My story in Reno and receiving the Technologist of the Year award

April 3rd, 2017

A few nights ago I was honored to receive an award from NCET as Technologist of the Year. This journey started nearly 15 years ago, so I thought I would share more about it.

In 2002 I finished the build out of a colocation data center in Reno, Nevada. I never thought I would come to Reno yet an opportunity to lead a colocation data center company focused on middle sized but underserved cities was appealing for many reasons. Early with this data center in Reno I experimented with and used air economization and hot-cold aisle containment, each very unknown ways to improve data center energy efficiency, perhaps the first use of these techniques, and they did significantly reduce energy use.

Starting in 2004 and for over a decade I worked mostly remotely from Reno for Google (when we started buying, designing, building and operating internal data centers), and Equinix (the largest data center provider), DuPont Fabros (at the time second largest wholesale data center provider), Yahoo!, in which I managed global data center strategy and development at a time when we were building out large internal data centers and expansions around the globe. I also worked for BEA Systems before acquired by Oracle running their global data centers, and completed long-term marketing and product development consulting for Digital Realty, the largest wholesale data center provider, and many others, including Facebook and other Big 7 Internet companies. I call Apple, Google, Microsoft, Amazon, Facebook, Yahoo! and eBay the Big 7, as they build, own and operate the majority of data centers, outspending data center capital every year of all of the colocation providers by a factor of almost 10. I have been lucky enough to work with five of these seven big data center companies.

In the midst of this, myself and others worked together to create and build the Reno Technology Park (RTP), the largest dedicated data center campus known at the time, located just outside of Reno in Washoe County. I worked with many companies to influence them to locate a future data center in Reno, and secured Apple as the first tenant of the RTP.

While maintaining a residence in the Reno area, with its very close proximity to Lake Tahoe, fabulous skiing, mountain biking, cycling and other activities that I love to do and have spent much time in the area for years playing. Yet with a home in the area, I avoid the congestion and high cost of living of the SF Bay Area and also a state income tax. There are many workers in technology companies that live and work in the Reno area and many like me that live in the Reno-Tahoe area yet commute to the Bay Area or elsewhere for work as needed, including executives of technology companies.

Because of the many great companies and people working in the Reno area I am even more humbled to receive this award. Thank you NCET and the board for this recognition and Abbi Whitaker for her nomination. Having developed data centers in over 20 countries and data center site selections in almost 30 countries as well as throughout the United States, I saw that Reno Nevada was a good place to locate data centers, and that they would be great for the local economy. I wanted to bring my industry to my home, and see the local economy continuing to grow and evolve.

I commend the team at EDAWN, Governor Sandoval and his staff including Steve Hill for helping to make these wins. I look forward to continuing to work with our community, all of you, NCET and EDAWN to see Reno’s economy grow and develop.

Is Digital Realty finally fighting to win again?

May 27th, 2016

Digital Realty scores a huge win by procuring the eight Equinix data centers located throughout Europe that Equinix was required to sell. This is a large cash influx for Equinix to grow into new markets, although I very much doubt that Equinix will grow into new markets and instead expand in markets that have been successful for them, only because this has been the same song they have repeated since they wrote it. Doing so will continue to limit Equinix’s growth and market share. I hope that Equinix has up its sleeve than the same song that is getting less airplay to the new hits getting more radio time than its classic approach.

However, the real surprise here is in this announcement in this Data Center Knowledge article is that Digital Realty may very well be back in the driver’s seat of its growth and acting like the leader it was and certainly can be. After years of Digital Realty standing by, collecting modest incremental revenue gains with decreasing margins, and giving up market share by not expanding into new markets, existing markets or adding new products, Digital Realty has been going thru a transformation and getting back on its feet. It’s like a prized fighter in a match getting knocked down over and over and then, finally getting up and punching back!

