BIG INTV: Matthew Prince Wants AI Companies to Pay for Their Sins

0:03From Wired, this is The Big Interview. I'm Katie Drummond. After his first startup got sued by the porn industry, you'd think Matthew Prince would lay low for a while. Instead, he went to Harvard Business School and came up with another idea. Cloudflare. The company officially launched in 2010. The basic idea? Act as a middleman between websites, apps, and their visitors. Cloudflare works similarly to a bodyguard for the internet. It filters out bad traffic, keeps websites safe, makes them load faster, and stops them from crashing when too many people visit at once. You've used the internet with Cloudflare's help today, I guarantee it, without even knowing it.

0:40Prince continues to evolve the way Cloudflare works. The company recently made news after introducing a new blocker tool targeted at unauthorized AI content scraping. The tool effectively creates a pay-per-crawl model, requiring content-hunting AI platforms to pay for what they want to access.

1:03Good to have you here, Matthew. Thanks for having me. Oh, I'm delighted. Now, you should have been warned ahead of time, but you probably weren't. We always start these conversations with some rapid-fire questions, like a warm-up. Sound good? Sort of like win sprints or something. Exactly. We're going to win sprint our way through some questions. What's the most embarrassing thing that regularly shows up in your feeds? That regularly shows up in my feeds? Probably just all the political content on X is pretty embarrassing. It is embarrassing. It's an embarrassing country right now. What can you teach me to do in two minutes or less?

1:41You don't actually have to teach me anything, but you need to commit that you could do it if you had to. Pretty good at like sort of pretty simple card tricks. So I could teach you a card trick to impress your friends. Oh, I like that. I like impressing people. Fiction or nonfiction? I tend to read more nonfiction, but I'm happier when I'm reading fiction. So I try and force myself to read fiction. And just the sort of trashier, the better. All right. Trashy fiction. What do your haters say about you? Oh, God. I mean, people talk about neo-Nazis surprisingly a lot with me because we either kick or don't kick them off our platform.

2:17And so I think that I am responsible for all the bad things that appear somewhere on the internet. Inbox zero or inbox chaos? Zero. Love it. Same. Okay, let's jump into it. Are you ready? I am. Those are fun wind sprints. Thank you. I enjoyed it more than high school. We do our best. Now, I love to ask people a little bit about where they came from, how they got to where they are. Yep. I'm going to ask you a little bit about that before we really get into what's going on with Cloudflare right now because you guys have been in the news a lot in the last few months. Yeah, the original name of Cloudflare was the only thing worse than Cloudflare because cl and flaw are really hard for English speakers to say, but we were almost like Barbara Walter's nightmare.

3:01We were going to be Project Web Wall. Project Web Wall. Yes, that is Barbara Walter's worst nightmare and probably mine too. If you're listening to this, just know it's been edited because I had to say Cloudflare like 19 times just now to actually get the name right out loud. But let's go back to where it started. Park City, Utah, where you grew up, you got your first computer. My understanding is you were seven. So were you always drawn to technology as like a little teeny tiny toddler? Or was that sort of a lucky accident as far as gifts go? Like, was that a pivotal moment for you or you just happened to get a computer when you were seven?

3:38You know, I got it from my grandmother who was just surprisingly with it. And Apple had just released the Apple II. And there wasn't a ton of access to technology in the way that the kids have it today. So I think that we always had a way of picking in our household whatever the technology that wouldn't work. So everyone else had an Atari. We had an Intellivision. Everyone else had a VHS player. We had a Betamax player. But the computer was really the first time that I really dove in. And I was like a duck to water. I just, I loved it. Now, you majored in English and you minored in computer science back in the day.

4:16Then you went to law school. What did you think you would end up doing if you look back at like 20, 21-year-old Matthew? What did that guy think he was going to be doing? I thought I was going to be the in-house counsel for some cool tech company. Oh, I like that. You know, I was good at computers. As a kid, the University of Utah had this incredible computer science program, and they did these continuing education courses. and my mom would sign up and then I'd do all the homework basically. And so by the time I got to college, I thought I was going to study computer science, but I took computer science 101 and I was so bored.

