Clint Heiden, QTS Chief Revenue Officer on the Amsterdam Data Center Market Halt, Being People-Focused in the Tech Sector, & More

12/13/2019

David Liggitt: This is HawkTalk 30. And I'm with Chief Revenue Officer, Clint Heiden with QTS. And we're talking about the data center industry.

Clint Heiden, thank you for joining us, or thank you for letting me join you here in Dallas. Really appreciate it. And it's been a while and we've been trying to do this for a while, but we finally made the calendars work.

So, you're obviously the Chief Revenue Officer with QTS and had been in the data center industry for a long time. One of the things I love to do for people that are listening and watching is have the people that we're talking to just go through their background and yours is very interesting, family's involved, which is part of your story. So just take us back to kinda your path into the industry and how you got to be the Chief Revenue Officer at QTS.

Clint Heiden: Yeah okay, so I'll go back quite some time. So going back to school, I first asked my father, what should I try to study? He said, “Computer information systems. Do that”. So, that kinda got me into a technical path and had started to think about doing some consulting at Anderson or one of those. And dad calls me up one day and he says, “There's a little Macintosh company doing TCP IP software. You should think about talking to them”. No revenue, founded on a visa credit card. And I became the fifth employee.

We sold that business to PSI Net, went to UUNET, spent five, six years there, then did a couple of fiber companies. Fiber companies turned into a couple data center companies. And, I had a bunch of friends that had come to QTS and I really respected the culture and kind of the attitude of the “Powered By People” and the fact that they really believe in that. And I called up and I said, “Is it really true that the culture is as good as I've heard?”, and they said, “Yeah”. And, so anyway, I talked to Chad Williams. It was the right timing and I've been here a year and a half now.

HYPERSCALE DATA CENTER USERS VS. ENTERPRISE DATA CENTER USERS

David Liggitt: Well, talk about, obviously your role is focused on sales and efforts and bringing customers and users to the QTS portfolio which is quite large now. But let's talk about data center users today. One of the things that we certainly have seen is really a bifurcation in enterprise users and then some of the larger hyperscale users that are in the market today. But what do you see as kind of the key differences between those two types of users today?

Clint Heiden: Yeah, well, I think in general, there's a couple and we serve both. And I think where companies have the best strength is when they do serve both cause they go well together.

There are hyperscale customers that order in very large megawatt sizes, but they also have kind of these on-ramps that are very important clouds and, so there's different approaches for sales in terms of how you handle those two categories. And then on the enterprise side, it's more of a consistent level of sale and allows you to kind of have a less peaky market focus, which works for Wall Street a little bit better, right?

And the thing that we're seeing actually in both of those customer sets is they want to feel like, and, I think this is the world in general now, they want to feel like that data center is theirs. They want to feel the visibility, the control. They want to feel as if they're owning it and operating it. But they know you've got better tools than they do. And they know you can do it more efficiently. So we have focused very much on innovation so that you can go in, you know, it used to take a week to put in a roster request and get a consultant or contractor added or pick up a shipment or this or that; get a cross-connect order. Now with a mobile device, you can simply order a cross-connect anywhere in the world. You can take it down, you can order a workload to a cloud. You can, order another cabinet. You can check your humidity, your density, we have 3D renderings of your cage. You can go in and see the, all the serial numbers, what roster has come in.

So the big thing we're finding is, there is no differentiator in cement and steel. And what people are wanting to see is actually a company that cares. That also cares about sustainability because we use a lot of utility and resources. And that cares about the fact that their business is going to depend on being a digital business in a couple of years, if not already. And that we control them making it or not in a lot of cases and that's what they want from us. And I think we do that better than anybody.

“There is no differentiator in cement and steel. And what people are wanting to see is actually a company that cares.” - QTS CRO, CLINT HEIDEN

David Liggitt: And that's one of the things, we actually did a podcast the other day on the data center user and some of the challenges that they have, and one of the things that we mentioned was, you've gotta be able to pick a data center operator that you trust because you will be in the trenches with that company and they're there, really, to support your digital business.


THE MOVE TO HYBRID DATA CENTER SOLUTIONS - FLEXIBILITY AND PORTABILITY

David Liggitt: You also mentioned the maturity of the market and how, just now from your phone you can do certain things. I think back to, kind of, the mid 2000's when companies were still, and enterprise users were still in the mode of I'm going to own and operate my own data center. The capital markets had their severe issue in 08 or 09, those companies really start looking to colocation operators whose businesses have become really mature and it really changed the market.