Digital Realty became invigorated again after Bill Stein took the helm, and it was at a tough time so it took Bill and team some time to figure out their options and growth paths. One big win was the acquisition of Telx. Another was adding cloud connections and products. And a third has been offering smaller retail colocation with services. This last one came first but took some time to formulate since it was competing with some of its customers and a very new set of services was needed to support this customer class, as well as needing to remove the minimum buy in of about 1 MW of capacity as it had always been for the first 10 years at Digital Realty.

I came along as a industry strategy consultant right after Bill Stein stepped into the CEO seat. He and I spoke my first week on the job for Digital, just a few months after he took the driver’s seat, and he and I had a great conversation about ideas in which the company could grow. As a past customer and industry veteran, I gave him my thoughts and he used my exact ideas and literally verbatim said them on the next quarterly earnings call a few days later. It was at this time that I knew he was serious about changing Digital Realty so that it could grow and expand unlike it had ever done before.

Over the next year or so, I helped to put into place with the great Digital Realty team many changes, from revising the website, focusing on adding different customers and developing new products, acquiring Telx, training and invigorating the sales team, developing cloud platforms and connections, and responding to customers’ unique needs that were different than anything Digital Realty had considered before. Digital Realty made great strides but was still adjusting to changes and a bit uncertain of the best path forward. Nonetheless, during my tenure at Digital Realty we made great advancements in all of these areas that were adding to the bottom and gradually changing the entrenched decade out of date ways of doing their business.

One of the areas in which I had made suggestions and growth changes was a continued expansion of interconnection hubs. We all know that Equinix is the Queen of interconnection hubs–they have the crown jewels of the industry. However, if Equinix is the Queen, Digital Realty is the King of the largest fleet of wholesale data centers with many of the largest growth customers in the world. So by interconnecting this data center fleet, and expanding its reach, Digital Realty is enabling growth with new customer connections and interest, as well as recreating some of the crown jewels that were once almost entirely controlled by Equinix.

It is the value of these European interconnection hubs from this acquisition that will garner the most value over time. Yes, these data centers are good data centers. Yes, they are in markets that Digital Realty wants to get into or can use some additional capacity in, and yes, the revenue from these data centers will be fantastic accretive revenue for Digital Realty and even more importantly, at a higher margin than Digital Realty’s norm. And yet, even more importantly will be the addition of many new logos to the Digital Realty customer roster. Yet, most important than all of these great facets of this acquisition will be the network interconnections that will propel Digital Realty to a much greater market position than it’s ever had in Europe.

And if Digital Realty can parley the lessons learned from these eight seemingly simple data centers about network interconnectivity, the customer value of those, and the global reach that these network connections can expand for Digital Realty, I believe that Digital Realty just might be back in the driver’s seat of the data center industry once again, collecting more crown jewels for itself but even more importantly, creating them, revenue and margin growth and adding not just shareholder value, but most importantly over time, customer value. I look forward to seeing how this will play out over the next several years.

Asia – the Wild, Wild West of Opportunity

July 11th, 2013

As I led Global Data Center Strategy and Development for Yahoo!—a position that I immensely enjoyed and would love to do again—I developed, sought out and negotiated data center capacity in over 20 counties. And of all the regions, Asia was by far the most challenging to find large blocks of good quality data center capacity. I spent much time looking for data center capacity to lease in Hong Kong, Taiwan, Singapore, Japan, Korea, and India. (China was a separate entity.) I have taken countless trips to Asia since 2004, and during my tenure at Yahoo!, I traveled to Asia every month (as well as elsewhere).

Due to this limited supply of high-quality data center capacity, I was willing to take down futures on good quality data centers to be built in Asia, especially those with network neutral connectivity, which can be difficult to find in many Asian countries due to limited access to cross-country networks except by incumbent network providers. My counterparts at Google and I were almost always rushing to get into the available data centers in these regions before each other, so I was always so surprised that the US data center providers were not rushing to build strategic capacity in Asia to take advantage of these business opportunities.

