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Saturday Morning Breakfast Cereal - Teach a Man to Fish

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In economics, they're robots. In political economy, they're all jerks. In sociology, they're all misunderstood.

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silviapfeiffer
447 days ago
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Teach all the women how to fish and how not to overfish and you will never go hungry again
Sydney, Australia
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pmac
448 days ago
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HAHA... awwww
Atlanta, GA

Best Seed Pitch Ever

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I read yesterday evening that our portfolio company Twilio, which priced its IPO last night,is going to live code from the NYSE this morning. That brought a powerful flashback to the first time I met Jeff Lawson, founder and CEO of Twilio.

It was 2008 in our old offices on the 14th floor of the building we still work in. My partner Albert, who led our investment in Twilio, Albert had met Jeff and was impressed with him and his vision for Twilio. He asked me if I would meet with him and so I did.

Jeff came into the conference room, sat down, and said “we have taken the entire messy and complex world of telephony and reduced it to five API calls”.

I said “get out of here, that’s impossible.”

Jeff proceeded to reel them off and I said “wow”.

He then pulled out his laptop, fired up an editor, and started live coding an app. He asked me for my cell phone number and within 30 seconds my phone was ringing.

I said “you can stop there. that’s amazing”.

It was, and remains, the best seed pitch I’ve ever gotten. I’ve told him that many times and have told this story many times. I am not sure why it has never made it to this blog. But this morning is a great time for that to happen.

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johnf
506 days ago
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Sydney, New South Wales
silviapfeiffer
507 days ago
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Sydney, Australia
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thoughts on the friendzone

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eriderp-ampora:

wendycorduroy:

when i was 5 years old my best friend was a boy named kyle who didn’t know how to knock on doors so he made dinosaur noises outside my window to wake me up in the summer until i demonstrated how to ball his fists and slam them against my doors.  we collected caterpillars in my trailer park and built them houses while we traded pokemon cards.  he wasn’t the only one.  there was ben, and mitch, and noah—but kyle’s the only one who hurt me, because when he tried to kiss me and i asked him why, he told me “because you’re a girl and i’m a boy, shouldn’t we like each other?”

i missed him so much and i wondered why he couldn’t just be my friend like he always was

in the first grade there was rich and joseph and i got sent to detention with them almost every day with a smile on my face.  we built block towers and sang to my teacher’s lion king soundtracks when she’d turn the lights off during lunch time.  one day they got in a fist fight over me at recess, and i wondered why they felt they needed to share my friendship, like it was something they owned.

in the second grade zach and i played yu gi oh under our desks during free time and i got moved for talking to him constantly.  everyone in the class would tease him and i for talking, asking when we were going to date already, asking him if he’d kissed me, and he stopped being my friend.

when i was 11 i met a chubby boy with the name of a colour who wore puffy vests and unwashed t-shirts, with greasy hair and bright blue eyes and a smile that hid hurt behind it.  people didn’t like him because he was silly, but i liked him, because i was also silly.  he became my friend the day he bought me 5 giant roses and asked me to be his girlfriend, and i politely declined but promised him i’d be his best friend because i’d always wanted a best guy friend that stuck around. we burnt our feet on the concrete during the summer and walked home with the sunset silhouetting us.  he talked often about how he loved me, but never blamed me for being me, even though he refused to move on. that boy dyed his hair jet black and sat on the end of my bed playing songs to me on guitar, and all that pent up rage from before didn’t show until the first time he slapped me across the face and called me a dumb cunt.

in the 7th grade there was a boy named ryan who sat next to me on the bus and talked to me about manga.  he’d ask me personal invasive questions but i didn’t mind because it was attention and i liked attention.  i was dating another guitarist with curly brown hair, one who was much more kind-tempered than the other, and ryan mentioned how much of an asshole he was every day.  i wondered, why, why does he think the love of my life is an asshole?  but whenever i asked him, he just told me, “girls only date assholes.  there’s no room for nice guys like me.”

i wondered, if he was so nice, why did he say such mean things?

he never stopped with me, taking me to movies, hanging out with me, you know.  being friendly.  i thought we were friends.  but then, how many times had i thought that before?

how many times had i bonded with a boy, thought they got me, only for them to ask me if i wanted to make out?

how come when i told ryan i was coming out as a lesbian, he stopped being my friend, and said “damnit, the one girl i really want to pound into a mattress, and she’s only interested in chicks!”

there was a boy my junior year who stayed up all night with me until the sun rose, talking about life, past loves, hopes, dreams.  beneath a million twinkling stars spanning forever, he brushed long brown hair out of his eyes and listened to me talk about the history that made me. then he asked me if i’d ever consider dating a guy, and complained about how he’d never get laid.

when i told him no a couple hundred times, he found new girls to listen to.

i would sit on the couch and play zelda with dakota, and he’d talk about all my favourite games with me.  he was the closest thing to support i had, and the letters and poems he wrote me were always so kind and friendly.  but he’d put his arms around me on the couch, and no matter how many times i told him i was uncomfortable, he’d still come over every day and do it.

