Building the Dark Fiber Networks of Tomorrow: Interview with Tom Brown of DataGryd

Steve Sidewell:

On this episode, we interviewed Tom Brown, the CEO of DataGryd during our interview, Tom shares information about Mega Suite Six, emerging technology in the data center space and so much more. Get ready, you’re now entering the Tech Bench Podcast.

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Welcome to the Tech Bench Podcast, here we talk about trend tech and IT.

Speaker 1:

So just to get started off today, we’re with Tom Brown, CEO of DataGryd. Can you tell us maybe a little bit about yourself, how you came into DataGryd, a little bit about your background, that sort of thing, just so that we can kind of get to know you a little bit better before we jump right into the company, which I’m super eager to do too.

Tom Brown:

Sure. So my background is in sales leadership and revenue generation and turnaround. That’s really been my focus with startups and turnaround opportunities. But what I will do is I’ll take you back to ’99, and that was really my foray into the wholesale side of the business. Where I embarked on an opportunity with a company called FiberNet. If you guys recall FiberNet in 2010 was purchased by Zayo. But while at FiberNet we built both networks and co-location facilities in the gateway cities, New York, Chicago, LA, and Miami.

And really what we did is we saw the ability to interconnect within and between key carrier hotels, which really has a lot to do with some of the challenges that we have here today. So started that back in ’99, sold it in 2010. As a result of my agreement had to sit on the sidelines, but never took my hand off the pulse of the business. Back in 2015 was approached by Windstream Communications to come back in and take a look at their high growth verticals of content, media, gaming, EMSOs, wireless and data centers. And they were all being underserved at the time on the side and Tony Thomas, the CEO of Windstream made a conscious decision with the support of the board to bring that over to the wholesale side, just because of the magnitude and the growth that they saw in the marketplace supporting their efforts, both from a lit and dark fiber perspective.

Prior to joining Windstream, I was doing some of my own consulting, as well as some startups, unrelated to telecom in the specialty financing side of the house. I was approached by then chairman of DataGryd, John DeLuca. John, was my CEO at FiberNet For many years. We worked together. He went on to build a company called Vercon, which was sold in 2018 to Crown Castle, but in the interim and in parallel, he was the chairman here at DataGryd.

The board in DataGryd looked at the next step in its evolution. And they’re really looking for a focus on revenue generation. And John reached out and I went through the process and we came to an agreement and I began my tenure here at DataGryd February of last year, 2018. Hopefully, that kind of gives you a background of who I am. Prior to ’99, I spent a couple of years, five years AT&T, a couple of years at LCI in various different managerial roles. So that’s a really a snapshot of the 25 plus years that I’ve had in this business, and I’m most excited about the opportunity that I’m taking advantage of today.

Speaker 1:

Well, that’s great. Thanks for the background, Tom. I appreciate that. Now DataGryd’s been around since 2012, correct?

Tom Brown:

Latter part of 2011, yes.

Speaker 1:

Okay. Got you. And I know that you guys are located at 60 Hudson and for those people who don’t know, that’s a historic landmark building that’s actually originally the headquarters of Western Union. Is that correct?

Tom Brown:

It is.

Speaker 1:

I’m just curious. Do you have to know how DataGryd started and how it ended up in such an iconic space?

Constructing New Data Centers on Old Grounds

Tom Brown:

Sure. So one of the founders of telex, Peter Foreman and our previous CEO, approached the building back in 2010, when four floors became available. For decades, there was two city agencies, both Department of Corrections and Department of Buildings that occupied this building. Around those four floors, you had the world of telecommunications evolving at a rapid pace, but once they vacated, Peter approached the building and said, “This would be an ideal opportunity to build a world-class data center in an iconic building.” So I tip my hat to Peter and everything that he did for DataGryd and the idea of bringing a world-class facility. Not a lot of folks recognize that that’s how DataGryd was born. But how do you make DataGryd create some unique assets? In addition to not only taking down two floors, both the fifth and sixth floor to create a data center out of raw space, we also went ahead and approached the utility.

And in this case, it’s Con Ed and we went out and we’re able to procure our own power to really see the market shift in dense power applications. Typically, in a traditional co-location setting, you might have one to two kilowatts per cabinet in a traditional telco setting. Today, the minimum is five KW, and anything above that, you need to make sure that you’re able to power those footprints sufficiently. The second thing we recognized is that within this building, there is legacy old telco suites, and due to the historical nature of it, it’s very difficult to come in and absolutely gut the entire guts of that particular suite. So we were rather fortunate when we created DataGryd that we were able to really design and implement the world-class data center after demolitioning office space that was vacated for decades.

