Not Your Father’s Data Center - A Conversation with an iMason with Dean Nelson

Episode Date: July 12, 2022

The hats he wears are many: Chairman & Founder of Infrastructure Masons (iMason,) CEO of Virtual Power Systems, Co-Host of The Next Wave Podcast, and Founder & CEO of a strategic advisory and consulting service for Startups, Fortune 500 companies, and Investment firms. One might call him a living legend in the data storage space. Back by popular demand, Dean Nelson joined Not Your Father’s Data Center for another tremendous conversation with host Raymond Hawkins. Nelson queued up some significant trends in the data storage space since his last visit that he was itching to discuss. “If you think about our industry, today we have 7 million data center locations,” Nelson said. “These are places that have some type of compute in them. And there’s about 104 gigawatts of capacity built. That’s capacity that could be used. From a consumption standpoint, there’s 594 terawatt-hours of consumption. If you now equate that, that’s 2.4% of the total energy draw globally. Through iMasons, we created this baseline on purpose. And what it includes is three categories. So, digital infrastructure, in general, is providers, networks, and crypto.” Breaking down these categories helps define where the energy usage is going and how Nelson and his iMasons can find new ways to maximize the consumption of that capacity. Even within the 594 terawatt-hours of consumption, Nelson said not all of that energy is consumed at once. Only roughly 67 gigawatts of the 104 gigawatts of power get consumed. That leaves at least 37 gigawatts unused around the globe. “And why is that,” Nelson asked. “That’s because of buffers and buffers, and everything else that happens from enterprise applications to cloud to data centers and everybody saving to ensure that they don’t have an issue.”  

Okay. Well, welcome again to another edition of Not Your Father's Data Center. We are joined again back by popular demand, Dean Nelson, friend and colleague, and also what's the right way to say? He and I come from the same generation. I think we're within a year of age. So life experience is the same. And Dean carries lots of titles, wears many hats, CEO of Virtual Power Systems, as well as the founder of iMason. And Dean, happy to have you.

And thank you so much for coming back. Yeah, thanks for having me back. I always loved our conversation. So we get to do it back. Yeah. Thanks for having me back. This is, I always loved our conversation, so we get to do it again. Yeah. Yeah. I appreciate you getting to chat with me. It makes my job really easy.

I asked two questions and then we, everybody gets to listen to how smart you are and it makes it go really easily. So not every podcast is that simple. So usually they say I talk too much, so that's a positive nature. Yeah. Not a problem when you're recording a podcast, we need you talking. So that's not a problem. Positive nature. Yeah, not a problem when you're recording a podcast. We need you talking.

So that's excellent. Well, man, I know you and I have chatted several times. Last time you were on, you did a lot of VPS and talking about how managing virtual power. If you're willing, I'd love to do a little bit of a revisit of that. How much we want to talk about virtual power systems, how much you want to talk about iMason or any other subject you like. I just love listening to how you think and how you see the world. But if you'd review a little for folks that don't know what virtual power systems is, if we could start there, that'd be great. Yeah.

Yeah. Virtual power systems is a software company. And what we're focusing on is unlocking stranded power in data centers. So that's the basics of it. But I'm going to broaden this out a little bit for your audience because there's been some really, really cool movements, I think, and trends that have been happening since we last talked. And the way this works is that if you think about our industry, today we have 7 million data center locations. OK, so think of that as unique addresses. These are places that have some type of compute in them.

And there's about 104 gigawatts of capacity built. OK, so 104,000 megawatts of capacity built. Okay, so 104,000 megawatts of capacity built globally in those 7 million data center locations. That's capacity that could be used. So then from a consumption standpoint, there's 594 terawatt hours of consumption. 594, okay? And if you now equate that,

that's 2.4% of the total energy draw globally. 2.4%. 2.4%. Now, this has been a contentious discussion from so many different people, right? Because how do we actually define what it is that actually is included in that number? And so through iMasons, we created this baseline on purpose. And what it includes in this is basically three categories. So digital infrastructure in general is providers, networks, and crypto.

All right. providers is basically any colo enterprise cloud edge hyperscaler just anybody that is providing a service either to others or to themselves okay so we lump them all together then we've got networks and this was not really considered before when we talked about quote-unquote data centers uh they excluded the network so think of fixed fixed networks, broadband, right? Telcos, all of those aspects. And then the third one was we haven't been considering crypto and all the blockchain elements that are driving crypto. And so right now, 80% of crypto consumption is Bitcoin. It's the math, the hash rates that are going in there

to actually discover the actual coins, right? Right. Right. But if you look at and break that down, 216 terawatt hours is the providers. That's cloud. That's everybody. 216 terawatt hours. Okay. 266 terawatt hours is network.

