Cloudflare CEO: Agentic Commerce Will Favour The Biggest Players

0:00 And I really do worry about small businesses. Now, that doesn't mean small businesses are doomed, but I but I think we have to be extremely deliberate at understanding what the risks are and then trying to figure out, you know, what the solution is. The world that I'm trying to play for is one where there is not five AI companies, there's 500,000. There's not, you know, a a tiny number of content creators that everyone can be a content creator and put something out.

0:22 And that that really importantly that we don't consolidate businesses into a few big mega corporations, but it still becomes a place where I think the internet has done historically incredible good job where new businesses can start up and thrive going going forward. And and I think that's what we have to play for is how do we have as many small businesses as possible. So, let me let me walk through what I think is the problem. So, in order to understand it, think about you're a you're a small business. Let's say you're starting something to be a new you know, B2C a a DTC a direct-to-consumer brand. I don't know, you're making I don't know, new light bulbs or makeup or who knows what what possibly it is.

1:01 What do you do in order to reach customers? The answer is you go on something like Instagram or Facebook or even a Google AdWords search and you start to buy the ability to get your product in front of consumers. And consumers, you know, again, they're scrolling through their Instagram feed and they see your, you know, slickly produced video that, you know, maybe you raised some venture capital or you got, you know, a small business loan in order to put together. And if you touch kind of the emotions and speak to consumers, then the then the companies that do that are actually going to rise and and and thrive over over time. And I think a lot of if we're really honest, a lot of the small businesses that we do business with, we do business with because we have some either emotional connection to them or because they're convenient. Like they save us money. Why do I shop at the local Bottega, even though I know it's more expensive? It's cuz it's convenient. And like I have limited time. And so I'm not going to, you know, go find whatever the cheapest place is for eggs. I'm just going to go to wherever is is most convenient. And that's what humans do. And if you think about brands, like what a brand is is a shortcut for humans to understand value and quality without having to do a ton of research.

2:13 So I see a Marriott logo on the side of a building, I kind of know what the experience is going to be when I go in. I see a Walmart logo on the side of a building, I know what the experience is going to be when I when I go into that. What I think is interesting is like brands are going to change radically. Like it's not going to be a couple of like swashes of pretty paint that agents are going to care about. As more and more commerce gets done through agents, what it what a brand means is going to be very different because agents have like they have almost infinite patience and they don't have emotion to sort of say, oh, you know, I I have this brand affinity to Marriott hotels, so I always stay at a Marriott hotel. Instead, they're willing to do really in-depth research in order to figure out what's right. And at first you might think, well, maybe that's good for the small guy. But I think it's actually going to be really hard for new entrants because new entrants don't have very much information online. I launch a small business trying to sell my new lightbulb or makeup brand. And like how do I get my first customer if all customers are going to be agentic in terms of that? I think that's a really interesting and hard problem cuz the agents have infinite time to research every single possible detail. And so they're going to look for where the richest sources of information that are online, which are going to be for the established big companies that are out there. And if we can't be in a place where new entrants can easily enter the market, then what happens over time is that the big companies will acquire each other, will have massive consolidation, and it actually for the end consumer might seem just fine because you can get hyper-specialized eye care. I I only want brown eggs from certain hens, right? And maybe, you know, Tyson Farms can produce that for me, you know, very efficiently. But, how does my local farmer find a way to actually reach this cuz they're just not going to have nearly the depth of information that's out there? And so, what I think is the thing that we have to be continuously thinking about is in a world where we're increasingly having commerce sort of federated by agents, and that that's the interface that people are going to do it. How do we make sure that a new brand without any real information in the market can actually be able to exist and thrive? Because if that doesn't happen, then agentic commerce becomes this massive tool of consolidation, and that's going to favor the big companies over the little companies. And over time, like I was I was meeting with the former CEO of PayPal who before that ran small business at Intuit, and he said, "I worry that in the future, there are only five companies.

4:40 One that holds the money, one that holds the real estate, one that makes things, one that ships things, and an AI company." And obviously, that's like isn't that's not what's going to happen. But, some level of consolidation is I think the natural trend of this. And and what I've I've been doing to kind of sometimes you can you can you can sort of see the future by watching kind of science fiction. And like, go back and watch like episodes of The Jetsons, the cartoon show.

5:05 And it's like, you know, we I as a kid I watched it and I thought, "Oh, that's kind of fun and funny." It's an incredibly nihilistic and kind of depressing world. There are only two employers in the world of The Jetsons. It's Spacely Sprockets and Cogswell's Cogs. Like, George Jetson's job is to basically push the button, but the robots do everything else. And all of the commerce that George Jetson does is basically through his helpful maid robot, Rosie. He's like, "Go get me eggs." And she goes off and does it, and it comes back, and George seems perfectly happy. But behind the scenes, like, do you think that Rosie is going and shopping at like the local bodega?

