Founders Talk – Episode #84

Building on global bare metal

with Zac Smith, Managing Director of Equinix Metal


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This week Adam is joined by Zac Smith, Co-Founder of Packet and now running Equinix Metal. They talk about the early days of the internet infrastructure space, the beginnings of Packet, the “why” of bare metal, transitioning Packet from startup to global company overnight when they were acquired by Equinix, and how all this for Zac is 20 years in the making.



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Well, Zac, welcome to Founders Talk. It’s been, I would say, a bit, coordinating this… Not quite the world record, as you may desire, to coordinate getting on this show… But definitely a few reschedules, some on your part, some on my part. But hey, that’s how it works out when you’re busy. I’m sure you are, you’ve been very busy.

It’s all that traveling. I just – I could find time, with all those airports I’ve been in.

I bet, I bet. I guess, how have you been? How have you been since – what’s interesting I think is that this acquisition for you, with Packet to Equinix Metal and into the Equinix family was around essentially the pandemic time. I think in January it was announced or talked of, and then finalized in March.

Yeah, we closed on March 2nd of 2020, our transaction. So I officially became part of Equinix on that day. And then March 3rd we closed all of our global offices, and that was that. So not how I expected to spend the getting to know my 10,000 other colleagues time… But yeah, it’s been kind of a trip, I can tell you that.

10,000 other colleagues? Is that true?

I think it’s a little more than that now. I think we’re up to 14,000 all-in… But yeah, we’ve been growing pretty fast, so it’s well over 10,000 at this point, and it’s a little bit – I think when we were acquired, Packet was like 130, or something… You know, you knew everybody’s name, you knew their kids’ names, you knew the pets’ names, all that stuff. And then suddenly, you’re in the midst of a much bigger ocean, which has definitely been a challenge, but super-fun at the same time. I think we have more offices in more countries than we had people at Packet.

[03:58] That’s crazy. So there’s a lot of different directions I wanna go, and I do wanna talk about that in particular, this transition from startup, essentially – or literally, startup…

Sure, yeah.

…a hundred people, essentially, to a much larger company. There’s things I wanna know about your journey… I want you to share as much about your background that makes sense to kind of get to where we’re at, but the things I’m curious about is this journey of building Packet, which was bare metal servers… Kind of the opposite of what everyone else is doing around hosting companies… Unless you’re AWS, and in that case you’re building your own servers and building your own cloud. But you were offering bare metal servers, ahead of its time, I would say. Even so much as like “Why?” Like, why would you do that? But clearly, you knew why, because you’re where you’re at, right? You saw the vision.

And a lot of people told me no. So we had to have a pretty strong reason why along the way…

I’ve been super-fortunate to be playing in the internet infrastructure space for almost 20 years, or a little over that. So I landed into the business kind of by happenstance, and actually I think that’s pretty common in the world of cloud, or internet infrastructure hosting and whatnot. You don’t go to school, go through a compsite and then end up racking and stacking servers in a data center, right?

So there’s usually a story about how everybody gets into this industry. Mine happened to be I was a Juilliard grad, I went to school for classical music, and like most classical musicians, I needed a real job… [laughs] So just after I left school, I ended up working at a bank, and I was working the 6 PM to 4 AM night shift, doing PowerPoint work… And I had a lot of free time, because the bankers wouldn’t usually come around; and I had access to the internet, but not much else. And I couldn’t leave. So I started thinking about how to start a business, and a family friend of mine, a guy by the name of John LaRue. He was the only guy I’d known who had ever started a business. My parents were in construction, education, things like that, so I didn’t know much about starting a business, but I thought “Okay, I’ll call John…” He had started a telecom company in the ‘90s, when that was deregulated… And I said “Hey, John, should I get into the phone business?” and he’s like “Absolutely not. It’s a terrible business. But you should get into the recurring revenue business. Something where if you sell once and you treat people well, the customers will keep paying you every month.” I said “What could that be?”, so I started reselling hosting to all of my musician friends. I started to put up homepages; everybody needed a homepage.

Is this in the CD Baby era?

Yeah, man. Geocities was still –

So almost a Derek Sivers story.

Yeah. And I thought “I could be the hosting company for classical musicians who needed a homepage.” So I started doing that. I found somebody online, on a… You know, I pinged them about how to – 2 AM in the morning I started posting… You can go look at it there, it’s pretty embarrassing; I think I spelled Linux wrong… And started selling $20/month hosting accounts, to managing, figuring out how to run that, things like that. A couple months in I was doing pretty well; it turned out I was not bad at – what did they say…? If you know just slightly more than the other person, right? It’s all you need to know. So I needed slightly more than my musician friends about how to put up a homepage on the internet.

So that’s how I got into the business. And I went up this little town called Troy, New York, which is where my provider was based out of… I thought I was gonna meet some big company, and I wore a suit, I did all this thing… It turns out it’s just this guy named Raj, and a couple of his college buddies who had dropped out of RPI, and they were running this hosting company… Because he had worked for VA Linux the previous summer, and came back like “Linux is taking over the world. We’re gonna get into that.”

Anyways, we ended up becoming partners. So I was doing a lot of the selling and the ops stuff down in New York, and he was doing the engineering and whatnot. We built one of the first cloud computing businesses. Raj taught me a whole lot about how to think about software and open source; he runs a company called Grafana these days.

Mm-hm. Big fan of Raj.

[07:58] So he’s kept with it. So we kind of grew up in that, in that internet infrastructure space… And it was super-hard, and it was full of self-funded, bootstrapped, nobody would give you money for this kind of weirdo business “No, no, no… We’re gonna sell people on-demand access to computers, with no contract… But don’t worry, they’re gonna stay.” And everyone’s like “No, they’re not. They’re gonna leave.” I’m like, “No, no, no, they’re gonna stay.” It turns out that they do stay. You get them pretty addicted to that kind of stuff.

So we sold the business actually in 2011 to a publicly-traded firm called Internap, and that was a really interesting process. We had raised some debt 18 months before, we had brought in some outside leadership… Mainly because Raj and I - we were like oil and water. We were kind of like mom and dad fighting in the corner. And he’s one of my best friends today, but we were young, and we had hundred-person company that we had bootstrapped, and we were paycheck to paycheck, and cashflow after the AmEx card, and all the kind of things you could think about…

Very stressful.

It was stressful, but we also had just a different style of working… And I used to think it was a real negative, but in retrospect it was a super-positive. Raj was such a forward thinker… And that’s actually a skill that I’ve had to really practice, is thinking about the future. Well, Raj did that natively. He always just wanted to go on long walks and talk about how it could be. And I was like, “No, no, no, we need to get back and do the thing that has to happen today.”

So we were just very different in those regards, and young, and so we ended up bringing an outside CEO to come help us. And then we sold the business, kind of not on purpose, but somebody wanted to buy it, and it had been a while, and it was a pretty good exit, and we had thought at the time that public clouds like AWS and related were gonna go and kind of crush the hosting market. And we had thought like “Hey, they can do databases, they can do data centers, they can do the whole stack.” And here we were - we didn’t own the data center, we didn’t do the software; we were just doing the hosting. And we thought “How is that gonna compete against these big giants?”

Very commodity.

Yeah. And so we thought it was a good time to sell. I think in retrospect it was maybe a little early. You never know, but it was the right time for us… And I vowed - and this is kind of the turn in the story - I would never get back… I told my wife, I’m like, “That’s it. I’m done with this whole internet thing. It’s too hard. This is gonna be very competitive, it’s a scale business… There’s no way.” And two years later I was sitting at a local bar here in lower Manhattan, and my brother Jacob, he’s like – he got so sick of me bitching about “Well, you know how it should be… You know why it could be this way… You know why we should do it this way…” He’s like “Dude. Zac. We’ve just gotta start another hosting company.” [laughs] And the idea was really that software was just eating the world, and why wouldn’t it also eat the clouds? And the concept of portable software – I’d become friends with a guy named Alex Polvi; he had started CoreOS.

You know everybody, man… Wow.

Well, he was at Rackspace before. He had sold his company, Libcloud, to Rackspace, and so we were talking about portable software… He’s like, “Nah, we’re gonna remake Linux, because containers.” And I’m like “What’s this stuff?” And he was explaining it to me, and then I just kind of grokked that “Wait, if you can ship your software anywhere, and make increasingly complex systems, like castles in the sky, out of software - well, why wouldn’t infrastructure be a competitive place again? Why wouldn’t there be a substrate called “Access the right thing, at the right time?”

It’s all cyclical, right?

Yeah. So I thought “Okay, I’m gonna get into the automated hardware for developers business”, and just bet that software is gonna move really fast. There was another neighbor of mine I happened to – his son was on my kid’s soccer team, so we sat near each other and I’m telling him how I started this business… And it turns out it’s Dan Kohn, who had started CNCF.