That was a big surprise. People didn't expect it to be that big. That's a big number. Yep. Because you tend to, you think of two post racks and little bitty locations and not a lot of power and sort of your vision. I am shocked to realize that one's bigger and bigger by 25%. It's not just a little bit. Right, right. Wow.

And the thing is that network was here first. Yeah. We didn't have these big core data centers we had offices and all all this stuff all over the place it still is there and more and more of it so think of also the the the wiring closets and the it aspects and buildings and there's just there's tons of of stuff out there and but network was a big chunk and this is controversial by the way people are are pushing back on the numbers right which is great because in the end of it, is the category right? Yeah. Providers, network, and crypto. Okay. Those are the three big consumers. If you want to move things around,

it doesn't matter. It's still the total amount of consumption. So I'm doing the math quickly in my head. I'm assuming this leaves us with uh what so that's that's 482 so that leaves us with a hundred and what 24 100 is that what it is i think it's 114 114 116 something like that so 216 266 and 114 if i remember correctly but that's crypto now now the important thing about crypto is that just four months ago it was 140 plus. China made a decision to no longer enable it, right? Right. Well, what happened is it shut down in China, but it all is moving. It's coming online somewhere else.

It's going to Europe. It's going to the Americas. It's going to LATAM. It's going all over the place. So that number is going to continue to increase. But think about it. 114 terawatt hours is crypto. It's not going away.

Okay, so the reason I bring this back up is if you look at that, that's 594 terawatt hours. Okay, great. But we built 104 gigawatts of capacity. How much capacity in a given second is consumed in that 594 terawatts? Those terawatt hours translate to 67 gigawatts of energy consumed of the 104. That means we've got at least 37 gigawatts unused globally. Yeah, built infrastructure not being used. Right. And why is that? That's because of buffers on buffers and everything else that happens from

enterprise applications to cloud to data centers and everybody's saving to ensure that they don't have an issue. The data center buffers it. The hardware team buffers it. The actual shared platform buffers it. The applications buffers it. Everybody buffers. The power company buffers it. Everybody.

Yeah. Right. Because they can't have the state where they don't have what they need. And so the example here that I use is that, by the way, that's conservative. 37 gigawatts is assuming that we have 60% utilization of built capacity for actual providers and for network. We don't. In your three buckets, which I've really, really, I think that's a great categorization. I like the categories,

providers network crypto. How do you account for when a crypto is in a provider? I'm assuming you've done the math and not double counted because there are cryptos that sit in providers buildings. How did you account for that? Right. Not much, by the way. And the reason is they don't need that. And the majority of them don't want UPS generators. They don't want any stuff they don't want cooling right they have a very unique right they reap and by the way this is the debate that was happening well what if it's a carrier hotel that has a colo in it okay great it's a location that's going to have a segmentation of it's going to have some network and it's going to have some provider yeah but the difference the difference here is that it's a location it's a location.

It's a address that's unique. That unique address has a certain amount of capacity built and it has a certain amount of source energy. So you should be able to now add up all those things and represent it the right way. But the thing that's important

is we need to have unique addresses, just like we have unique IP addresses on the network. There's no duplicate networks. NAT hides it all. But in the end of it, on the internet, everybody's unique. You get that point. You know exactly what it is. And an identifier that goes with it. That's right. Yep. So data centers need to be the same way. If not, we can't have a baseline measurement

to show progress. So this has been an iMasons effort. And I've been working with Rob Aldrich. He's the chair of the sustainability committee for iMasons. And we're finishing up this paper to publish about this. And I'm just sharing the numbers with you. And Eric Massonet is with UC Santa Cruz as well. He has worked with DOE and a whole bunch of companies and other academics on getting these baseline numbers. And this is how we've now rolled them all together. So we're starting from there. Okay. And what I care about is we have a starting point. We got a baseline. Now, the reason I bring this back up is that if we've got this much stranded capacity out there, what are we doing with that stranded capacity? And so I look at data centers around the world

and we sell one product today. We sell a 5.9 SLA with a certain term, with a certain efficiency, at a certain price, right? And the majority of them are the REIT structures. So they care about the asset. They are not driven by the utilization. I build a data center. I sell it. It's used 60%. It's 100% sold.