And one of the ways, I think from a maturity perspective, we've seen it grow is kind of in this hybrid approach that a lot of companies have either hybrid colocation or hybrid cloud. And it really talks about, I think the flexibility users are looking for today. Why do you feel like that's important for the customers that you all have and people that you're talking to?

Clint Heiden: Yeah. It's interesting because we've been talking about cloud forever, right? And data centers and it's still a very I think it's still something that many customers don't have their full strategy around. So to the extent that we can offer a customer flexibility around solution portability. It allows them to go in and say, “Okay, I don't know what I'm going to need in five years, but I know today I need a hundred a hundred racks in a X by X cage. But I don't know how much of that I'm going to port to the cloud over time or vice versa”.

And we say, “Look, you don't have to worry about that with us. We're going to be your complete solution. And if you want to port 25% of your spend to a cloud offering, we'll convert that. We'll trim 25 of your racks down. So that you don't have to have the answer today because we would almost argue that if you did have the answer today, it's going to change anyway. It's always going to be different”. And so we've tried to say we know it's going to be different. “We're not trying to lock you into something that is not good for you. And so to the extent that we can make it flexible and portable that's what you're going to get from us”. And our customers have reacted very well to that message.

“We're not trying to lock you into something that is not good for you. And so to the extent that we can make it flexible and portable that's what you're going to get from us” - QTS CRO, CLINT HEIDEN

David Liggitt: Yeah. It's almost like, data center users today have to make the best decision for today, but also the best decision for tomorrow. And I think what, at least we've seen from our perspective is data center operators really changing their solutions to say, “Hey, what you have with us today, we will be as flexible as we can to serve you, one year from now, three years from now, when you acquire that company five years from now when you need to expand globally and those types of things”.

QTS’ GLOBAL DATA CENTER APPROACH

David Liggitt: So, and that's one of the things I wanted to talk to you about is just, as I mentioned, QTS has a very large US portfolio, in all the major markets and some different secondary markets. And you've recently expanded internationally with some recent announcements, but talk about just, I think from maybe a high level, just how this business is a global business now. And then, specifically around growing where you're growing in Amsterdam.

Clint Heiden: Yeah. So we're, just North of Amsterdam, Eemshaven, and Groningen. But one of the things that you'll find, and one of my favorite charts to show some of our own employees, is the one that describes how international and global we are. Because when you think about us, you think, wow, you've got 25 data centers in North America. But then when I show Hillsborough, Richmond, Piscataway, Miami, and Eemshaven, and the sub sea cables coming into those, we actually are the major... So if you think about the three largest cables that have just come in, and newest and fastest, you've got Marea, Brusa, and Havfrue and we have landed all three of those cables.

And so if you think about international connectivity, those are the new bridges where data is being transported across the globe. So, you don't have to be in Europe to be a massive European data center provider because they're all trying to get over here as well. I mean, the globe has shrunk. And so we have a, I call it the connected data center. We have a strategy around getting every ASN number into our data center, every sub sea cable, every IP player, every IX, anything that could be needed for the ecosystem to allow a company to exist digitally on a global level. We're going to have in a data center.

“You don't have to be in Europe to be a massive European data center provider...the globe has shrunk.” - QTS CRO, CLINT HEIDEN

HOW THE US DATA CENTER MARKET DIFFERS FROM ITS INTERNATIONAL COUNTERPARTS

David Liggitt: And what are some of the differences that you see between the US data center market as well as the international markets? I mean traditionally I feel like, I mean the US obviously has a very large footprint from the data center operators that are here. Obviously that's similar in Europe, but it's growing. We're seeing, additional growth in Asia PAC and other areas. But what do you see as, kind of, some of the key differences between those markets?

Clint Heiden: So this is interesting. Let's take Amsterdam and Ashburn. I think we're in a time where we've hit these easy buttons and one of them is Ashburn. We just keep saying, Hey, put another data center in Ashburn. Well, there comes a point where you've got to port or import the power, the water from West Virginia, from North Carolina, just to power that location. So why do we keep putting data centers in a location where all of the users are not... Data is meant to be digested by a set of eyeballs. So if 70% of the data is going through Ashburn, that to me says that 70% of the globe should live in Ashburn and it doesn't. And so, why do we keep stressing that region?