Speaker 1:

And that’s mainly, I assume because even though there’s various other data center, stuff like that in the building, what DataGryd was taken over, was as you’re saying, just Department of Corrections, Department of Buildings, just office space. So it wasn’t just swamped with old cabling that one out of 9,000 is actually still important.

Tom Brown:

Yeah, that is true. That is true. And that was really, really helpful to enable us to not only design and engineer, to support, not only for today’s requirements, but also tomorrow’s requirements. And we’ll talk a little bit more about that later about the emerging technologies.

Speaker 1:

Can you tell me more, we’re talking about power a second ago. So you have your own line in through Con Ed or you’re saying that you have your own power coming directly in, how does that work?

Tom Brown:

Sure. So we went ahead and let me take a step back. Due to the density of this building, there’s well over 300 service providers that reside within this iconic building. So latency is critical to this building and we’ll talk a little bit more about how we differentiate ourselves because of that density of providers here in the building.

But there is a challenge within the building that all of the power is contracted out today. The utilization is north of 50%. But when you contract out the power and I tip my hat to all the folks and say, “Hey, listen, let me grab as much power as I can.” Because of thinking about forward-thinking, it’s a smart thing to do. So at the time we said, “Hey, why don’t we go ahead and directly grab power, not only from a diversity perspective, but also for the ability for us to provide that dense power application and manage our own power from the utility.” And as I said, it’s Con Ed here in the city. So, today we have three megawatts from the building and 12 directly fed from utility, so a total of 15 megawatts. And if you think about the footprint here in New York City in lower Manhattan, that is a significant amount of power.

Speaker 1:

No, absolutely. So would you say that in terms of setting yourself apart from other providers in the New York City area, would you say it’s that power latency that you have, or are there factors that play into that?

Reducing Data Center Costs

Tom Brown:

So I think power is really critical, but there is also another challenge that’s inherent within this building and not only this building, but throughout the market place, whether it’s Chicago, whether it’s Dallas, Denver, LA, there’s specific buildings that you need to interconnect with. And as you can see in the marketplace, the pricing of bandwidth has gone down significantly. Where I was when I was at Windstream running those verticals, we made that up with volume, but we saw time and time again, pricing of bandwidth just dropping and dropping significantly, exponentially in some cases.

 And we were trying to outpace this trajectory by going to our vendors and saying, “Hey, what can we do? Can we open up the line cards in the long haul transport kiosk?” And what we found in the marketplace is that what you haven’t seen being reduced is the cross connects. And whether it’s in between floors or whether it’s within the same floor interconnecting with one another, that pricing has remained consistent for better part of 10 to 15 years. We have the ability to mitigate that by building directly from our suites on the sixth floor now, to anywhere in the building to provide what we call a direct connect.

 And that direct connect through a four-inch conduit enables our customer to pull a large fiber count to their apartment. We did an analysis for a large content provider where they realized that 75% of their connectivity was with four partners. And had they had the ability to have a direct connect from their pop to directly to that suite, they would save a significant amount of dollars.

So not only do you have, just to kind of recap what sets us apart is 300 service providers, and that’s traditional service vendors, both domestic and international. That is also the various pairing fabrics for the cloud providers that have certainly reside here, and as you can see, emerged over the last several years as cloud has become such a big player. So if you can reduce that cost, which is burdensome on a monthly basis, coupled with power, which is diverse in the building. If you look at the total cost of ownership, we have a world-class data center right here in lower Manhattan, where there’s 4 million eyeballs right outside our door. And terabytes of traffic traverse this building, data traffic to versus building. So we believe that we’re well positioned.

Speaker 1:

Well. That’s great. And I think to me, it sounds like a lot of that is because both you guys saw the opportunity to develop those cross-connects and being in a building that has really provider dense, enables that to be a kind of a reality without having long distance lines taken into account. My understanding that kind of sort of correctly?

Tom Brown:

You got that correct. Yes. I heard a term that I haven’t heard in a long time, long distance lines. Long distance has gone, now it’s all about fiber. It’s all about data transmission. Voice is [crosstalk 00:15:07]-

Speaker 1:

Oh, no. I just meant physically a long way away. Instead of going from the data center you got in Manhattan to a data center in Jersey and making that connection, you’re making a connection to just effectively another cage, it’s just that cage is from another provider.