[12:08] And he was just an incredible mentor and inspiration for me. He’s like, “No, we’re starting this Linux Foundation thing, it’s about cloud-native software that can go anywhere”, and I’m like, “I’m gonna make really automated hardware so that way we can meet in the ether.” And so that was the genesis for Packet. A little crazy idea, but you know, you had to think far enough out. You had to believe – you still have to believe, actually, that software is gonna eat the whole thing; and that means that software can run anywhere, and become increasingly - I’m gonna call it easier to operate. Maybe that’s not the case right now… It is – I argue to myself sometimes, like “Wow, I can’t always spin up my own Kubernetes pod, and keep up with all the things…” But just think about how many people can run a globally distributed workload now, versus five years ago. That was like…

Unheard of, yeah.

Yeah, that was like crazy stuff. And now it’s like, “Oh, yeah, okay. We can do that.”

No big deal.

Yeah. So you have to monitor it and do all these other things, but –

I can do it right here, in my house, on a Raspberry Pi.

Yeah, exactly. So it’s pretty–

On several clusters.

It’s pretty incredible the pace of software innovation… So I kind of thought, “Okay, if software is gonna get easier to operate in more places, there’s gotta be a way to connect that with the infrastructure”, which is actually becoming more unique, not less. This whole infrastructure-as-a-commodity was such a – I mean, yes, it is, but only if it doesn’t really matter that much to you.

I use the analogy because I always carry around a commodity piece of infrastructure all day long called an iPhone… Which is not a commodity at all; it’s super-special. And when Tim Cook gets up and talks about the new iPhone, they talk about the processor, they talk about the silicon that makes it go… And frankly, all the stuff that’s happening in our life, related to talking at the walls, and the 5G things, and all the apps that magically do things and tell me what’s going on… That’s not normal; that’s special stuff, where software and hardware come together. So I kind of had this vision that, hey, a software is gonna go do its thing… I actually kind of know how to do the other thing. We just have to upgrade and change it for a different customer who’s never gonna speak BGP to you, or rack and stack servers and debug SFP optics. That’s probably not gonna be what they wanna spend their time on. But they do wanna touch the cool, new processor on the machine learning card, so how do we get that to go? That was the idea.

Hm. Yeah. There’s a lot of tentacles there… Dan Kohn, Alex Polvi… Raj Dutt , as you mentioned…


I had Raj on Founders Talk a little while back. He’s actually due to come back again…

Oh, nice.

…because a lot of big stuff happening in Grafana land…

Yeah, just a little bit… [laughs]

Just a little bit.

He’s got a juggernaut… I mean, open source business is like – wow,,, Raj had been trying to build open source monitoring and business for the entire time I’ve known him. I just didn’t understand it for the first ten years.

Which is crazy, because – just to glean on his story a little bit… There will be some who look at Grafana and the recent race to unicorn status, for example, and think “Wow, that came out of nowhere.”


Or just like it was an overnight success. And they won’t see behind the scenes, this 20-year journey that you’re privy to.

Yeah. I mean, if we’re building monitoring – with the first company, Voxel, that Raj started, that I joined - we had an open source platform for infrastructure operations like billing, and device management and monitoring. Because in the hosting world you used to give away free monitoring so that you could tell people that their host was up online. That was your job, to do the monitoring. And it was just such an interesting paradigm… I remember actually a conversation with Raj and Alexis from Datadog in our offices here in New York - we were arguing over giving away monitoring, which is what we had to do for hosting… And he was like, “No, no, no. We can charge for monitoring.” And there was this big argument between Raj and Alexis - I mean, it wasn’t an argument; it was more like a –

[16:10] Which is interesting too, those two…

Yeah, of course. And Alexis is like, “Well, you have to make monitoring that isn’t awful.” And we were like “Oh, fair point.” [laughs]

But it’s kind of fascinating how incredible Datadog has done in terms of giving observability as a SaaS platform to millions of developers, and how Raj has built free monitoring, and then created a great business with it. So observability is an open platform; some things never change.

Yeah. I actually have an internet Pi on my network, where I had essentially an internet monitor, to keep my internet provider honest. So the dashboard is Grafana. I don’t pay him for it… It’s open source.

Yeah. It got your mindshare though. You know all about Grafana and love it.

Right. Running on Kubernetes, in a Docker container… It’s a crazy world.

I think the most fascinating thing that I can learn out of all this time being in the cloud space, which has been super-fun, an incredible ride… And I’ve been thinking about it a lot here at Equinix, which we’ll get to at some point… But one of the most fascinating things for me is that in cloud it was the first real B2B business that had platform-like growth… Where you signed up, you used it, if you liked it, you used more, you get stuck, you adopt… And then you get sold to; later, you buy it. Like, you negotiate, or whatever. And SaaS companies like Datadog, also, similar.

But then I think B2B open source is that kind of next phase, where the cost of – for example, ranked order and priority, the cost of getting to your market and then legacy (I’m gonna call it) legacy enterprise software business where you have to hire a bunch of salespeople, you built the product, and you had to knock on all the doors, and you had to sell the software, they had to want to buy it, and that was a really, really expensive thing, to go and get your software into the market.

And then came the cloud, where it was like, “No, just sign up and try it.” SaaS. “Okay, try it. Cool.” So you lowered the cost of finding your market, because you’re like – you don’t have to go out there and sell it and install it and whatnot; just come try it. It’s all good. Free trial.

I think open source just took that to another level, because way early on, even before you had a product, you find product-market fit. And as soon as it hits, which took years – like in the Grafana, it took years to get product-market fit, but man, it finds itself through the littlest tiniest - because the distribution cost is nothing. And then once it does, there’s this really cool thing called infrastructure everywhere, and “Oh, hey, you don’t wanna run that software? I’ll run that for you.” That’s a business model now.

So open SaaS I think is a really cool way to think of monetizing. So from a business model perspective I think there’s just some structural advantages that open source businesses have. SaaS had structural advantages over enterprise software, and I just think open source has that next wave of structural advantages.

Let’s chase this a little bit then. If you weren’t doing what you do now with Equinix, if you weren’t knee-deep in this journey and you could eject this moment not like giving up any, but just copy Zac…

Find my alter ego, put on my –

Zac version 2, or something like that; just like make a Zac 2, like multiplicity, or something like that… What would you do?

Clone a repo?

Wait, my parents already did that. I have a twin brother. Shoot. Okay…


Okay, fork repo… Okay…

What business would you be in if you weren’t in the business you’re in now?

Well, I’m super-interested in the shift that’s undergoing related to – and I have to tell you, I’m addicted to cool ideas, and I’m always thinking about new stuff, or talking to different founders, or investing in them if I can afford to, or doing other kinds of stuff… But I love new things, and thinking about where it all might be, or how could it be…

[19:55] The topic that I think about a lot these days has to do with that buyer adoption and persona issue that I see right now in sales. Because the go to market motion of like Salesforce, where you’ve gotta qualify people out, so you only focus on the ones that matter, who are ready to buy, and the whole marketing machine that drives leads towards that funnel, and then you trim it down to the point where you get down to a negotiation… The way that I see the highest growth companies work these days, like Datadog or whatever, is the opposite. It’s like, invite everybody in; don’t restrict the funnel, widen it. Free trial. Easy access. Sign up now. Get going. Free. Download. Open source. Whatever. Wide, wide, wide, wide, wide. A long phase of adoption, that can be very, very differential in terms of its place. It can move very quick, or it could take very long.

And then eventually, some sort of buying signal, where the customer buys it, because they want to subscribe, they want to have, they want more… Or they raise their hand and be like “I need something that’s not normal. I need to negotiate it. I work for BigCo, and we need this sock-2 thing” or whatever it is. And I think that the tooling behind (let’s call it) product-led or developer-led growth models is just so different, versus sales-led growth models. The whole infrastructure around comp, and sales tooling, and revenue, and billing, and all the things that are done in the rears in a sales-driven model, because the time to value and the process is so long - they get flipped on their head, and suddenly all the back-office stuff becomes the front office. Pricing is in the website; pricing is there, where you can consume it.

Usage models have to be real-time, because those are the adoption signals that tell you if it’s worth engaging with people. All that stuff gets backwards. So to me, that’s one of the most fascinating areas, that we kind of like randomly ran into in the cloud, which is like – if you talk to most cloud people… Like, I’m sure you call Ben at DigitalOcean, or talk to… They probably built their own billing systems. They probably built their own CRM. They probably built all their own stuff for these user-led adoption models, which the whole kind of sales infrastructure wasn’t capable of supporting. And I find that fascinating, because I think that’s just happening in more and more places, and that’s gonna shift. So I would probably be spending time on that.

So you’d be building the sales software systems that they all built themselves - you’d build the one that everybody uses.

I think I would build tooling that allowed product-led founders to super-charge their go-to-market, and not like when they get to their series B import a sales leader who’s like, “Oh, we have to shift everything to Salesforce, and use Marketo, and stop all this amazing thing that got you to your series B. We’ve gotta install a real sales team.” I think that that’s false. I think that leaning in and allowing to accelerate product-led growth, while still having things like good control of your numbers, and bigger teams, and GDPR compliance, and contract management - these things matter; and enterprise billing problems. These things all matter, but in a product-led growth I think it just could be – like, we don’t have those things right now, let’s put it that way. [laughs] At least when I talk to founders and I talk to other companies, everybody struggles with that. So I think there’s a unique opportunity. That’s where I would play.