“Data is meant to be digested by a set of eyeballs. So if 70% of the data is going through Ashburn, that to me says that 70% of the globe should live in Ashburn and it doesn't. And so why do we keep stressing that region?” - QTS CRO, CLINT HEIDEN

And so one of the things that I found really unique and brave was recently Amsterdam said, “We're going to put a halt for a little bit and we want the data center industry to come back and tell us, how are you going to effectively use our utilities? How are you going to help us replenish the water? How are you going to not take over our commercial real estate scenario? And, and we want our city to be beautiful and historic for tourism”. And if you've been to Ashburn, that's not going to draw a lot of people that want to go. You get the idea of Amsterdam doesn't want to look like it has 50 bowling alleys and power lines. They want to make their money off of tourism and that kind of thing as well as data centers.

So 30% of the data centers in Europe are in Amsterdam. And I thought it was very bold and very intriguing that they took a step back and said, let's evaluate this. And you know why that's good for the rest of the market? So we're up in Groningen and, if you don't have to overburden a particular region, you get to spread out traffic. You get to spread out grid utility, you get to spread out water usage, you get to spread the workforce out. You get to give another region a way to play in the economic development of the digital world.

And so that's what we were trying to do with the Richmond NAP and getting an area to understand that, you've got the two fastest, largest cables in the world coming into Richmond from Europe and South America. You don't need to go to Ashburn to turn back around pass Richmond again to get to Atlanta. You don't need to do it. And it's such a simple conversation, but people aren't thinking about that. Because the easy button is Ashburn where we have a lot of data center land and data centers ourselves.

But, I think we've got to get to a point where we start diversifying more. And I think Europe is going to beat us to that punch in terms of how they think about the market approach. And Grange Castle, a part of Dublin ran out of power two years ago, the utility, and they ran out four years before they thought they were going to run out because all of the data centers picked that region.

“A part of Dublin ran out of power two years ago...they ran out four years before they thought they were going to run out because all of the data centers picked that region.” - QTS CRO, CLINT HEIDEN

And so it meant hospitals didn't have power. Homes didn't have power and they weren't, they are still not on utility power and ended up having to pipe in gas from 50 miles away to run the data center industry in that area. So anyway, we've gotta do a better job of not... The data center industry and the digital economy is going to be a very important one and we've got to make sure that we're doing the right thing. Right? And it's not just lip service anymore to say, let's go green. You really need to mean it and because it's going to become important.

David Liggitt: Yeah, I agree. And I think especially, I mean, if you just look at the size of the industry and how it's grown in the last three to four years, and thinking about the tax from how much infrastructure the industry actually uses. A lot of times we'll get questions about, Hey, you can build data centers anywhere. It just, it takes time and it takes money. And so but I think the industry to an extent, needs to, and it is evaluating ways to spread out the infrastructure demand to best meet the user and also solve some of the problems and challenges that the industry has, which is renewable energy and that kind of stuff.

“It's not just lip service anymore to say, let's go green. You really need to mean it and because it's going to become important.” - QTS CRO, CLINT HEIDEN

THE IMPORTANCE OF DATA CENTER CONNECTIVITY

David Liggitt: One of the other things that we've seen users, at least in my opinion, really stress over the last two to three years is the importance of connectivity. And you talked about the sub sea cables, but talk about just, and I want to go back to that enterprise user, and if you're listening and you're in this industry, this might be, a couple of cabinets to a couple of megawatts, or whatever the size might be. But talk about how important connectivity has become, especially as companies are relying so heavily on this infrastructure to support their business. And I know that QTS has come out with different connectivity solutions for users, but talk about that and why it's so important.

Clint Heiden: Yeah, so I call it the connected data center versus the unconnected one, 10 years ago banks would use a data center to house data. You would go to a branch and say, “Hey, I need a PDF of a check to prove that I paid my utility bill”. An employee would print it out and give you, the PDF of the check. And that's what they used the data center for. Now, that same bank, if they don't have their systems completely available to every user on a global basis, they will go out of business. And it's not crazy anymore to think that companies that don't become data companies, and data companies must be connected, will cease to exist in the future. I mean, I think a couple of years ago you think about stuff like that. Oh, a bank could go out of business if it doesn't have a good online experience or McDonald's will go out of business if you can't order online. Those were catchy themes or things to say two years ago. Now you realize, it's absolutely true.

