Matthew Prince and Harry Stebbings Debate How Narrowly Startups Should Focus

Harry Stebbings and Cloudflare co-founder Matthew Prince revisit a disagreement that began on social media. Harry had argued that startups before product-market fit should focus on an almost impossibly narrow customer segment and earn the right to expand. Matthew disagreed, and both use the conversation to sharpen what they mean.

Matthew first narrows the context. A niche can be exactly right for a bootstrapped business, he says, but the debate concerns founders taking venture capital. Harry agrees that his advice was aimed at that path, not every entrepreneur.

For venture-backed companies, Matthew proposes three broad outcomes. The best is a major success; the second best, in his view, is a quick failure that lets people move on. He says this is easier to accept when professional investors, rather than friends and family who may be unable to absorb a loss, bear the financial risk.

Cloudflare did not take friends-and-family or angel money before its public offering, Matthew says. He recalls recognizing that failure was likely, while treating the possibility of losing a professional investor's money as part of the venture model.

His least desirable outcome is a prolonged slog: a company grows just enough to make success feel close, while investors lose attention and founders spend years without the progress or learning they hoped for. Harry agrees with this framework.

Matthew argues that recruiting exceptional people is one of the hardest and most important early tasks. A founder needs to attract those people to a meaningful ambition, even while working out which particular customers will adopt the product.

He uses a hypothetical Shopify pitch to make the distinction: is it easier to recruit engineers for software aimed only at snowboard shops in Ottawa, or for a platform that gives merchants control of their own brands? Harry responds that a founder should show the journey from a concrete starting point to the larger outcome, not just offer a vague promise to challenge Amazon.

Matthew credits the Bay Area's optimism with helping founders recruit around ambitious plans, while suggesting that the same environment is not always ideal for scaling. When Cloudflare started, he says, the team described its vision as helping run the internet and asked how it should design technology, policy and products for that scale.

Matthew believes a pitch limited to protecting small-business websites would have attracted a different team. Harry replies that this need not be binary: a company can explain both where it starts and how milestones connect that starting point to a larger vision.

Matthew adds that founders may not know in advance which initial audience will adopt a product. Cloudflare wanted eventually to serve large organizations, but needed customer data to improve security models and needed customers in order to obtain that data.

To address the chicken-and-egg problem, Cloudflare launched a free service open to everyone. The team expected startups and individual developers; Matthew says an unexpected group of civil-society and human-rights organizations also arrived, facing substantial security risks despite limited budgets.

In his account, an overly narrow initial marketing message might have excluded users the team had not anticipated. Harry questions whether Cloudflare's experience is a special case rather than a general rule.

Matthew disputes retrospective startup stories that portray a broad ambition as a cute, tiny beginning. He questions the familiar account that eBay began with Beanie Babies, based on his own conversations. This is his characterization of that history, not an independently established finding in the interview.

Harry clarifies that he is not arguing against ambitious founders. His claim is that a specific ideal customer profile can help a company find its first committed users. Matthew says he agrees with learning deeply from early customers, but warns that deciding in advance who those customers must be may cause the team to miss another market.

Matthew says Cloudflare's first thousand customers were diverse. The company spent time understanding them and improving the product, while continuing to pursue a broad problem. For him, listening to early users is different from defining the ultimate business too narrowly.

He warns that a narrowly framed initial product can shape hiring and product decisions: a team might optimize for features specific to one small segment and make it harder to reach a broader goal. Harry maintains that focus on a customer segment and a large vision can coexist.

They test the distinction with fintech and cross-border payments. Harry sees a specific group of users within a broad financial problem as a useful starting point; Matthew questions whether the underlying market should be described as small at all.

Matthew says he often sees founders choose too small a target even when a product works. An early investor told him that a large initial vision tends to narrow as a company confronts reality. Matthew finds it harder to identify cases where a genuinely limited ambition later expanded into a much larger company.

His concern is that a team can spend years optimizing for a local minimum. Founders should articulate the larger ambition clearly, he says, so the people they recruit do not confuse the first use case with the final destination.

Harry agrees that fundraising requires the big picture. Matthew extends that to recruiting and to the founder's own motivation during difficult periods. Both agree that ambition alone is insufficient: Harry wants founders to connect the vision to current proof points and milestones.

On customer acquisition, Harry argues that specific messaging matters. Customers want to understand the efficiency achieved for existing users, see a message relevant to their situation and encounter it through a channel that fits how they buy. A broad vision does not remove the need to be concrete today.

Matthew accepts that narrower claim but repeats his warning about how investors' advice can be heard. Venture investors seek very large outcomes, he says; founders should not interpret a call for focus as a requirement to stay forever inside the first product's boundaries.

They discuss Facebook as another example. Matthew suspects that a vision of connecting far more than Harvard emerged early, but explicitly presents that as his hunch rather than evidence from Mark Zuckerberg. Harry does not disagree that a broad ambition can be present from the outset.

Matthew says choosing the wrong co-founders is one major startup mistake, followed by aiming at too small an opportunity. Harry emphasizes choosing a weak market. They agree that a product can succeed within its immediate niche yet still leave little room for the venture-scale outcome its investors expect.

Harry offers consumer meditation as a possible difficult market. Matthew says he does not know those companies well enough to judge, but suggests that reducing mental-health spending for large employers might be a different and potentially large business-to-business opportunity. Harry agrees that it is a distinct market.

Asked what advice from investors frustrates him, Matthew reflects on the early-stage ecosystem's attention to personalities and social standing. He says Cloudflare's founders were not part of the fashionable circles, which helped them focus on building the company.

Matthew returns to his earlier qualification: success does not have to mean going public or building a billion-dollar company. He describes acquaintances who build several bootstrapped software businesses intended to generate cash for a small team.

Harry wonders whether that team might create something larger by concentrating on one business. Matthew replies that reliable cash flow, a small group with complementary skills and the freedom to start another business can themselves be attractive outcomes. For that model, a niche may make excellent sense.

Matthew compares Cloudflare with Tough Mudder, founded by a former business-school peer. He suggests that public valuation and media attention are not the only measures of success: building a recognizable business that produces cash and leaves its founder freedom may also be compelling.