4:52And I was like, there's nothing, there's nothing, you know, the arrogant, you know, 17, 18 year old me. It's like, there's nothing I can learn from this. And so I switched my major to English literature. And this is like 92 to 96, right as the internet was taking off. And I knew enough about it that I got hired on to be one of the student network administrators on our campus and help build what was one of the first thousand websites, actually Wired, when Wired didn't even have their own website, awarded us some award. And the award was a Sun workstation. We had no idea what to do with it. So we just stood in the corner and acted as a space heater.

5:30And I felt like I was sort of there, but I was also kind of burned out from the whole thing. We started this online magazine and and the browsers at the time were were so flaky that like if you're a college kid like what you why you write for the online magazine why you write for the newspaper why you write for anything is like to impress the girl that you like down the down the hall or whatever right and no one on campus could actually get the browser to work and i remember getting an email from someone in japan that um it was like i love what you're writing please write more and i was like, why do I care if somebody in Japan is reading this?

6:10And I just, I was so myopic. I wrote my college thesis on why the internet was a fad. Yeah, it was just pretty embarrassing. Had some sort of things that I predicted that search engines were going to become political, like that there would be a conservative one and a liberal one. And I'm still actually quite amazed that that hasn't happened. But when I got to the end, I was pretty good at standardized tests. So I took the LSAT, didn't know how to really get a job. So, um, you know, applying to, to law school and I went to law school and in 96 being like, eh, this internet thing is a fad. And then somewhere between, I took a year off to basically goof around and be a, be a ski instructor.

6:49Um, and by the time, like I actually got to the first day of class, um, I realized two things. One, the internet was going to be kind of a big deal. And then the second thing was that, you know, within about three days of law school, I was like, I'm not sure I'm not sure I'm cut out for and um I finally found a type of law that I thought was really interesting which was securities law basically taking companies public and spent the summer of 99 working at a law firm in San Francisco I worked on six IPOs in one summer because it was total dot-com boom yeah and I was like this is really fun and what I'll do is I'll go I'll do this for five years I'll find a company that's really great I'll help them you know get ready for their payo.

7:33They'll hire me as their counsel. And then went back to school thinking that was what was going to happen in March of 2000, the internet bubble burst. And the law firm called and said, hey, you know, good news, bad news. Good news, you still have a job. Bad news, we don't need any more securities lawyers. But bankruptcy is basically the same thing. And we think you'd be cool. And I just didn't want to do that. So I was, you know, crying in my beer with uh there's a young law professor named doug lickman and and he's like hey my brother is starting a b2b what we call it sass company today although we did at the time um in the insurance industry which i knew nothing about would you be interested they'll match your your salary and give you this thing called stock and so i i was like yeah that sounds better than being a bankruptcy attorney and so i did that uh and it was a disaster like we we raised like $6 million we burned through it in like 18 months.

8:28We never got product market fit, made every possible mistake. But in the process of doing that, it was just like, it's so much fun to, with a group of people, take something from, you know, an idea on a piece of paper to, in this case, a magnificent failure, but, you know, an honorable one. And I was just hooked. Man, that is a journey. And it brings us, we're going to fast forward through a few years worth of worth of journey there but there's been a lot written about cloud flares origins but just so that people have a basic understanding when if you're listening to this you're not super familiar with the company how would you describe sort of the the company's original mission sort of when it was founded and and how has that evolved over time yeah so i was super lost like i was i was working as a bartender i was doing like lsat prep stuff and and all kinds of things and somewhat to run away from the sort of familial obligation of taking over my my father's restaurant business I applied to business school and that's where I met my co-founder Michelle.

9:29And what we saw back in sort of 2009 was that all of the world of software was moving to the cloud. All the world of sort of servers were moving to the cloud. And so inevitably that would mean that all of sort of the security and networking tools, the firewalls of the world would move to the cloud. And so the original idea of Cloudflare was how can you take a firewall and put it in the cloud? And the problem that we had was we knew that in order to be a successful business, we'd eventually have to sell to really big banks and healthcare companies and governments and things like that. But in order to do that, we had to have something that was valuable.

10:10In order to generate something that was valuable, we actually had to have data. and so being plucky business students we thought well what if we made a sort of stripped down light version of the service and gave it away for free and that would allow us to gather a bunch of data that would be valuable for the firewall for the you know big banks and things like that and at some of the whole story of cloudflare is if you do take a firewall in the cloud and make it free you create so many different problems and in the process of solving all of those problems you can build what Cloudflare is today, which is more than just a firewall on the cloud.

