Q&A with Flexential’s Chris Downie: All Indicators Point to More Positive Growth

CHARLOTTE, NC — Christopher Downie is Chief Executive Officer at Flexential, formerly Peak 10 + ViaWest. Christopher leads Flexential as a proven chief executive with deep expertise in the economics, delivery and operations of the data center and colocation business. Joining Peak 10 in 2016, he is responsible for managing the strategic priorities that drive profitable growth in entrepreneurial, high growth environments. Prior to joining Peak 10, Christopher served as chief executive officer of Telx, a leading interconnection and data center provider based in New York City, New York. He has over 20 years of combined executive leadership experience in finance and operations, working for Daniels & Associates, BroadStreet Communications and Motient Corporation. Chris was a featured speaker at CAPRE’s Carolinas Data Center Summit. After the event, Chris shared with CAPRE exclusive insight on the latest at Flexential, including their post-merger progress as well as the launch of their latest platforms.

CAPRE: Thanks for chatting with us today. What’s the latest at Flexential? What kind of activity have you had in 2019?

Downie: We came in, in 2019, very focused on growth. Not that we weren’t focused on growth before, but we spent a lot of 2018 principally focused on the continued integration of the two companies and the formation of what is Flexential now. It has a rock solid foundation of combined systems and processes and capabilities that we can deploy fairly seamlessly on a national basis. We’ve got a fairly broad geographic footprint, from Phoenix to Philadelphia and from Ft. Lauderdale to Portland. We’re seeing good returns as we exited 2018 into 2019, and in addition to continuing to focus on the retail tenant base, we’ve got 3900 customers spread across those facilities.

We’ve also developed a wholesale product capability in the second half of last year and built a team to build that effectively. In Q4 of 2018 and Q1 of 2019 we were successful in closing several large multi-megawatt and wholesale transactions, in the scale of 3 megawatts. That demonstrates our ability to get in front of those demand sets. And now we’re enjoying a much stronger foundation of back office support.

CAPRE: What about expansion? Where is Flexential building and eyeing?

Downie: As we continue through integration we’re also seeing some expansion. the markets where we’ve expanded recently have included Portland, which is tremendous for us and had great growth performance enhanced by the overseas fiber cables. It’s a high demand marketplace. And then Atlanta, where we actually just commissioned new capacity during this last month. There’s a lot of activity around that 70,000 square foot footprint there.

Next on the list is Charlotte, and we’ve also been developing capacity in Nashville for one of those large wholesale tenants that I mentioned earlier. So there’s continued growth in the platform and a much stronger sales force to take the new Flexential value proposition to market.

CAPRE: What’s Flexential’s differentiator in this rapidly evolving market?

Downie: Our FlexAnywhere platform continues to differentiate our offering to the market.  We’re experiencing really strong growth in those product lines, given their importance to the data center and deployment. We continue to focus on hybrid utilities and product offerings, as additional available services from those facilities. We still offer Private Cloud. We have a number of data protection products, such as Disaster Recovery-as-a-Service, Recovery Cloud, and professional services continue to differentiate our engagement with our customers simply because the customers are facing more complex IT infrastructure requirements.

Chris Downie, CEO, Flexential

CAPRE: What industry trends or trajectories are you keeping tabs on as you prepare for the next chapter?

Downie: Obviously, we look at all of the research out there to see what changes in the growth of cloud consumption or colocation. Those are indicators of that universe getting closer and closer to utilizing third-party environments. Then there are population centers, and some are scaling more quickly than others, and we’re in a number of markets that are demonstrating both business and population growth, like Atlanta, which has been a good data center market for some time. Or you can look at markets like Denver, Phoenix, Charlotte, Nashville, even Las Vegas which are experiencing population growth.

CAPRE: It was great to hear from you at CAPRE’s Carolinas Data Center Summit. How did the conference go and how was your panel?

Downie: It was a good audience. The agenda offered a broad perspective. There was good discussion about the market, capital raising, real estate development, and what’s important for operators. It gave the audience a broad perspective and a broad return. My session was a bit more focused on my longer-term experience. some folks have been in the space longer but I’ve been in the space since 2007, and I have the first-hand experience of being in the middle of a lot of dynamic thing going on in our industry. So we spoke about how I’ve seen things evolve and based on that experience, where do I see things evolving next? I hope that longer term perspective is helpful to people.

CAPRE: What were the takeaways? What kind of themes characterized the panel discussions and networking?

Downie: For a number of the participants in the panels, there was a question of whether we’re in the early innings. And all of us who are in it, we see the opportunity for continued growth. I definitely support that thesis. I think that with a number of business that are hyperscaling – and I’m not just talking about AWS, Microsoft, and Google – but more so the Dropbox, Uber, Nvidia, those companies that are scaling massively as a result of the compute or their ability to process massive data, to make something that people have been doing for 100 years incredibly easy and cost-effective to come.

All of that generates data and it’s all a benefit to what we do. It’s not just focused in primary geographic areas. Scaling needs to not only accommodate much more than just the massive population centers. We’re very Tier II market focused, and there’s going to be a massive amount of building going on in terms of the ability to process data in and around our marketplaces.

CAPRE: Let’s talk about the Carolinas market specifically. What sets it apart?

Downie: We’ve been here a long time, so we’ve kind of grown up with Charlotte and Raleigh. I’d say that Charlotte is a bit bigger of a population center, although Raleigh has its own growth from the research triangle and a lot of the leading companies that have been doing research and education in that arena. there’s been a lot of good things going on in these marketplace for a long time.

New Event SquareSo there’s been solid growth and just given the land availability, the workforce availability, the tax profile, the power availability, there’s a lot of ingredients that will make north Carolina a continued good place to do business. There’s been a lot of large enterprise here from a data center perspective – look at T5 and CyrusOne. People don’t always think about this region because they’re so focused on Ashburn, but Facebook is building in the Carolinas as well, and they’re there for a reason. These are all good indicators for forward growth.

CAPRE: Speaking more broadly, what kind of economic trends are setting the pace now, perhaps in terms of trade of interest rates?

Downie: Given the fact that a lot of our peers are REITS, interest rates have the ability to impact valuation. There has certainly been an increase in interest rates. and we’re also a capital-intensive business. But it’s just something we’re monitoring, it’s not dramatically impacting our ability to be successful. Given the larger hyperscale capacity being developed, and the fact that we’re developing large facilities, there’s a long lead on infrastructure procurement.

So we’re also keeping an eye on that – if it takes you twice as long to get generators or UPS or switching gear in house, then that can obviously delay your ability to put capacity in front of customers. now we’re of a scale. We have a pretty good idea what we’re building in a given year, so we place those orders well in advantage. But with all of the activity going on, you have to be aware that a generator can be hard to get at a given point in time. But we haven’t seen any material impacts yet. Then given what’s going on in the world, what’s happening with China and tariffs, that could impact our materials as well – but it’s not had a material impact yet, we’re simply keeping an eye on it.

CAPRE: Got it. Thanks so much for your time today Chris. We’ll see you at another CAPRE Data Center Summit soon!