Yeah. At some point you get serious about sales, essentially. You’ve done something that has attracted, but then you install a sales team, and then it gets –

Yeah. And then your growth model gets all wanky, because what worked for you and your growth before, suddenly it’s like “Oh, but now we need to expand, and move faster, and talk to bigger companies.” I don’t know, I think there’s a more continuum there, and I think the concept of like quick install Salesforce and move to a pipeline model - I don’t believe it.

You’d mentioned back in the day with Raj you were leading sales. Have you always been on the sales front, the business side front, the make it fit with the customer economically etc? Has that always been your spot?

[24:02] Well, interestingly enough, when I was working with Raj I didn’t really run the sales; I really ran operations, which we might call these days Customer Success… So in a way I was doing sales and I was doing growth. And I love being out with customers; it’s one of my favorite things to do, is talk to customers and understand what they love, what they hate… I think that’s one of the coolest things of being at a small startup, is that you can ’t hide from the customers.

Have you ever read Jeff Lawson’s book “Ask your developer”? It’s like, get in the seat, answer support calls, because then you’ll really know the product pain; then you’ll really know what people love and hate.

So I’ve always tried to do that, is be close to the customers… But I wasn’t really in like a sales role at Voxel. But once I started Packet, that was really what I did. Number one, selling the vision, like why we were doing this, and I think building a strong story and evangelizing that was something not only that I was passionate about, but it was actually my job… And my brother, Jacob, is a marketer and a great storyteller. And he’s been an awesome partner in really pushing that, and pushing me to do more of that.

And then, of course, leading more of the revenue side when you’re the CEO of the company, and you’re like sales person in chief in some way, shape or form… And then frankly, selling to investors. Our series B took 52 no’s to get a yes, man… So I was on the road, selling. [laughs] Selling the dream.

Yeah. So then you’ve gotta be selling the dream to have runway, to have the funding to have runway to build the dream…


You also have to lead, right? So you have people inside the company that’s gotta look up to Zac and say “Zac’s got it together.” Do you find the CEO role being a lonely role? Is that your experience? What’s your experience with the role?

Yeah, well I’ve been really lucky to always have great co-founders, who can empathize. Not everybody can go through being a startup founder. It’s hard. Lonely is not exactly the word I would use, but it can be isolating in certain ways… But I’ve always been lucky to have some great co-founders along. Raj is a great founder and partner, and loves – he cared so much about what he was building and the people he was doing that for, and so we both share that.

And the same thing at Packet, but I would say it has a different set of pressures on it, and not everybody is cut out for it. One of the things that I really wanted to do with Packet was build a better company; something that “Hey, I learned some stuff about myself, and I learned some stuff about what works and not. Well, how can I do that better, as a personal challenge?”

So I started with Packet – we used a framework called the Entrepreneurial Operating System (EOS). It’s basically just a framework on how to build and run companies. And I followed that, and it worked really well for me; that kind of helped make sure that you really looked co-founders and early employees in the eye and said “Is this the right person, the right butt in the right role, the right seat, at the right time of their life? Are you ready to do it?” Because being a startup founder is like all-in; it’s not kinda in, or usually in, or “except on the weekends.” It’s all-in, whatever it takes.

Once you get that going and maybe you raise capital or you’re constantly convincing people to join you, suddenly it’s like, “Man, these people and their kids’ tuition, or even their brand, is built on whether we do well or not. And it may not be a guarantee but I’ve gotta live up to that. I’ve gotta look these people in the eye and say “I did everything”

So making sure you’re with the right group of people, who align with the same vision as you, and also have this – in EOS it’s People Analyzer. Right butt, in the right seat, at the right time in their life. And I think that’s really important, and that helped me – I can totally look back and wow I was the right person, in the right seat, but in the wrong time. Like, they were just not ready. They had like four kids, and two mortgages, and this and that… And they couldn’t do it. That was too much pressure for them. Or other things, maybe with – you know, they’ve gotta support their wife who was starting something, or their husband who was doing something. It just depends… So I think being honest about that has helped make sure that expectations were clear around founder groups… Because you can’t do it on your own. It’s too much. Especially these days. It’s so competitive, and it’s hard, and it’s moving so fast, and the technology space in particular. Things move fast, and living up to that is difficult.

Can you speak to the pace of Packet prior to Equinix Metal, Equinix? How many people at the beginning, when was the beginning, how fast did you ramp? Were you always involved in the hiring, were you personally involved? How has that worked for you?

Yeah, well - we started in 2014, July. We started relatively small - a couple people, me, Jacob, Aaron, a guy named Aaron Welch and a few original technical founders… And we started with a small seed round that we put in with some friends and family, and said “We’re gonna figure out if we can get to the end of the year.” Because infrastructure is an expensive business; not only do you have to fund doing the work and the software, you have to, like, buy stuff. So we had to, like, buy stuff.

So we started that, and I think by when we got our first product on the market - and I remember, because it was like January of 2015 when we finally had something that you could consume… So we really compressed, a lean startup, six-month kind of thing. Ramen noodles, late nights etc. etc. And we finally got it out, and we were working off of fumes by that point, and just trying to see if we could prove that we could do this.

And we finally got it out - I remember one of our first customers, a guy named Mitchell shows up on our website, and signs up for HashiCorp. He was like, “This is cool, I can deploy automatic bare metal with an API.” I’m like, “That’s exactly what we’re doing.”


That was really validating. I was like, “This is amazing. This guy is great!”

Nice. Yeah.

So yeah, I was close to all that. And then just recruiting, that initial stage of not only the people who were willing to take a gamble on this very polar opposite thing called “Build an automated infrastructure company in the time of the public clouds who were dominating.” You had to really believe in this. So doing that, and getting the first few people going, and really built off of that… And then, like I said, doing that people analyzer, so you could build leadership really quickly. And so to answer your question - yes, I was involved. Usually, I would interview every person. Not interview, because we had a pretty strong value system that we had to read. We had to read our mission statement to you before you wanted – just to make sure, like, “We’re out here to build a better internet, and what that means for us is this. And if this is not how you feel about it, and these are your core values, then maybe this isn’t the right thing.” Because you know, often it’s really hard to interview people, and whatnot, so you’ve gotta align on values, and then of course, you can move into skill sets and whatever.

So having that done allowed us to be in a point – my job in the process was usually not to hire - I wasn’t out there recruiting, it was to get that alignment at the end of the process… Like, “Alright, do you want it? Do you believe in it? Do you follow the same core values that we do? If so, what questions can I answer?”

Because otherwise, we’re gonna get to the right answer, if we all believe in this and have the right values; like, we wanna do this together… Then cool.

So that was my job in the hiring scheme. And we grew – I’d say the first two years was pretty good… I got a series A backed by Softbank. That was kind of a wild ride; we probably don’t have enough time for that conversation. And Michael Dell backed us through Dell Tech Capital. So that was cool. We had a little bit more money, we grew the team. And frankly, we built it through a strong brand, which was – we didn’t think that we could be known by everybody, but if you had passion about automating fundamental hardware, we wanted everybody to know that. And that’s what we did, is like - if you believed in it as much as we did, cool. T-shirt API, hidden HTML on all of our pages that talk about where to buy. Crazy T-shirts that talked about rack and stack 19-inch rails. Because only they would get it. And those were our ways to do that. Then we threw a crazy conference in Las Vegas called IFX, in a parking lot… And of course, it rained. We did it again the next year, it rained again. Like, the only time it rains a lot in Las Vegas is when we put on an outdoor event in Las Vegas. But we had like a hardware petting zoo. It was like, “Come touch the hardware.”

[35:04] So we attracted people in that way. So I think we were really lucky and fortunate on having a shared values system with most of our employees, who had a strong passion and desire to work on similar things that we wanted to work on. My job was to make sure we had enough money to see that through, and customers who also valued what we did… Because there was a lot of gaps they had to fill in along the way.

And we had raised a series B later, with Third Point, and Samsung, and Battery Ventures, and a couple of other people… And then right before we were out to raise a series C is when Equinix stepped in and decided that they wanted to automate their data centers. So that’s where we ended up.

Wow. I have an interesting history, that I’m super-passionate about rack and stack, 19-inch rails - I would totally get that now. But I wouldn’t have gotten it back in the day.

[laughs] Break your fingers Exactly. [laughs]

I dig that stuff. There’s nothing that I would love to – not so much build… I guess this is where I find my side passion, I guess, maybe, if that’s a thing… Because I don’t do it for a dayjob, obviously, but I do it for fun, because I find it very fun.

Right. Some people throw clay, and you wanna get your cabling right.