5:35 Of course not. She's going to wherever she can get the most information about what the quality of eggs is, and that's going to be some mega corporation that's out there. I worry about that, and I think we need to worry about that. And again, I'm not I'm I'm nervous about it, but I think the first way of solving it is actually articulating what the challenge is and then thinking about how can we make sure that new entrants have a shot in a world where more and more commerce is being done by infinitely patient, you know, deeply researched, unemotional agents that are acting on our behalfs.

6:06 >> Can I give the counterargument? And that is that brand is actually something that favors the big companies over the small companies because they have the money to spend. And so, like you might be much more much better suited to work with like a small business that you've never heard of, but because you, a busy person, don't have the time to research them, you just say, "Okay, I'm going to Target." >> Go with I'm going to buy Nike as opposed to, you know, whatever the new I I think that might be right if you can get that. But the But the the question is how do you And then And that's that's the happy story. And that's what we want to get to. But the question is how do you bootstrap that?

6:44 How do you get the information into the system? How do you get enough customer reviews? How do you get Like And then how do you encapsulate that? So, like what is a brand in the world of agentic commerce? I don't think it's pretty swirls of paint. I think it's actually like a true attestation of quality and experience. So, like how do I take Amazon star ratings, but bundle that with what's your actual like shipping fulfillment time? How many returns do you get? How many chargebacks happen to it? How do I aggregate all that information, package it up into some sort of module, and then make it actually verifiable, so that when my agent comes and sees it, they go, "Oh, I can see that this is a quality merchant, and I'm going to be able to do that." I think you have to have that, but then you also have to think, "Before I have any reputation, I'm just trying to prove that my product is better, how am I actually going to be able to succeed in doing that?" I don't think it's impossible, but I think that left to its own devices, agentic commerce is going to be a consolidating factor. And so, we have to be extremely deliberate in making sure that we're giving small businesses the tools to be able to do this. And again, I don't I think Cloudflare can do this on our own. I'm I would love to be part of a solution.

7:55 But I'm spending a lot of time with, you know, Shopify, you know, PayPal, Visa, Mastercard, American Express, you know, Intuit, the companies that actually deal with these small businesses and saying, "How can we bring together the tools in order to make sure that they can succeed in this future?" Because again, if they're if they're all just sort of following what the old SEO playbook is, that's not going to work for the future. It's got to be something else. And I think it's really one of the most important questions is, "How do we make sure that these small businesses have the tools to be able to again live in in what I think you described as as the optimistic outcome?" And again, I'm optimistic, but I think we should also But in order to be optimistic, you also need to worry about what could go wrong and and articulate it and then figure out what are the solutions to that problem.

8:40 >> Okay, so last question for you. What does that look like from a technical standpoint? Is it just like a small business has a portal in like the back end of ChatGPT and just like spends, you know, the small business owner spends their weekends like dictating all the things about their business or how what could it look like and what are the solutions you've discussed so far? >> I I like I Like when we talked last year, I didn't really have a sense of what like the solution for media is. And I just spent a whole bunch of time talking to media, talking to payments companies, talking to AI companies saying, "Hey, this is the problem. How do we solve it?"

9:11 And I think we've made a lot of progress. My hope is that when we talk next year, I'll have a better answer to your question. But it's only going to be because, you know, people who hear this say say, "Hey, I had an idea." and they reach out, right? Or or, you know, meet with Tobi from Shopify and he goes like, "Hey, we've we've been working on this. Can you help distribute it for us?" Or or, you know, American Express says, "Hey, we've been working with all these small businesses. Here's something we found works." Like I think we're trying to just gather as much information. I don't think we're going to solve the problem but I hope that we can be a part of the solution to the problem because like we could be in a place done right where this is actually helping more small businesses reach customers and the better product finding the best possible consumers for that product and done right that that's amazing and then and then by the way we get to worry about the next problem which is that AI is this massive divider between you know the rich and the poor and and if we're not and if we're not in an ad based business model anymore which I think is likely if if you're spending thousands of dollars a year for your agent you don't want it to be influenced by any ads at all you want it to be completely honest so I think the wealthy parts of the world are going to have just huge advantages over the poorer parts of the world and so that's that's that's the next problem and that that we have and and and again we're starting to think about it I don't think we can solve it entirely ourselves but I think we need to talk about these things in order to make sure that the future that we're that we're building is one that you know is is is as utopian and and and not dystopian as as possible