Tom Brown:

That’s absolutely correct. And we don’t charge for that monthly cross-connect it is, “Hey, we’ll build your pipe for a one-time fee, and then a very nominal fee for that.” But if you take a look at the overall cost analysis, it’s material.

Speaker 1:

Yeah. No, that’s funny, long distance. I haven’t thought about that in I don’t even know how many years. So Tom, you actually mentioned suites a couple of minutes ago. Now, I know that you guys had just announced that you’re building out, I believe your entire sixth floor as a Mega Suite Six. Can you tell us about this project and how that fuels your future growth plans?

Tom Brown:

Sure. So we have, again, just to kind of recap, we have two floors, the fifth and sixth floor, it’s a total of 120,000 square feet. We have an anchor tenant on the fifth floor. And the middle of 2018, we finally finished commissioning the sixth floor with the City of New York and its approvals processed, it’s unlike any other city in the United States. It does take a little bit longer. So patience is certainly a virtue. But we decided, and we saw a shift in the marketplace that folks that aren’t taking large parcels of space, particularly here in the metro. What you’re seeing is, whether it’s a cloud provider or an exchange, they’re taking what we call a metro pot, you hear this term more and more throughout any conference or trade show that the size of it in the parcel space is they’re taking what they need.

So we have designed the sixth floor to have five, one megawatt data halls. And we are building the first of five and construction is underway as you and I are having this conversation. And we’re excited to provide regular updates via social media, through a video to show the progress, because it’s real exciting about what’s taking place here in lower Manhattan and construction. There isn’t any other project going on this Island in Manhattan, and we’re excited to do that. We thought it was really, really helpful to show our prospective customers white space. And we want to do that in a one megawatt data hall. What you can do in that one megawatt data hall is have your customized space, whether it’s 100 KW, 200 KW, 500 KW parcels of space that are caged off within that data hall. Sure, some folks can come and say, “Hey, listen, I need more than that one megawatt.” And there are opportunities that we’re evaluating right now, but we wanted to do it in a progressive way that not only we gain cost efficiencies with our contractors, but in a way that’s very simple for us.

Speaker 1:

No, that’s great. And I know we’re kind of living in a time now, you’ve mentioned that where there’s no other project like that in New York. It seems like the overall data center space in Manhattan is actually shrinking right now. Especially once Google bought 111 eighth Avenue, moved a lot of people out to Jersey. Do you find that actually as a competitive advantage for you guys being one of the few players left in Southern Manhattan or there’s still a lot of competition out there?

Tom Brown:

Well, there is competition, but I also think about the competition as complimentary, right? We are a specific requirement. And I say that if you need to have … and latency is becoming more and more prevalent in the marketplace. And with the density of providers that reside within this building, there is no other building like that, arguably in North America. So depending on what your requirements are, should you need to have a lower cost model to go out to New Jersey, or whether it be roll up North of New York City or out to Long Island, I understand it. But the application is such that 111 eighth Avenue, as it continues to contract, will create opportunities for us to naturally migrate their pops over to 60 Hudson Street and we’re beginning those conversations as well. So it’s interesting on my perspective, as opposed to saying, “Hey, that’s my competitor.” Yes, there are instances where we’re in a competitive situation, but we are unique in the fact that if your application requires latency, you would consider 60 Hudson Street and DataGryd

Speaker 1:

Yeah. That makes a lot of sense. Definitely. So I guess on another part of the changes we’re seeing now. Do you see new technologies, like AI and 5G, edge computing? How do you see that impacting the data center space and especially, I guess, in the Manhattan market?

The Future of Data Centers

Tom Brown:

I think it’s a tremendous opportunity as those personalities emerge. And think about the concentration of folks here in the Island of Manhattan. AI just look last week, McDonald’s, they purchased a first company since buying Boston Market and they purchased an AI company. Think about why they did that and the implications of how AI is going to change our environment rapidly. You walk into McDonald’s, whether it’s here in New York City or someplace else, and whether it’s St Patrick’s Day and whether it’s cold out, it all has implications on what’s going to be on that menu. And what’s going to drive people to purchase those items as a result of what’s happening around them. That’s how they see the future. And there’s data implications for that. Autonomous vehicles, Uber is testing currently today. And we know that there was challenges with some of their testing, but what I see so impactful to our business is that every time that they take an autonomous vehicle out, it’s typically takes down about 100 gig of traffic, but they need to download and store.

