Conversation with Equinix Co-Founder Jay Adelson

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In this episode, Jay Adelson, Co-Founder of Equinix speaks with Colby Synesael, Communications Infrastructure & Telecom Services Analyst. They discuss the Equinix origin story and founding purpose, the initial investors in the company, and why Jay decided to leave the company. They also discuss net neutrality at third party data centers today, additional services that data center providers offer and the role of Network as a service (NaaS). Press play to listen to their conversation.

Transcript

Speaker 1:                       Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Colby Synesael:               My name’s Colby Synesael. I’m the equity research analyst at Cowen covering communications infrastructure and telecom services. Today, we’re joined by Jay Adelson, who is the co-founder of Equinix and several other companies, including Center Electric, a VC firm, focused on IOT and sits on the board of Megaport. He’s joining us as part of our Leaders, Legends, Luminaries, and Visionaries podcast series. Jay, thanks for being here.

Jay Adelson:                    It’s my pleasure.

Colby Synesael:               I wanted to start just talking a little bit about your background, your history before we go into the founding of Equinix and then some of the things you’ve been doing since then. I was reading that you graduated in 1992 from Boston University and that you studied film and broadcasting but with a concentration in computer science. I’m just curious, was the computer science degree your fallback plan in case the film part didn’t work out?

Jay Adelson:                    Well, see, I love that you’re giving me the credit for having a plan at any time. What I knew when I went in to Boston University was that I was really into both radio and film and computers. Then within the computer universe, I was, since I was 10 years old playing around with telecommunications, and so I wouldn’t even say just computers in general. I really loved telecom, which I know sounds strange, bulletin board systems and all that. When I went to college, I didn’t really know which way I was going to go. I ended up deciding to focus on film and broadcasting. I got my degree in that. Then I had the computer science concentration, which allowed me to take any courses I wanted to without any other requisites, so I could skip things like discrete math, which a lot of people love, I couldn’t stand and all the calculus courses and just focus on coding. But when I graduated, I was an audio engineer. That was my plan. I got an internship out here in California, did a bunch of contract sound work, post-production. I just could eat, and the rest is history.

Colby Synesael:               It’s funny. I feel like there’s so many people that have some general idea of what they want to do in college, but so many of us end up coming out and what we ended up doing is not probably anywhere close to what we thought we were going to do the day that we actually graduated.

Jay Adelson:                    No, that’s right. I remember I gave a commencement speech a Boston University 20 years later.  Part of the thought process of creating that speech was remembering sitting in that audience and really having no clue. I mean, I think the problem was where would you live? How would you eat? What would be the mechanism of just transport yourself out of this expensive town and into another one? These tactical issues and the idea of a career or some kind of plan, it wasn’t even close to realized in my head. That was my message, I think, to allow the students, was you’ve got to focus on the little bites and trying to find something to be passionate about in a job that may not appear related to your particular passions that you had as you went through college.

Colby Synesael:               Soon after college, if I got this correct, you took a little bit time off to travel. I’m curious, first off, do I have that right? If I am, where did you go? Would you advise others, now in retrospect, maybe your own kids, taking that time off to experience the world before really of grinding into a career?

Jay Adelson:                    I think a gap year or two or five is a great idea. I’m not suggesting that it be completely unstructured and that they’re not be work in there and some kind of income or plan. But I do think we rush. Everybody jumps in, this is the way it’s done, four years of school, maybe grad school, maybe not, jump right into a career and in a cube somewhere. Any amount of time, whether it’s just a few months or a year or whatever really does give you perspective. It slows you down. It gets you off of that, I don’t know, the treadmill.

                                         In my case, yeah, I’d come out. I was working as an audio engineer. I couldn’t barely pay my rent with it. I just decided to do one of those $3,000 tickets. I don’t even know if you could still do this anymore, but you get like, you would spend $3,000 and you could have as many stops as you wanted to, so you could go anywhere in the world, but you could only cross the Northern-Southern hemisphere twice, but you could do this for a year if you wanted to, as many flights as you wanted. These travel agencies used to be in the classifieds in the back of the New York Times, you know?

                                         So I got one of those tickets. I sold all of my worldly possessions, which pretty much was nothing except for maybe an Amiga computer and a closet of like three shirts. I went to Southeast Asia. I mean, it was a nine month trip. I stopped in a lot of places. I spent about 45 days or so in Nepal. It wasn’t like, I wouldn’t call this trip transformative. I would just say it gave me the time to get that perspective that I really needed. Also, I got really hungry. By the time I got back, I was very focused on what could I do, how could I work my myself into the corporate American universe and make a living?

Colby Synesael:               Very cool. I did something a bit more mainstream after graduating. My mom gave me two options. She said she should either give me a really nice watch for graduating, or she would help fund a backpacking trip across Western Europe. I chose Western Europe. I got the Euro rail pass, which effectively allowed you to go all over for some period of time. It was a great trip. I actually kept a journal. I’ve read it a few times since then. I talked about what I wanted out of my life going forward. It’s pretty neat to have that, but to your point, it gave me perspective which was, I think in hindsight, really helpful.

                                         In 1993, so about a year after you graduate, you do get serious and you go to work for Netcom which was a dial up ISP. Then in 1996, you go to work for a company called DEC, which I don’t know if everybody knows that, but it’s Digital Equipment Corporation, I think at the time was referred to as Digital, which made computers, but also owned PAIX or intended to own PAIX. What was or is PAIX? Let’s start there.

Jay Adelson:                    Okay, well, I think for your listeners, you have to go back in time to the mid-’90s. As much as it’s impossible to imagine a world without a commercial internet, ’94 was was really the  first time that you could buy a connection and dial up to the internet. Before that it was bulletin boards and AOL and CompuServe and all that. When I was working at Netcom, we were one of the first to really offer that kind of connectivity, both for business and consumers.