“don’t you know how it feels to love someone and not have them love you back?  don’t you know what it feels like to be friendzoned?”

when i meet guys who talk about the friendzone, who talk about the girls who don’t give “nice guys” like them i chance, i always want to just say

when i was 10 years old i met a girl whose brown hair fell across her shoulders and whos eyes sparkled when the sunlight hit them, whose voice was like velvet and whose scent was like mountain smoke, who made me dizzier than a fly climbing a sugar hill.  and i’m 18 years old, and i still love her, and she knows, and she doesn’t love me.

but my first thoughts upon hearing her rejection were not “what a bitch,” were not “she just wants a douchebag and not a nice girl like me!” were not “im going to keep pushing her until she dates me,”

they were

“she is the best friend i have ever had, and i am the best she’s ever had, and i would hate to take that away from her.”

so before you play the victim, mr. Nice Guy, before you angrily throw your fedora on the ground and blame the girl you claim to adore so much:

put yourself in the shoes of a girl who thought she made a wonderful friend, only to find out that he just wanted her for sex.  that he just wanted her for a relationship.  a girl who was just an object to win, a prize.  a girl who’s trust you’ve just shattered.

maybe she friendzoned you.  but you girlfriendzoned her, first.

Even if you don’t read it all, read the last sentence. Then you will understand so much about me and other girls.