So what do we do with that? So it needs to be filtered through a Metro pop, like DataGryd and an edge pop like DataGryd. And I’m saying each in terms are separate, but very similar. So we’re well positioned based on our ability to provide customizable space and to also provide the dense power application. So as these technologies evolve, and as you see 5G, whether it’s on sides of buildings or on traffic lights, you need to get that information and be able to have these metro pops. It also goes even further to various verticals, whether it’s the financials, whether it’s healthcare, they’re now taking their cloud off-prem and bringing it to data centers. So we believe that we’re well positioned to address all of those applications.

Speaker 1:

Actually, that was going to be my next thing. There is a large trend right now for companies to either have a hybrid solution or go all in, into the cloud. How has that shift affected your business and how do you see it in the future?

Tom Brown:

Again, we keep our business model simple. We’re not all things to everyone. And what we do is we leverage partnerships. So you keep on mentioning the cloud. So depending on what the application is, we will partner with cloud providers to address those needs. But we bring it back to our simple messaging is space, power, and connectivity. And every cloud provider resides within this building and it’s an easy on ramp. So the partnership they want to leverage with us is, “Hey, we have a world-class data center that we need house our … in this instance, financial vertical.” It makes natural sense for us to partner with these guys.

Speaker 1:

No, of course.

Tom Brown:

Our model is not such where we have all these managed services or these software applications as a service, we partner up. And it just makes a lot more simple for our model.

Speaker 1:

I was going to actually talk about verticals and who would be an ideal market, but anybody with the need for space power activity would find it suitable, would be a good fit.

Tom Brown:

Sure. Yeah. I talk about that all the time. Our focus is, and I’m asked this, whether I’m on a panel or a similar conversation I’m having with you folks is that, “Hey Tom, would you consider yourself wholesale or retail?” And it’s very hybrid, right? Depending on who that customer is. So our focus is whether it’s financial or whether it’s healthcare, because this is very dense here in the City of New York. Whether it’s a large enterprise, both domestic or international, whether it’s a service provider, both domestic and international, cloud provider, whether it’s content, gaming, they all need space, power, and connectivity. And the beauty of it is that we can custom design whatever they need in our space.

Speaker 1:

Well, that was great. Thank you very much. So I know James and I both really appreciate you coming on today. Is there anything James that you wanted to add?

James:

No, I would just ask Tom if people are looking to work with DataGryd, what would be the best next steps for them?

Tom Brown:

Sure. They can reach out to info@datagrid.com and that will get to my entire team. I would also encourage folks to connect with me in LinkedIn and see all the updates. We’re very active on social media, providing and validating our message. I would encourage everyone to reach out in that grain. I’m also at most of the major trade shows, so please reach out to me directly at tbrowndatagrid.com. And I certainly look forward to having discussions.

Speaker 1:

That’s awesome. Thank you. And I want it to just fall too on the social media, because you had mentioned that earlier. Is LinkedIn the best place for people to reach out and follow you and see what’s going on or are there other channels that you guys utilize a lot?

Tom Brown:

Sure. So LinkedIn is a major, and that’s been very successful for us. We have a Twitter feed. We have also Facebook, but our PR firm, I Miller has done a great job in partnering with us. Those are the various ways that we continue to share our message.

Speaker 1:

That’s great, so I would imagine people can just look you up by DataGryd kind of pretty much wherever and-

Tom Brown:

Absolutely.

Speaker 1:

Really kind of hone in on what you guys are working on, on your message and on your mission.

Tom Brown:

Couldn’t agree with you more.

Speaker 1:

Awesome. Tom, thank you so much for coming on today. Really, really appreciate it. It’s been Tom Brown, CEO of DataGryd.

Tom Brown:

Thank you, [inaudible 00:28:14]. Appreciate it.

Speaker 1:

Tom, take care. Bye now.

Steve Sidwell:

Thank you for joining us for another episode of the tech bench podcast. Join us for our next episode while we’ll be speaking with Eli Scher, the founder of New Continuum Data Centers. If you enjoyed this episode, please make sure to subscribe and follow us on Instagram, Twitter, and Facebook at the LTTB Podcast. If you have any comments, questions, or show ideas, please feel free to email us at thetechbench@liquidtechnology.net. For show notes, visit liquidtechnology.net/techbench.