I build another one. That's right. It's 100% sold from an I generate NOI on my asset from a dollars perspective. There's not really a technology understanding of it. What did I build? What did I utilize? What's the utilization? It's rather, hey, I generated the rent out of that asset I needed, and I'm good. Right. Exactly. And again, we understand why the REITs are driven by assets and the rollover of the money that has to go in because of their structure. So the reason this happens is because they have to report in a certain way. And utilization isn't something that's going to move the needle on the other side.

So tons and tons and tons of money is coming in. But to me, from a sustainability standpoint, that's not a sustainable model. We're basically perpetuating low utilization globally. And that's going to happen in these emerging markets too. So what we care about is can we help unlock that stranded capacity? Can we still keep the models that work for REITs, but also bring them additional revenue? But now, okay, I gave you this baseline. So you get an idea. There's like 37 gigawatts capacity that is translates to about $222 billion worth of investment that is not

yielding returns. There's money left on the table, right? From a sales standpoint, I should be able to sell that capacity. Yeah. Well, so hold on. Let's talk through it, Dean. So I get what you're saying in the sense it's not generating return because it's not being utilized. But in the calculus of the REIT, they built the building, they generated the rent they wanted on the building. And in that calculus is some stranded capacity, is some overhead, is some protection. So I get your point of it's not generating revenue, but from a REITs perspective, hey, I got the return on the building I wanted to get. What I hear you saying is, hey, that's nice, but let's look at it. Let's look at the same

picture from the other direction and go, wouldn't it be nice if you could utilize all of that asset? Right. So basically they've achieved their objectives. They have an asset that has value that's predictable over 10 years. That's what the REITs really want. That's why they invest in airports and power generation and all types of things. They're infrastructure assets that are predictable. But if you flip this back around and you think about the people that are investing in these companies, they are ESG focused, the investment in sustainability. And so we've got

this disconnect between that. And so when you start to expose this to the actual investors to say, there's money left on the table, but there's also a large embedded carbon footprint that's exacerbated because we're not utilizing what we built. That's going to be counter to what's happening because Blackstone, BlackRock, Macquarie, all of these really big investment firms. Yeah. Yeah. They're all ESG focused. No question. Yeah. How do we make sure our dollars are being spent in a planet wise fashion? Right. And for us, if you think about it, we're 2.4% of the total energy draw for the world, but that's digital infrastructure enabling like everything.

Yeah, exactly right. It's great, but we're technology. We should be able to know exactly what the real-time carbon impact is of digital infrastructure. So by having this, we now can be able to see unique addresses, the actual built, the type, and the energy sources of it. We should be able to calculate carbon footprints. Right. So hold on, Dean. I want to make sure, I want to talk something out, make sure I'm tracking with you. So what I hear you saying is, and the 65% or 37 gigawatts of capacity that we're not using. What I think I hear you're saying is two things. One is there's a bunch of capital investment in that equipment, in that plant and equipment that is prepared to provide electrons to digital equipment. We spent a bunch of money on it.

We delivered a bunch of it, and it's not delivering any utility to the digital infrastructure world. What you're not saying is, hey, we're wasting the energy because if there's not drawing, we're not spending any energy. What you are saying is, Raymond, what about all of the energy and all of the effort and all of the plants and equipment and all of the raw materials and all the product that have gone to build a third of the global infrastructure that's sitting there doing nothing. That's what you're talking about. I don't know how many cars are in the world, but imagine if a third of the cars in the world never drove anywhere. That's really what you're saying. Did we need that? I don't know how many cars are on the planet. It's a bad analogy, but did we need that other 1.2 billion cars that just sit in people's driveways and go anywhere?

And that's what you're saying, right? Yeah. Yep. Yeah. And so, and again, especially for our industry, because we're so focused on efficiency and sustainability now, it's really, it's, the money's behind it. Yeah. There's a disconnect here. And the reason I'm bringing this back up is I want people to understand that there is a large pool of capacity that is not utilized. Okay. And then

we've got a model that we do in data centers right now that we sell the RFP process, the contracts and everything else is that it's driving a certain behavior. And I'll give you an example. When I was at Uber, we had a full region fault. We lost the West Coast. Done, out, right? And so we had the East and the West serving the world. And when we lost the West, all of those things had to fail to the East. Okay, so think about this.

When Uber was basically trips, eats, freight, any of those things, they serve cities out of a region. So Paris and New York and LA are served out of west. Okay. So when we fail, that actually goes and shifts to be served out of the east. When that failure happened, the total increase in draw in the east of half the world's capacity migrating to the other region was less than 10%. It was single digit increase in capacity consumption. So you're pointing to an overbuild environment. Again, buffer against buffer against buffer. Think of the server, right?

