International colocation and hosting services provider, Colohouse, hired Jeremy Pease a year ago from DataBank to assume the role of CEO and steer the business towards ambitious expansion. Hostingjournalist sat down with Mr. Pease to discuss the state of the market, advancements at Colohouse, and his future plans with the company.
“The key aspect of any successful organization is looking at growth,” stated Mr. Pease. “As CEO, I am constantly asking myself and the leadership team questions to uncover our business’s strengths and opportunities for further development.”
Investment company Valterra Partners, owners of the Colohouse business, were also stressing the importance of revenue growth when appointing you as Colohouse’s new CEO. What questions do you ask yourself and the team to sharpen your leadership?
“We conduct conversations around:
- How is the business doing year over year in terms of revenue growth? This helps us gauge performance and overall health to continue to align our business strategies.
- How well are the products performing? What are areas of growth or opportunities to fortify?
- Are we meeting the customers' needs? How can we push further to fill gaps or uncover unknown challenges?
- How is our sales team performing? When we analyze this in terms of the overall business, revenue is two components: either view revenue as top line revenue or look at bottom line revenue.
- How are we managing that revenue in terms of our COGS or the different components of the business from a cost perspective?
- How are we managing that revenue in terms of our COGS or the different components of the business from a cost perspective?”
“Overall, when I look at the organization’s complete strategy, we can look at each of these questions, the findings, and how to continue to build upon this valuable information and grow revenue. We also consider how do we continue to optimize our costs on the operational side of the business and manage that together. By constantly revisiting and examining these questions we reveal the health of the business and can provide the right insight to Valterra and their investors.”
How does this growth fit into creating customer value?
“As revenue grows, if you manage the operational pieces and your expenditures appropriately, your capital expenditure budget grows. This allows us to invest more into things like products, like investing in our new cloud 2.0 as we do today.”
“A lot of companies have a vision statement they use for Public Relations, or they put on their website. We want to go beyond and show our customers that we are continuously driving towards our mission – one of our core value's is ‘One Team, One Mission.’ With our actions and promise, our customers would see the growing opportunities we provide, like improving our cloud platform, backups, and Disaster Recovery capabilities. Not only can our customers enjoy the benefits that come with the advancements of those products, but we are better equipped to expand into new markets.”
“This includes expanding into new geographies and making an investment in doing that by having the capital expenditure to do so and acquiring and buying other companies. This is the piece of growth that we can offer to that customer base in terms of products and services, and we can also invest the ability to expand not only our geographies but even expand our current locations where customers may want to expand with us further.”
As a CEO, Mr. Pease, how do you balance incremental growth and growth through acquisitions?
“Let’s call it organic growth vs. acquisition growth. From Valterra’s point of view, organic growth is significant. Our marketing team is focused on brand positioning and awareness while driving lead-generation campaigns. This triggers sales opportunities, whether that is among the customer base or new logos. All this drives revenue, which leads to optimal organizational health.”
“Acquisitions provide a unique opportunity to bring in new revenue opportunities. I approach those by asking the same questions mentioned before to assess their organizational health. Are they growing year over year? Understanding their revenue pieces, how are those tracking?”
“Aside from organizational health, is the acquisition bringing something new for our customers? A new core product, new service, best-in-breed automation and portals? This is a crucial element to our strategy. All of this leads to cross-selling opportunities in the base.”
It was about a year ago that you joined to Colohouse from a managerial role at Databank. In what ways is Colohouse different from Databank?
“Databank is a wholesale colocation provider. They have expanded their footprint to over 70 data centers across the United States, and they are building many of those facilities with the idea of selling huge MW deals, which is their focus. They do manage services as a component of that to provide other opportunities to customers, but their focus is wholesale.”
“Colohouse is a retail colocation provider, and we will not get into the wholesale business now. We are not considering it; we are not building data centers. Our company occupies space within other data centers where we can focus on retail colocation applications and opportunities and on our managed services.”
“That is one of the main reasons I wanted to come to Colohouse. It is the part of the business I love - managed service offerings, bare metal, cloud, DR backups, security compliance, network automation - all these different pieces allow us to deliver a comprehensive set of solutions based on what we know the customer needs. So, the overall difference is wholesale colocation vs retail colocation. Databank is focusing on a massive scale with major customers building at an immense scale. At Colohouse, we are looking at providing services across the board, a little bit smaller scale in terms of retail, colocation, managed services, and cloud offerings, with a more concentrated focus.”
What similarities do you see?
“Both provide a lot of the same services and other than Colohouse not being in the wholesale colocation game, we are providing many of the same services up and down the board. Databank has a cloud platform, bare metal, disaster recovery, network connectivity, and provides retail colocation options. Our product sets are very similar, and we both look at the market very similarly in terms of the importance of those products and what it means to offer customers a range of different solutions. We both want to ensure we are seen as a single provider to turn to for any solution a customer needs.
How important is services diversification to Colohouse, and how broad may it become?
“Each customer’s application could have a different type of service necessary for that application. Right now, the industry is broken into ‘specialists,’ and for a customer to have one provider that can provide all the different services they need for all the various applications can be a huge advantage for that customer in their industry.”