That’s right, I wanna rack and stack it, and I wanna build out Linux servers, and do fun things like that, just because I wanna have a reason to, basically. But it’s funny, because in 2004 or 2005 I worked for an IT company; it was my very first IT-focused job. I didn’t go to school for anything I know in software development, or frontend… That’s my story, I didn’t go to school for any of this stuff. I was at the right place, at the wrong time. At least on that part of my journey.


There was a really good part that I was there for the right reasons, but for the IT part of it, I didn’t understand Linux, I didn’t understand servers. We were doing Citrix installs, and stuff like that, and rolling WatchGuard in our collocated data center. We did all the cool stuff, but I didn’t understand what I was around then, what I know now… Which is kind of interesting. But I have a big passion for just playing with hardware.

Well, if you ever wanna go to data centers, we have some seriously cool data centers, let me tell you about that. [laughs]

And lots of cool hardware.

And that’s an interesting with your business - and I don’t wanna go away from what we were just talking about there, which was this clarity that you provided. When people came into Packet - prior to Equinix, obviously - you were super-clear about who you were and what your mission was.


But I think the thing there is - what people don’t understand is that people gell around beliefs.

Like, if you believe what I believe, if we have shared beliefs, then we can go places together.

We can go places. We can build stuff.

If we have misaligned beliefs, that means we don’t have a shared mindshare - it doesn’t mean that you’re a bad person or I’m a bad person, it just means that we don’t believe in the same directions of life, or whatever it might be. But when you have an alignment of shared beliefs, that is the most BA CPU in a server, ever. That’s everything.

It’s so important in startups, because you haven’t figured it out. You don’t know the How, you know the Why. And “Why are we doing this?” And then you’ll figure out the How, which will probably change. You might even change the What. You know, what we’re trying to do – for example, the mission of Packet, beyond a very high-level one that we put on our T-shirts called “Build a better internet”, was that we wanted to connect the world’s developers to the technology, no matter where it was, no matter what it was, and no matter what you wanted to build on it. That was the What. We were like “You know what - we believe that software is gonna be portable and free, and innovation happens, magic happens when you put the right hardware and the right software together. We wanna do our job and make that better. And how we’re gonna do that - it turned out to be a bare metal cloud. That actually wasn’t the main vision. The main vision was like “Be the best bare metal cloud in the world” - it was not that. It was like “Get technology in a sustainable way out to the developers of the world, so they can create magic.” That’s what we wanted to do.

[39:11] Was the What a surprise, to some degree, then?

Well, I think we had a lot of da-da-da-da-da along the way, ticks and tacks. And I remember deep arguments, in 2015 and 2016, where some of my partners and colleagues and customers were like “You need to build load balancing as a service. People just need load balancers.” And I was like, “Nope. Software will handle it.” I was like, “How can we support another automated BGPH for this Kubernetes thing? Ah, there’s this cool thing metalLB It just works. Let’s do it! Let’s fund it.” You know, like, “How can we make those things happen?” But there were a lot – people were like “We should build database as a service. You know why? Because databases are hard.” And I’m like, “No, but that’s not our mission. Our mission is not to solve the world’s database problems. Our mission is to connect software with hardware. That’s our job. How can we do that, and just be the best at that thing?”

Through the years, some people left the company because they didn’t believe in those things in the end. They were like, “No, no, no. We should be building an IaaS layer. We should be building a database as a service.” I’m like, “Man, that’s not what we’re gonna do. That’s not the vision.”

So that belief, I think, held through in a lot of good ways. The What changed several times, and I’d even say the What is changing here at Equinix, and frankly, getting more aligned with my original thesis than ever, which is as a distribution and operating model for technology, versus the bare metal hosting company… Which is really cool to see. And I would say, getting back to what worked in the startup and why Equinix was a great place for us - because… That was not a foregone conclusion at all, but Charles as the CEO of Equinix, Charles Meyers - great guy. Also, if you go to Equinix’s website, they have an extremely clear and crisp values statement. It’s about what does it mean for - as the world’s digital infrastructure company, our job is to be a neutral place for the internet to live. So people can do and create great things through interconnection and connectivity. It’s not like “Have the most data centers.”

So I think that we aligned really well on those topics, and I’ve seen a lot of those same practices, which has made Equinix successful - you can use them at a smaller level, at a startup. Even more important, I think, at a startup where if you hire one person wrong, that’s 20% of your staff… You know, like “Oops!” That’s a big miss, right?

So getting that right at the beginning, and… You know, we spent – oh, man, we spent days locked up in a room, writing our values, which ended up being an elevator pitch that everybody could say on-demand. Five core values in a single product promise. And that took us – we didn’t change it for like five years. But we reevaluated every quarter to see if it felt the same. We were like, “Oh, it still feels pretty good.”

Was that your guiding rudder, in many ways? Because I feel like we’ve got a couple of those, and every time I – I could share a few of them with you. They’re just more like operating things than it is product load. It’s more like “Slow and steady wins. If you’re going too fast, slow down and check yourself.”

Like mantras to live by, right?

Yeah. These are sort of like “If you believe that, then you’ll be successful working with us, because you’re not going against the grain, you know what I mean?”


If you’re pushing too fast, we can’t follow that fast. We’re just more into slow and steady. “Keeping the main thing the main thing” is another one for us… Far too often it’s hard to find your main thing, and then once you do, you get so distracted by all the possible yes’es that lead you to the no’s you never say, and then you’re saying yes to too many things. And the way you focus is not by saying yes, it’s by saying no. A lot.

[42:45] Yeah. That’s hard. Yeah, well, it’s fascinating about building startups and building companies. And I would say that the other thing that I learned in the journey of Packet - we did a management memo. We started very early with – I have this very frustrating experience when Raj and I sold Voxel… Because we weren’t dataroom ready. We had built a business, we kind of like didn’t understand full P&L’s and all that stuff along the way… And then when we sold to a public company, it was rather painful for us.

So I was like, “You know what I’m gonna do? When I start a new company, I’m gonna make it really buttoned up from the beginning. I wanna make sure that we’re good. And I started this thing where we would write a management memo at the tenth of every month. We’d close out the month – we started it from July of 2014, when our month was only like two weeks, and we wrote kind of a letter to ourselves. And it was to our investors, and other people, and eventually to our whole company, because we’re a very transparent company… So we share everything except personal salary details throughout the company. And that served as a record for us, to really – because the other thing that happens in a startup, from my experience, is time goes by really fast, because you’re doing so much. And then four months later, you look back and you’re like, “Wow, that seemed like a long time ago. Did we really think that we were gonna do that? Is that really what we thought four months ago?”

And you kind of go through this selective amnesia. So we wrote these management memos to kind of outline the state of the business, key metrics, what do we do, what have we accomplished… And we ship them every single month. That kind of rigor, that was super-easy at the beginning, because it only took us like an hour - we copied a Google Doc, filled it out, shipped it to ourselves, whatever. That muscle memory became so important throughout the company, and our history… And in the end, when we went to go do those 52 pitches, I would love when a VC on Sand Hill or something would be like, “Well, send me all your diligence”, I’m like, “No, I’m gonna send you my last one year of management memos, and if you like what you see on how we actually build stuff and handle problems, then we’ll talk further.” And that turned out to help me a lot in terms of time. I didn’t have to go and do a diligence process where somebody sniffed me forever.

So my other big takeaway was that half the battle, I feel – obviously, you’ve gotta figure out product fit, you’ve gotta make sure that you build an awesome thing that people love, you’ve gotta make sure to build a community or an ecosystem that is inclusive and appropriate and in line with your values… And then you just have to run a good company. Which sounds easier than you think. And a lot of this is just “Keep good records. Count your metrics. Run good meetings. Hire and fire.” Do the stuff of running a good business, especially if it’s in line with something like “We wanna have a global remote work policy”, which is we’re a remote-first company. Okay, what’s it gonna take to do that? Okay, we’ve gotta learn how to hire and fire in all these countries around the world. Well, that could become a major drain when you’re actually scaling and the business is going well. Suddenly, all these problems come out of the woodwork, because you have an institutionalized muscle memory around just running the company.

And that was the other thing that I learned at Packet, was how important that was, and how impactful it could be to allow you to focus your time on the thing that mattered, which is like the customers, and the product, and your vision, versus on the muck of running the company… Which - you’ve gotta do.

Yeah. And as a CEO, you’ve gotta do all those things. You’re responsible. If the rudder falls off, if the ship fails, or something happens, you hit an iceberg, metaphorically, it’s your fault.

Yeah. I had a bull’s eye that I’ve put up on my wall, and now it’s just my visual mantra… A bull’s eye means you’ve got this situation – I’ve got time in a day, as a CEO, or as a manager, a founder, or whatever, and at that time, you’ve got the outer ring, which was the things that are super-urgent, but not at all important. And then you’ve got the middle part of the bull’s eye, which is the stuff that’s urgent and important. “Wow, my biggest customer called and he’s having an outage. We really need to fix that.”