In the server, they put power supplies. The power supplies are oversized because all these components could be in there. I could have more CPU. That's right. And they all could be running at 100%. Yeah, that's right. Right. That's right.

But they don't. And so now you've got this buffer of the power supplies. Then you have the buffer of the data center. Then you have the buffer of the data center. Then you have the buffer of the utility. But then you take the next layer and say that compute is shared in the shared compute layer. They buffer it by sizing it appropriately to say certain virtualization, which means the buffers go up that direction. Then you have the applications that say, well, I have to have this much. So they buffer that.

Then you have resiliency of the application. They say, I must be in three zones in a region and have multiple regions. So you can imagine how much waste is in that stack. It's like the electrical distribution system generation and how much is lost by the time it gets to where those electrons are consumed. Huge amounts, right? Transformation, distance, all that stuff. It's the same stuff here. We build in all those buffers because, quote unquote, we have to have the resiliency.

And what I'm telling you is that every company in the world has the same architecture. I haven't found anybody that has something different. It just comes down to how efficiently they operate it. So there's a thing called replication factor. And that basically means that if I have two regions, I need to have 220% of my capacity. Because I have 100% in one region, 100% in the other. Then I have 20% just in case in one and 20% in the other. 220.

So that's a replication factor of 2.2. If I now do three regions, my replication factor goes down to 1.8. If I do four regions, it goes to 1.7. Like it keeps going down to where if you've got enough distributed capacity, you could have only 1.2% of the capacity you need to have the same resiliency.

Yeah, because it's divided over multiple ways to essentially fail to replicate. Yeah. But this is a systems architecture challenge of how people go in and do this. And it's complex. It's hard to get down to those things. But people have been spending a lot of time on that. My point is that there is at least half of the industry, half of the companies in the world have this legacy approach where they've got so much excess. So all this translates back into it manifests in the data center of capacity. This is not used. Right. Right. And Dean, you're talking about you're talking about changing a global mindset.

I mean, that's really what we're talking about here. Right. You're saying, hey, we got here in a legacy way. I understand how we got here, but is it how we want to go forward? That's really what I hear you saying. And how do we begin to change the mindset that I don't need redundancy on redundancy on redundancy, even though that's how I started this business? I meaning the industry, right? That's how the technology space started. When we first started running computers and wow, wow, that's really important. And if something happens, that's a problem. Great. We'll do two of them. And that was the response, right? And oh, if we're going to do two of them, well, heck, then let's put them in a RAID array and let's have a whole

group of them, right? And that's what we're talking about. And essentially it's a crude analogy and I'd have to have my data storage friends from days gone by. But essentially what I hear you saying is, hey, let's raid our ID, you know, the digital infrastructure, not just the storage subsystem. That's what I hear you saying, because you can manage your replication factor dramatically better in a raid array than you can in the way the data center industry is built today. Number one, the only way that works is with software. And if you think about it, we hit a wall in compute about 10 years ago, and that was dedicated servers, dedicated storage, dedicated network.

And what did they do? They came up with virtualization. And then virtualization became containerization, right? Kubernetes came out. So orchestration started happening and they were able to use software to now get more out of it. Okay. Yeah. Yeah. There's no question. Yeah. That's exactly right. I'm going way back in technology to use the RAID example, but that's it. Right. And it used to be, if you needed a hundred megawatts and you wanted to fit fault

tolerance, you got a second hundred megawatts. And we started going, Oh no, no, no, that's not the best way to do it. Right. Let's let's there's, there's, we don a second 100 megawatts. And we started going, oh, no, no, no, that's not the best way to do it. Right? We don't need two of the same. And it started at the storage level and it's cascaded up the stack of compute. And I hear you saying, let's keep going. Let's take it into the data center side of the compute world as well. This is nothing new if you think about it.