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silviapfeiffer
643 days ago
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So true!
Sydney, Australia
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adamcole
642 days ago
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Hey Samuel, the comments on the shares here are why I want a way to block users. Can we make that a thing sometime soon? I don't want to have to follow dukeofwolf just to be able to block him.
Philadelphia, PA, USA
dukeofwulf
641 days ago
Awww Adam, let's be friends! :)
srsly
638 days ago
Seriously though there is no reason to let newsblur turn into reddit, where nobody may have an opinion without prompt backlash from internet strangers. Like if I wanted to hear the opinions of internet strangers who disagreed with me, I would go back to reddit.
cbenard
638 days ago
Don't forget sjk!
notadoctor
643 days ago
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❤️
Oakland, CA
cygnoir
643 days ago
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This.
Portland, OR, USA
dukeofwulf
643 days ago
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Either Wendy has had tons of friends, or she keeps mostly male friends. I wonder why she keeps coming back to get burned?... "but i didn’t mind because it was attention and i liked attention." Ah, I see. Obviously these guys were horrible to her, but apparently expectations were not being set correctly, and communication is a two-way street.
wmorrell
643 days ago
Bullshit. Bulllll. Shiiiiit. You read that and think, "oh, it's her fault"? All these experiences are those of a child, the last friendship mentioned was at the age of 18. She says for each one, "hey, let's be friends". She doesn't say they are her only friends. She just says that these Nice Guys™ subset of friends in her life were shitty to her. All of them were children too; but society taught them that they have to possess girls, that they have to be Nice and they will Get The Girl. It's bullshit, it's wrong, it's bad for the little boys and it's dangerous for the little girls. Now that she's older, I expect she'll see men like you, and steer a wide berth: just another Nice Guy™ blaming women for not setting expectations (read again, she did), for not communicating (ditto), for being oh-so-mean to those poor Nice Guys™.
aranth
643 days ago
Unfortunately guys spring this attitude out of nowhere sometimes- they stealthily "befriend" the girl with a boyfriend, then "wait their turn", maybe sneaking in a "let me know if you're ever single" to "hold their place." Then, when she stays single or dates a different guy, the rage comes. "WTF I deserved this." No miscommunication needed- it's the default assumption for some poor souls who never learned women aren't a service you claim and take a number for.
dukeofwulf
643 days ago
wmorrell, I was pretty clear that none of this was "her fault." Obviously this discussion comes very close to the "blame the victim" rape theory, which is repugnant. But you act like 18 is an age where you still can't pick your friends for yourself. ... No need to address your personal attacks, you're being childish.
dukeofwulf
643 days ago
I want to share this Mexican saying, even though it doesn't serve my argument: "The ax asked the tree for its handle, and the tree complied."
wmorrell
643 days ago
Again, bullshit. «I wonder why she keeps coming back to get burned?» That is calling it her fault for being around terrible people. A child who has not developed the experience to magically tell apart people who will treat her as an object instead of a person. You quote her liking attention from people who enjoy the same things as her (yugioh, anime, etc). As if wanting friends is some horrible failing. Women get to have friends. Your comments make it pretty clear that you are so much better than those other guys, if only Wendy could seeeee.
dukeofwulf
643 days ago
You must be a hit at parties.
notadoctor
641 days ago
You did say it was her fault, that she shared fault. "Communication is a two way street", you said.
dukeofwulf
641 days ago
Not, now we're talking semantics of the word "fault." I'll save us time and just say that's not what I meant.
notadoctor
641 days ago
Okay Sir Troll
rtreborb
639 days ago
I'm with you, dukeofwulf. There are garbage guys out there and it sounds like this lady unfortunately had to experience them. But things aren't always one sided so to point the finger at one gender at every turn without even _thinking_ of looking at the other side of the story is not the right approach. I honestly don't understand why simply asking the question of "what about the other person?" is automatically perceived as an offense of the highest, most vicious form. Somehow, asking a question--to some people, anyway--immediately and irreconcilably means that the asker is senseless, heinous, and wrong to the utmost degree. I think it's a tragedy that honest and open communication can't happen anymore without one party becoming the "attacker" against the "innocent."
notadoctor
639 days ago
rtreborb, you are polarizing something the author didn't polarize. She never says #AllMen. And here in the comments we aren't saying #AllMen. We're saying - some of us from PERSONAL EXPERIENCE - that the girlfriend zone is as real as the "friend zone". And we're salty with dukeofwulf because of comments insinuating that she ends up in the girlfriend zone because she communicates badly. Her essay isn't about all the people, male and female, with whom she has great communication. And as a female myself, I have to tell you - what about the other person is ALL OVER THE INTERNET. This essay was about her, if you want their side check the front page of reddit.
dukeofwulf
639 days ago
borb, appreciate the kind comment, but I'm opting out of this conversation. I'd apparently forgotten the personal attacks (morrell) and close-mindedness (adam) that come with internet discussion. not, I appreciate you hewing to civility.
wmorrell
639 days ago
Who me? Personal attacks? I just called you a Nice Guy. You seem to like being a Nice Guy defending other Nice Guys.
superiphi
644 days ago
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I think I was a bit luckier growing up in Switzerland, where we all hung out in mixed friend groups, and dating was not a thing, and having a gfriend or bfriend was not a status thing...
Idle, Bradford, United Kingdom
kazriko
643 days ago
The only comment I have on this is... Opportunity cost and hierarchy of needs. Having a friend who is a girl is fine, so long as the need of having a girlfriend is already met. Time spent on the former can prevent the latter.
jhamill
645 days ago
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This.
California

Should product managers be in the business of saying yes or saying no?

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product management

The question of whether you're in the business of saying yes or saying no is an interesting one, but it's one you may have never asked. I’d argue it’s one worth pondering.

To give an example of what I mean, Marc Andreessen, co-author of Mosaic, and founder of Netscape and VC firm Andreessen Horowitz, has explicitly stated that he’s in the business of “crushing the hope and dreams of entrepreneurs.” This is due to a16z’s thousands of potential inbound investment deals per year, and the firm only funding between 10 and 20 of them.

When most people think about venture capital, they probably think about funding the hopes and dreams of entrepreneurs, or saying yes, so it’s interesting that Andreessen articulated his job in this way.

Switching the context over to product, or to those designing and ultimately taking a product to market, ask yourself what business you are in - the business of saying yes or the business of saying no?

I recently read a great eBook on Product Management from Intercom, where they go into detail about product evaluation, saying no to new features, what features you should say yes to, and ultimately, how to get those features used regularly by your users.

It was a compelling read, with some great insights and tools or frameworks that can be used regularly by product managers, product owners, founders, or anyone else deeply engrained in managing product.

