The $3.2 billion startup Cloudflare just bought a mega-popular company that saves money on your phone bill

Cloudflare founders Michelle Zatlyn and Matthew Prince.

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Cloudflare founders Michelle Zatlyn and Matthew Prince.
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CloudFlare

  • Cloudflare, a content delivery network known for protecting and then withdrawing its protection from a Nazi blog called The Daily Stormer, has acquired startup Neumob.
  • Cloudflare was primarily interested in Neumob’s now defunct virtual private network (VPN) product, which it plans to revive.
  • The company also plans to relaunch Neumob’s core product, which allows developers to speed up their applications, under its own brand.

Aiming to get into the virtual private network (VPN) market, content delivery network provider Cloudflare has acquired Neumob.

Neumob’s primary product is software that helps developers speed up their app so they run faster and require less bandwidth. But the company previously offered a popular VPN product that Cloudflare plans to resurrect and make more stable and secure.

“We think there’s an opportunity to create a VPN that doesn’t suck,” Cloudflare CEO Matthew Prince said.

Cloudflare, which was last valued at $3.2 billion in 2016 and is currently prepping for its initial public offering (IPO), officially took control of Neumob on Tuesday. The company plans to relaunch Neumob’s products under the Cloudflare brand and move Neumob’s systems onto its own.

The companies didn’t disclose the terms of the deal.

VPNs are like dedicated channels on the internet; they allow remote computers to get past firewalls and act as if they are directly connected to distant servers or corporate networks. They can also allow users to mask their locations. A computer in Romania that’s connected to a US VPN will typically appear to the websites it visits as if it is based in the United States.

The Neumob VPN was extremely popular in markets where phone plans can be costly and prohibitive for mobile internet use. The VPN speeds up load times on mobile applications, which in turn uses less costly phone data.

However, Neumob was forced to shut down the product earlier this year after an overzealous radio host in Brazil promoted it, Prince said. So many new customers flooded in that the service became unsustainable.

“Retail bandwidth in Brazil and India is so expensive, it became overwhelming for them to keep it up,” he said.

Cloudflare, which is best known for first protecting the Nazi site the Daily Stormer from a hacker attack and then withdrawing that support, plans to relaunch the VPN service as as a free consumer product in the coming months, Prince said. The revived VPN service will run through Cloudflare’s existing global infrastructure, which is designed to withstand heavy traffic.

The relaunched product will focus on high-security and high-speed data transfers. But it will broadcast users’ actual locations, so it won’t be useful for streaming Netflix from another country or bypassing national firewalls.

Prior to the acquisition, Neumob had raised $11.5 million in funding led by Accel. Among the customers of its app accelerator software is HotelTonight.