Zac Smith left his role leading Equinix Metal in June of 2023. Since then, heās been thinking deeply about the present and potential future of data centers, OEMs, chip makers & more.
Zac Smith: Well, I took away from it something and I saw this with a lot of larger companies, and it really gave me this newfound respect, both for market leaders and for startups. And I used to see them as very in conflict. And actually, I can see why great market leading companies have muscles around acquisitions. Because in market leading companies - there was a really good book, I think itās Zone to Win. Have you ever read the book Zone to Win? It basically talks about thereās four zones in a companyās lifecycle or where its products are. And the upper right zone in the quadrant - just think of a two by two - is the kind of market leading. You know how to sell it, youāre leading the market, everybody knows that you do it⦠Thatās where itās all working.
Then kind of like below it you have the stuff thatās like starting to work. And I think they call them like Horizon One and Horizon Two, something āItās right here, or itās like a future opportunity.ā And then over on the bottom left - and Iām totally bastardizing this, so please, somebody google it, and it will make a lot of sense. But on the bottom left you have like innovation, which is this kind of like incubation zone, which is not even a thing yet. We donāt even know. Itās super-weird, itās super-scary, it might fail, probably will fail, weāre not sure⦠And then youāve kind of got this adoption zone, where itās like āOh, itās starting to work.ā
What I realized is that the zone up on the right hand side where itās winning, itās that way because it actually figures out what works; for example, with Equinix, interconnected co-location works. They dominate the market, theyāve been doing that for a while, everybody knows that thatās what they do⦠And they then build processes that keep that market leading around it. And so internally at the company - and Iām sure that this is at other market-leading companies like say Google, right now with their ad business - thereās a very protectionist approach. Like, donāt distract from winning at the thing that is working. Like, donāt get us off track, because weāre nailing it every quarter, customers love it, weāre dominating the market⦠Keep doing that. But what that can do is that can obviously take something that looks not working yet, e.g. incubation, or some sort of innovation, and kill it. Because itās a distraction to the market-leading component of the business.
[00:23:55.02] And so that was definitely one of the challenges we had at Equinix, was they were trying to figure out how this 20 years of market leadership they had around a single thing - well, what happens to the next thing? What do they say about ā thereās this funny phrase, itās like āI went broke slowly, and then all at once.ā Itās like, itās it was working, and I was the number one until ā I mean, look at Intel right now. Until I wasnāt.
I think that there was a good self-awareness at Equinix, like āHey, how are we going to upgrade our products and our experiences for the next thing?ā And so acquisition is part of that. And I think startups play a great role, because there is no past. All they have is future. So there is no zone that is swapping away innovation. Everybodyās like āAll ideas are good, because we need to figure out how to survive, or make the next wave.ā
And so I think thatās super-interesting that companies who have figured out how to do that over and over and over again⦠And whether they figure out how to incubate, like what maybe certain companies do with labs divisions, or open source, or side projects, or through M&A. I had a very much renewed appreciation for that cycle.