Industry Spotlight: Involta CEO Brett Lindsey Looks Ahead

April 29th, 2024 by · Leave a Comment

The data center sector has never been hotter, with AI and other new technologies driving new investments and technological developments.  But it’s not just in the biggest markets. Tier 2 and Tier 3 data centers are seeing opportunities, too. With us today is Brett Lindsey, CEO of Involta.  Involta targets enterprise customers in such markets and is backed by Carlyle. Brett took over the company this past winter, shifting over to data centers and the cloud from fiber and telecom.

TR: You joined Involta last year after a long run at Everstream. What led to the switch, and what opportunity did you see?

BL: I have known Bruce Lehrman (one of Involta’s co-founders and current Vice Chairman) for quite some time. Involta and Everstream were both invested in by MC Partners out of Boston, and the two companies had a business relationship since some of the large customers in Northeast Ohio were customers of both companies. When he let me know that Involta was looking at a CEO transition, we started talking about it. After being in the fiber sector for the last 30 years, I was ready to do something else, and data centers seemed like the logical next step for me. Right now, the tailwinds behind the data center space are as strong as they can be. With Carlyle as a sponsor, it was a unique opportunity to be able to grow the Involta platform.

TR: What do you see as driving those tailwinds behind the part of the data center industry Involta focuses on?

BL: There are the obvious ones related to AI. But when you consider the sheer amount of capital that’s being put into the data center space around the hyperscalers, there’s a bit of overflow to the enterprise-focused data center with an edge presence. There’s massive data center investment happening in the typical data center markets – with millions of square feet coming online. But what we’re also finding is that those same customers still need to be in Tier 2 and Tier 3 markets, just not with the same kind of order of magnitude. We also see enterprise customers continuing to grow their own needs from a cloud and data center perspective. I believe that AI is going to push enterprise customers to expand their footprints. They will want to run AI in a more secure privatized model versus having it broadly available on the internet. All of that will help drive capacity requirements for us in each of our markets.

TR:  So, how will Involta approach the marketplace in the years ahead?

BL: We plan to grow in a few ways: we are going to build more of our own data centers and look for strategic acquisitions. On the building front, we will continue to buy land, construct data centers, and own and operate those facilities anchored by enterprise customers. We’ll also continue to expand through acquisition as we have done over the years, such as IT|Lynk and DRS. We most recently acquired a facility in Green Bay and plan to build a 20 MW data center campus on the surrounding data center.

Whether through new builds or acquisitions, we will expand into additional Tier 2 markets, cities that are roughly a million people or above, because this is where we see the most need arising. The largest segment of our business is colocation, followed by cloud, especially private cloud, and then managed services that our customers are asking for. If you were to prioritize our investment with Carlyle over the next three to five years, that will be predicated on building new data centers from scratch. That will include both greenfield markets, where we believe there’s a need, and expansions of our existing facilities.

TR: Where will you be investing your resources this year?

BL: We will soon be announcing a planned 2MW expansion at each of our three existing locations where we’ve got specific customer demands. That will allow us to be ready for those upsized, edge deals, like 500,000 to 1 MW transactions, taking the business upmarket from where it has been historically. The way this typically works is we’ll begin to place orders for equipment that’s needed, because the lead time could be upwards of a year plus, so those orders have been placed for a while. Then you have to expand the facilities to get ready. We own the land where the data centers are today, so we have the ability to expand data halls or build new facilities based on our latest Gen 6 design. We’ll continue to look at M&A activity over the next 6 to 12 months. We’ll look at Tier 2 markets that are in the sweet spot of around 1 million people.

TR: Are there any particular geographies you have in mind?

BL: It’s more opportunistic. Places like Florida, Texas and Nashville, where you’ve got a significant amount of growth potential, would be key for us. When we’re looking for anchor tenants, we’ve got some key verticals such as healthcare, finance, and manufacturing, so markets with a higher density of companies in those industries are on our radar. One of the other things we’ll start spending a significant amount of time on is helping some of our larger customers with a presence in other states grow. We’ll look at how we can partner with them to expand together. We have a great partner with Carlyle that will allow us to get the capital required to grow aggressively. We are going to be strategic in choosing the locations for which we think the competitive dynamics are positive and where we can serve existing customers and target the verticals that make sense.

TR: Involta recently acquired land and a data center in Green Bay, WI.  How are you approaching your entry into that new market?

BL: We had an opportunity to buy an existing enterprise data center that we could convert into a multi-tenant facility. When we go into a city, It’s important for us to not only serve our customers and support the community through hiring local staff, but we want to become engaged in local initiatives as well. We do that through Involta Cares, an internal program which allows our team members to become involved in each community with a specific charity or group that they want to donate their time to. Employees in each market pick a different group that they want to partner with. As we plan for the opening of Green Bay, we see our role in the community as being engaged with local tech organizations to help drive economic development. That is always going to play a role in the decision-making process we have on which markets to go into.

TR: To what extent are new technologies like AI affecting the product mix that your customers are looking for?

BL: AI is going to touch just about every enterprise company out there in one way or another. I don’t see how that can do anything but drive growth in the data center business. The chance that enterprises are going to need additional space and power is high. IT leaders are replacing a lot of the compute and the power at the actual servers that they’re doing work with, and they’re turning to providers like us to help them.

The sheer amount of power and cooling required due to the rise of AI is different. For example, we have a large manufacturing customer doing simulations in a controlled environment hosted in our data center. The specific compute power requires direct liquid cooling delivered in an environment unavailable within their own facilities. They looked to us to make those investments. I think we’re going to continue to see that. Whether the compute is just on their own machine learning exercises or part of a move towards AI, it’s increasingly difficult for enterprises to build all the required infrastructure within their own facilities.

But broadly, I think customers are still looking for a solid partner with a strong financial sponsor so they feel comfortable putting mission-critical information and technology into a facility. I believe that’s why they chose Involta to begin with.

TR: How different has it been for you to be on the data center side rather than the fiber side so far?

BL: It’s definitely not the same old, same old, but the learning curve hasn’t been too steep. If I had come from somewhere other than telecom, the curve might have been harder. But in my prior job, we had been providing connectivity for data centers for a long time, and a lot of the same customers and expectations are there.

TR: As you move forward on your expansion plans, what does the supply chain ecosystem look like right now?  Has it gotten easier or more complicated in the past year or so?

BL:  It’s gotten more complicated in the last 12 months. When you see the big push towards AI with people building multi-million-square-foot data centers across the country, and you hear one company is planning on building 22 data centers in Phoenix alone, the components that go into building those data centers are not unique to them versus us. All data centers require the same basic infrastructure – which is why it’s more important than ever to plan for the next 18-24 months.

TR: Where are the bottlenecks? What are the pieces that everybody runs into the most trouble in?

BL: First is the raw power from the electric utilities. Utilities must invest billions of dollars into their own infrastructure to meet today’s demand, and sometimes, you are extending that power down into a substation that you’re building at your data center. Second, the generators. We’re now competing with many other industries that require 24×7 power. And then all the components of the physical infrastructure – ladder racking, fiber, cables, power, and more. Frankly, other than the land and being able to throw up a shell, everything inside of the data center itself has gotten harder to come by.

TR: In what other ways are you looking to generate revenue growth?

BL: We also have been growing our channel partner community. Many enterprise customers have existing partners with whom they have a relationship. So we want to be able to partner with them as well, which is something that’s new for us.

TR: Thank you for talking with Telecom Ramblings!

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Categories: Datacenter · Industry Spotlight

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