And then you’ve got the bull’s eye, which is the stuff that’s totally not urgent, but super-important. “How are we gonna win the market next year? How do we get that key employee is interested in gorecruit? Where do we go for that partnership that I might need to start developing? I should call that person again…” And those are the things that you never – as the business gets big, and there’s stuff, and there’s customers… There’s a special time at the beginning of a startup where you don’t have any customers, you don’t have any revenue… It’s amazing, because you can just think about the bull’s eye stuff. “How do we build this right thing? How do we go in the future? What do we do…?” You know, you do all that stuff.

[47:25] Then as the business starts to come around you, and be successful or grow, you’ve got all this stuff in the outer ring that hits you in the face all day long. “We need this. This has to get paid. What’s going on with that? That customer is annoyed” etc. It’s noise. It needs to be done. But it’s just not important in the grand scheme of things.

So figuring out how you can organize as a CEO around how do you get 10%, 20%, 30% of your time in that bull’s eye - that’s gonna make a difference. If you spend most of your time, and you recognize that you’re spending all of your time… You go to bed at the end of your day and you’re like “Shoot, I spend like 100% of my time in the outer rings”, something is wrong. So you’ve gotta figure out how as a leader you are maniacally delegating, empowering other people, figuring out how you let some stuff drop on the floor, so that you can make sure you get some of that bull’s eye time. That has to happen every day. That’s my trick.

Some people do it once a week, some people do it often, some people are just good at that… Raj is great at that, and he’s always good at hitting the bull’s eye, and he can tune out everything else. I can’t. I’m like an Inbox (0) guy, so I have to figure out how to get rid of it in a way that allows me to focus on the middle.

How do you define what should be in the middle? Is that something that’s sort of unique to everybody?

I think it is…

Or are there particulars that you just know of, that are for sure in the middle?

I think if you look back on your day, today, and you’re like “How did I spend my time?” And like I said, before I got into this whole computers on the internet business, I was a musician… And you become pretty self-critical being a musician, because you’ve gotta – like any artist or sports or something, you’ve gotta be willing to take criticism, and think about that criticism yourself, so you can get better… So I like to think back at the end of the day what did I do.

If you look at spending your time and you’re like, “Well, I just responded to a whole bunch of emails”, you’re gonna find pretty quickly that “Yeah, it’s kind of in the outer ring. Is it really gonna make or break this business if I respond to that or not?” I mean, maybe I need to… But did that really move this thing meaningfully forward?

The hard one is in my opinion not the outside ring. Outside ring is easy. You can pretty much tell in your life, whatever it is, or in your role, what is super-urgent, but not really that impactful. And the hard part for me is differentiating between the middle and the bull’s eye. Because a lot of times that middle can seem like it’s the most important stuff. I like to think out 2-3 years. How do I think out the big, impactful stuff 2-3 years from now? What do I need to be doing now to pack down the road? That’s where I say it’s a bull’s eye thing. If it’s anything that’s gonna happen in like 3, 4, 5 months, it’s probably not that “I should have already been doing it” kind of thing. So just throw that football out and think about something that’s not the now.

I had a mentor, a guy named Bill Luby at Seaport Capital, and he always told me, when we started Packet, he’s like “You’re so lucky. You have no customers and no revenue”, and I was like “What…?!” He was like, “Yeah. You just get to think about the future all day long. The second you have all this other stuff, you have to think about the now and what just happened. You were so fortunate just to be able to dream about the future, so all your brain cycles are on that.”

I was like, “That’s really cool.” That’s what I try to do, is keep a little bit of that future imagination that’s not bounded by all the problems of the day, or challenges of end-cycle that we have to do or the backlog of all the thingamajigers and be like you know what? We should totally change the whole infrastructure of how our go-to-market sales stuff works, because maybe it could be better.” Lots of people around you might be like, “No…! It’d be too much work…” And you have to be like “Well, maybe we could.”

[51:00] Yeah. Well, that’s how you got there in the first place, right? Like you said, pre-customers, pre-revenue - all you were doing was dreaming at the future, what it could be, and then suddenly you get in this mix and you have no contemplation time. Do you ever think about that word very often, contemplation?

Oh, yeah.

That’s a word I learned from John-Daniel Trask; he’s the CEO/co-founder of Raygun, out of New Zealand. He was on Founders Talk as well. Talking to him changed my life; just the way he looks at biographies of like Bill Gates, and others… The way he learned from Cornelius Vanderbilt… Like, the earliest entrepreneurs.


Back in these days they didn’t have iPhones that distracted them, and all these different things. All they had was – they had to send somebody days to go send a message to their frontline, or whatever it might have been. It was a different world…

Yeah. We don’t have that contemplation time. You have to carve it, defend it.

Yeah. And I think that’s probably pretty challenging, is how do you – what are some of the things you can do as a CEO? Do you just simply hire and delegate to get that contemplation time? What are some of the things you do to 1) know it’s important, and 2) carve it out and make sure it’s there.

Well, you probably wouldn’t be a founder of a business if you didn’t have that muscle somewhere. You’re like, “You know what we should do - we should start this crazy company, and go raise money, and build something that nobody else has done before.” And so I think naturally, founders have muscle in there, and you just have to kind of find your style… Just like going to the gym. You know, like, that’s my way. It doesn’t happen naturally for me, and that’s what I learned from Raj - I really need to carve time for it. So for me, it’s a purposeful exercise that I have to do. For me, I put on music, I listen to certain kind of music, and I think about it when I go on runs… That’s where I think about the crazy stuff; the things that I don’t need to do today. I have to switch my brain into that.

So I think it’s about just finding your way and systematizing that, so that when things get busy at a company - which they will - whether it’s going good or going bad, it’ll get busy, and you’ll be in the middle of it all; that will help you. And then delegation for me has always been really important. Super-challenging, because I like to be involved; some people call that “controlling”. I like to be involved. But delegating and ensuring that you get good at that is also really important, especially when you’re scaling a company.

Well, let’s go deeper into Packet and then Equinix… Because you’d mentioned the seed round, you mentioned series A and series B, and then series C was when Equinix came knocking… Is that right? Did I remember correctly?


The acquisition was 300-something million dollars. I’m curious about the details, how do you think about that… Other questions I have, and – I’m just kind of giving you sort of a shotgun approach, because you can take us any direction you want. I’m curious about how you thought about running Packet to an acquisition? Were you considering an acquisition? Were you thinking “Well, we’ll be acquired eventually”, or were you building a company that you can run independently from acquisition? How did you handle that step forward from series B to series C, that wasn’t really a series C, it was an acquisition?

Yeah… So I don’t believe you can build companies to be acquired. I think that’s pretty hard to do. You have to be genuine about a business that you’re building and the sustainability of that… But I always did feel that we were going to partner in some way, shape or form with real estate. I knew that some way we had to get access to lower-cost capital for infrastructure deployment with global reach.

So we spent a lot of time with telcos… One of our biggest customers was Sprint; that’s why we took most of our money from strategics, like Softbank and Dell. These were aligned, strategic partners who had global reach and access to capital that was useful for infrastructure.

We spent a lot of time with different REITs, everything from data center REITs, to cold storage REITs, to - you name it. Power REITs… We were spending time with people with distribution, and it wasn’t like “Oh, you could buy us”, but I was thinking like “We’re gonna need to partner and reach a much bigger distribution scale to achieve our mission, somehow.” And so we were always looking for that.

We had actually partnered with Equinix to some degree, and that’s how the whole conversation started between us, because our vision was so aligned with where Charles and that team wanted to go. That kind of occurred, but it wasn’t exclusive. We were working with all kinds of people to try to advance that vision. But I think that was an important kind of inflection, because timing is hard to call in startups. We had an extremely capital-intensive business, and effectively, think of every single one of our customers was offloading their capital requirements to us; and those customers were getting bigger and bigger, and they wanted to do more and more, in more and more places.

So we were really needing… And after our series B, which was led by Third Point, which is Dan Loeb’s venture side of his Third Point private equity firm, or something… And one of the reasons why we did that was we wanted sophisticated access to more capital. That proved prescient. We needed that, especially as we started to get really, really big customers.

[58:54] So in the end, I don’t think we wanted to, but we were in a position where we really needed to raise a ton more money for our series C, and it so happened that when Equinix approached us - you know, they have such an incredible balance sheet that they immediately saw what they could do with our platform against their balance sheet. So either we were gonna be out for a pretty big slug of capital, probably a lot of debt, and some venture, which would have been complicated, or we were gonna get acquired by one of these capital-heavy businesses…

I can’t say we went to get sold, but we definitely were out there, looking for a partner with a large capital base. So a little bit not normal is what I meant to do in terms of fundraising strategy, only because we knew that we were gonna have to be with a larger pool of capital to really execute on our business vision.

The raising the money part was fascinating for me… And it’s something that I’ve tried to counsel other founders on. Because raising money can be so – I don’t know, it can be so weird… And I never really played well in the venture scene, as it were, or played the game… Evaluation this, trading stories with people, I don’t do that. I was just building a product and figuring out what it could do.