For me, the value of a product is measured by its efficacy, or rather, how effectively it fulfils the customer's job-to-be-done (JTBD). By that, I simply mean the degree of satisfaction your customers experience each and every time your product enables them to achieve their specific objective (their JTBD).

For context, let’s look at a strange yet highly relevant example - milkshakes. Yes, milkshakes. You may have already seen the video below, but it’s probably worth watching again.

https://www.youtube.com/watch?v=f84LymEs67Y

In this video, Christensen perfectly captures the essence of the customer job with his milkshake example, and offers some great insights into the ways in which the people designing products and services might need to think about fulfilling that job effectively.

People hire products to fulfil a functional or emotional job. They then fire products that aren’t effectively fulfilling that job, particularly when there’s an alternative solution delivering a more valuable experience.

With this in mind, I wanted to look specifically at the role of a product manager. In an early-stage startup, this might be one of the founders, however in certain environments, particularly larger organisations, this will be a specific function and role title.

The primary objective of a product manager is to solve the right problem for the right group of people at the right time. Therefore the product manager is directly responsible for the efficacy of the product. This is also what they should be measured on.

To look at the role in more depth, Josh Elman’s SlideShare presentation is worth referencing.

[caption id="attachment_48009" align="aligncenter" width="613"]ProductManagerRole Image credit: Greylock VC[/caption]

From this visual representation of a product manager's roles and responsibilities, it’s clear that there’s some serious breadth to the role. The synthesis of this breadth, in combination with the input of your team, is likely how decisions will be reached.

For those of us in product management or similar roles, you’re probably used to an onslaught of ideas. These may be your ideas or the ideas of others. But, it’s important to note that ideas are not a finite resource. However, while ideas are not finite, many of the ideas in circulation may be excellent in some way, shape or form.

So how do you say no to an excellent idea? How do you say no when there’s a compelling argument that can be made to say yes? Perhaps the data supports it, the budget owner is requesting it, or perhaps it’s been determined that this will provide competitive differentiation.

“Building a great product isn’t about creating tons of tactically useful features which are tangentially related. It’s about delivering a cohesive product within well defined parameters.” - Intercom on Product Management, eBook 2015.

I absolutely love this paragraph as it succinctly sums up the collective reasoning as to why product managers will likely find themselves saying no, over and over.

The success of your product is directly related to how effectively you fulfill the specific jobs of your customers. The role of a product manager is to make this a reality.

Everything that doesn’t help the customer achieve their objective is waste. This intense focus on product efficacy is why a product manager is in the business of saying no.

This isn’t to say you default at no, but it does mean that your well defined parameters, your vision, or the specific job you’re trying to fulfil for your customers, needs to remain the sole focus.

So how do you know when to say yes?

An example you might be familiar with, and something Intercom referenced in their eBook, is Anthony Ulwick’s opportunity algorithm.

[caption id="attachment_48008" align="aligncenter" width="731"]OpportunityAlgorithm Image credit: Intercom on Product Management - a worked opportunity example using Ulwick’s opportunity algorithm[/caption]

By having clearly defined the importance of a customer JTBD, as well as their satisfaction with their existing experience, high-value, under-exploited opportunities may present themselves.

This is one of the ways in which a product manager might work towards yes.

But there’s a lot more to think about.

[caption id="attachment_48007" align="aligncenter" width="678"]Image credit: Intercom on Product Management Image credit: Intercom on Product Management[/caption]

How about the cost in time, effort, and capital? Does the increment of value the proposed feature delivers to customers deliver an equal or greater increment of value to the business?

There are many questions to ask and honestly answer here, but at this stage, I’m going to divert you back to Intercom’s eBook for reading.

Product management is multi-faceted and ubiquitous. It’s about synthesising a plethora of often imperfect information from the market, from users, from the business and from your team, all in an attempt to intimately understand, and eventually deliver a product that effectively enables your customers to achieve their specific objectives.

The primary objective of a product manager is to solve the right problem for the right group of people at the right time. Often this involves saying no.

So, what business are you in?

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silviapfeiffer
727 days ago
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Sydney, Australia
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Averaging In And Averaging Out

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One of my favorite techniques to buying and selling transactional assets (stocks being the prime example) is to dollar cost average on the way in and the way out.