10:46Tell me and everyone else sort of how you describe the company today. And then I want to sort of jump into why you've been in the news so much recently. Yeah, I think if I'm at a dinner party and you come up and ask me, you know, what do you do? And I say, well, for Cloudflare, and then they say, what does Cloudflare do? And I don't really want to talk to you much more. I say, you know, Cloudflare makes the internet faster and protects it from bad guys. and everyone's response to that is, oh, that's really nice. And then they walk away. Yeah, they're like, oh, sounds great. Yeah. Yeah, thank you for doing that.

11:15And then, you know, if I want to sort of actually engage with someone, what I would say is, you know, when we wrote all the protocols for the internet in the 60s, 70s, and 80s, we had no idea what the internet was going to become. You know, if you go back and read the original proposal for DNS or BGP or these fundamental kind of technology of the internet, like there's a section often on security that says this section is intentionally left blank, right? And so no one has actually done the work to do that. And that's true in security. It's true in reliability. It's true in performance. And so now that we know how important this is, how do we go back and redesign all of those fundamental things about the internet?

11:57That's what motivates everyone at Cloudflare. That's what defines our roadmap. And so when we say we're trying to help build a better internet, that's literally what we try and do every single day. And so let's talk about that better internet in the context of AI. And a few months ago, your company made major news, especially to people, I would say, working in media, people sort of in the creator class around what you are doing with AI bots and their ability to scrape websites with impunity, right? which has essentially been going on more or less for the last several years. That's how a lot of these AI models are trained in the first place, right, is that they scrape the internet, they pull whatever content they want, whatever content they can access, they use that to train LLMs, etc.

12:45Your company has now made a major stand to essentially stop that from happening without any financial incentives for the creators of that content. Huge deal, huge deal for my parent company, Condé Nast. Tell us a little bit about where that idea came from. Why now? And talk to us about how that actually works in practice. Yeah, so my co-founder, Michelle, hates history lessons. I, on the other hand, am a recovering adjunct law professor, so I love lessons. And so I think to understand this, let's just talk about the history of the internet, where we've been, where we are, where we're going, and what the opportunities are and what the challenges are.

13:29So the first thing is that there has, you know, there's this sort of mistaken belief that the web has been free. The web has never been free. Somebody has always paid for the web because journalists like yourself and, you know, other folks, Condé Nast, other folks at, you know, all of the different media companies, like they deserve to eat. And just like the rest of us, you know, if you go to a restaurant, they kind of want you to pay your bill. And so somehow there has to be money that goes back to the people that are creating, whether it's news or entertainment or anything else. And for the last 25 years, the great patron of the Internet has been Google.

14:12they created this incredible tool to let you search for things and then it gives you a treasure map and you can click on the links in that treasure map and that will take you to content that you know either content asked or dot dash meredith or you know whoever it is and you find what it is that you're looking for and the key wasn't just the search engine the key was also that that traffic that their treasure maps generated, they then provided the tools in order to turn that traffic into revenue, into dollars that you could then pay contact creators with. So with things like DoubleClick, that's a really amazing thing.

14:56It has, at the same time, had some perverse effects that are out there where the traffic has never been the best measure of quality in any kind of objective sense. And you had a bunch of publications and like I love Ben Smith that, you know, started BuzzFeed and things, but like BuzzFeed literally would A, B test headlines to figure out which ones generated the largest cortisol response, the largest stress response. Because the sort of baiting you into clicking things, regardless of what the quality of the actual content was, was kind of the game that Google helped define. And again, I think Google has been a massive force of good in the world.

15:34The internet would not exist in the form that it is right now without Google's patronage. But that same sort of traffic is all we care about is what led to Facebook, which was what led to TikTok. And again, we've kind of spiraled down the sort of attention economy hole where I think all of us feel a little bit like wistful for the internet of old, right? Yes, absolutely. Wouldn't it be great if we could get back to that? So that's That's kind of where we are today in terms of the content side. And what's been happening, though, is that the entire industry has moved now away from search being the dominant interface of the web.