They virtualized the compute, the storage, and the network. We have not virtualized the power. That power plane is nothing new. If you think about it, they virtualize the compute, the storage and the network. We have not virtualized the power. That power plane is still dedicated. Well, I'll take. Yeah, you're saying compute. Let's just go through the computer. Right. Because I have I have an answer I give folks when they say, hey, Raymond, do you think that the tech, the data center is going to keep growing as computers get smaller? I'm like, well, hold on a minute. We had three major events that shrank the computer, right? And what were those three major events? The first was four major events, excuse me, not three. First was, and not in order, we virtualized the operating system layer, right? We took utilization from 12% in servers to 90% in servers, right? So we got to use a lot more of the server by virtualizing the operating system and slicing all the assets in the system. How are we able to do that? Because

we've got to put more cores on a single processor, right? We used to be one core, one processor. We've got multi-core processors. How do we manage that? And how did we handle the intensity of multi-core processors? Well, then we virtualized the memory, right? We used to, excuse me, virtualized the storage. All our storage used to be spinning platters, which have all kinds of limitations on their speed because a platter is spinning, electricity is being used. And we virtualized that by putting them on flash drives, right? So we moved, we made the huge shift from physical spinning platters to flash drives. And then we're now doing virtual networks, right?

So those four components all fundamentally change the physical footprint, the energy use, and the utilization level. And what I hear you saying is, wait a minute, all those things, let's do it outside the server, outside the rack. Let's do it at the digital infrastructure level. And it makes complete sense because you're right. We've already done all of that, for lack of a better word, inside the computer. I mean, it's a terrible description. But, yeah, that's what I hear you know that you're right on uh the uh we just haven't applied um the software methodology software defined power right to the power plane we haven't virtualized the power plane

and this is i think people have a hard time getting their head around it because like well you can't virtualize power you can virtualize power and here's what happened think about a server you just outlined it It's still physically bound. Yeah, exactly. It's no different than virtualizing the processor. It's no different. You just think about it differently., why can't you have it on electrons pumping through the wall? It's the same. It's a physical asset that has its own physical constraints, but you lay a virtualization layer and then orchestration layer on top of it so that you can utilize that asset more efficiently. That's all. I say it's all you're saying. That's what you're saying. All discounts. That's what you're saying, right? I mean, let's lay a virtualization

orchestration layer on top of the physical asset of power. So we have an intelligent control of energy that basically is a virtualization layer. And what our software does is we start with measuring. We're looking at what power is being drawn where, then we're assessing within that one, is there anything that's changed? And then we're taking action. So the difference here is that today when we sell power, you sell the power and it's just dedicated to somebody. But that power itself is not all used. So if you're now saying, I'm going to stack rank my virtualization of my power, this manifests in SLAs. Today we sell a 5.9 SLA.

That 5.9 SLA is for that 10 megawatts, and that's it. And however you utilize, whatever it is. But assume that they're using 50% of it. Okay. Well, I also have that 10 megawatts in a 5 makes 4 design. Has another 2 megawatts of redundancy on top of it. So I have 12 megawatts, and I'm using 5. You have 7 megawatts never used. So you offer up additional SLAs. Imagine a 2.9 SLA. A 2.9 SLA means 1% of the month I could have an outage.

A 2.9 SLA is seven hours a month if you have an issue. So I sell another five megawatts of two nine SLAs. I've already sold out 10 megawatts of five nine. They use 50% of it. I sell another five megawatts of two nine SLAs. Let's assume they use 50% of it. That's seven and a half megawatts of 10. Yes. You still have another two half megawatts of headroom. So you can oversell this capacity.

And then what you have to have is the relief valve. And this is what happens in cloud. And I'll explain that in a minute. But if you've got a 2.9 SLA, that means that if the other ones are starting to consume, you shed the load of the 2.9 SLAs. It's part of the contract. Because he's agreed to it. That's right. He's agreed to it as part of it.

Yeah. Because today we basically say you can have any color you want as long as it's black. Yeah. It's a 5.9 SLA. As long as it's 5.9, you can have whatever one you want. Right. So now you start. Thank you, Mr. Ford.

Right. There you go. Got a model A or whatever. Yeah. So, so when we now start saying that that is not the way that applications work, let's go into cloud for a second. Cloud today has a flexible model.

They call it elastic compute, elastic storage. Why? Because it can actually grow or shrink. So what you do is you say, I'm going to spend X amount of dollars and then I'm going to use the cloud. OK, so that manifests into three blocks. For infrastructure capacity and cloud, it's basically reserved instances, on-demand instances, and spot. So those three blocks, reserved instances are just like reserved power in a data center. I have them, I pay for them. If I use it or not, it doesn't matter. You're paying for it, right? So that reserved capacity,