Although data center capacity in Asia has been continually added faster than probably any other global region, demand still persists for good-quality, network-neutral data centers throughout Asia. This is evidenced by correlation to network growth mentioned in this statement about Equinix expanding in Osaka: “Osaka is Japan’s second largest economy after Tokyo and saw internet traffic grow a staggering 68 percent and bandwidth increase at a compound annual growth rate (CAGR) of 56 percent from 2008 to 2012 rivaling Tokyo.” http://www.datacenterknowledge.com/archives/2013/07/09/equinix-plans-data-center-in-osaka-cloudsigma-begins-deploying-across-its-footprint/

In large, mature and well-developed markets such as Osaka, intrinsic organic market demand doesn’t grow by 56% CAGR, so this indicates to me that there is likely unmeant demand finally being absorbed by new capacity. I believe that the same is true for other recent data center expansions in Asia by Equinix, Digital Realty Trust, and others.

Other locations, particularly Brazil and Mexico, have also been seeing tremendous growth that has been fairly unmeant by high-quality US data center providers. This has also been a challenge for other global locations. So even though US and non-US data center providers have been adding capacity and finally expanding into new global markets, it isn’t enough to have met and continue to meet new demand in these non-US markets.

It’s well beyond time for US data center providers to change their US-centric focus on US locations and take advantages of the many opportunities outside of the US, which can not only provide excellent revenue and margin growth, but also benefits of customer retention and new customer acquisitions, as well as network interconnectivity and market share dominance. All of these being immensely valuable in a much more competitive and global marketplace than it was even just a year ago. It’s time to smartly expand globally to gain many great advantages and cease the ultra-conservative approach that misses market share, revenue and margin growth opportunities for high-quality data center providers.

I hope that I can help guide some of these providers with these new opportunities and also the end-users find the best providers in these growing data center locations. Growth opportunities are nearly boundless in this global market. Now get out there and grow!

Apple+Reno+Solar = “Controllable Power”

July 8th, 2013

Some of you know that I have developed the Reno Technology Park along with a few others. I am the sole data center expert in the group and when I first viewed the property, I saw that it had potential as a site for data centers with the property being laced with electricity and natural gas transmission lines, main fiber routes crossing thru the property, and proximity to clean power plants. However, that infrastructure was not enough to sway me to get involved. The project needed lower cost power and tax options.

At my insistence, we created some unique tax incentives, but as a data center power guy for nearly two decades negotiating power deals and developing power plants, I saw the real potential was for clean, “controllable” power. I brought Apple to the site last spring and they too saw the same potential.

Fast forward now just over a year, and Apple has one operational data center building, a second data center building fast approaching commissioning, and now an announcement of a nearby 18-MegaWatt solar project near the Reno Technology Park. Here are some links to public articles about these announcements:
http://www.macrumors.com/2013/03/27/first-phase-of-apples-new-reno-nevada-data-center-ready-to-open/
http://www.datacenterknowledge.com/archives/2013/03/27/apple-ready-to-roll-in-reno-with-a-coop/
http://www.rgj.com/videonetwork/2264915824001?odyssey=mod%7Ctvideo2%7Carticle
http://www.datacenterknowledge.com/archives/2013/07/02/apple-planning-solar-farm-next-to-planned-reno-nevada-data-center/
http://www.computerworld.com/s/article/9240559/Apple_unveils_18_megawatt_solar_farm_to_power_cloud_data_center?source=CTWNLE_nlt_pm_2013-07-03)

