The top executive of the world's largest data center operator—managing 273 facilities in 36 countries—offers his outlook on the sector's progress.

This interview has been edited and condensed for clarity. 

We last met when you were starting out in the role.

This past year has been an amazing period of growth and understanding that this role lacks a definitive guide. Your prior experiences inform the choices you make for the organization's path forward. We've established the plan and refined it into ten concise terms. The initial one is “build bolder.”, representing our approach to building and developing the foundational systems supporting the digital economy.

The second element of our ten-word approach is “solve smarter.” This involves simplifying the intricate nature of networking and infrastructure, our proprietary advantage, and presenting it to our clients, thereby establishing Equinix as the straightforward solution. The third component is to “serve better.” While most entities in the data center sector serve five or six clients, our company caters to over 10,000 corporate customers. Consequently, these represent the three foundational principles. 

What are the other four words?

Underlying this, we have “run simpler,”, a concept that's simple to articulate but challenging to implement. It involves simplifying your operations by examining your existing systems and workflows. The final element is our focus on personnel, which is to “grow together,” expand our enterprise alongside our clientele, connecting the achievements of our staff with the satisfaction of our patrons. 

Is that a big change?

For 27 years, Equinix has been a participant in this sector, positioning us as one of the established entities in this field. Over the subsequent five years, our intention is to introduce capacity equivalent to what we've achieved in the preceding 27 years. This represents a substantial capital outlay for our organization. 

Where do you sit in the data-center ecosystem?

It seems there's a common inclination to view data centers as a uniform entity. However, data centers can be divided into four separate classifications, each possessing unique subtleties and attributes. Our operations fall within one of these classifications. The first is the hyperscale category, developed by cloud service providers, which involves substantial financial commitment. The second classification is wholesale, where a facility is typically constructed to be leased to a single occupant, or perhaps two, often facilitating (AI) training. The third type is enterprise, where major corporations, such as financial institutions, opt to maintain their own data center infrastructure. The fourth classification is colocation, which is the segment where Equinix operates.

And what are the advantages of that? 

Consider us akin to an airport authority. This entity oversees the runways and amenities of an airport, enabling you to secure ticketing and various other services. Subsequently, it orchestrates passenger transitions, so when an airline, such as KLM, disembarks a traveler, a seamless process unfolds behind the scenes to transfer that individual and their baggage to United for onward travel to California. We function somewhat like the internet's airport authority: a data packet arrives at Equinix and then proceeds to its subsequent destination. The distinction between our role and that of an airport authority lies in the fact that airport carriers will vie for business, whereas many of our clients establish co-location facilities to foster collaboration. 

What do you do in terms of AI workloads? 

We handle both the learning phase and the application phase. A pharmaceutical firm would conduct its learning privately at Equinix, as within the pharmaceutical sector, a significant portion of their research and drug development procedures must utilize private frameworks due to compliance requirements or the safeguarding of proprietary information. The learning process is akin to educating the system, and then the application phase involves effectively utilizing the knowledge the system has acquired. 

What about the energy needs?

Data centers vary in their attributes concerning power consumption, the entities they're deprioritizing, and how they contribute to regional economies and populations. 

We're currently in the heart of what I'd characterize as an energy super cycle. Data centers are a part of this, as is the widespread adoption of electricity for all applications. The rapid advancement of AI is colliding head-on with the slower pace of utility infrastructure development. While we don't see this as an impossible hurdle, it will necessitate cooperation, new ideas, and a period of development. 

How do you seeing it playing out?

From this point until 2028, a power shortage is anticipated. We are aware of the sources for all power we will be supplying up to 2028. Between 2028 and 2032, the power sector will experience a surge of innovation, particularly from data centers and their operators. These entities will explore methods for on-site power generation, on-premises production, grid integration and feedback, and flexible grid participation. Innovations will also emerge in areas like nuclear energy, with a focus on the application of small modular reactors. 