an instance, by the way, for people that may not know, an instance is a virtual machine. It's virtual CPUs and memory, right? And storage and a network thing. You carved up this virtual system, this instance for people to use. Okay. So I'm going to get reserved instances. They're mine. They're dedicated to me. Then they've got on-demand instances. If you suddenly need more, you can burst into them, right? You pay more for it, but it's there when you need it. Then they have spot. Okay. So spot is basically the capacity is not used, sold on an open market, but they have a two-minute grace period. Basically, if they need it back, they're going to tell you, and they shut down in two minutes. So people architect to this already. They have applications aligned, services aligned to the different types of capacity. So take this concept, reserved, spot,

and on-demand instances. Translate that back down to data center reserved power, on-demand power, and spot power. Okay? So the way that manifests is I've got a 5.9 SLA rack. That rack is reserved power with on demand power that they can burst into. It's still five nines. So you sell that you basically have this capacity that's going to be there all the time they're consuming and they can burst in as they need it. You're basically giving them the insurance policy, the buffer that they would normally do. You provided this burst. So I'm talking about the colo, right? Okay. Then you have spot capacity, spot power. You land the racks and you allow them to consume what they want when they need it. Okay.

So reserved is based on kilowatts rent and then consumption of power and PUE. On demand is kilowatt hours. It's a loaded cost. When you consume it, you just pay for it. It's metering. On spot, same thing. I've got the ability now to put it in compute, and when I use it, I pay for it. Well, what that works out to be is all of a sudden you've got these things.

You can roll 5-9s and 2-9 SLAs. Spot is 2-9. Spot is the stuff you'll shed to ensure the 5-9s are never shut off. Yeah, this is back to your 10 meg, 12 meg example. What you're saying is instead of me trying to recover all of the cost of those other seven megs in the rent per kilowatt of the five megs, why don't I offer that at one price and then offer the other two spot and on demand at another price and being able to say to the guy, hey, you can have this capacity, but you have to agree to this level of SLA. Hey, the reason you get it for a 40% discount is because it comes with a radically different SLA. And you understand your, frankly, it's a little bit, this is a really tortured now,

it's a little bit like subordinated debt. You understand that when that business has a problem, all right, the bank goes first and this creditor goes second and you go third. You're just agreeing on the front end. Hey, for that huge discount, I'll take third spot. I'm third. Yep. And by the way, the beauty of this is that it's not like they have to rethink everything. They do this in cloud every day. That's right. It's already part of the cloud infrastructure. That's right. It's how they think about cloud infrastructure. So the way that these companies go in, they architect and orchestrate services to leverage those different quote unquote SLAs in cloud. Right. Their cash register application is running in 5.9. Their HR application is running in 2.9. Because if it's out for seven hours this month, it's okay. It's not costing us any money.

The RTO, that return to operation. Apology to all HR professionals. I'm just saying it's not the cash register. Right, right, right, right, right. You can wait for a bit for your vacation to be registered. That's right. You can't wait for a payment. That's right.

Exactly right. So every company has these different service levels, right? There's different services. Their services need to run. And so what we've missed in the data center industry is mapping that. So what we do as VPS is a long way to get around to this thing,

is we unlock that strand of capacity by enabling cloud-like flexibility on-prem through reserve power capacity, which is really, really right-sized contracts, on-demand power, and spot power. So, Dean, I got to believe that my friends in the co-location business who are trying to manage multiple customers, multiple SLAs, multiple environments with a single set of infrastructure,

that this has to be viewed as revolutionary and just an incredible opportunity. And you don't have to name customers. We're not asking for competitive or proprietary information, but how is this getting received in the marketplace? What's great about this is that we pivoted the company earlier this year. We were building hardware for a long time, right? And the hardware we had was

where we protect the grace period. Because again, a spot rack that goes in would have two minutes, two to five minutes of grace period, which means you need to hold it up for that period of time. What we found is that, again, because of the utilization,

the majority of them don't need additional energy when you're at lower utilization. You're using the capacity that exists. So you can give the grace period and shut it down, right, to get rid of it. Because you've got that headroom. But we had built hardware that allowed us to do energy injection we could inject current to provide that hold up time

now i see need it it's still needed but it's when you start to get to higher utilizations so let's say that's later in the cycle yeah right yes but but uh so we've got partners now ce plus t and schneiders and other that they provide the capability of the hardware. We don't need to do that. We have there are partners that do this really well. We just need software control of those components. And those are our actuators. OK, so there's two big there's really three big things. What we built before was energy injection. OK, to add energy in parallel to protect the upstream breaker. The second was phase balancing because things get out of phase based on workloads and all the other things.

