Not Your Father’s Data Center - Powering Data Center Growth: Expansion and International Reach

Episode Date: August 8, 2023

Today, David Liggitt joins the show to talk about data center expansion.David Liggitt is the Founder of and CEO at datacenterHawk, helping data center professionals make the best decisions possible. With over 15 years in commercial real estate and extensive experience navigating the data center industry, David understands the communication between data center providers, users, vendors, investors, and consultants.Today they discuss expansion into major markets across the US, as well as into international areas around the globe, while accommodating the need for power to run these processes. They touch on the introduction of AI into the marketplace and the future of data centers across the world.Connect with David here: https://www.linkedin.com/in/davidliggitt/

You know, I think that you will see in major markets, so think Dallas, Chicago, Phoenix, developments continue to push out to the outer edges geographically, and those will continue until the applications break. And then though that demand has to be placed in other potential places. All right, welcome to another edition of Not Your Father's Data Center. My friend David Liggett, wetting his whistle as needed because he's got lots to say. David here in Dallas, Texas, Data Center Hawk headquartered here as well as Compass. David, thanks for jumping on with us and excited to hear about you and your life and the business. But let's start with you personally.

Tell us a little bit about Team Liggett. Yes, you bet. Well, Raymond, thanks for having me. It's been fun to see y'all's podcast continue to grow so uh it's great to be back on you know i think you probably know some of this stuff but maybe for those that don't so i'm from the dallas area and grew up here ended up going to college at baylor university in waco texas uh go bears go bears yeah i'm not sure the right i never get the right

which give me I know it's not that's TCU I know that one of course I know Texas you gotta give me the okay got it I just want to make sure

I got it right got it go Bears sick them Bears that's it sick them I knew it was sick them sick them

got it yeah it's like if you're here like in the Big 12 it's like you kinda gotta know all of the you know wreck them tech

and hook them horns boomer sooner and then out of college I actually spent five years 12, it's like you kind of got to know all of the, you know, Wreck'em Tech and Hook'em Horns, Boomer Sooner. And then out of college, I actually spent five years. Saw them off. Everybody's got Saw them off, right? Yeah, you bet. And then, and notice the one I didn't use was anything for the Aggies. So just for those. Well, they're Aggies. That's right. Yeah, they probably wouldn't noticed anyway. That's right. But so anyway, out of college, I spent some time working at a sports camp and then got into the business world in 2007 with CBRE. David, were you up at Canicook? Uh-huh, yeah.

Canicook, oh, right. I didn't know you did a Canicook tour. That's awesome. Yeah, right out of college and had a great experience there. And then got into the business world in 2007 with CBRE and spent eight years on that team and just loved that experience. Great group of people. And that's where I learned the data center business. Was Bram the team?

Was he on the team back then? Yeah, he came in, I think, in 2011 maybe. So I was there for four or five years with another group. And then he came in and had a great experience working with him, learned a lot from him. And I think those that know him in the industry would agree he's just such a great person, too. Great human being. Yeah, wonderful. Yeah.

This show brought to you by the Brant Burnett Foundation. Oh, wait, just look at this. Check him out. Yeah, exactly right. He should have a blog. I have been encouraging him for years to start a blog. He's a great writer, too. Hear, hear.

And then started Data Center Hawk back in 2014. Felt like there was a big opportunity for a third-party data center information platform in the space. And so we've been running ever since. I can't believe it's almost been a decade, David. Holy cow. I know. So when's the 10-year anniversary? Sometime in the next year here. So we've been running ever since. I can't believe it's almost been a decade, David. Holy cow. I know. I know. So when's the 10-year anniversary?

Sometime in the next year here. Yeah, I guess it'd be in August of, I guess we're almost in nine years. So August 20, August 24. Yes. Awesome. That'll be really cool. 10 years. All right.

Well, what an awesome decade. What a fun time to be an entrepreneur. What a cool space to be an entrepreneur in. That's right. Well, what an awesome decade. What a fun time to be an entrepreneur. What a cool space to be an entrepreneur in. That's right. Tell us a company called, a holding company called Simplify Compliance. Now for those in our space, they wouldn't know that name, but a name they would know is Fiber Locator. So this is the same holding company that owns Fiber Locator. And so we were purchased by them and it's been just such a great experience,

a great process they've given us, we have access to more capital to go put more resources in different markets and strengthen our team here in Dallas. And so we are actively growing our team, not just here in Dallas, but also in, you know, across really the world, which is really fun. So I think you'll see our platform globalize in the next, you know next 12 to 24 months. And we'll be