If you don't have a digital capability, which means having the right connectivity, which means having diversity and diversification of where all of this data resides. Because part of having a connected data center is you don't want every bit going to Ashburn just to get on the same fiber and to be at risk of being, stocked, or cut, or whatever. You want things spread out. So part of being connected is connect where you need to connect to versus sending everything where you don't need to send it. Bottling it up and giving an inferior experience.

DATA CENTER COMPLIANCE AND SECURITY

David Liggitt: Yeah, and how do the end users today, like at the enterprise level, view compliance? I mean, what's their mindset around the compliance that obviously the data center would have and it's a combination of what they're doing plus the data centers together, but talk about that and how important that is.

Clint Heiden: It has gone from, the last five years I've seen it go from, measuring door jam width, and that was what they were looking for, fit and finish, to now it's, they know that they could be out of business if something happens to them and their data. And the idea of compliance and, in our CSO suite and who we've got running it. I mean, we've got experts in cybersecurity that, you would have used to have found working for the government, right? That, are now in house working on our stuff because it's become that important. So it has become one of the most important topics. And, and they will test you in every possible way. And especially when you get into the federal business, which we've done very well with them, but they will test everything you can think of.

CLINT HEIDEN ON LEADERSHIP

David Liggitt: Well, let me shift gears for a little bit. You've been in the industry now for a long time and you've had the opportunity to work with family. Now you're at a company that prides itself on the people that work there. We talk a lot about business leadership and just themes and maybe philosophies that have helped shape careers. And I always think, for the data center industry, it's really interesting to look at senior level leaders and get to just hear from their perspective, “Hey, these are the things that I've kind of clung to over the last 20 or 30 years of my career that have helped shape it”.

But when you think about the last however many years, what are the things that have helped shape you from a leadership perspective? Here you are leading the revenue side for QTS, but what has helped shape you?

Clint Heiden: Well, first of all, I think you have to be willing to do whatever you ask somebody else to do. So there are some, there are basic things and I think people expect and want to see that and when they see that they can start to respect and realize that you're in this with them. But, getting away from some of those basics, I'll never forget the conversation I had with my mom because I was very worried about this topic.

“You have to be willing to do whatever you ask somebody else to do.” - QTS CRO, CLINT HEIDEN

I was at James Madison, I think I was maybe a junior starting to think about having a profession. And I said, “Mom, how will I ever be as successful as dad?” And now, he was in the military. So, to me, he was the most successful person. I wanted to be like him and I didn't know how I could ever accomplish that. And she looked at me and she said, “Your dad is not the smartest guy in the room. He's not going to be this guy and this guy or this guy. There's one thing he is though, he's the person that everybody wants to work for”. And she said, “If you're the person who people want to work for, if you recognize that being that is the most important thing, you'll make it”.

So, I have always realized that my success absolutely comes from those that I work with. And by making them successful and helping them be successful, I focus on that versus focusing on my success, because it always leads to the success of the company. So, I pride myself on that. I've always thought, businesses are about people. And so when I got here and saw the phrase “Powered By People”. I felt like I'd kind of come to a place that got it.

“I have always realized that my success absolutely comes from those that I work with. And by making them successful and helping them...it always leads to the success of the company.” - QTS CRO, CLINT HEIDEN

A lot of people are like, nah, it's powered by technology, but at the end of the day, you gotta realize the people made the technology. And if you don't treat the people right, you're going to have a bad business. Because happy employees, they take better care of customers, they’re fun to work with, they create better products. And I just want to be at a place where we have fun winning together. We're passionate. We care enough to want to deliver the very best.

I just gave a presentation to the Dallas office saying, we are a lean machine of 600 employees and if we get those 600 going in the right direction, the same direction all rolling together, you won't be able to stop us. So that's kind of my number one belief.

David Liggitt: Yeah, that's good. Well I think that stuff is so valuable because that's really, I mean, that's obviously your background and your story, and it's been fun to sit with others that have similar things or conversations they've had with parents or mentors that have really helped shape the way that they do business. And the way that people like you are doing business is really shaping the data center industry and it's shaping the way that the digital infrastructure of the world is being run.

So I always love hearing those stories. Thanks for sharing that. And thanks for letting us be here in Dallas. This has been a really fun discussion. Appreciate it. Excited to see what QTS will do the rest of the year and in the future, and we appreciate the time.

Clint Heiden: Thank you, David.

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