So that is in parallel as well. And then intelligent switching. The only way that this is going to work is that you have the ability to enforce the 2,9 SLAs. So in line, so think about this. We've got smart RPPs that allow us to be able to do switching of actual breakers, right? We've got smart CANs that allow the same thing, and we have smart RAC PDUs that do the same thing. So we can literally shed the 2.9 SLA to protect the 5.9 SLA. From our standpoint, what we care about is software will orchestrate those elements. If software is not there, it doesn't work. But we also need the hardware components to actuate to enforce the SLA. Does that make sense?

Yes, absolutely. It does. Yeah. Yeah. I mean, and I'm making a tortured analogy, but this is the same thing that happened when we started to virtualize machines. I've got to be able to manage those assets. I've got to be able to decide who gets what, and then I've got to be able to orchestrate it when it happens. Right, exactly. And so this is a transformation or I think a disruption in our industry. And it's not as scary as people think it is. Because think about it,

most of the colas right now still oversubscribe at risk. That's right. With no controls, no orchestration layer, no controls. They're just doing some, hey, I think I can do this. And I don't want to use the word get away because that implies a negative. But hey, I think we can manage to this. And what you're saying is don't think, let's actually manage to it. Right. And then you can ensure those SLAs. Because can manage to this. And what you're saying is don't think, let's actually manage to it. Right. And then you can ensure those SLAs. Because in the end of it, if you have to shed the, because, okay, let's say we take that 10 megawatt example again, and I sell 10 megawatts of 5.9 and they use 5.

And then I sell another 5 megawatts that's going to be 2.9. Let's say that 10 megawatts starts to increase and they go to 7 or 8 megawatts. I don't need to shed the 2.9s unless I have a fault because I'd lose that or eight megawatts. I don't need to shed the two nines unless I have a fault because I'd lose that other two megawatts of redundancy. But I also don't need to shed all the two nines if I have that issue. I can shed portions of it to get down under that level. But what workload besides gaming and machine learning actually has spiky consumption?

Almost none. Yeah, not many. It's predictable. Yeah. Data centers are utilities. Yeah. Data centers are utilities best friends because they're constant load, right? Yeah. Yeah. That's right. That's right. Steady state load. That's right. Yeah. Yeah. Not like air conditioners and whatever else is going on. That's right. So that's where I'm saying that our algorithms go in there and calculate those elements and we can show that okay you could do 200 over subscription in this so it just comes down to the company's willingness to go in and say well how much do we want to do the other one is what demand so we've been working on is i went and spent hundreds of hours doing dozens and dozens of interviews with end

users, my peers from the past and said, yeah, if this was available, would you use it? Every one of them has an orchestration layer software play right in cloud that allows them to be able to do this. You just point it at the infrastructure and data centers now, right? It's not like rocket science that you have to go back and reinvent the wheel. They have these abstraction layers that allow it to happen. So we just don't offer the product. We think about it from a cloud bursting, cloud performance arena. We don't think about it from the power utilization. And that's what you're saying is, hey guys, I'm not asking you to think about this a totally different way. I'm asking you to think about something you already do and put it on top of power. That's really what you're saying. Not a new unique way

of thinking, just pointed at a unique problem, a problem we haven't looked at from a power utilization perspective. Well, Dean, I did not expect us to spend 40 minutes talking about VPS. It's been 40 minutes? Yeah, yeah. No, it's so good. This is so, so, so helpful. And I enjoy it and it's awesome. And I'm amazed that it's a sign of an interesting subject and a good conversation that slips by us as quickly as it does. I'm going to back up a little bit and take a little bit of a ESG sort of stewardship comment about all of this. At the end of the day, you use the statistic or quoted the statistic where 2.4% of the global

digital or electronic infrastructure, right? We're eating up 2.4% of the draw, right? And I think that our industry gets a little bit knocked on the head of, hey, you guys are really big power users, individual municipalities, individual counties go, man, I don't know if I want those guys here. Well, you made the point. Wait a minute. We're 2.4% of the draw, but we are enabling 70% of what goes on in the planet. So in reality, not that bad. Now, that being said, I'm not trying to discount that we need to be responsible stewards of the energy that we consume. But we also, I think it would help if our industry could continue to talk about, hey, what do we actually enable with that 2.4%? And a bad analogy, I think a little bit about America.

America, America, oh, America consumes 25% of the global goods. Yeah, but we also produce X percentage of the global engine to provide for everything. So a little bit of that, hey, yes, we are eating up 2.4% of the draw, but we are enabling, meaning our industry, enabling an awful lot of things to go on on that 2.4%. So I just think it's good to keep in perspective. The digitization of the world is being fueled by that 2.4%, which in that context is not out of whack. So if you think about digital infrastructure today, it runs the world. It's the internet of everything. If we didn't have digital infrastructure, the world as we know it would stop.