“At the end of the day, when you think about having one vendor to do all of it rather than having 20 specialists across the country doing different pieces and pulling all of them together- both from the technology aspect and the billing aspect.”
“For Colohouse, we will continue diversifying our offerings for our customer base. Our core offerings include colocation, cloud, and bare metal. Then, all the other pieces that wrap around those core pieces: network connectivity, security and compliance, disaster recovery, backups, and hosting.”
How does diversification align with the evolving needs of (potential) clients?
“Our customers have unique applications and infrastructure needs, so they always look at what those pieces are and who will offer and support that application. As Colohouse continues to build trust around the customer and their needs, it allows us to function as a trusted advisor for them. An example of that can be, ‘I need some colocation because I already have the gear,’ or ‘I need bare metal services because we have a development team that's working on this application, and they need that type of hardware, or I need to be able to connect those across the country with network connectivity.’ We are constantly working on evolving the solutions platform and improving the customer journey and experience.”
Why do you think you were hired as Colohouse’s new CEO?
“This is an interesting question, and I’m going to share something that I don’t know that I’ve shared in any of the interviews so far, but it was interesting that the executive recruiter who reached out to me almost didn't submit me for the role because I didn’t have the main thing that Valterra was looking for in a CEO. Their number one requirement was someone with CEO experience who has taken a company through a significant growth process, and I needed that experience. However, I checked the boxes on all the other requirements listed, but it is not about checking them. When we started to get into the interview process, there was great chemistry in all the leaders that I spoke to from the organization, as well as all the board members and all the investors from Valterra. We all aligned in terms of our vision for the organization's future and what we felt like the future of this industry was about. In the end our vision alignment and my leadership style are what propelled me as the top candidate for the CEO position. The qualities I would bring to the organization and how much we both care about culture and values was a perfect recipe to bring me onboard.”
What achievements have you made so far in your position?
“We have done many wonderful things here, and I cannot believe we have done a lot in the almost 11 months of my time here at Colohouse. We established our core values, mission, vision, and values, the thematic goal for the organization, and consistently having transparent communication throughout the organization. We are absolutely knocking it out of the park this year; major milestone in closing over $300,000 MRR in the first half of 2023 is an exceptional endeavor. We can move faster and expand our offerings by evolving our technology. For example, we are currently investing in our next-generation cloud service - Cloud 2.0. We are also investing and expanding our space in facilities like Orangeburg, New York and reclaiming significant space in our Colorado Springs data center.”
“Another huge milestone is refreshing the Colohouse brand, bringing six acquired business units together as a whole. This was a massive focus for us to represent ourselves to the market better - Colohouse then and Colohouse now. This initiative was impressive. Another great milestone for the organization is when you look at our core values, we discuss people first. We align this value throughout the organization by celebrating great accomplishments and those attributed to those wins in our monthly corporate meetings. We try our best to acknowledge all of the hard work being done by our teams.”
“Along with verbal acknowledgement, we established bonus structures to reward our employees as they continue to help evolve and grow the business. A great milestone that we are immensely proud of is improving our benefits for our employees such as changing standard PTO to a flexible PTO, realigning health benefits to better fit the needs of our employees, and changing the commission structure to make sure that it makes sense for the future growth of the organization. We did not stop there; we also restructured the executive and senior leadership team to allow micro focus on the strengths and growth opportunities to continue to build this business. Those are some examples of what we have achieved in just a short 10 ½ - 11 months' time. I am incredibly proud of this team and what we have accomplished.”
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When it comes to geographic distribution of IT infrastructures and workloads, what vision do you as CEO have of the concept of edge computing?
“Some will say edge is a little overutilized as a term in our space, but I think it is important and I think it is going to become even more important as we figure out how to continue to maintain the volume of data traveling back and forth, especially when reaching customers that are in secondary, tertiary markets that are a little more difficult to reach. A lot of that is already being done through cell phones and 5G technology. Real connectivity must be available to support all devices and the multitude of data activities.”
“At Colohouse, we have certain secondary markets that we consider. For instance, our Colorado Springs location is a secondary market to Denver, and since Denver is becoming oversaturated, we have the ideal position to back up the businesses in and around that market. The Colorado Springs data center is considered a carrier hotel, so the connectivity and services are quite competitive and substantial.”
“Another example of Colohouse catering to secondary markets is our data center in Orangeburg, New York. The New York market has little real estate to expand with and is maximized. Orangeburg, like Colorado Springs, is the ideal data center location to support businesses that need more but cannot find availability in the New York market. These are examples of how we view utilizing edge computing to get connectivity outside the primary markets. And this is something the industry must focus on how we are getting to the edge in terms of all the customers and all the people that applications need to reach.”
What role do you think AI will play within Colohouse’s infrastructure services portfolio and over what time frame?
“The AI space and the high demand that comes with it is something we have discussed with our board members. For me, it comes down to building our bare metal and cloud services to have the capacity to manage AI, because at the end of the day, when AI providers start really looking for more overall colo space, it is going to be more wholesale. We have seen a massive six month spread with over 3 gigawatts of data center space consumed by AI.”
