Long Road From Cuba: Manny Medina, CEO of Terremark (Part 3)

SM: What else was going on around you at this time? Wasn’t Exodus a high-profile data center company at the time?

MM: Absolutely. That was in 2000, and Exodus was going through the roof. Global Crossing had a global center. Back then it was a mad race to the finish. It was a crazy time. Exodus was building data centers like there was no tomorrow. All the dot-com companies were getting the funding they wanted and were going to Exodus asking for 30,000 and 40,000 square feet of raised floor space because they were planning on growing infinitely. Obviously, the bubble ended up bursting in 2001.

At that time we actually felt that the NAP Americas was a good investment. I equated it to an airport. If we were able to buy the Miami International Airport in the 1930s then we would have made a good deal. That is why we fought so hard for it. When the bubble burst, all the money dried up and we were in the middle of building the physical infrastructure to accommodate all the carriers. The carriers had all signed MOUs saying that they agreed to use it as a point to exchange their traffic. They still needed to bring their fiber from landing in the beach into one location. That is the part of our business that we felt could never be duplicated again. This would never happen again. Once a carrier was there, they were not going to leave because they need each other.

Along the way the party ended and everyone had a hangover. It was still a difficult time. We plugged along because we believed we would come out winners because of the power of a grouping of carriers in one location. Something else that helped was the implosion of the telecommunications industry. The carriers had to slam on the brakes and stop building. Instead of being in an environment in which everyone wanted their own datacenter, they were much more amenable to sharing. This had never happened in the industry before.

Carriers were taking space from us to re-sale to their own customers because they could not come up with the space and could not build out more space. To a certain extent that helped us. September 11th also helped us because it also began our federal business, which today is a significant part of our business.

SM: Is that because people were more aware of disaster recovery requirements?

MM: After September 11th, the fact that you were so vulnerable if an exchange point were damaged became obvious. If those planes had hit Hudson it would have been chaos. Therefore there was a new awareness in enterprises and the federal government that you needed to make sure your networks were backed up. You could not be vulnerable. At that point we had 30 carriers in our facility, so basically it brought us into a whole new sector of business.

Even though we received new business, our model had not changed. We remained there to exchange traffic. You had a peering point in a fortress we built, and then we could sell all kinds of services such as security, hosting, and storage.

SM: We are talking 2000 and 2001. What were your revenues like at the time?

MM: What revenues? We started from $0. The company had revenues in the real estate areas. We were pulling something in the $20 million range from other business areas.

SM: The collocation business was at $0 at that point?

MM: Correct.

SM: Which was the transition point for you to start changing the emphasis of your business?

MM: Exactly. We then excited all the other businesses. When everything burst, we had to make a fundamental decision, left or right. Left meant we would abandon this endeavor of building technology centers, and right was to abandon the real estate business and sell everything we had to raise as much capital as we could so that we could finish building the NAP Americas. We made the decision to go this way.

This segment is part 3 in the series : Long Road From Cuba: Manny Medina, CEO of Terremark
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