365 Main

A California-based firm specializing in data center facilities has just gone national, responding to what execs say is a growing demand for space.

365 Main Inc., founded in San Francisco in 2002, buys and builds data center space to rent to enterprise customers, Web hosting companies, and Internet service providers. The firm plans a grand opening for a second facility in Los Angeles tomorrow, where management will also announce the opening of additional data centers in Phoenix and Chantilly, Va.

Execs at 365 Main say their company is moving outward from California in response to a burgeoning need for more data center space nationwide. President/founding partner Chris Dolan (ex-AboveNet) says growth in data volumes, the need for regulatory compliance, and fresh interest in disaster recovery are behind the move and have earned the 70-employee firm about 300 customers. "We opened our [228,000-square-foot] flagship center in downtown San Francisco [in 2004] with one customer and one equipment rack. In two to three weeks, we'll be full up in San Francisco," Dolan says.

The data center in Los Angeles/El Segundo, Calif., first announced last year, offers an additional 135,000 square feet and is about one-third full. A new center in Phoenix, Ariz., is now open for business with 315,000 square feet, of which one-quarter has been taken already by financial company Charles Schwab. The northern Virginia location will open with 145,000 square feet September 1.

According to 365 Main's VP of marketing, Miles Kelly (also ex-AboveNet), would-be customers are on waiting lists for space. "We have 1 million square feet of interest in the pipeline for Phoenix," he declares. That means customers have expressed interest in having more than twice the space that 365 Main now offers in Phoenix.One customer typifies the kind of enterprise that's glomming onto the likes of 365 Main. The National Football League's Oakland Raiders use 365 Main to host their public Website, which reduces the burden on in-house IT.

Besides providing the bandwidth to keep the site running, 365 Main helps the team keep downtime to a minimum. "They have a NOC [Network Operations Center] and can tell if the Website goes down as opposed to us having a 24/7 monitor on our own," says Tom Blanda, director of finance and technology for the team.

365 Main, which functions as a specialized realty business with private, ongoing, and undisclosed funding, isn't alone in addressing market momentum. Competitors abound, both regional ones and national or international players like AboveNet, Equinix, and Savvis. Also playing is Digital Realty Trust Inc., whose model is similar to that of 365 Main.

Unlike most of its competition, 365 Main does not specialize in providing wide-area connectivity to its customers, though it does provide an Internet exchange point in San Francisco. Instead, 365 Main focuses on what it calls "environmentals" -- power, cooling, security, and other aspects of the physical plant. Demand for power, driven by the use of denser servers, blade servers, and storage gear have changed the requirements of many organizations.

"We've seen a quadrupling of power requirements in the last three years," Kelly says. A high-end, six-unit server typically needs four times the power it did back then. Blade servers also tax power, and over half of 365 Main's customers are using them.365 Main has devised a monitoring system that enables customers to be charged only for the power they actually use -- something that execs say distinguishes it from other players. Dolan and Kelly say the firm developed this in house.

The company's focus on the physical is paying off for at least one customer. "Their environmentals are excellent," says Pervez Delawalla, CEO of Net2Ez, a company that offers managed data center services using 365 Main's facilities. He bought his space at the company's El Segundo site prior to the sale of the building to 365 Main by AboveNet, a transaction that was listed in a Digital Realty SEC filing as worth $22.5 million, though 365 Main won't confirm that. According to Delawalla, 365 Main has subsequently offered him more modern facilities with better redundancy than its competitors and on terms that make sense for the long-term goals of his business.

Speaking of terms, the cost of space isn't cheap. A rack in one of 365 Main's facilities costs anywhere from $600 to $1,000 per month, or, on other negotiable terms, $15 to $25 and up per square foot per month.

Still, Dolan and Kelly think they're onto a market that's only speeding up. "Data centers are white hot!" Kelly says.

Mary Jander, Site Editor, and Dave Raffo, News Editor, Byte and SwitchOrganizations mentioned in this article: