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Josh  
Hi everybody and welcome to [Un]churned. I'm Josh Schachter. I'm the founder and CEO of UpdateAI and the host of [Un]churned. I'm incredibly excited about our episode today. Joining me is Harnish Kanani. Harnish is the Chief Customer Officer at Cloudflare Harnish. Thank you so much for being on the program. Well, thanks, Josh, appreciate the time to speak with you and the audience. So a little bit about Cloudflare when I google Cloudflare. This comes up Cloudflare Incorporated, is an American content delivery network and DDoS mitigation company founded in 2009, it primarily acts as a reverse proxy between websites visitor in the cloud for your customers hosting provider, it's headquartered in SF, break that down for all of our listeners, we all you know, many of us in this industry, of course, know Cloudflare help us kind of lame Annise it a little bit, exactly what you guys do, Josh CloudFlare, actually, it was was set up around 12 years ago. And we've actually come a long ways from our launch of the company, we are quite a large player in what we call the networking in the security space, we have millions of customers over the time, we've been fortunate enough to serve a very large customer base around the world. And we have one mission, our mission is to make the internet better for everyone, whether you're, you know journalistic website, or whether you're election website, or you're an enterprise looking to secure your networking properties, we are the solution, we have a platform. And we serve millions of customers using this platform. So over the last 12 years, we've again grown quite a bit, we play a very important role in many different areas, a lot of it in the networking and security space. But we've been fortunate enough to serve a very large market with one goal in mind, which is to improve improve the internet for everyone. That's an ambitious goal. Approving improving the internet. I like that shoot for lofty goals, right. And you do serve a large market, you serve 4.2 million customers, over 150,000 paying customers, your group specifically serves 8500 Plus enterprises that are within your existing customer set. You oversee all of post sales except support. You've got 200 CSMs, and you're serving over a billion dollars in ARR. Did I get all that correct? All of that is true. I mean, it's those numbers are monstrous, monumental. And this is gonna be great conversation because I really want to learn about how how operations run at that at that size and scalp before we go straight into that. I want to work backwards a little bit and get to learn a little bit more about her niche as a person because we call this this this podcast on insurance. We want to get raw, authentic learn about you. Because you are an inspiration. You've built your career in such a tremendous way. And so we you know, others can take out of that. Where were you born? And where do you live now?

Harnish
I was born in Mumbai, India, and many years ago, and I'm based out of the bay area since around 2000. So 23 years locally, what what brought you over from Mumbai to the United States. So I started my career back in the mid 80s. And I have since then, from the beginning spent a large portion of my time just serving enterprise customers. So a lot of my first few years back in the day verse were with a large organization called Tatas, and we were a management consulting firm and a technical consulting firm. And from day one back in that time, all I've done is, in the initial days, I build code, I was a programmer for around eight years. And then as I grew through my career, I began to serve large and small customers in a consulting fashion. And then around 2000, I decided that I actually, instead of being a consultant, on the other side of the table, I actually wanted to be inside of a company and serve the same customers in a post sales fashion. So all of my last 30 plus years have been dedicated to serving large and small enterprise customers, I get it consulting is an amazing place to learn. But at some point you get you get that itch to go out there and execute on those operations yourself. What's something that you've got 200 people working for you wield a lot of influence? What's something that a lot of those people would be surprised perhaps, to learn about? Yeah. So look, I, you know, in the culture that I'm building here, as well as what I built in the prior companies, one of the biggest things that works for me, is to wake up every day and be ready to serve the customer. If you don't wake up every morning to serve your customer. Or if at night, when you go to bed. If you aren't fulfilled by serving customers or focusing on their success, then it's around job for you. So So what works for me is to wake up every morning and say, hey, look, what do I need to do to serve my customers in many different aspects? So as you think about how What would surprise my team, if they ever found me, misrepresenting ourselves, then that would surprise them because that's not the culture we are building or I would ever want to build. What would surprise them is if we were we were constantly working with our customers to you know,

Harnish  
cover up for any product gaps or delivery gaps. That's not the culture we are building. So a lot of the people that I work with are the people that I've hired or trained or coached or mentored, they are driven to delivering success on a day in and day out basis. And that's the team I partner with. That's the team I'm proud of.

Josh  
Let's talk about customer success. So, you know, there's, there's several models out there for how you take a new customer, and account that you deal with enterprise accounts, and transition that account into the post sales space. I want to learn about how that works at Cloudflare. You know, who was really at the center quarterbacking, this journey and how that transition takes place?