I’ve found investors to be very, very different. I’m sure other founders deal with this as well, but… I probably ended up being 40%+ of my time was managing our investor base.

Some of our best investors were angels, who were domain experts and really went to bat for us, and helped, and mentored, and told me the hard stuff that I needed to hear and whatnot along the way… And some of our strategic investors were great. And then others were just not that great. They frankly “You’re part of a portfolio”, they ended up giving you more work than me giving them… And that’s where I turned the tables after my series A and I started really using – it was actually at the counseling of Dan Docter at Dell Tech Capital. He’s like, “You’re not giving us enough to do.” I’m like, “What do you mean?” He’s like, “At the board meetings, don’t give me the opportunity to give you a thousand things to go figure out… Because I will. Because I’m just talking, I have ideas, whatever… You know, why don’t you go find out about this market? Why don’t you go figure out this thing?” And he’s like, “You’ve gotta turn it around, Zac.”

And that’s where I ended up using my management memos. I’d send those every month, and then we’d have our quarterly board meeting where I would get in and the first five minutes would be “Have you all read the management memos? Because if so, you already know what happened this quarter, so we don’t need to go over that. And then what we’re gonna do is we’re gonna talk about two things - we’re gonna talk about all that bull’s eye stuff, where we need to go, why this, whatever, and the second thing we’re gonna talk about is all the stuff that you guys can do for me. Because I’m really busy. So I need hiring, I need customers, I need strategic help, I need to get a relationship with that person…” And you could really tell which investors stepped up based upon who took those tasks. I considered them an extension of our staff. Like, you’re unpaid – well, not exactly unpaid; you’re taking a big – the most expensive salary from me.

You get paid eventually.

Yeah, you’re gonna get paid. So how do I leverage you? And that was a really interesting angle that I took on investors… And I think that founders are so – good founders, especially, who are good operators and executors, they’re diamonds in the rough. It’s hard to find good founders. But there are a lot of investors, frankly. Now, finding the investors that believe in your vision and align with those same things that employees do, so that you’re not sitting in board meetings, like “Does this tie back to the Why? Are we all here for the right reasons?” Because if the Why is just make money, it’s probably gonna be a tough gig. But if the Why is like “We believe in this thing, and we all think that this is really important”, then we’ll get through all this stuff together. And I’ve got work for you to do, man… Because I need all the help I can get.

I like that.

So finding your investors and sorting through to find the right ones, and then leaning in there, and making sure that you can give them the work. That’s super-important. Because I think a lot of founders feel under the thumb of their investors oftentimes. Or maybe that’s not the case. Maybe that is only how I felt, but… I think some of the founders I work with do feel that way.

It’s a mixed experience out there, for sure…

Change it, you know, if you can. It’s still your job to change it, by the way…

[01:03:06.22] …which means you have to provide the information. Like in any other asynchronous model, people are very, very busy. So if you’re in a business as a founder, you’ve got a bagillion things that are data points for you, you know exactly what’s going on, you’re spending all your time worrying about the bare metal dedicated computer market, or the monitoring and observability business - they’re not. So you need to be able to provide good, consistent, open community, so that when they show up for that board meeting or when you do call them for your monthly one-on-one, that they can actually lend value to you, and you can ask them to do stuff, and they have context. Otherwise it’s like, “Hey, let’s catch up. How’s things?” So being more purposeful about that I think makes a big difference.

These monthly memos and the to-do’s - I’m curious on the specifics. What were some specifics you would put into those monthly memos that would get them up to speed easier, so that you can not waste time? And then when you gave them things to do, what are some specifics to your case that you gave them to do? You’d mentioned contact with X, Y or Z; did you leverage them for connections? Did you say “Go to work for me and get me in touch with this person, because we need a partner in this area?” Is that an example?

Yeah. So first and foremost from the memo standpoint - I kind of recognize that although this is something that I spent my whole life doing - like, I would send this to not only our investors, all of our employees, but also all of our constituents. I gonna call them “influential fans.” I was being pretty transparent and I knew some people shared it around. Like, okay, you might see our numbers… That’s okay, whatever. But it was a circle of trust kind of thing, let’s put it that way.

But in this memo I kind of realized that nobody spent more than five minutes reading this stuff. In fact, they’re probably gonna read it when they drink their coffee in the morning, on their iPhone, or sitting on the bus, or whatever. Which is totally cool. So I went for, just like I did in our monthly newsletter that we sent to 35,000 people at Metal - no crap. “Craft, not crap” is our rule. And so crafted out, succincted down, exact summary, each department, ding-ding-ding, same model every time, so they know what to expect… Because certain people just won’t look at sales. So in the same thing, they’re gonna flip to page two. And it’s cool.

Other people wanna know about product, other people wanna know about what’s going on in the industry. And so what we did is we just did that in a very formulaic way, never more than a page per major department or sub-area, so that they could just read it, get their key bullet points, whatever, move along.

Usually, I get like two or three people out of the 30 or so that I would send it to, who would immediately write back with like “Oh, I didn’t know that you’re working on a partnership with Red Hat. We were investors in Red Hat, as Battery Ventures. I know that guy over there, let me connect you with the product manager for that thing.” “Awesome. I didn’t even know that you knew that. It would have never come up. High five.”

Wow. Opportunity for serendipity.

Yeah. Increase serendipity, totally. So follow those things, get it out, be repetitive in that motion; that really helped. And then when it came around to our board meetings - like, I was never shy about asking our investors or anybody for favors… Like, “I need your help.”

The things that worked best for Softbank was they were buying so many companies, and they were investing through Vision Fund, and… I was like “I want to meet with the head of engineering from pretty much any unicorn that you invest with.” So that’s what I put my team on. “I don’t wanna sell them, I just wanna talk to them.” Where are they going, how are they thinking, what’s going on… I just want 30 minutes with Tokopedia. I just want 30 minutes with Uber. I just want 30 minutes with… That’s what I used Softbank for.

For Dell, you would think they would end up being strategic… It was actually more like personal advice. Dan, who’s over there, became a really good friend of mine… And he was one of the guys who would do real talk with Zac. Like, “Hey, Zac, I love you and everything, but dude, you’re being so stupid on this. Stop it.” Like, “No, no, no, it’s really gonna work.” He’s like, “Dude. I’m telling you… You’re gonna regret this, you call me back in two weeks after you fail, and we’re gonna work on it together.”

[01:07:10.08] So that was more like a parent relationship, or like real talk… So I’d always be the most vulnerable with Dan. It was like, “Hey dad, what do you think about this?” And then different other investors, like Alex at Battery Ventures… He was so knowledgeable on software networking. That’s what I use him for - engineering advice, and “Can I connect you with my head of engineering where we’re struggling with this problem?” and he would know people about those things. I mean, like anything, you have to use people towards their strengths.

Yeah. It seems – I don’t wanna say easy… Logical. Like, yeah, for sure, that’s the way you do it, Zac…


But this is all new, to some degree, for me… Like, were you the person that would systematically write these monthlies? Was it one person, was it you?

Oh, we team-edited them.

So we were super-boring… We would take the last month, copy it in Google Docs, make a copy, change the title… And we’d do that on the first of the month. I still do it, by the way. It’s still a muscle. I still do it at Equinix today.

So on the first of the month I copied it, and then you go through and you highlight the sections, each person has their own section, which was mainly my key reports… And it will only take you five minutes to write, because I just want it, while it’s fresh in your mind, what happened this month. And give me the key things, and the key points, and we’ll fill in the numbers… And when we’ll close our books or get our key metrics, by like the tenth, you update it, I do a read-through… Jacob is a better editor than me, so he always spices it up, and condenses, and gets rid of all my fluff… Because I usually have fluff, because I talk too much… So he’s like, “No, you can say that in one sentence”, so he edits it. Much easier to edit other people’s stuff than to write it, from what I’ve found. So he edits it down, and then send it out. That was it. So it was very formulaic. The idea was like “You can do that in less than an hour.”

And at Equinix - it’s funny, because we stopped for a while. Because Equinix has a different way of reporting, and whatever… And we had some new people on our management team, because we’re kind of like a small business unit within Equinix… So finally, a year ago, I was like, “You know what - we just really need to start our memos again.” Because there’s too many people who wanna have meetings about all this stuff, and then they don’t have any context. And they don’t know how to help. It’s a 10,000-person company. I don’t talk to the market manager in Australia very often… But I want his help. And yet, we’re not doing him any favors, like to make him go and learn all this stuff about us, to find out what we’re doing, to find out if he can help…

So we restarted the memos, and at first, people were like, “Oh, it’s gonna take a lot of TPS report. We’re gonna have to do another report…” I was like, “No, no, no, trust me. This ain’t’ gonna waste your time.” So the idea is you should be able – most people get their section done in like 15 minutes. It doesn’t take that long.

