Don't Take VC Funding – It Will Destroy Your Company

It actually builds a worse internet. One that is closed to the exchange of information and services. One in which Cloudflare, an entity that allegedly helps build a better internet, would not even exist.

You know full well, that if all domain registrars had prevented nameserver changes to Cloudflare, that Cloudflare would not exist. In this context, you could forgive a skeptic for suggesting that "building a better internet" is just empty corporate speak.

Let's now consider the business case for domain registration. You mention that it is at cost as far as ICANN fees and registry fees are concerned. But you incur payment processing fees and customer support fees that would place an undue business burden that would generate a loss.

For payment processing fees, let's assume one to two percent. Cloudflare domain registration for the dot com registry including ICANN fee currently stands at $9.15.

One percent is $0.0915 or let's just say a dime. Two percent is $0.183 or let's just say a quarter. Registrants would surely not mind paying an extra dime or quarter to cover payment processing costs. Heck, you could just round it up to an even $10.

If your intention is indeed lead generation for your other services, it would actually make even more business sense to have this slightly higher price as a lead qualifier. Do you think a potential customer that is price sensitive for a few cents on domain registration is likely to purchase your other services?

As for customer support, if the user changes the nameservers to another provider, by definition, that user will have to get support for dns records and all other issues from that provider. In other words, there would not be much custom to support.

So, if payment processing and customer support are your key arguments against blocking nameserver changes, respectfully, they are tangential and inconsequential. If there are some more relevant and consequential arguments for blocking nameserver changes, out of curiosity, please share those with us. Thanks.

Still, many of those companies try to become cashflow positive (especially right now). Which means they earn more than they spent, but they invest a lot in their expansion (and as soon as they stop it they could show instant profit).

Ultimately, a very small share of companies ever raise VC funding.

It's completely OK to bootstrap your project, focus on the revenue and profitability from day one. But it's also difficult, especially you're building some kind of a SaaS product in a competitive space. Not everyone can be Basecamp (which started a long time ago and built an enormous marketing operation to get "free" leads).

I've seen this from the inside, I liked the company a lot but I'd never suspect it'd become the most obvious success for us.