My history with the company goes back to the company’s inception. When I first started working with Digital Realty as the company’s investment banker in 2004, Digital Realty did not even have its current name, let alone a logo. At the time, the company was based in a small office on Sand Hill Road that it shared with GI Partners, the investment firm that incubated what eventually became Digital Realty. I was on the investment banking team that underwrote Digital Realty’s IPO in October 2004, and I had the good fortune to be one of the company’s investment bankers ever since.
Fast forward to today: Digital Realty is the one of the largest data center providers in the world. I am privileged to have been closely involved throughout Digital Realty’s transformation over the years as the company created not only an original business model – the outsourced data center solution – but also created a new asset class. Digital Realty was the first data center REIT, and the company has had a REIT structure since its 2004 IPO.
One of the things that has fascinated me all along is the fact that the company is both a real estate play and a technology play. Initially, this was an interesting challenge, because the information needs and investment parameters of real estate investors are very different from those of tech investors. Real estate is typically a local business, in which space and location are the main differentiators and there is little value-add to owning properties across several markets. Data center real estate is different, however.
With data centers, intellectual capital can be brought to bear in terms of how you market the space to a client, how you drive additional revenue from the space, how you sell into our clients’ key deployment areas as opposed to how you sell any other piece of real estate. In other real estate property types, a broker might bring out a package, and the questions are, “What are your specs? Your square footage? What’s your rent?” There weren’t really any differentiating factors around marketing the real estate in terms of service, or the overall value proposition of your space.
With data centers, there is the opportunity to layer higher-value services on top of the basic attributes of the properties and to do so with international scale. Accordingly, the value of the real estate assets can be continually increased over time. Digital Realty’s enormous global data center portfolio is, in this context, a tremendous foundation for revenue growth, as well as for better experiences for our clients.
Prior to my arrival, Bill Stein was obviously the company’s CFO, and he was also CFO back in 2004 when we began working together. He was an important influence on my decision to become the company’s CFO. I was always impressed by his success in expanding Digital Realty’s business and now I am excited to keep that momentum going and guide Digital Realty through the next phase of its evolution. I definitely have some big shoes to fill!
When Bill was appointed CEO last year, I was of course delighted to see him get the CEO role. He reached out to me and I was beyond flattered that he would consider me for the CFO role. After consulting with my wife, I literally said, “Please put my hat in the ring. I know that this is a $15 billion-dollar company, international, based in a phenomenal city. I’m sure you have a line around the block of other highly qualified candidates, but please include me.”
And I went through the process. I wasn’t running away from investment banking like a lot of people are. I definitely thought I had a several more innings left in me. What I saw at Digital Realty was an exciting opportunity to make a difference at an organization that’s on the cusp of some really exciting initiatives.
Digital Realty already has a high-energy team in place to go along with its worldwide reach in data center real estate. This gives us a great foundation for sustainable growth, especially since so many of our data center clients scale their operations globally.
New facilities like our second Singapore data center will be pivotal to fueling our expansion overseas. As someone who has been close to Digital Realty for years, I look forward to the privilege of guiding these and other developments, such as our planned acquisition of Telx, to help ensure Digital Realty’s long-term success.
Andy Power, Chief Financial Officer