“Since we are retail-focused, this is different from where we are going to play. This type of activity is in the Databank realm where they focus on wholesale. For Colohouse, we will still have AI considerations and view it more from our cloud and bare metal services. Within the next 6 to 12 months, we will look at how we utilize GPU and CPU as combined opportunities to provide AI-capable resources within our bare metal and cloud solutions. We offer solutions today, but we must expand to accommodate elevated capabilities for AI providers.”
What is Colohouse’s strategy towards striking a balance between cutting-edge technologies and conventional data center services?
“They are in definition, but it goes beyond that simplistic view and is all about making sure we have diverse types of offerings based on the complexity of the customer and their applications. On the foundation, colocation is here for the customers that need a simple solution. They want us to provide power, space, and connectivity, and they will bring everything else to the table. Bare metal brings more to the customer with more software defined infrastructure where the customer can establish the server set that they want, while receiving all the automation and networking around that development on top of the platform. This type of build is meant for customers with dev teams who understand the specific complexities they are looking for within a software-defined infrastructure on a bare metal service. We are looking to provide this type of offering to that customer base. As for the customers that really want simplification such as, we do the monitoring, we do the patching, we do all the virtualization and they put their application on top of it and understand it will run appropriately to the system provided.”
“We are trying to consider all organizations, with all types of teams available to handle the moving pieces, that require a variety of solution options - from simple to complex. Flexibility is key. At the end of the day, we want to be able to provide the automation that the customer needs while providing customer service that they deserve. And so, we are always going to be focused on the services that are wrapped around the standard. I think this gets lost in technology conversations: that you can provide that cool new technology, but if you do not provide any service behind it, that can really cause an issue for the customers. For the Colohouse initiative, we want to be able to balance both of those within our offerings.”
As organizations evaluate service providers like Colohouse and its competition, what key factors should they consider ensuring the chosen partner aligns with their expectations?
“It is about evaluating. Organizations should ask many questions during consideration, like: What is it that they need and what are they expecting from the solution at the end of the day? Can they trust that solution provider to be their trusted partner, that they really want to work with for everything that they need to do and everything they need to accomplish? And will they get the service they expect from that provider at the end of the day?”
“When organizations speak to a solutions provider, ensure the provider addresses all the points presented, and, in most cases, an organization should want to receive feedback to challenge the mindset and give a different perspective on what they are trying to do. If the first response is ‘yes, I can provide you everything that you need...’ without discovery questions, then there should be some concern. From the provider's viewpoint, it is thinking about how to ensure the customer is optimizing your solution with all the different opportunities and products they have. Next the provider should inquire about their service, what type of service is the customer expecting? Do they want the automation and that is it, or do they require white-glove-like service? These questions serve well in making sure both the provider and customer get the ideal fit.”
“Another suggestion is to ask the provider about their CSAT scores if the organization will require service and that it is a core component. Ask them what their customer satisfaction is like. Ask them for some referrals about and what type of support are you getting from this provider? Because if that is critical to you, you really need to understand these values. Wrapping it all up - Do you know all their solutions? What do they offer? Is it what you need? Are they going to challenge you? Will they ask you the challenging questions and ensure you are getting the right solution and balancing automation versus customer service? And is that what you want and need from that service provider?”
At what stage is Colohouse now regarding M&A and further portfolio diversification?
“We have many core pieces in place - I just spoke about colocation, cloud, and bare metal. The next phase of our growth through M&A is adding to that foundation by stacking services and automation. We have a bare metal platform, but we would like to bring in automation around that bare metal. We are currently rolling out our Cloud 2.0 platform and what that means to us. As we look at these services, we start to look at what can be brought in through M&A, what would advance our timelines in terms of technology road map, product road map, and how that could help us?”
“At first, we were looking from the perspective that Colohouse brought together several companies, and each had different pieces to those platforms, but it was also opportunistic in terms of locations, geographies, and companies that were looking for an opportunity to consolidate at that point. Now, we are looking at various geographies, but we are more specific to the product offerings it can bring to the table for Colohouse. Our strategy now is looking at different companies that bring us other pieces of technology, different pieces of the product roadmap, and the overall vision we have for the organization’s future.”
“Is Colohouse’s acquisition strategy primarily focused on diversification or are there other goals as well?
“Outside of product diversification, we are interested in expanding to new locations throughout the US. Currently, Colorado is as far West as our services reach and our customers are asking for a true West Coast presence.”
Next to the U.S., how important are Europe and Asia for Colohouse’s go-to-market strategy?
“This is something that will come along with future acquisitions. We are in the Netherlands mainly because a customer needed us to be there, and so, we grew into that market organically based on customer demand. In terms of our go-to-market strategy, it is not something we are looking at today. During acquisition considerations, we evaluate if this opportunity is available within that prospect. As customers need expansion into Europe or Asia, it is something that we will assess and if that opportunity makes sense, we will absolutely go there and be there for our customers.”
To learn more about Colohouse’s proposition, visit their website here.