There’s like six people who edit it, I do it once over, we send it out… It’s like the most valuable thing we do every month now. I mean, sorry; that’s probably an overstatement. It’s one of the more valuable communication tools. [laughs]

What I love though is that it’s this transparency, this ability to share where you’ve been, your past tense roadmap.


So if you want to leverage the knowledge base or the connections of the market manager in Australia -

Gotta give them some context.

…well, you might have to do a lot more - like you said, context-building for them… When you could just say “You know what - if you just read the last three months of these memos, which will probably take you ten minutes to glean over coffee… Then we meet and you’re asking me questions, versus me kind of giving you a 20-minute spiel of where we’ve been. You know. You know what our challenges are, you know what the bigger Equinix story is already… So you know all those details, but you can specifically help me with Metal-related things.”

[01:10:52.06] And if you as a founder aren’t good at doing that, find somebody and make them your internal reporter. “Could you just write the story of XYZ startup every month? Just write the article. Something that people wanna read.” And that will allow you internally to get consensus… But oh man, leveraging your investors, and your fans… Like, think about your family members, or your friends, or your colleagues that you used to work with, or other people who might really wanna help you, but they don’t have time to learn everything. You can’t get a beer and get a whole download on what’s been going on in the machine learning space for the past year, so your friend at Facebook can help you out…

So I think finding a good way to do that… Some people maybe have a blog, some people do this… This for me was a better mechanism, but –

…time-saver. That’s a leverage tool. How about that? Because otherwise, I found myself spending so much time just explaining to my investors what the hell’s been going on… Like, “Wait… Did you read my memo?” They’re like, “No.” I’m like, “Well, read it and then we’ll talk.” [laughter]

That’s so awesome. I love that demeanor. That’s cool.

RTFM, man…

Yeah. “Don’t waste my time here.”

[laughs] I am busy. You want me building value for you, right? Okay, cool. Then I need to go back to doing that stuff.

Do you wanna talk more about this kind of stuff, or do you wanna dig into the direction of the company, product…? What would be the most fun for you to talk about for the next however long?

I think I’d love to cover in a few minutes – so yeah, I’d love to talk about the future of it all… Because that’s been a super-fun ride for me. So dot-dot-dot, fast-forward… We’re at Equinix. 2021 happens, like “Oh, my God”, right? And global pandemic, yadda-yadda, the internet continues to grow, everybody’s using Roblox, Zoom is everywhere etc. Okay, cool. I think there’s two awesome things that have happened; number one - this is in our industry - even big companies who were (I’m gonna say) on the fence related to remote culture and all that stuff, remote work, they’re totally fine now. All that is good; the world is flat, as you’ve mentioned earlier. That’s really interesting, because it’s causing a whole bunch of cultural things that I think – like, software developers in particular are really good at this, which is asynchronous communication. You’ve got a lot of tools around asynchronous; you’ve got mailing lists, you’ve got GitHub, you’ve got issues, you’ve got chat when you need it through Slack, or Discord, or IRC, or whatever… You have a bunch of different communication modalities, and you kind of know how to use them, because it’s ingrained in the work that you, called like “I will issue a pull request, and then somebody will review it. We won’t have to have a Zoom meeting for you to review my pull request. You will do it, and it is fine, because you get notified, and then do it after dinner, and it’s all good.”

Well, a big portion of work right now is going through that transition, without the same institutional tooling and whatever, such as like “How do we share the context of information when we’re not in the same building all the time?” So I see that happening. I think it’s a fascinating time, a fascinating opportunity, and I’m certainly enjoying my role at Equinix, helping to kind of invent new ways in a bigger company… Like, 13,000 people is a lot of people to share context with… And so how to go through and be with that kind of global – we are a global company, so dealing with that… But from a product standpoint, the other big thing that happened is every single one of our enterprise customers - we have around 11,000 enterprise customers - has put the gas pedal on digital transformation. And digital transformation to me was always such a buzzword. I was like, “Oh, whatever. That’s just consulting speak.” But actually, I think it’s pretty true.

Is it really?

It’s real. Companies going through and seeing technology as a weapon in their business. Like, how can they use technology to win their market, defend their market, accelerate their market, deal with the problems of Covid and healthcare, remote ordering for Taco Bell… Like, I don’t know, like, fat is a tech problem, which most every industry is having.

So just seeing that accelerate just represents this huge opportunity. Where I’m most focused on it, and where I’m super-proud to be working at Equinix is that championed by our CEO, Charles, we have a very strong commitment to sustainability. And so our mission is to, in the end, create a better planet, basically, as part of what we do. And that in a data center world and technology world has been removed from people’s direct view… Like, “I’m just doing it in the cloud”, which is burning Diesel, and massive air conditioners, and billions of gallons of water, and tons of toxic chemicals called computers, to do - what? To do what we do of like being on a Zoom?

[01:15:32.23] This is an incredibly Carbon-intensive part of our world that is generally invisible to most people, and I think part of that has to do - my personal viewpoint on sustainability, beyond where we’ve made 2030 targets to be Carbon-neutral; we already do almost 100% of our power renewable, but if you think, the rest of our business - there’s huge amounts of opportunity and ways to become net-zero from a science target standpoint.

What I think we can do at Equinix, and why I’m here, and what I’m the most excited about with my role in Equinix Metal, which is to put the computers in the data center. Number one, we could do that way more efficiently. I’m part of a Linux Foundation project called Open19, where we’re pushing forward a standard throughout our industry for liquid cooling, so we can have blind mate connectivity for liquid cooling at the back of computers, so we can dramatically lower the PUE, remove the wastewater, get to zero-Carbon data centers, which is incredibly important.

So number one is making the use of hardware, no matter what it is and no matter where it is, sustainable from that perspective… And number two is helping the major technology providers in the world, like OEMs such as Dell, or silicon partners such as Intel or NVIDIA, go from a business model where they only made money when they sold you more chips or sold you more servers - which is by itself not a very sustainable business - to them making money when you got outcomes or used the thing. Helping the biggest technology companies in the world move to as-a-service will actually align – so that instead of us having to tick-tock you and sell you new chips every two years, well, why can’t we just sell you on technology which had full recycling, and we wanted you to use it for longer, because that was the aligned outcome between Intel and Dell and Equinix and you? That to me is a fascinating problem space. Not only can we make the operating of technology sustainable, but we can make the business model of technology sustainable.

A lot of the cloud have made meaningful impact there on there; they’ve moved it far – because they are paid for usage and subscription of their services, which aligns a big portion of the industry towards that… But I still think when you think about the OEMs, the hardware companies - they’re still in the business of shipping you more stuff… And I think that has to change. And we have to align it so it’s circular, so we can recycle.

Awesome speech two years ago at our IFX conference from this hardware reclamation company; I forgot the name… ITRenew. So cool. And they basically did an analysis of the energy in the lifetime of a server. We all focus on the power you plug it into, or the air conditioners, the PUE, right? That’s only about 20% of the energy of the entire – like, if you run that thing for five years, that’s only 20% the energy of the server’s life. 70% is making the server. Supply chain, silicon, all that stuff. 70% of the energy. Huge. And 10% is getting rid of the server. Destruction, recycle, shippants, whatever.

So if we just work on improving the 20% of the PUE, we’re just rounding on this thing. We’ve gotta work on the 70% of like “We have to make new servers all the time”, and the 10% of “Oh my God, we have to recycle this thing”, and make that much more circular. To me, that is like a game-changer, not only in terms of allowing for new technology to come to market, but allowing it to happen in a way that’s sustainable for our planet. To me, that’s what I’m excited about.

[01:19:12.01] Give me a scenario then how you make that more effective than with, say, an NVIDIA. Or Intel. Or even any of the chip manufacturers. How do they still get paid despite lack of future sales of new chips, for example? How do you incentivize longevity?

Well, instead of selling you a A30 NVIDIA card, what if they got paid when you used it? What if they got paid when you had outcomes from it, like your models were trained?

Per usage billing, essentially.

Yeah. Some sort of alignment, so that way “Hey, it makes sense for us to have you continue to use that thing.” It makes sense for them to continue to optimize code against the five-year-old card which now doesn’t make sense for them to do, because they’re like “You know what - I should only optimize the new one, so I can sell more the new one.” And right now, I think there’s a whole – if you wanna get into the military industrial complex, there’s like the silicon industrial complex…

Yeah, I bet.

…which is like “We have to tick-tock you, so that way I can sell you another chip. Because I’ve spent a lot of money on this fab, and we have to move you to the new one. That’s gotta happen. Otherwise we can’t recoup our bagillions of dollars of R&D.”

And you want the innovation, right?

You want the innovation, in the right place.

I like this model, because it focuses them – when you shift this model, it’s gonna probably take a while to transition to it, too… Hopefully not, maybe now with things being so compressed, with remote, and a lot of things that were before, ten years of a transition, I think Covid really transitioned a lot of people into remote world super-fast, so a lot of things are being compressed… But if they could innovation, focus on the innovation versus the sales models of selling you more, and just focus on the innovation - that would be probably a game-changer for just the future.