Starting in 2032, power providers have implemented alterations. Previously, one would approach a utility and request a specific quantity of power at a designated time, a just-in-time delivery. For entities like ours, with a power consumption not comparable to a hyperscale data center, this arrangement was typically sufficient. However, utilities are now examining their power infrastructure through cluster analyses, consolidating a set of demands collectively at a given moment. You must specify the anticipated power consumption, and it will likely adopt a take-or-pay structure. If you committed to a certain usage level, you'd be obligated to pay for it, regardless of actual consumption. 

It's crucial for substantial energy consumers, such as data centers, to incur an additional charge for their consumption. This ensures that smaller customers, or those with minimal energy needs, are not adversely affected. Consequently, considerable effort is being directed towards cooperative initiatives. Our organization boasts a 27-year track record of such partnerships with utility companies, and we actively participate in numerous related endeavors. 

Talk about the challenge of building these centers.

One aspect is the supply chain, encompassing the items required for building a data center, some of which have faced import duties. While this isn't a problem presently, it could present challenges we'll need to address down the road. Additionally, there's the labor force, including the skilled tradespeople like plumbers, mechanical engineers, and welders responsible for maintaining the infrastructure that supports the internet. A significant number of vocational, construction, and technical proficiencies are essential for establishing a data center. 

Have the facilities you're constructing for these tasks grown in size compared to previous ones? 

We assist our major cloud provider associates by supplying data centers via a venture known as xScale, which operates as a partnership. We have associates who finance our partnerships, thus we engage in what I've termed the wholesale sector by developing what's recognized as the build-to-suit data center field for a major cloud provider. Consequently, a company like Google might approach us and inquire, ‘Do you possess power and land in region X? And would you construct for us?’ We undertake this through a partnership separate from our main financial statements due to the significant capital investment required. We hold a 25% stake in our America JV and a 20% stake in our EMEA and APAC JVs. Globally, we currently have 15 centers that are already functioning.

What do you think is underappreciated about your business model?

I believe Equinix's network capabilities are not fully recognized. With 270 facilities globally, we stand as the premier independent data center provider that remains a publicly traded entity. While the physical structures are visible, the true value lies in the network links within each facility. These connections manifest in three ways. Primarily, it's the capacity to link one business with another. We host the major trading exchanges: 72% of global trading platforms are situated on Equinix. These exchanges, along with their associated partners requiring immediate, low-latency connections for transactions, are located in close proximity. Within our facilities, we facilitate 492,000 direct connections between businesses, spanning various industries. 

Another aspect of connectivity relates to cloud services. These are an extremely vital component of the technological environment. A significant number of clients keep their information within cloud platforms, and the majority of these clients utilize multiple cloud services. They distribute their data across various providers. Our company holds a 35% stake in direct cloud connections originating from our data centers. This allows users to access the cloud, retrieve their data, and then return it.

Furthermore, the third aspect concerns our physical positioning. We aren't situated in the nation's interior. Instead, we're located within urban centers, where individuals interact with their technology. Many characterize us as being at the metro edge, the city edge, the edge where people are actively present. Consequently, we can link the cloud through the metro edge, where people reside, to the distant edge where devices may be employed. 

Do you think people appreciate the role that data centers play in their lives?

Across numerous nations, we're recognized as essential infrastructure, a status also held in specific states, though not federally. When considering the essentials for a household: water, gas, electricity, the internet emerges as that fourth utility. A substantial 95% of internet data traverses the Equinix network. Should you have participated in a Zoom discussion earlier today, streamed content from any leading providers, arranged for An Uber, or bought a train pass, you utilized a platform that accessed Equinix at some juncture. 

What are you seeing in terms of customer trends? 

A significant number of our clients are transitioning from the initial testing stages of AI to its practical implementation. This shift presents numerous challenges. It's not simply a matter of overlaying AI onto an existing business procedure. There are a multitude of factors concerning oversight and data handling that haven't been fully integrated into the business strategy thus far, but are critically important, particularly for sectors with stringent regulations. 

That’s why some have not even adopted that much AI. 

Indeed. Even if they're leading the pack, it's now somewhat like returning and asking, 'how do we ensure we're audible, traceable, accountable—all the elements of sound business governance?' If we're going to implement a technology capable of automating numerous tasks and removing human involvement, how should I report, oversee, and uphold the governance structure for those operations within my company?

