The facts
Matthew Prince and Michelle Zatlyn, the co-founders of Cloudflare, met at Harvard Business School in 2007. Prince serves as CEO. Zatlyn serves as the President. They co-chair the board of directors. The company went public in September 2019 at $15 per share; on August 10, 2026, the stock closed at an all-time high of $310.59 per share, and the company's market capitalization stands at around $100 billion. More than twenty percent of the Internet uses the company's products.
Cloudflare went public with a dual-class structure. The founders held Class B stock carrying ten votes per share. Public investors got Class A stock carrying one vote per share. The founders' share of voting power peaked at 60% in 2021, then steadily declined. From 2020 through the spring of 2026, Prince sold shares worth approximately $1.18 billion, and Zatlyn sold shares worth approximately $629 million. On March 5, 2026, the founders controlled approximately 51% of the voting power. On June 5, they controlled 50.3%. At their historical selling pace, they would lose majority control by December 2026.
Their solution was a recapitalization. In the first step, the founders would exchange each high-vote share for one low-vote share plus a share of preferred stock carrying nine votes but only nominal equity value. In the second step, the company would distribute a new share of non-voting common stock for each outstanding low-vote share. Going forward, the founders could divest non-voting shares without affecting their control. The court's summary of the plan ends with two words: "Problem solved."
Stockholders sued. They contend the founders breached their fiduciary duties as controlling stockholders by extracting an unfair deal and that the directors breached theirs by approving it. On October 16, 2026, the Delaware Court of Chancery granted a preliminary injunction. The court found a reasonable probability that the special committee "did not act in good faith", cited the "defendants’ credibility problems", and ruled: "An injunction will issue preventing the Recapitalization from closing pending the post-trial disposition of the case."
Our take
So these two cunts, Matthew Prince and Michelle Zatlyn, sold off nearly two billion dollars worth of their own fucking stock. Prince dumped $1.18 billion, and Zatlyn dumped $629 million. They took the money and ran. But then, like the greedy little pigs they are, they decided they still wanted to keep their hands on the steering wheel. They wanted to have their cake, eat the whole fucking bakery, and then shit on the table while still being declared the king and queen of the feast. That's the level of entitled, self-serving bullshit we're dealing with here.
Their 'solution' was a piece of financial wizardry so transparently corrupt it's a wonder they didn't just send the proposal written in crayon. They wanted to swap their high-vote shares for low-vote shares, plus a special 'preferred' share that magically carried nine votes but was essentially worthless in terms of actual ownership. Then, the company would print a bunch of new, non-voting shares for the other suckers - sorry, 'shareholders' - to trade. The founders could then sell those non-voting shares for more cash, forever, without ever losing their iron grip on the company. They literally designed a system where they could sell the whole goddamn company out from under everyone and still be the bosses. The court's dry summary of this plan - 'Problem solved.' - is the most devastatingly sarcastic two-word legal burn in history.
But thank fuck for the stockholders who sued, and for the Delaware Court of Chancery judge who wasn't having any of it. The court looked at the so-called 'special committee' that was supposed to protect shareholders and found a reasonable probability it 'did not act in good faith.' Let's be clear: that's legalese for 'this committee was a fucking sham, a rubber-stamp operation for the founders' vanity project.' The committee's job was to say no to this obvious power grab, and instead it apparently just bent over and asked for more.
The absolute chef's kiss, the line that should be tattooed on Prince and Zatlyn's foreheads, is the court citing the 'defendants’ credibility problems.' A Delaware judge, in a formal legal opinion, declared that these billion-dollar Harvard Business School graduates cannot be fucking believed. Their word is shit. Their scheme reeked of bad faith so strongly the court had to step in and block it with a preliminary injunction. They wanted all the money and all the power. What they got was a judicial spanking and a public declaration that they are, in the eyes of the law, a pair of untrustworthy dickheads. The crown they tried to glue to their own heads is now locked in a vault, and the key is with a judge who thinks they're full of shit.
