Today, my Partners and I at Meritage Funds announced that we’ve established a new platform in the data center colocation market. Headquartered in Seattle, WA, Digital Fortress operates nearly 50,000 square feet of data center colocation space, focused on delivering high-power density installations to enterprise customers. A Meritage Funds blog post announcing the investment has much more on our thesis and goals for the investment.
Tech people use the phrase “there is a pony in here somewhere” to describe a tough situation where there is a hidden big opportunity. I hear it most often in the context of a stagnating business that can’t seem to break-out and needs a new catalyst for growth. For example, in businesses that need to make a pivot (btw, the most overused word of 2010/2011 in my mind).
I like the idea behind finding the pony, although not the specific phrase for reasons made clear below. Which leaves a very important question: How do you find the pony? I recommend the following process:
One of the trends I’ve observed over the past several years is that more and more technology entrepreneurs are starting service-delivery business. By services businesses, I’m referring to the category of businesses that some venture investors refer to as technology-enabled services (“TES”). We at Meritage prefer the term network-enabled services (“NES”), which we think more accurately demonstrates the fundamental innovation in the business model, which is that there is a high-level of connectivity between the service delivery platform and the customer. Services is a big tent, so to ground it, put your mind on business models like SaaS, cloud computing, and even search.
Last week, I attended GigaOm’s Structure ’09 Conference: Put Cloud Computing to Work. It was worthwhile to attend and I intend to return next year. It was exciting to see how the services business model is being rapidly adopted by the technology-delivery value-chain.
In a talk titled The Cloud in Context, Russ Daniels, VP and CTO of Cloud Services Strategy at HP put it most succinctly, describing HP’s vision as:
“Everything is a Service”.
Full video of Daniels’ talk here. While the “everything is a service” mantra is almost certainly overreaching, it drives home an undeniable point; the action is in services. To make it fully, I think you have to start with the view from the customer’s perspective.