expanding into markets, certainly more in Europe, APAC, Middle East, Africa. We're really excited. Latin America, we just hired a regional director for Latin America. So we're super excited about the future. And it's been a great experience.'s stick a pin in africa and latin america because both i think exciting things about the future david said in his bit there guys that he is uh headquartered in dallas and recording with us today in dallas but we did convince him to fly from his home in the bahamas after recently selling his business he's got a large estate in the bahamas we got him to come back to Texas just for this recording. All good. All good. All right. Well, all right. So the data center business, just kind of crazy these days. You know, COVID took all of us a little bit by surprise,

not only from a health and global standpoint, but from what it was going to do to our business. Grateful that that is behind us from a global health scare perspective, but it's certainly changed our business. It's changed our business in lots of ways. And I would love to hear from your perspective as you have your thumb on the pulse of the industry. What's changed since COVID? We're past it now. What do you see as the differences?

And let's use that as a launching off point to things that you see in the future. Yeah, so that's a great, great setup. And a couple of things I would say that lead us to where we are today. You know, in 2019, I think one of the maybe misconceptions about our space is that it has only grown the way that it has because of COVID. Now, if you look at the data center Hawk data, we could show you in 2019, actually, before COVID started, that we were actually already starting to see, you know, mainly cloud service providers, but also service providers and other companies realizing that they had to expand their infrastructure to support the current world that we lived in, but they were also, I think, looking to at the future going, you know, we need to make sure that we're in a position to serve customers three years from now, five years from now. And with the supply chain woes that hit our industry then and that demand increase, you know, you now find us in go, get a site that is large enough to handle

a campus that could support user needs for, you know, five to 10 to 20 years. You know, everything's gotten more challenging. And so I think the exciting thing within that is that that means there's opportunities. You know, if you can figure out how to deliver a campus that can support 300 megawatts in the Northern Virginia area, you know, south of Manassas. I mean, you will have some very interested parties. And I think you could take that same mantra and apply it to Dallas, Chicago, Phoenix, Northern California. It's the same situation. So I think one of the areas I'm also encouraged is the issue right now with our space is really a challenge to deliver the supply.

The demand is there. It's just can the supply meet when the demand needs it to be there? Yeah. Hear, hear. Well, I would completely agree with your assessment. Let's go back to 19. You can see the takes were getting bigger, right? It was coming. I think COVID enhanced that scale or that pace of change, but it was coming. We completely agree with you there. I think COVID enhanced that scale or that pace of change, but it was coming. We completely agree with you there. I think you nailed that. And COVID just changed everything. And the campus and the large takedown and what used to be megawatts became tens and in some places hundreds of megawatts of planning.

And that's really changed in the last three years, right? It was not that way three years ago. Correct. And that seems to be, I don't want to say it's the norm, but just it's not unusual today to get calls about hundreds of megawatts. Yeah, totally different. The downstream impact that you described, right, that changes everything, right? It's enough concrete, enough workers, enough PDUs. Everything in the system has to get built and delivered, and it did it at such a scale that the industry, I feel like, is catching up now,

but had a big, oh, my goodness, everything's changing. And, oh, by the way, it all changed at the same time that we had the worst global supply chain constraint in my professional career, right? So you get those two problems and lots of smart people and lots of hard workers. And I think you used the word constraint. Still, our industry feels the constraint, but I feel like at least everyone knows what the problems are, has a plan in place, is working on a fix. We're working in the right direction, but man, it was tough. So COVID changed the world. Everybody worked from home. All the things everybody loved to talk about.

What's changed in the future of the data center business? Where do you see us headed and what's driving that? Let's start maybe on the larger scale requirements. data center operators to, you know, acquire larger land parcels or work really hard within the area that those users want to be to put together a land parcel that could serve, you know, whether it's 100 megawatts or 150 megawatts. So it really depends on geographically, the challenges in the future really depend on kind of where you want to be. You know, I think that you will see in major markets, so think Dallas, Chicago, Phoenix, Northern Virginia, Atlanta. Let's take those for instance. I think you will see developments continue to push out to the outer edges geographically, and those will continue until the applications break from a