Harnish
Yeah, that's a good question, Josh. You know, as we've embraced the model here at CloudFlare, one of the important lessons for us that we've learned is how do you continue the relationship that an account executive or a solution engineer establishes, at the first instance, when you meet with a prospect? How can we continue that relationship through the journey so like you rightly said, there are several models in the industry around how an enterprise account gets transitioned to a poor sales team, the way the better way to look at this is from an outside perspective, and to look at this from a customer experience perspective, I believe we should look at this through the lens of the customer to make sure that they have an awesome experience with how they see the company, the value that they are deriving from our solutions, and the experience they're receiving from the company, again, at Cloudflare. We have chosen to look at this from a customer's perspective. And we have tailored our service aligned with the journey they have with us, starting with the account executive and the solution engineer who touches our customers for us, we've decided that the account executive is the right quarterback on the account, so that the initial relationship the customer has, stays long term and stays throughout.

Josh 
So that account executive stays with you. They're there, obviously before the sale is converted, and then they're there for indefinitely through the relation through the life of the relationship. Yeah.

Harnish
And as the customer success team, and the support team gets introduced to the customer during that initial engagement with the prospect, we want to make sure that those relationships are additive and incremental to the relationship that the AE and the SC already have established you. And I know that along the journey of the customer delivery more and more folks who interact with the customer, product team talks to the customer, we have product managers who talk to the customer, we have solution architects, we have sales specialists. But we have decided to clarify that those relationships continue to enhance the partnership further, but it's always important to let the AE be the quarterback on the account. So that the customer has a unified experience all the way from the prospecting stages, all the way to the journey with us. Is there any

Josh  
particular way that you introduce these these new functions that come in and interact with the customer? Because it can be overwhelming? For sure. Right? As a new customer, let me introduce you to SO and SO SO and SO SO and SO, is there any particular practice that you guys have taken up to demonstrate the most value in those new functions that are being introduced?

Harnish 
So very, very early in the entire sales cycle, as you know, think about a customer's experience as they begin to validate if their problem or this use cases are served by the cloud first solutions are platform, the aiac take that first big step and in explaining the value and invalidating the use case is fulfilled by our solutions. As the customer is getting closer to contracting with us. They have questions which typically include hey, look, how do I onboard myself now cloud fair knowing we serve millions of customers, a large portion of our solutions are actually can be self onboarded. But for the customers in enterprise level, they their businesses are complex, they need more guidance, some a lot of people choose one on one hand holding. So before a contract gets signed, we typically get introduced V as in the customer success team gets introduced to the customer during that time, say hello, let me make sure you feel comfortable with the team that is going to get you on board or implemented. And here's our initial varnishes team that is being introduced to you. We also at the same time introduce our support folks, because they are going to be our 24 by seven support organization that is around our world. So in the before you even sign the contract, a lot of these relationships are put in place. And the account executive reaffirms the fact that hey, I'm going to be a quarterback. But I'm going to bring time and again different specialists from the organization to serve your business needs. So we do get introduced before even the contract gets signed.

Josh
So it's not just all dumped on them. As soon as the contract data you don't overwhelm them. you layer it staggered in a meaningful way.

Harnish  
Yeah, a lot of the times while then the contract is signed, we want to be in a place where they've had the initial introduction they are exposed to the value we bring the understanding they're buying a premium success offering they understand the value that they are deriving why would they pay for such an experience? A lot of that is actually done somewhat before the contract gets signed.

JOsh
There's a lot of conversation amongst CS leaders around segmentation. I'd like to know how Cloudflare segments, their customers, how do you go about that?

