Ed note: Wikibon co-founder and CEO David Vellante interviewed Jason Mendenhall, Executive VP of Switch a co-location and cloud infrastructure provider, which has built the Super|Nap, the world’s highest density data center in Las Vegas. In this second of a series of pieces taken from the interview, they discuss the Inter-Cloud Exchange. Then Mendenhall tells the story of how Switch Founder and CEO Rob Roy Salvaged the Enron Bandwidth Arbitrage Center, with fibre optic connectivity to 26 North American connectivity providers, from the Enron bankruptcy and turned it into the Super|Nap connectivity front end, and what that means for Switch users.
David Vellante: So from a service standpoint are you, like Google, using a lot of white-box stuff that you’ve added value to, or is it your own design?
Jason Mendenhall: We break it up into several areas of our business. So the one is the Super|Nap, the data center, where we’ve built this world-class operation. It’s commercially available; customers can put their servers in it. And then we’ve added to that our own United States Inter-Cloud Exchange, where we’ve brought all of the top hardware providers into one location. All of our customers can have a public/private cloud environment and use any kind of virtualization that’s out there on the market. So some of it is ours, some of it is our providers’, some are our partners’. But with all that we’ve created this unique place where customers can get all of these solutions integrated into one place.
David Vellante: So I’ve heard that you guys can actually sell at lower-than-wholesale prices. Is that true?
Jason Mendenhall: It is true, particularly where we help people with their total cost of ownership through having all these solutions together.
So we talked about colocation, we talked about compute and Intercloud Exchange, the third piece is connectivity. So back in the day, late ‘90s early 2000s, a little company named Enron was looking to build a broad-band arbitrage center. They were going to arbitrage bandwidth just like they were arbitraging power. An announcement went out -- Enron Broadband Service -- it bumped their stock up, everybody was very excited about it.
About a week before they were ready to open that facility, they declared bankruptcy. And prior to that they had paid millions of dollars to have all of these fibre providers string connectivity into this one facility in Las Vegas. They chose Las Vegas for the same reasons we talked about earlier.
Our founder and CEO Rob Roy was across the street. He saw this happening, watched it, talked to the guys. He spent the next nine months pulling that facility out of Enron’s bankruptcy. So that facility is now Switch’s asset. It is a fibre hub unlike anything else in the world. Our insurance companies tell us that the only thing close to it is the Amsterdam Internet Exchange, and that was created by government.
So with that buying power we are able to lower the total cost of ownership for our customers.
David Vellante: So when did you pick that asset up? Was it after the Dot-Com bubble burst?
Jason Mendenhall: Yes, it was after the bubble burst.
David Vellante: So you were able to pick that up at a nice value.
Jason Mendenhall: And Enron’s bankruptcy helped keep the cost reasonable as well.
David Vellante: So now you’re executing on Enron’s vision.
Jason Mendenhall: Absolutely. Well, it’s not just that. Here’s what it does for our customers. A data center’s nothing unless you can connect to it and compute to it. What we’ve created is a combined ordering retail bandwidth system covering all these 27 carriers.
So our customers aren’t shackled to that one carrier they’re used to dealing with. If you’re with AT&T, or Level 3, or Verizon -- love the guys, but guess what, if you ask them a question the right answer is always Level 3, or AT&T, or Verizon. With the carrier network that we’ve built we can mix and match to create the best solution for our customers to connect into the data center.
We can negotiate on their behalf. And we use the buying power of all our customers to negotiate the best total cost of ownership to them.
David Vellante: I thought the Internet was about cutting out the middleman.
Jason Mendenhall: Not at our place. Here’s the thing -- we deliver those solutions -- we deliver that connectivity, we deliver that communications infrastructure, and you can do it through us, or you can do it directly with your carrier. It doesn’t matter at our end. We are truly a carrier-neutral facility. So if you need our help, we’re there to help you. If you don’t need our help we’ll help you negotiate the best price you’ve ever had from the carrier of your choice. And we’re negotiating best prices for the largest companies in the world.
David Vellante: Your customers must love that, and you have a lot of credibility with them.
Jason Mendenhall: Absolutely.