network side of things. And then that demand has to be placed in other potential places. It's one of the reasons we're seeing a lot of activity in secondary markets. So think about Salt Lake City, Austin, Minneapolis, like these areas that traditionally have had some data center development, but are seeing a lot more interest over the last 12 to 18 months. And so I think that what this shows is that if four megawatts was a large requirement back in 2010, and maybe that changed to six to eight in 2018, by 2020, it started to be 12 to 16. And then by 2022, that started to be 36 to 72. And then today, you know, to your point, you made the comment earlier about several hundreds of megawatts. That's not an uncommon requirement. Now, there aren't 50 requirements out like that in Dallas. But, you know, historically, Dallas is a really good example. But it's like, that type of demand wouldn't come to Dallas

because of certain reasons. And that has changed. So anyway, I think in the future, we're just going to see activities by data center operators and investors really focused on how can we meet the large demand? Where do they want to be? And it's one of the reasons you're seeing so much money pour into acquiring land right now. And if you want to win three to five years from now, you have to be buying that land today. And in some cases, if you want to win 10 years from now, you've got to be buying that land today. I was in a meeting several months ago

where I heard 2030 as a, hey, this is when the power would be available. In our space, that's crazy, but that's where we are today. You brought up the land getting purchased way out ahead, but you also mentioned power. That's the other piece of this, right? Power.

Yes. Right? We as an industry, I say the industry, have come to the market and said, I need power in such scale globally that we're really taxing the generators. We're taxing the grids. Right? Everybody's seen the stories around Northern Virginia. It wasn't a generation problem. It was a distribution problem. And we're

now making those large power requirement requests years and years in advance to go with the land. Yeah. It's definitely that scale change has changed the power dynamic. Yeah. And one thing I would say that for maybe those that aren't in the space listening, you know, historically, you know, if I go back to like 2015, if someone was buying land to do a data center development, you know, you'd acquire the parcel, you'd do the site selection work, and you just make sure with the power company that you could get 30 megawatts or whatever the power is. But it was in the 20 to 40 megawatt range. Let's say that was the power analysis is, you know, looking at certain areas from a generation perspective and going, hey, if we put our resources in this region, can this region support power generation of X over the next 10 to 20 years? Then we move to the transmission, which obviously through areas like Dominion have become much more visible and focused on.

Then you get to the site substation construction and whatever. And so it's almost like the analysis, the due diligence has gone further up the scale because to your point, the sizes are so large. And once you put that capital in a market, it's there, it ain't coming out. So you got to make sure that you can grow the way you want to. Absolutely. Well, we couldn't agree with you more. It's interesting to hear because you have such more of a broader market view than we do. But man, absolutely. Land years in advance now and power due diligence and power analysis years and years in advance and close collaboration with the generators. You described it perfectly. All right. So what's driving all this, right? When do we get to, what was the great Arnold Schwarzenegger movie? I'm

drawing a blank. Terminator. When do we get to where the computers take over the world and we don't need humans anymore? How far away are we from AI and ML killing us all? Seems like, yeah. Seems like that's being talked about more and more now almost every day. You know, so I kind of keep looking over my shoulder to make sure I'm safe. But I keep reminding folks that our data centers have off switches. We just turn them off. But go ahead.

I don't want to stop the hysteria. I know there's lots of worry out there. That's funny. Well, I think anyone that's gone to a data center conference over the last five years, you've heard words like 5G and edge and the autonomous cars and AI, that this is going to be the next round of infrastructure needs. And I think several of those technologies have probably underperformed the expectations or at least the amount that the industry has talked about them. Wait a minute.

Wait a minute. Internet of Things is changing everything. Stop. So we're going to have data centers on every corner. That's right. That's right. Of course. But I think that AI is a really good example of probably one of the first technologies that I would look at and say, hey, there's some real

strength behind this. And I don't even think we know what that is just yet, especially as some of these technologies become more consumer-friendly. I think that we are probably just scratched the surface from an infrastructure perspective. And we can tie certain development projects and transactions in the market back to specific AI requirements that are driving that demand. You know, and this is not the Bitcoin type of demand that doesn't have infrastructure redundancy needs or, you know, anything like that. I mean, this is, you know, high density compute that needs to be in, locations. And so that's one of the things that we've seen really push up the absorption numbers over the last two to three quarters has been the continual adoption of AI, both from, as I mentioned, a consumer perspective, but also from a business standpoint.

I think businesses are getting smarter about how can we use AI to save us time. If you look on LinkedIn, you can scroll through. There's different industries that have put, hey, here's how financial companies should use AI. Here's how a insurance company should use that. And so I think the light is coming on to a lot of people related to how they can use AI in their business and even personally. Yeah, I've been amazed. You mentioned LinkedIn. I see those lists, the top 10 apps your business needs for AI. First of all, I didn't know there was 10, much less the top 10. I mean, all the things you can do that are AI-enabled, have some AI back in.