Yeah. Think about it. If you lose your phone, what happens? Yeah. You don't know what's going on. Yeah. You can't watch the news. You can't get in a car. You can't book a room. You can't travel.

You can't. Yeah. I mean, 100%. Yeah. That's the point is the digital infrastructure has become the backbone of virtually all levels of commerce and transportation. And it's funny. I said to somebody the other day, we're talking about redundancy. You're going to laugh.

I actually suggested to somebody, I think I need to buy two phones because I don't think we realize how valuable that asset is. And I think it's silly that if I lose one, there should be a backup, you know, sleeve in my backpack that here's my second phone because it's such an incredibly, I mean, when I travel, you know, my, my boarding passes, you know, my, my IDs, my credit cards, my, my, my actual car, right. I don't, I don't get a car. Uber comes and gets me. I can't get in an Uber without my phone. I physically can't get to my meetings. I can't move. I think I underestimate how vital that phone is to how I function every day. Yeah. Two weeks ago, I was in Virginia and my phone stopped working. So I didn't lose it, but all of a sudden it wouldn't boot. And I plugged in the wall for an hour and it kept giving me this error message. I'm like, oh my God, I don't even know what I'm going to do.

How do I... So suddenly that panic about what it was. I'm like, Oh my God, I don't even, what am I going to do? Yeah. How do I, so suddenly that panic about what it was, I'm like, do I need to go buy a phone and I'll reinstall it. But then I thought my phone is my two factor authentication. Yeah. How are you going to log in?

How do I, how do I, how do you log in to replicate to your new device? Cause it's right. That's right. That's right. Yeah. I mean,

that's what I mean. That's I literally, I mean, as we talk about infrastructure, I'm not suggesting everyone go buy two phones, but I do for guys that do what you and I do and travel as much. I think a second phone is almost, and, and I also think so. So I see you have a bunch of hard drives back over your right,

your right shoulder. Right. And I back up my laptop to those because when I travel somewhere, I want my data resting somewhere that's not at risk. I think the same thing with my phone. Yeah. I think that it'd be great if I had two copies everywhere. And the thing that, okay, we're going off on a different topic here. I know.

It's a whole different subject now, but yeah. I literally just ran out of storage on iCloud. They only offer two terabytes, right? Right. But if you think, I literally have a 64 terabyte array sitting right there. I can't get it anywhere else except here, which is a risk. What happens if there's a fire in my house? If there's a fire in your building, God forbid, but yeah, what if there's a fire? Or what if there's a lightning strike and it fries the device? So I think there's, to tie it back to

what you're saying, digital infrastructure enables the world and it's only going to grow, but it's only 2.4% of the actual energy draw. If you think of a comparison, Chris Crosby gave me this example, 13% of energy consumed is for water. Water purification, 13%. So of course we need water, we need shelter, we need power, we need food, right? So all those things. Digital infrastructure is one of those core elements that we have to have. It's going to grow. It's definitely going to grow. But we're a lot smaller than I think people believe and what we enable. So there is a messaging thing here. There's a communication element to say people need to understand. I don't know if you saw the actual protest in Ireland about data centers.

Okay. No, I didn't see them. No. They're saying you're using all of our energy and they want to shut down data centers? Okay, no, I didn't see them, no. They're saying you're using all of our energy and they want to shut down data centers in Ireland, right? And so that is propagating to a lot of different places. It's people that are not aware that everything they do every day goes through the data centers that they're actually protesting in front of. Yeah, Dean, it's funny. People ask me what I do for a living. And the easy answer is I say I'm a real estate developer. And that usually stops the conversation. Thanks. And they get it when people really start

to dig into, that's all I say when they really start to dig in. I go, look, here's the easiest thing I can say to you. Everything you do on your cell phone runs in our buildings. That's the easiest way I can say it. If it, if you do it on your phone, that means it's happening in a building we built. That's what we do. And yeah, that's exactly what you're describing. Well, Damon, thank you so much. I always enjoy getting to chat with you. I'm so grateful that you're willing to do the podcast so my listeners can benefit from your experience and wisdom. And man, love talking to you. Love seeing you out there in the marketplace and love what you guys are doing at BPS. I think you're changing the way we need to think about the way power gets

utilized. And that's something important as stewards of a significant chunk of our planet's energy utilization so thank you dean awesome thanks for having me on