I am doing this right now with Bitcoin. I want to buy enough bitcoin so I can make charitable gifts and political donations with it and generally transact in it as much as possible. I’m buying 1.5 bitcoin every week in my Coinbase account. I have a reminder in my calendar and I buy some every week at the same time (I bought some this morning). I’ll keep doing this until I feel like stopping. A lot depends on how much I spend I guess. But the point is I would not be comfortable going out and buying a bunch of bitcoin in one transaction. There’s too much market risk in doing that. By purchasing an asset in small amounts over a long period of time you average into your price and I like doing that.

When a stock is distributed to me from USV, I generally sell a little bit and then put some away permanently. And then I slowly sell the remaining amount over a long period of time, generally three to five years. I generally like to sell once a quarter at the same time. I like the week after the earnings reports, when all the information is in the market and the market has digested it. But that’s not the important thing. The important thing is to sell roughly the same amount in a regular rhythm.

The point of averaging in and averaging out is you never get the top or the bottom, but you get the average. And the average is just fine with me.

In some ways, building a position in an early stage venture fund is the same thing. We buy a bit at the seed stage, a bit more at the Srs A stage, a bit more at the Srs B stage, and so on and so forth. In some of our best companies, we have bought stock in five to ten rounds. Some of those rounds will turn out to have been bargains. Some will turn out to have been overpriced. But on average, if you get to invest in ten rounds, you will build a very good position at a very good price.

It goes back to optimizing versus satisficing. If you want to find the optimal entry price or the optimal exit price, you will drive yourself crazy. I prefer to find an acceptable price. And I think that averaging in and averaging out does that for you.

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silviapfeiffer
1105 days ago
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Pretty sound investment advice, too!
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The Relative Cost of Bandwidth Around the World

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Over the last few months, there’s been increased attention on networks and how they interconnect. CloudFlare runs a large network that interconnects with many others around the world. From our vantage point, we have incredible visibility into global network operations. Given our unique situation, we thought it might be useful to explain how networks operate, and the relative costs of Internet connectivity in different parts of the world.

A Connected Network

The Internet is a vast network made up of a collection of smaller networks. The networks that make up the Internet are connected in two main ways. Networks can connect with each other directly, in which case they are said to be “peered”, or they can connect via an intermediary network known as a “transit provider”.

At the core of the Internet are a handful of very large transit providers that all peer with one another. This group of approximately twelve companies are known as Tier 1 network providers. Whether directly or indirectly, every ISP (Internet Service Provider) around the world connects with one of these Tier 1 providers. And, since the Tier 1 providers are all interconnected themselves, from any point on the network you should be able to reach any other point. That's what makes the Internet the Internet: it’s a huge group of networks that are all interconnected.

Paying to Connect

To be a part of the Internet, CloudFlare buys bandwidth, known as transit, from a number of different providers. The rate we pay for this bandwidth varies from region to region around the world. In some cases we buy from a Tier 1 provider. In other cases, we buy from regional transit providers that either peer with the networks we need to reach directly (bypassing any Tier 1), or interconnect themselves with other transit providers.

CloudFlare buys transit wholesale and on the basis of the capacity we use in any given month. Unlike some cloud services like Amazon Web Services (AWS) or traditional CDNs that bill for individual bits delivered across a network (called "stock"), we pay for a maximum utilization for a period of time (called "flow"). Typically, we pay based on the maximum number of megabits per second we use during a month on any given provider.

Traffic levels across CloudFlare's global network over the last 3 months. Each color represents one of our 28 data centers.

Most transit agreements bill the 95th percentile of utilization in any given month. That means you throw out approximately 36 not-necessarily-contiguous hours worth of peak utilization when calculating usage for the month. Legend has it that in its early days, Google used to take advantage of these contracts by using very little bandwidth for most of the month and then ship its indexes between data centers, a very high bandwidth operation, during one 24-hour period. A clever, if undoubtedly short-lived, strategy to avoid high bandwidth bills.

Another subtlety is that when you buy transit wholesale you typically only pay for traffic coming in (“ingress") ("ingress") or traffic going out (“egress”) ("egress") of your network, not both. Generally you pay which ever one is greater.

CloudFlare is a caching proxy so egress (out) typically exceeds ingress (in), usually by around 4-5x. Our bandwidth bill is therefore calculated on egress so we don't pay for ingress. This is part of the reason we don't charge extra when a site on our network comes under a DDoS attack. An attack increases our ingress but, unless the attack is very large, our ingress traffic will still not exceed egress, and therefore doesn’t increase our bandwidth bill.

