Snowflake Marketplace — a data exchange where over 2,000 providers list datasets that customers can access instantly without copying.

Streamlit — the open-source Python framework for building data apps, acquired in 2022 for $800 million, now deeply integrated as Snowflake's app-building layer.

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.

Snowflake

Sutter Hill Ventures was the earliest and most consequential investor — managing director Mike Speiser actually served as founding CEO and incubated the company. Altimeter Capital, Dragoneer Investment Group, and Salesforce Ventures participated in growth rounds.

Warren Buffett's Berkshire Hathaway famously bought $250 million in shares at the IPO price — Buffett's first IPO participation in decades. Sequoia Capital and ICONIQ Capital also invested pre-IPO.

The September 2020 IPO raised $3.4 billion at a $33 billion valuation.