Harnish
You know, I think segmenting a customer base is a good industry best practice. And each of the organization or each company actually has to determine, you know, how a customer gets? How do we serve them? What is the propensity of the customer to buy? What are the complexity of their business needs? How soon is the customer willing to adopt your solution, or how aggravated is the problem that they are trying to solve? So there are there are a certain number of what I would say, levers that we use to decide what's the right level of service, I'll, I'll give you three or four just to begin the conversation. And feel that the I feel that the most important decision for a CCO or a head of success in an organization is how to use a defined set of resources that are given to that customer success officer to to deliver the goods to to all of their customers. So here's what we look at number one, we look at the needs and complexity of the customers business. You know, it's the first thing that's top of mind for me, or any head of success is the needs of the customer, what which customer needs, which customer needs, what service, what service is appropriate for the customer. For example, Josh, I'll tell you that different size, customers need different levels of service. So when a customer's business is more complex, or they're trying to derive value from our solutions that are that have complexity where they have multiple lines of businesses, or they are using, in today's world, multiple VPN tunnels, and they're trying to replace that connection, we have to first and my first dimension is what is the need, how urgent it is, how is the complexity of their business, so that I can obviously deliver the service that is appropriate for them that they have, obviously signed us up for a second. And third is the size of the company and the vertical, which they are in, for example, if you look at a cloud native company, they tend to be a lot more technologically savvy, and they most times have resources that understand the complexity of implementing a security solution or networking solution. And our service level with them is slightly different because they are well educated. On the flip side, if you look at a consumer packaged goods industry, well, their job is not that their job, their job is to go sell consumer packaged goods products. But they don't necessarily have all the IT resources or security or networking resources, our service level to them is slightly different because they don't have the readiness. How do you how do you vet that out? Initially, it's a lot of the discovery call, Josh that we're having with the customer. So when somebody is about to let's say, as an example, implement a zero trust strategy, zero trust is a state of business. And so there's a bunch of solutions that deliver that zero trust, in my discovery call, or my team's discovery, really ask the customer say, hey, look, here are five things that get you to a zero trusted? How prepared is your team? Can I really talk to some of your engineers who we can work with. And through the discovery process, we assess the level of the competency, and then we actually have to agree on the speed with which they want to adopt the solution. We have obviously many tools in our bag that include workshop based engagement model at the high end, or remote guidance at the low end. So a lot of the service level. Back to your question, Josh, a lot of the, for that particular segment, what's the right level of service is an art. We go through a discovery process to make sure that the customer feels comfortable. And we can align with their speed and timing. As we bring them on board onto our solutions makes sense. I'll say one more couple of more things. So I present a lot of the customer point of view, starting from the needs, the size, the vertical, the speed, the readiness of the teams, from a company perspective, which is a vendor perspective, or the solution provider, we also have to look at some of what we are trying to accomplish. And so I call that company strategy, you know, are you trying to win a large market? Are you newer in the market? Do you need more referenceable customers? How do you build a reference ability with your initial customers, if you're a startup, we also look at market conditions. So knowing that in this tougher market when the economy market is tough, I expect that my customers won't have the resources they need or they might be short on their staff. And so we help them with a higher level of service because I know they are in a tougher market. So again, more of an art than science, but we are very sensitive to a customer's needs and want to align our service level to what they want and the speed with which they want to move.

Josh 
I counted seven or eight differently. vers levers that you pull. So the needs in the complexity of the customer and their business, what they what they want, of course, something that you captured during during your discovery, the size of the company makes a difference for sure. The vertical you mentioned, you talked about vertical, but I don't think it was necessarily like automotive versus FinTech versus healthcare. Right? It was more vertical. To me, it sounded more like it was generally like how tech savvy of a company are that? Is that Is that correct? Yeah.

Unknown Speaker  
Yeah, demean that.

Josh 
Yep. And then the readiness of the company to spend and execute the readiness of their of their team to get going into the product in their competency, their their propensity to buy, how much they want to spend, of course, is going to influence the resources and the investment that you put behind them. The strategy basically, which kind of goes hand in hand with their propensity to buy? And then their market conditions, everything, all the externalities around them? That's a lot. Did I did I get that right? More or less?

Harnish  
Yeah, I would say so. I, you know, and, and the premise behind all this is when you are in the market, public or private company, the customer success team has a certain pool of resources, whether it's funds or people. And so you really want to decide for yourself, how do I take this finite set of people or pool of money to service all of our customers, but with the right levels? And that causes you to segment them and agree on the service level? But but you're right about the seven or eight parameters I spoke,

Josh 
I mean, this is this is this is SimCity. For adults, right? You've got a pool of money, and you have to play around with it to develop the overall the best community. So do you like what are the actual tools, the tools that you use to do this your Is it a team that you have behind you? Is there a certain kind of modeling that you

Harnish
guys have created? So we do this, we do this twice a year, Josh, obviously coming into the year as we approach our finance team and our CFO for a certain amount of funds in the subsequent year. Obviously, you do this analysis at the beginning of the year, whatever your financial year is, and then we DO RE assess six months into the year because you know that there's a there's a lot of time in that six months and a lot of things change economies, people's needs, market conditions. And so we do this twice a year, we reassess what we want to go to market with in terms of our service levels, we run surveys along the way. We are pulling our customers, we are looking at how they see our service level. And then in six months, we are reassessing, hey, what levers do we need to tweak or adjust. But that's working for us as a price level.