Numerous local communities are experiencing significant opposition to the construction of massive hyperscale data centers. How do you assert your position that your operations are distinct from these, yet still represent essential infrastructure that is required?

Considering the positive impacts a data center can have on a local area, we actively involve ourselves with nearby residents during the initial stages of building. Such projects introduce employment opportunities, especially during the construction phase, though fewer are present during operation as data centers don't require a large workforce. Furthermore, the location benefits from tax revenue generated by the facility. Thirdly, we prioritize hiring and sourcing from the local area. I'm particularly enthusiastic about our apprenticeship program, which offers young individuals without formal educational backgrounds a chance to train as data center technicians or critical facility engineers. Additionally, the construction of a data center frequently leads to improvements in surrounding infrastructure, such as power capacity and road networks. 

Are people asking more questions about water, energy? 

Absolutely. And we acknowledge that these are critically vital components of our planet's ecological framework. We were the initial data center provider to commence disclosing our water consumption. When you introduce electricity, the objective is to optimize the application of that energy for deploying customer workloads, rather than solely powering the data center's operations. We track our energy consumption and our efficiency in utilizing power. The most effective method to conserve energy is to reduce its overall demand. That is unequivocally a current industry benchmark.

And water?

Water's examination and scrutiny never matched that of power. Currently, a metric for water-use efficiency exists, and we were among the initial outlets to cover it. Since it's not as uniformly established as power metrics, we're collaborating within the industry to enhance its standardization. 

Looking ahead, data centers will probably be cooled using liquid systems, rather than air or evaporative methods. Liquid cooling operates as a closed-loop system concerning water consumption. The identical water is repeatedly utilized to cool the chips. The technology itself will shape sustainability. 

Major technology firms are striving to create these models more compact and performant. Ultimately, they'll aim for numerous small, co-located data centers. Do you anticipate this will be advantageous for you? 

We estimate the addressable market for inference, alongside the network, to be approximately $250 billion, excluding cloud-based activities. By 2029, the inference market is projected to be double the size of the training market. This is precisely why we are positioning ourselves to capitalize on this prospect. 

One might consider training as a consolidated AI sentiment, while inference is quite a decentralized sentiment. It will commence on a piece of hardware or perhaps via speech, or eyewear, or whatever the apparatus may be. And it will likely feature a representative to direct its ensemble, by directing other representatives to retrieve information from multiple sources. This is the reason for our careful consideration regarding our construction sites. 

You joined this role from Google approximately eighteen months back. How does your current situation compare to your expectations when you started? 

I'd describe it as being on a journey, not yet at the end but progressing appropriately. I'm certain that our distinct blend of attributes—our urban settings, our network capabilities, our special formula—positions us for significant advancement. I'm addressing the complexities associated with negative perceptions of data centers. The energy concerns have been particularly significant in Europe. Some nations, such as Ireland, my native land, have recently imposed a halt on data-center construction to allow for a pause and assessment of their capacity. These issues are entirely solvable and can certainly be overcome. It's a matter of timing, requiring joint effort and new ideas to find a resolution. 

What about the regulatory environment? That’s been in flux.

Amidst considerable discussion on numerous subjects, my focus remains on managing what's within my influence and proceeding along what we deem the correct course. For instance, Equinix has established objectives concerning our sustainability story. By the year 2030, we committed to achieving carbon neutrality in our operations. We are still progressing towards this objective. Furthermore, we have set a science-aligned target for 2040 to reach net-zero emissions, and we will persist in innovating and striving to accomplish this. 

We don't just think technology and innovation can coexist with responsible environmental practices. Our clients are increasingly requesting details on how their operations at Equinix affect aspects that we are able to quantify.

There's considerable discussion about AI's future impact. What will its role be? However, there's also a where concerning AI. We are essentially the hub for AI. Physical infrastructure, including sub-oceanic cables, cable conduits, and countless wires, is essential. In California, one can observe the evolution of data centers. The internet's presence will be palpable. We've accumulated three decades of data center development, from our initial facility to our most recent. I never anticipated joining a company with 56 ongoing construction sites globally.