Being under NDA with Apple, I cannot expand upon these articles with information from other sources. So let’s talk about what I mean by “controllable power”. The ability to take control of what I call the “Three C’s”: cost, capacity and control. Control being the deliverability, schedule and mix of that power, as well as controlling the future cost of the electricity. Cost being current and future costs, as when we plan to operate a data center, we must take into account the total electricity cost over the expected life, usually 10-20 years. And ideally, we don’t just want a low cost today, but more importantly a low average cost over that life cycle. I see too many folks run to a market with low-cost electricity today but not realize that those low costs will go up, and often within 1-3 years and to an average much higher than other location options. Predicting and seeing these future costs is one of the key advantages to using MegaWatt Consulting for your data center site selections and not another company, as I do not see any other company looking at all of the factors that will influence future data center costs like we do. Do you want to choose a site that has great costs before you start constructing yet high costs by the time you fill it and be surprised that your site is not a low cost site a few years from now, or go to a site that will continue to provide low costs for years to come?
And capacity is key, as there is a cost to bringing power capacity to a project and sometimes that is enormous. For example, a few years ago I was consulting for Equinix and the cost they were quoted by the utility to bring power capacity to a site was equal to nearly one-third of the construction cost for an entire new and large data center! That would have added nearly 50% to the total construction budget! I was able to negotiate that down to less than 10% of the total project budget, but still a very large expense and one that is often not accounted for during site selection TCO estimates. All proving the point that controllability of power over time–each it’s cost, capacity, mix and deliverability—provide significant benefits to a company and it’s costs over time.

Whether or not Apple is responding to pressure from Greenpeace, NY Times’ articles, their stockholders, consumers or other shareholders, having a data center site that can provide flexibility for the many factors over time is key to adjust to changing needs. Whether those needs are costs, the fuel mix, deliverability or reliability of that power, all provide significant benefits when they can be controlled to meet changing needs over time. And all needs change over time, and being that electricity cost drives a 10-year Net-Present Value analysis of data center ownership, “controllable power” is essential to good data center cost management.

If you’d like “to take control” of your data center’s a key driver of current and future costs, as well as combat changing pressures from shareholders, markets and other factors, let’s talk about some options.

How to save on water costs in your data center

April 15th, 2012

Two weeks ago I spoke at the Recycled Water Use and Outreach Workshop in Sacramento. I know what you’re asking, “why is a data center guy talking at a recycled water conference?” Well, funny that you asked.

First of all, most of my ultra-efficient designs use water for cooling, often indirect evaporative systems. Hence, we trade energy use for water use. Now water is far less costly than energy and often has a much lower carbon footprint and other environmental impact per unit of cooling than electricity. But it always is a bonus to use recycled water, as it has an even lower environmental impact than standard potable supply. Of course, all water IS recycled. There are only a finite number of water drops on this wonderful planet that sustains us and every one of them has been around the water cycle block at least a few times, so in essence, all water is recycled.

As we use water to help or entirely cool our data centers, water plays an even greater role in data centers to achieve the greatest efficiency. Hence, water quality, capacity, cost and reliability of service are just as important as any other valuable input into our system of operations, making these factors and the future cost of water even more important into our site selection decisions. I’ve seen water cost between $.10 to $10.00 per 1,000 gallons—wow! What a spread! And I’ve seen it increase at 40% rates per year! Wouldn’t it be nice to have a consistent price from a non-profit water system that YOU have control over and full visibility into all costs? And one that is built to meet the high-availability and quality standards for data centers, and is DEDICATED to data center use? That is what you get at the Reno Technology Park!

And it’s not just the supply but also the discharge of water. I learned much about water discharge challenges in Quincy, WA, when building the Yahoo! data center there, as the local water utility wanted Microsoft and Yahoo! to pony up $10-15 million to pay for a new water treatment plant to handle the QUANTITY of our discharge water. Our quality was fine, but the quantity was too much for the current systems. This led me to find solutions to reduce the cooling tower blow down and avoid this $10+ million unplanned cost to our project.

I’ve always been a fan of chemical-free water treatment systems, but when looking for new solutions to solve our problem, I came across WCTI, which makes a chemical-free system quite different than other systems, and could provide us a system to get the cycles of concentration up over 200!!! Yes, that is over 200 cycles of concentration, which means nearly zero blow down! Which means it lowers water consumption by 30-50% and avoidance of paying for a new water treatment plant for the city. And it’s truly chemical free (even no biocides), which means it’s safer for people and the environment, as well as much lower cost. Keep those chiller tubes and/or pipes clean!

This is one of the comprehensive solutions that we provide for our clients at MegaWatt Consulting. It’s about saving money, and water is just another critical part of our system. Reach out to us to learn more!