16:19And you can actually see this at Google itself. Responding to pressure, Google now, if you run a search, gives you back basically an answer at the top of the page. It doesn't give you a treasure map. Like you have to dig now for the treasure map, but instead it provides you what they call an AI overview, which has taken a whole bunch of content, which is out there, smashed it together, summarized it in various ways and synthesized it. And to be clear, for 95 % of the people in 95 % of the use cases, that is a better UI for what they're trying to do because they don't really want to follow a treasure map.

16:58They just want to get an answer to their question. And Google is doing that. And Google is just one piece. Like if you look at perplexity, if you look at OpenAI, if you look at Anthropic, they're not search engines, they're answer engines. And the difference is that if you just give someone the answer, then they don't generate traffic. They don't follow those things. And we have the data on how much that has changed. The short answer is that in Google's case, it's about 10 times harder today because of AI overviews to get traffic for the same amount of content than it was back when Google was just 10 blue links and effectively a treasure map.

17:36And I would say, I mean, they have been very resistant to the notion that AI overviews have damaged traffic to publishers. I mean, I think that that is well documented. I think they've been very careful in saying that they're still sending a bunch of clicks to the web, but they've been very imprecise about what parts of the web are benefiting, what parts are hurting. So what we see is that if you're an e-commerce shop, AI reviews haven't hurt you as much because again, people still have to buy the thing. So they're like, okay, which digital camera is the best digital camera to buy? And they get an AI overview that answers that and that they still then have to go buy the digital camera.

18:16So they still go to, you know, one of the digital camera sellers that's out there, but they're not reading Wired's description directly of what digital camera is the best. Instead, the AI overview, Google or Anthropic or Plexi or APN.AI, any of them, has slurped up the Wired review, smashed that together, used that sort of knowledge in order to create that. And so while I think that it is true, and if you read what Google has said, I think it's true that they are still sending traffic to the web, the word that I would push back on is you saying that they haven't heard publishers. I think they very much know that for things that are just purely information-based, the traffic to those things is just falling off of a cliff.

19:03And third-party data is all confirmed exactly what we see as well. But again, they couldn't generate that AI overview if they hadn't slurped up the data from Wired and Ars Technica and all the different companies that are out there that are actually doing the work to review the cameras. Well, and you know, I'm still waiting for my check from Google. So when is that coming? Well, Google does send you a check, but they only send you a check personally, maybe, but they only send you a check if a human has followed a link and then there's an ad that double click serves and then they and so so google is still supporting the ecosystem but that support is declining declining declining right as we shift from search engines to answer engines yeah and so regardless of cloudflare regardless of anything else the future is going to look different than the past and i think that there are three possible outcomes the most nihilistic of all is you starve to death and die.

20:08I personally and other journalists like me. And all the other journalists that are out there. And not just journalists, academics, researchers, that whole group. I mean, maybe this is the best answer to your earlier question of what's the most embarrassing thing that I get in my feeds. It is terrifying to me how many people out there in sort of the AI maximalist camp are like, why do we need journalists anymore? We have drones. And I'm kind of like, you really have no earthly idea. Like, what good journalism is. And I think that that's like, I don't think we need necessarily journalists to be covering like sports.

20:45I mean, we haven't for a long time. Like it's just, here's what happened. Sure, the facts, you can do that. But the real color of someone saying, hey, your house just was swept away in the flood. How are you, you know, how are you dealing with that? Like it's gonna, that really is an incredibly important thing. I mean, the reporting, the storytelling, the investigative work. I mean, it's, it's, it is human-led work. It is fundamentally human-led work. And so it would be like the nihilistic version is awful and I think unlikely to happen. The second possibility, which I think is frighteningly likely to happen, is what I would call sort of the black mirror possibility, which is that journalists and academics and researchers don't go away.

21:28But we don't go back to a time where a lot of people fantasize about sort of the media of the 1980s. We go back to a time of the media of the 1400s, which is the Medici's, right? Where every journalist, every researcher, every academic is employed by one of five big families. But it's not families anymore. It's AI companies. And it's not too crazy to imagine a world where Sam Altman says, you know what? We're just going to stand up our own Associated Press, right? A lot of unemployed journalists out there. We're going to hire them. where the stand-up bureaus all around the world. And if they do that, then Anthropoc has to do it and everyone else has to do it.