I'm not going to name the company for obvious reasons, but I do know that customer had a set of personal productivity tools, and they said, hey, it took us 14 months to get to 100 million users of this set of tools and they said hey when we rolled out this ai solution it took nine days to get to 100 million users and and i think that that caught some people's attention right is that the the the the speed of adoption and the ability the ease in which you can integrate it into what you're doing and how quickly it changes things, I think has got our industry coming out of COVID and trying to handle the COVID demand just another leg up again. So hear, hear, AI and what it's doing to enable businesses of all sorts and the backend to drive it, an incredible driver

for our industry. You mentioned Latin America and Africa. I will tell you from a Compass perspective, we have projects going in both continents, both parts of the world. Would love to hear your take about what you're seeing down there in both places. Well, I should say down for South America and over for Africa. What are you guys seeing? I'm glad you mentioned, I think, before we got on about that you're already hiring in both places. So we'd love to hear about that and hear about what growth you see.

Yeah. You know, typically we say, and I can't prove this with data, that the U.S. data center market is, you know, we would say two to three years kind of ahead of what's happening in Europe. And then we'd say the European market is probably a couple a year or two ahead of what's happening in APAC. And then I would take like a Latin America and an Africa and say, hey, these are, you know, in the next kind of rung of maturity and activity that's happening from a development perspective of interest for cloud service providers, for other hyperscale users, for enterprises that want to provide better solutions to these regions. I mean, I think one of the things that we need to remember in the U.S. is how big these areas are, Latin America, Africa, you know, how many people from a population

perspective, you know, live in these locations. And, you know, with that density of people comes business opportunities. And I think that's one of the reasons that you're seeing a lot of these groups look at how to mature their infrastructure footprint in, you know, these locations. Now, it comes with a challenge. You know, some of the way I think some of these companies think is, hey, we've got $100 million, $200 million, whatever the amount of money is, you know, $500 million that we're going to put somewhere. And so we've got to de-risk, you know, wherever we put that to the best that we can, that money. And so there are some risks as you move into some of these other less mature continents and areas that every data center operator and investor has to be aware of, you know, related to how data center or

how requirements get completed in that market, you know, who you need to know to make that happen. I think one mistake a number of US groups have made is like just going into a market thinking that the way we did this in the US is going to work in these other countries. And I think most of us would look back at that and go, you know, there's probably a better way. You know, you really need to understand the culture and the groups that are there and why they're there and where they are and really probably work with someone in those countries to, you know, better your footprint there. And that's I think that's one of the reasons you've seen a number of acquisitions, you know, in, you know, certainly in those two regions over the last,

you know, 12 to 24 months, because people go, hey, we want to get mature here. We can either go in and do it ourselves, or we can look at data center operators that have a footprint of five facilities or 15 facilities. And that has seemed to be, you know, a more preferred approach over the last 12 months. All right, let's get you on the record. Let's make some predictions. You talked about here in the U.S. You mentioned Chicago and Dallas and Northern Virginia and Phoenix and the markets that we all know and kind of tier two Atlanta. So let's get your prediction for big markets in Africa and your prediction for big markets in South America.

Pick one or two. Where do you see the first real data center dense market in either one of those continents? Yeah, I mean, I think Mexico is, you know, certainly the most, one of the most interesting, you know, areas with several markets there that I think are seeing a lot of demand. No surprise, power is a challenge, you know, in those markets. And so strengthening the infrastructure there. I think Rio is another area that will continue to grow, just given that the population of people, you know, in those areas that I would think both of those areas are really

set to grow. You know, for Africa, I know from our perspective, it's definitely a focus area of growth just because of the density of people that are there and the lack of infrastructure. Yeah, I got a funny Africa story or a little anecdote about Africa. So the first time I went to Africa on mission trip, I walk into a village, there's half a million people, there's no paved roads, there's no sanitation system, there's no sewer system. I mean, there's no infrastructure, i mean there's no infrastructure not but there's no two-story buildings i mean there's nothing there yet the first person walked up to me had a cell phone of course and and i asked i was like hey i don't understand how do you get have a cell phone and they laughed and they walked me through the village and they said