Peering

While we pay for transit, peering directly with other providers is typically free — with some notable exceptions recently highlighted by Netflix. In CloudFlare's case, unlike Netflix, at this time, all our peering is currently "settlement free," meaning we don't pay for it. Therefore, the more we peer the less we pay for bandwidth. Peering also typically increases performance by cutting out intermediaries that may add latency. In general, peering is a good thing.

The chart above shows how CloudFlare has increased the number of networks we peer with over the last three months (both over IPv4 and IPv6). Currently, we peer around 45% of our total traffic globally (depending on the time of day), across nearly 3,000 different peering sessions. The chart below shows the split between peering and transit and how it's improved over the last three months as we’ve added more peers.

North America

We don't disclose exactly what we pay for transit, but I can give you a relative sense of regional differences. To start, let's assume as a benchmark in North America you'd pay a blended average across all the transit providers of $10/Mbps (megabit per second per month). In reality, we pay less than that, but it can serve as a benchmark, and keep the numbers round as we compare regions. If you assume that benchmark, for every 1,000Mbps (1Gbps) you'd pay $10,000/month (again, acknowledge that’s higher than reality, it’s just an illustrative benchmark and keeps the numbers round, bear with me).

While that benchmark establishes the transit price, the effective price for bandwidth in the region is the blended price of transit ($10/Mbps) and peering ($0/Mbps). Every byte delivered over peering is a would-be transit byte that doesn't need to be paid for. While North America has some of the lowest transit pricing in the world, it also has below average rates of peering. The chart below shows the split between peering and transit in the region. While it's gotten better over the last three months, North America still lags behind every other region in the world in terms of peering.. peering.

While we peer nearly 40% of traffic globally, we only peer around 20-25% in North America. Assuming the price of transit is the benchmark $10/Mbps in North America without peering, with peering it is effectively $8/Mbps. Based only on bandwidth costs, that makes it the second least expensive region in the world to provide an Internet service like CloudFlare. So what's the least expensive?

Europe

Europe's transit pricing roughly mirrors North America's so, again, assume a benchmark of $10/Mbps. While transit is priced similarly to North America, in Europe there is a significantly higher rate of peering. CloudFlare peers 50-55% of traffic in the region, making the effective bandwidth price $5/Mbps. Because of the high rate of peering and the low transit costs, Europe is the least expensive region in the world for bandwidth.

The higher rate of peering is due in part to the organization of the region's “peering exchanges”. A peering exchange is a service where networks can pay a fee to join, and then easily exchange traffic between each other without having to run individual cables between each others' routers. Networks connect to a peering exchange, run a single cable, and then can connect to many other networks. Since using a port on a router has a cost (routers cost money, have a finite number of ports, and a port used for one network cannot be used for another), and since data centers typically charge a monthly fee for running a cable between two different customers (known as a "cross connect"), connecting to one service, using one port and one cable, and then being able to connect to many networks can be very cost effective.

The value of an exchange depends on the number of networks that are a part of it. The Amsterdam Internet Exchange (AMS-IX), Frankfurt Internet Exchange (DE-CIX), and the London Internet Exchange (LINX) are three of the largest exchanges in the world. (Note: these links point to PeeringDB.com which provides information on peering between networks. You'll need to use the username/password guest/guest in order to login.)

In Europe, and most other regions outside North America, these and other exchanges are generally run as non-profit collectives set up to benefit their member networks. In North America, while there are Internet exchanges, they are typically run by for-profit companies. The largest of these for-profit exchanges in North America are run by Equinix, a data center company, which uses exchanges in its facilities to increase the value of locating equipment there. Since they are run with a profit motive, pricing to join North American exchanges is typically higher than exchanges in the rest of the world.

CloudFlare is a member of many of Equinix's exchanges, but, overall, fewer networks connect with Equinix compared with Europe's exchanges (compare, for instance, Equinix Ashburn, which is their most popular exchange with about 400 networks connected, versus 1,200 networks connected to AMS-IX). In North America the combination of relatively cheap transit, and relatively expensive exchanges lowers the value of joining an exchange. With less networks joining exchanges, there are fewer opportunities for networks to easily peer. The corollary is that in Europe transit is also cheap but peering is very easy, making the effective price of bandwidth in the region the lowest in the world.

Asia

Asia’s peering rates are similar to Europe. Like in Europe, CloudFlare peers 50-55% of traffic in Asia. However, transit pricing is significantly more expensive. Compared with the benchmark of $10/Mbps in North America and Europe, Asia's transit pricing is approximately 7x as expensive ($70/Mbps, based on the benchmark). When peering is taken into account, however, the effective price of bandwidth in the region is $32/Mbps.