I think it would be – aligning outcomes with the people who create most of the technology, silicon, and the people who use that technology to create things for our world… Aligning those two things would be good. They are not currently in line, for most companies. They’re aligned for cloud companies, who often create their own technology, and also create their own services… Which is really cool for a couple of hyperscalars, and not really as cool for everybody else. And I personally believe that innovation is messy, and it means thousands of people have the ability to change the world, and we can’t use – I don’t believe that my kids are gonna give up on technology and become Luddites and move to the woods… I don’t believe that. I think we’ve gotta lean in harder, and we have to find more sustainable ways of creating the outcomes that we want.

It’s not gonna go away.

It’s not gonna go away, right?

Technological advancements, the innovations, whether it’s literal TikTok, or something that changes the world in different ways… Not that that doesn’t change the world, but what might be just simply a fun or entertaining application, to, say a world-changing application, like a machine learning model that understands cancer differently, that can predict outcomes, or something like that.

Sure. We’re all living through some pretty crazy technological innovations right now called mRNA Covid vaccines and whatnot, right?


So - okay, there are these amazing things that happen with technology, but right now the business models aren’t fully aligned. And then we would see - I hope we would see things like “Wow, we should get rid of packaging.” Have you ever unracked servers in a data center? Do you know how much crap we throw out?

All of it.

Like, a lot.

You want new, you want fresh, it’s gotta be pretty…

And then we do so much stuff within a rack, like the sheet metal, and the cables, which - we throw out all of those, because we need new servers… Because they move the power supplies from the left to the right.

Wow. Yeah.

You know, I’m like “Oh my God, I don’t wanna do that.” Think how much waste we create. So there’s all kinds of – we haven’t even touched the surface on this stuff.

I wish we had more time to talk about this, because I’m actually super-interested in the recyclability of this stuff… Just to give you a silly example in comparison - I take out my trash. I’m the one who fills the recyclable bin.

[01:23:06.05] You’re like, “Wow, that’s a lot of trash.” [laughs]

And my recyclables are way bigger than my trash, because I’m die-hard about it… Now, some people say it’s a waste of time; I sure hope it’s not… But I care enough to like – now I’m super-aware of packaging in the things I see day to day. And then this is your day-to-day, racking and unracking servers; there’s a lot of waste.

And the cool thing about moving to cloud, or cloud-operated models, where people are not longer just grabbing computers and putting them in their corporate data centers - now we have actually very, very well-known places throughout the world where these things go. It’s not just randomly showing up anywhere; Intel technology showing up at Equinix global data centers is a thing. And we can make that circular. We can make it zero waste, actually. We’ve even done work on our data centers where we make it negative. We capture all the heat and we turn it back into geothermal energy, or sell it back to municipal cities. We’re just right now exhausting all that stuff, just to get rid of it, wasting water through evaporative cooling. There are so many cooler ways that we can take what we do, which is very wasteful right now, and turn it into a net positive for our society… But we have to align the business models of the forces; otherwise we can be the Greenpeace boat, driving around the data center, being like “No, don’t do it that!” or we can create a better way for everybody to make outcomes and money, frankly; like, economic. And I think that if we get those two things aligned - and that’s what I’m most passionate about at Equinix, as like the world’s largest data center company, where tons of things of the internet happen; global distribution in 64 markets… And I’m the guy trying to put computers in them. If we can make computers go better as an industry, as a team, that’s gonna be great for our world.

As I say, who better than Equinix? You touched a little bit on the size… Can you give a wider spectrum…? I know you mentioned employee count, global… Give us specifics on countries, data center numbers, stuff like that… Just to kind of give the audience some context to how you’re poised to make this change, or enable it in some way.

Yeah, so we’ve been going since 1998. Jay Adelson started the business as the “Equality in the internet exchange. Equinix.” And we were a neutral place for the internet at the time to meet, which was the content side and the telecom side. And we’ve kind of continued that, and now at this point we have I guess about 230 data centers, maybe 50 under construction right now. Globally, we’re in 64 markets around the world, the largest provider in every single region of the world at this point. Everywhere from Sao Paolo to Mexico City, to Warsaw, to Brisbane, to Osaka… It’s a pretty massive global platform, not only of data centers, but of interconnection. And that’s really the reason why people come to Equinix, is to interconnect.

We helped Amazon create Direct Connect, we operate the vast majority of cloud on-ramps, and over 400,000 interconnections between our customers, to allow them to move traffic cheaper and faster, more economically between each other.

So our whole business model is built around creating more of the network effect, so it’s a really, really interesting opportunity, a really interesting business. It sits in between all the clouds and all the things, and allows the kind of magic of our customers to happen in a neutral way. I think, like any business, we’ve had an incredible ride, it’s been going great, and I think you can look at our public side and it looks really good… But we too were undergoing some big shifts, as people wanna go to the data center less, and we’re gonna do more of that for them by automating. And as our OEM partners move to as-a-service businesses, as climate change becomes a central part of what we do… Every RFP that we field now, the number one thing now from large enterprise customers is “Help me meet my science targets.” Which is awesome. A year ago that wasn’t the case. Now it’s everywhere. It’s awesome.

[01:26:50.06] But we have that increased burden and responsibility, I think, to invest, and even in certain places like Singapore, unless you can create a Carbon-neutral data center, that means generating your power in a green way as well, like green Carbon, you can’t build another data center in Singapore. They are not issuing a permit.

So things like that are gonna be the next phase for all of us to do in our industry, a challenge, but Equinix is well-placed. And great leadership; really forward-thinking, and with a strong amount of integrity, and a sense of community and whatnot. So… Pretty cool.

I think it’s wild to say 7 years ago you were thinking about what could be, and now here you are…

[laughs] It was a really good beer. It was a really good beer I was drinking then.

I bet. I mean, I just think about that… That’s why I love, I guess, the journey of founders - because you think one day what could be, and then you make it, and then now you’re in a position acquired by the behemoth of places that Packet could have become. You could have acquired a series C and kept going down that route. Where would you be? Not that it’s a wrong route…

No. I feel very fortunate. Not only was it a good economic outcome for all the people and whatnot who came along the way, and investors… But I think it’s the right fit. You don’t get that very often, where you’re like “Wow. That’s the place where we should be” and maybe we can end it on a good note, but… I think it was five years ago…? Charles wasn’t yet CEO, but I met with him over something, because we had known each other a little bit through industry. I was like, “One day you should buy us.” [laughs] And at the time it was just like, “What are you guys doing?” and we’re like, “Well, you know, automating computers and data centers.” And it was kind of like, “Um, yeah, that’s not what we do…” and then five years later that was just so aligned that our business evolved, and their business evolved, to the point where it was like “Wow, you know what we should do together? It’s this.” That’s kind of cool.

That’s super-cool. I know we’re probably right at the moment of our time, but my last question for you is just a good tease, I suppose… Is there anything on the horizon, that you haven’t mentioned? I know you talked about a lot of the climate change stuff that you’re really enacting, the efficiency of data centers and compute and whatnot… But what else is on the horizon for you, for Equinix, for Equinix Metal in particular, that not many people know about? It could be a conference coming up, it could be anything. What’s on the horizon for you?

Yeah. Well, I’m gonna not dive into forward-looking statements… But I think we’re gonna have some pretty exciting stuff making our platform even more accessible. We’ve got a lot of cool things that we do - networking services, interconnection, global access to our NFVs, metal, our data centers… And I think one of the things you’ll see Equinix start doing is making all that stuff way more consumable, way easier for more companies to access… So I’m super-excited about that, and what 2022 has to come.

And then the other thing is if you’re a hardware nerd, Equinix is gonna be a great place to hang out. We’re gonna have some really awesome go-to-markets for very interesting hardware, so stay tuned if you like the hardware. Calling all gamers.

Very cool. Is there anything I didn’t ask you that you wanna talk about on the close? Anything left that is left unsaid?

Well, for all you founders out there - I mean, I just celebrated my wedding anniversary with my wife yesterday; she’s still with me… There’s always a secret partner in many startups, and that partner is often your family. For me, that’s been just an incredible support system. I think it’s the unsung hero in most startups or businesses, it’s the person who – or the people, my kids and whatnot, who have helped me do what I do, and really invest in the things that I love, by the support system. So I’m sure other founders have the same setups, or are intimate with that, but… I can’t say that stuff enough.

I agree. My wife is for sure my partner, and everything I do, I couldn’t do without her.


So thankful.

Alright, Adam, it’s been great talking. This is fun. We should do it more often, but maybe in a noisy data center.

I would love that, actually. I would love to tour a data center. It would be so cool.

Let’s do it.

I haven’t done a tour of a data center in probably like 15 years at least… So it’s been too long, and things have changed quite a bit.

I’ll meet you in Dallas. We’ve got some good data centers there.

Let’s do it. Thanks, Zac.

Alright, Adam.


Our transcripts are open source on GitHub. Improvements are welcome. 💚

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