22:11And that they're then feeding the machine that's out there. And if that happens, we get back to my college thesis, which is like, there will be a conservative one and there will be a liberal one and there will be a Chinese one and there will be an Indian one. And the Europeans will try to create one and eventually just use the liberal US one. But that's not crazy. but think about how backwards moving that is like the internet has been this great information sort of equalizer democratizer right and in this world all of a sudden you subscribe to one of the five big ai companies and you get their perspective and it's really it's going to be very difficult if it's thousands of dollars a month for your ai subscription you're not going to subscribe to two Very few people will.

23:00And so information in that world gets incredibly siloed, but it's not crazy. And it's actually not that far different from what the AI companies were doing with scale AI. It's sort of just two degrees further from that. But I think that there is a version of the future, the sort of third possibility, which I think is really attractive, where what the AI companies compete on, it's not going to be GPUs. Like, yes, you spend$10 billion a year on GPUs today if you're open AI, but it's silicon. So over time, that will become more and more of a commodity. It's not going to be people, right? Today, there's a shortage of AI researchers, and we see the headlines of, you know, metas paying these crazy pay packages.

23:40But the education markets are pretty efficient, and every university in the world right now is standing up an AI PhD program. And so, like, we're going to have more AI researchers that are out there. The third leg of the stool, the third thing that you need is content. And right now, everyone's getting that content for free. In the future, I think the AI companies look less like science labs and they look more like Netflix, where what differentiates them is do they have access to unique content and that that unique content is something that they'll be willing to pay for. And that's the day in which not only Google, but OpenAI and Perplexity and Anthropic and all the different AI companies, and hopefully there are thousands of them, all of them are sending you a check.

24:27Well, I'm waiting, but Cloudflare is doing something very fundamental in sort of helping to ensure that that third possibility becomes a reality, right? Or you're helping publishers say to these companies, hey, actually, you cannot access this content, right? So tell us a little bit about how that works. Well, okay. So that third possibility is a market. The one thing that every market has in common is scarcity. You can't have a market if there's no scarcity. There's not a market for breathable air because most places there's plenty of breathable air. For now. Yeah, for now. We've talked about a lot of dystopian futures.

25:11We can talk about more if you want. Let's stick with this one. So, but in every market that exists, there has to be scarcity. And the problem that we saw was that our customers who were publishers and the entire publishing industry, they weren't creating scarcity. And for a lot of that was that they didn't have the technical wherewithal to actually identify who the AI scrapers were and block them from coming and taking their content. We're really good at that. Like, that's what we do every day. And, you know, we built these tools to stop like the Chinese hackers or Iranian hackers or Russian hackers or, you know, whoever it was.

25:48But those same tools also identify, oh, by the way, that's the perplexity bot or that's the, you know, ByteDance bot or that's the whatever bot. And we can give publishers the tools to do that. And again, I think that if our mission is to help build a better internet, it made total sense for us to not only build those tools, but then make them available for free to anyone who is creating content online and wants to say, I don't want you to have my content unless there's some exchange of value. And we have to be clear, there's always been an exchange of value. In the search engine world, the exchange of value was you got the search engine got your content in exchange for they sent you traffic and then helped you monetize that traffic.

26:31As the world moves to answer engines, we have to figure out what that new exchange of value is. But step one is creating scarcity. Since you have made this announcement, right, you have sort of created the tools to allow for scarcity. What kind of uptake have you seen in terms of companies taking you up on that offer, right, which is we have these tools, you can have them for free. What's the response been like? on the content creator publisher side has been just extraordinary and everyone from the associate press as if davis and and every publisher in between has come to us and said we've been waiting for someone uh to come along and it's you know the the most common thing as i've talked to the ceos of a publishing house has said i've gone from being just depressed like there's nothing i can do to actually be optimistic.

27:17If you look, like, what's an analogy to this? The music industry, some level is an analogy. The entire music industry, the day before Steve Jobs steps on stage and announces iTunes 99 cents a song, entire music industry is worth$8 billion. Not revenue, market cap, right? Which, you know, it's a big number, but for the influence that it had in the world, you know, it's actually relatively modest. 99 cents a song isn't the business model that ended up winning. It ended up being something that's closer to Spotify. And there's still record sales. There's still other licensing agreements. And again, there's Spotify and Apple Music and Tidal and YouTube and TikTok.