Josh 
So it's a constant data collapse collection, I assume it's quantitative and qualitative. I mean, you said their surveys, but then obviously, like the metrics of their usage, and all that sort of thing. So it's, it's a combination of quant and qual that you're continuously capturing. And you have a process and a playbook in place from your frontline teams to do that. And then like you said, semi annually, you're going through each of the major accounts and you're reviewing based on those inputs, where should they be and what level of service should you deliver? And so it's kind of that dynamic, semiannual adjustment is that that's correct. Paraphrase. Yeah, absolutely. Wonderful. So on this topic of budget, how do you work with the CFO of Cloudflare to forecast and get budget?

Harnish
Look, I must say this, you know, this is actually one of the most current focus areas for many different CXOs. You know, I was I was at a conference around for six weeks here, ago, and this was one of our biggest topics. So But in talking with peers across our industry, we see and in the lack of clarity we have around the economy in in 2023. It's really making it difficult for people like myself or my peers in the industry, on how to really forecast growth in in the revenues for 2023. And as a result of which it's really difficult for CS organizations to go request a sizable budget from their finance organizations. Because there isn't much clarity, there's a there's a lack of, there's a lack of clarity for sure. But there's uncertainty around business growth, not just for cloudfare or any of our competitors, just in the industry in general. So look, I There are three types of organization and how how they look at the CES related budgets, I'll give you you know, three different types of companies. So number one is if you're an organization, temporary or startup, you look at the cost of CSS something that is necessary to develop your business and build a set of referenceable customers to help propagate the company and the company's product. So think about the first type of organization are startups and they obviously look at the cost of CSS and investment to making sure they their solutions are accepted in the market and they have a good success rate. A second type of organization wants who wants to invest in the CSD and function while making sure the cost of CS does not bleed or dilute the subscription gross margin. So think about the public company who has a finite set of resources based on the margin you're trying to hit in the market. These organizations try and strike a balance between how much they can afford to invest, to meaningfully grow the referenceable customers, while also making sure it does not negatively impact the gross margin that they are reporting into Wall Street. So that's the second type. The last type of organization Josh's is highly mature companies. These are large established players in the market who have built sizable market presence, and they are relying on their customers to request the services were essential. And were needed. These are organizations who have built value added services that customers want to purchase, but and that allows the company to charge premium rates. And that helps prevent the dilution of the subscription margin, or where the size of revenue is included separate from subscription revenue model. So think about these being several billion dollars in size, they offer services, they charge a premium, I would, the name that comes to mind is Salesforce today, they are a premium organization that can charge for every services. So back to your question. Depending on the type and size of organization you are, and whether you're a public or private, it makes it either easier or tougher to request budgets from your CFO. At cloud. Obviously, you asked about how I how we look at this. at Cloudera, we focused on building our solutions and platform in a way that is self onboarding. As you know, we have millions of customers, and a large portion of this customers who are not paying us and who are served by us for free. They're simply they are self onboard, our solutions are self ordered on variable, we provide a lot of what's called self onboarding materials, artifacts, links, where customers feel comfortable. The only what I would say is a large portion is that customer base, the enterprise customers that you mentioned at the beginning of the call around 1500. Plus, they, they could actually use the cell phone, whatever techniques, but they reach out for our services more because their businesses are complex, or they are trying to attain a zero trust state over a number of months or quarters. That's the type of people who actually come to us and say hello, We'd like some best practices from Cloudflare. And that's where my team gets involved.

Josh
And just a little bit of industry jargon, I'm sorry, what is zero trust state in your world.