There are three primary reasons transit is so much more expensive in Asia. First, there is less competition, and a greater number of large monopoly providers. Second, the market for Internet services is less mature. And finally, if you look at a map of Asia you’ll see a lot of one thing: water. Running undersea cabling is more expensive than running fiber optic cable across land so transit pricing offsets the cost of the infrastructure to move bytes.

Latin America

Latin America is CloudFlare's newest region. When we opened our first data center in Valparaíso, Chile, we delivered 100 percent of our traffic over transit, which you can see from the graph above. To peer traffic in Latin America you need to either be in a "carrier neutral" data center — which means multiple network operators come together in a single building where they can directly plug into each other's routers — or you need to be able to reach an Internet exchange. Both are in short supply in much of Latin America.

The country with the most robust peering ecosystem is Brazil, which also happens to be the largest country and largest source of traffic in the region. You can see that as we brought our São Paulo, Brazil data center online about two months ago we increased our peering in the region significantly. We've also worked out special arrangements with ISPs in Latin America to set up facilities directly in their data centers and peer with their networks, which is what we did in Medellín, Colombia.

While today our peering ratio in Latin America is the best of anywhere in the world at approximately 60 percent, the region's transit pricing is 8x ($80/Mbps) the benchmark of North America and Europe. That means the effective bandwidth pricing in the region is $32/Mbps, or approximately the same as Asia.

Australia

Australia is the most expensive region in which we operate, but for an interesting reason. We peer with virtually every ISP in the region except one: Telstra. Telstra, which controls approximately 50% of the market, and was traditionally the monopoly telecom provider, charges some of the highest transit pricing in the world — 20x the benchmark ($200/Mbps). Given that we are able to peer approximately half of our traffic, the effective bandwidth benchmark price is $100/Mbps.

To give you some sense of how out-of-whack Australia is, at CloudFlare we pay about as much every month for bandwidth to serve all of Europe as we do to for Australia. That’s in spite of the fact that approximately 33x the number of people live in Europe (750 million) versus Australia (22 million).

If Australians wonder why Internet and many other services are more expensive in their country than anywhere else in the world they need only look to Telstra. What's interesting is that Telstra maintains their high pricing even if only delivering traffic inside the country. Given that Australia is one large land mass with relatively concentrated population centers, it's difficult to justify the pricing based on anything other than Telstra's market power. In regions like North America where there is increasing consolidation of networks, Australia's experience with Telstra provides a cautionary tale.

Conclusion

The chart above shows the relative cost of bandwidth assuming a benchmark transit cost of $10/Megabits per second (Mbps) per month (which we know is higher than actual pricing, it’s just a benchmark) in North America and Europe.

While we keep our pricing at CloudFlare straight forward, charging a flat rate regardless of where traffic is delivered around the world, actual bandwidth prices vary dramatically between regions. We’ll continue to work to decrease our transit pricing, and increasing our peering in order to offer the best possible service at the lowest possible price. In the meantime, if you’re an ISP who wants to offer better connectivity to the increasing portion of the Internet behind CloudFlare’s network, we have an open policy and are always happy to peer.

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silviapfeiffer
1183 days ago
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Wow, telstra!
Sydney, Australia
popular
1183 days ago
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5 public comments
graydon
1178 days ago
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Monopolies in telecoms are Very Problematic.
tedder
1183 days ago
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I've tried to explain "transit" and "peering" to people wrt the Netflix thing. This is great.
Uranus
futurile
1183 days ago
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Really informative post on how the network-of-networks (Inter-net) really functions and some of the prices involved.

Peering is very hard to get for small/new providers - it's one of the ways the big boys protect themselves. Just think what happens if you can also get the sites providing the content to pay ... *cough* net neutrality.
London
BLueSS
1183 days ago
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Dang, Australia.
acdha
1184 days ago
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“To give you some sense of how out-of-whack Australia is, at CloudFlare we pay about as much every month for bandwidth to serve all of Europe as we do to for Australia. That’s in spite of the fact that approximately 33x the number of people live in Europe (750 million) versus Australia (22 million).”

“In regions like North America where there is increasing consolidation of networks, Australia's experience with Telstra provides a cautionary tale.”
Washington, DC
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