hey here's the cell tower they got built in town running on a generator to your point no power and my next question was look how do you guys charge your cell phones and there are people in the town that carried around car batteries that they had built adapters to the top of and people charged you would come and you would go to the store and charge your cell phone off of the car battery and you pay for the time it was on the charger and and so so you know i asked hey you didn't do do, no, we skipped over the wired part. And I think we're going to see similar kinds of things from the data center business, right? We're going to jump in at phase three or four of the data center business, because to your

point, the population is there and the size of the economy is there and the growth, right? When you look at the demography of Africa versus the demography of North and the growth, right? When you look at the demography of Africa versus the demography of North America or Europe, right? We're getting older and shrinking in population. They're getting younger and growing in population. I think Africa is one of the most exciting places for many, many reasons, not just the potential to develop, but the human growth and the vastness of Africa. I'm always amazed at how fortunate to get to fly on mission air. So you fly fairly low altitude airplanes from town to town. It is just the biggest place. I live in Texas and it's the biggest place I've ever seen. It's just unbelievable.

So I'm excited about Africa for us as an industry. All right. So let's get a really, really important question on the table. This is vital. This is probably, after this, we probably close, and the phones will be ringing off the hook, and we'll be getting asked for reporters. Let's have you on the record pick who is the most handsome CEO in the data center. You've got Andrew Schaap, Chris Crosby, or Brian Cox.

I mean, between those three, and let's put Andy Power in the race. Those four guys, who, and we did a question on this online once, if you had to pick the next James Bond out of data center CEOs, so that's how we'll question it. Oh, gosh. If one of those guys had to be tapped as the next James Bond, is it Chris Crosby, Andy Power, Brian Cox out of stack, or Andrew Schaap out of the line.

I mean, that's a handsome group of men, and one of them is going to have to be the next Bond guy. So who do you take? That is a good group of guys and a very smart crew. Smart group of fellows, yeah. That's right. I'm going to go with your boss, Chris Crosby. You're taking Crosby.

I'm taking Brian Cox, but Crosby. You're taking Crosby. I'm taking Brian Cox, but Crosby's not a bad pick. Sure. You know, I think each one of those could be a good pick. In fact, I'd love to...

Could be a future Bond. That's right. I'd love to see like a little PDF of them as like a little movie trailer with them in the... Yeah, yeah. In their tuxedos,

playing poker or something. That would be awesome. That's right. Yeah, I wouldn't put anything past Shapp. And certainly Andy Power knows what he's doing as well. Andy knows what he's doing too, that's for sure. Good guys. Well, I would agree with you.

Our industry is led by some really bright guys doing really cool stuff, taking really big risks, and helping change the infrastructure. We didn't spend any time on this because we've done it in other podcasts, but occasionally you'll all get asked by us or journalists or analysts, the infrastructure. We didn't spend any time on this because we've done it in other podcasts, but occasionally you'll all get asked by us or journalists or analysts, you guys are using way too much power. Your industry's just too power hungry. You're messing up the grid. What are you guys doing in the data center business? You got to be more efficient. And I always ask people, say, hey, can you grab your cell phone for me? Just tell me on here what you want to quit doing. I mean, we'll turn it off. You don't want Netflix anymore. You don't want to ride Uber. You don't want to book your hotel on here anymore.

No problem. Just tell me the things you plan to stop doing on here and it'll stop running in our building as soon as you want to stop doing it. I make the joke that we are enabling the digitization of our planet and that does take some energy. But I think on the whole, it's great for growth and great for humanity and great for humanity and great for um for where we're going we want to be great stewards of the energy we're using but i do think it does serve the greater good that what we're doing on the other end of those phones for sure yeah i think you could even look at the companies that you just you know i guess you know digital stack compass aligned like and look at what they're doing from a sustainability perspective

and go, the industry's come such a long way over, you know, if you think about it in like, you know, a relatively short period of time, if you think about our industry kind of in a macro view related to the efficiencies and really trying to, you know, be as sustainable as possible in many different ways. And there's still a long way to go. There go that I think we're all working to figure out. But I think we're definitely heading in the right direction. Yeah, definitely lessons to be learned. But the business has changed dramatically in the last decade.

You know, PUE is measured in the one dot somethings is so different than it was a decade ago, right? Oh, yeah. Oh, yeah. So it's changed a bunch. And PUE is just scratching the surface, but an easy metric everyone understands. Well, David, excited for you guys. Congratulations on the success of Data Center Hawk and excited for you in the future and grateful to be in this space with you and with great folks like you and your team.

And thank you for joining us on the podcast. Thank you so much. You bet. Raymond, thanks for having me on.