Harnish 
So, you know, as COVID has come in over the last two or three years, and people have people have gotten accustomed to working in that environment, a lot of us no longer going to the office, we are remote. And so we dial in from our home and our home networks and our home offices. And what has happened over the last three or four years is there's been a lot of now dependency on people dialing from home. So the older ways of connecting your home office to your corporate servers no longer works, if you remember the term VPN or virtual private network, that was a lot of what happened. And that's what we use many, many years ago. Well, none of those are secure. And so the world is getting a lot more complex security is becoming a real challenge for a large portion of the companies. And so the concept of zero trust defines how you can attain that, how you can attain that state for a company where you basically trust no one. And so you have to secure your networks, your connectivity, your connections from your home office to the corporate server in a way that you don't know who's logging in? Or who's dialing in or who's connecting in trust no one and that zero trust with that zero trust it basically, how do you how do you let your employees connect your partners connect in a way that the connection is extremely secure, and you're not attacked or or under breach by anyone. So we don't trust you the state that a company is striving to attend. And for that to happen, you have to make some changes in your networking and your security solutions.

JOsh 
You seem like such a friendly and warm person on insha. Allah, I'm shocked to hear that you trust nobody. A joke. So the last question that that I want to go on to is around a concept that I've heard more and more about lately, was actually advocated by Jeffrey Moore months ago at Gainsight pulse conference, and we had him on the on the show, and he was talking more about this as well, but customer maturity and the customer maturity model. What does that look like? First of all, what is the customer maturity model? And what does it look like a Cloudflare.

Harnish
Judge again, hats off to Geoffrey Moore. But the conversation in the market for the last many years for customer success in general is how do you assess the value that a customer is deriving from your solution? When somebody spends a million bucks? It is my job to constantly communicate back to the customer have the value that they are deriving and what could I do to enhance that value? And so many, many companies many, many CCOs like myself have struggled to build A compelling model that allows me to very clearly and succinctly clearly communicate the value we deliver to the customer. This allows the customer as well to hear from us on a regular basis to take it back to their boards, or their board of directors or the CEO say, look, here's the value we are deriving. So, you know, at Cloud fair, Josh, we believe in working with our enterprise customers as partners in business. And in this relationship with our customers, it's extremely important for us to share that value we are delivering. So one of those tools we specifically designed for this purpose is what we call Customer Maturity Model CMM. For sure, the goal of this model, Josh, is to clearly communicate to a customer number one, how are they using our platform? Number two, where are the more opportunities for them to gain additional ROI? Number three, what does it take to be the best in class? And lastly, how do they compare to the rest of their peer group? Not only that, our our sales team is actually able to work with these individual customers to help them attain the best in class, with each product within our platform. So a simple view of this Josh's if I if you are my customer, and I came onto a call with you answer Hello, you scored a really good 76 on a score of 100. Feel proud about yourself, because you you're a you're a great customer, you're leveraging our solutions, and you scored a certain number on a scale of 100. And your next question to me is, are we well, I did score 76. That's good news. But what are my peers doing? And if I would ever tell you say, Hey, your peers scored at 86. Your first question to me is, well, how can I not only get to 86? But what does it take to get 200? Totally, this dialogue is very important, Josh, between us and our customers saying, Look, my job is to get you 200 My job is to create an adaption roadmap that takes you from zero to 100, depending on your speed, and how fast you want to work with us to get you 200 Because that's my job, that's where I'm gonna feel good, and you're gonna feel good. So the models that we developed at Cloudflare in the CMM, or customer maturity model, we use meta data from our entire customer base of millions of customers with industry trends. And and those these trends are aligned with what is called a sassy framework from Gartner. How do you

Josh
what sorry, the sassy framework is that like, like, attitude set? Like, how do you spell sassy framework just

Josh 
for people that want to

Harnish 
spend as S A SE? You know, it's a framework that Gartner who's a leading analysts presented the market to look at networking and security solutions. So obviously, Google our sa SC framework from Gartner. And what we've done, Josh is as customers are embracing our security and networking solutions, we look at the reuse of our solutions, we actually rank them from around five different levels, you know, are you a basic user of this particular solution? Are you an advanced user? Are you a best in class, and we talked to this is a dialogue with the customer say, hey, look, here's how you fared across these five different levels. And here's how your peer group fared. And my job or my customer success teams job is to get you to the best in class. So let's go work on some items from your own. We call them playbooks are run books, and it takes them from point A to point B. That's the job of the CS team. That's what we do day in and day out to make sure the customer is elevated from the lowest levels of use, to best in class for each of the solutions that they buy from us.

Josh 
Wonderful. Harnish. You've given us so much depth into an insight into the processes and your strategies at Cloudflare. I wish you nothing but the very most success heading into 2023 and I want to thank you so much for being on our episode.

Harnish
Thanks, Josh. I really appreciate the opportunity to speak to you as well as to our larger audience.