                                         By the time ’96 rolled around, the internet was exploding and growing so fast that the decisions that were made in ’94 to make a commercial were obsolete. A lot of the ways that networks could interconnect were growing super congested. Bob Metcalf, at the time, had famously said that the internet would collapse by the end of ’96. I just remember, at the time, because back to my roots, I loved this idea of the world being connected. I was very passionate about it. The stuff that we were doing at Netcom was largely about getting regular, mainstream people on the internet and connecting them together.

                                         And so it’s not surprising that Digital Equipment who has this network systems laboratory, or had, in Palo Alto, and up until that point, it lost a little bit to internet history. They were doing a lot of the stuff that was required at the core of the internet. For example, there still is this Usenet global message board that’s still active today. That was one of the first applications before even the web that was run on the internet. They were running the core of that, the core machines that kept that organized.

Colby Synesael:               Wow, very cool.

Jay Adelson:                    Man, it’s so cool, and I knew about it because I was working, running network operations at Netcom. I got recruited by Al Avery who had been working there to basically take this research project, which was taking two of the original networks that Paul Vixy and Steven Stewart had arranged conductivity between these two networks, Alternet and Barnet, and take that concept and really make it a product or a business, the concept of an exchange point, but a neutral one.

                                         Because back in the early ’90s, the reason the internet was congested is because when the government handed over the keys, they handed it over to the telecom companies. They built these exchange points that were growing congested. If you were Netcom or somebody else, you had to pay one of these big carriers for all of your internet traffic, unless you could connect to everyone else directly. Most of them just said, “Well, this particular exchange point is owned by me. I’m AT&T or I’m Sprint. We’re only going to allow other folks like us to connect us here.” Right?

                                         But a neutral exchange point was different. Everyone was going to be treated the same. We didn’t treat carriers different than we would treat content providers or enterprises. Everybody was basically the same. That experiments started in that basement in Palo Alto. I don’t think we expected it to become as successful as quickly as it did. But it created a whole bunch of problems, because the company was getting acquired by Compaq.

Colby Synesael:               Digital was?

Jay Adelson:                    Yeah, Digital, at the time that I joined, had 120,000 employees, right? Now, it’s really, the closest thing that I think most people think about is IBM, just in terms of scope and scale of a company. Talk about a change from startup of Netcom. That was an education for me. I think they gave me a book with 20 pages thick with three letter acronyms for every process in the company. Yeah, it was complicated. They didn’t know what to do with this as a business. They really didn’t. I mean, the research and development group, Paul and Steven and Brian Reed,  we were in R&D, so we were given a lot of freedom to do what we needed to do. But when it came to a research project, making money and actually being a profitable business, I think it was very confusing to an organization that makes computers.

Colby Synesael:               Okay, so a few things. First off these access exchange points that you’re referring to that were run by the telcos, am I right that those are what we’ve thought of as May East and May West. It was Ameritech in Chicago. You mentioned Sprint, which I think got the one in New Jersey. I mean, these initial interconnect points were allocated by the government to telcos. That was the logical place, but it was somewhat of a gated system. They controlled how they wanted to operate and run those. The whole idea of PAIX, which again was formed out of Digital was to create this neutral platform. Even though it wasn’t a big part of what Digital was or was known for, they certainly had the capital to invest. They had an R&D lab. That’s what you were brought in to figure out.

Jay Adelson:                    That’s right. Yeah. I don’t think when I joined as the operations manager of this business unit inside of R&D, I don’t think that anyone really knew necessarily what the business would look like. They didn’t know what the product specifically was, would it be cross-connects or would it be a switch fabric, how much of the service we maintain, would we be regulated, right? No one knew yet. We had to learn all these things. We invented our own three letter acronyms, like PNI and CNI.

                                         We realized very quickly that up until that point, almost everything on the internet was metered. If you’re a telecom company and you open up an exchange point and you’re the service that needs to be leased to get in the door, you’re going to charge based on volume. I think our thought was, “Well, if we flat rate it and we say, ‘All right, instead of it being megabits per second, or what have you, it’s just a wire and a wire costs 200 bucks a month or whatever it is. You can run any amount of bandwidth you want over that. If you want more of these, just order more of them.'” It changes the whole economic model of this exchange point. For our carriers [crosstalk].

Colby Synesael:               [crosstalk] cross-connect.

Jay Adelson:                    Yeah. I mean, it’s a cross-connect, so cross-connects existed. You could go to data centers or carrier hotels. You can order cross-connects. But if you did that, the way you were billed was based on a advanced service, like a T1 or a DS3 or if it was MFS Data Net, which owned May East and May West, they had ethernet over Metro at the time. They had their own billing methodology. We were a neutral exchange point, so we weren’t a carrier. We didn’t make money from network services. And so what we came up with was this idea of a flat rate in a port in a cross-connect. We didn’t really classify you as a carrier and charge you a different thing than say Yahoo at the time that came in and also had a network. We treated them the exact same way we treated Sprint, which by the way, it wasn’t, at first, it created, it’s certainly ruffled some feathers. Let’s just put it that way.

Colby Synesael:               Sure, so you mentioned Al, so Al Avery and you are the two co-founders of Equinix. What makes you and Al leave Digital after creating PAIX and ultimately move on to start what ultimately becomes Equinix? What’s the bridge? What has to happen for them?

Jay Adelson:                    Well, I think there are two people really that influenced us in that regard. One is Andy Rachleff. Andy Rachleff, who had been one of the founders of Benchmark Capital. Andy, also the founder of Wealthfront, he is a VC, a venture capitalist based in the Bay area. He had a portfolio company, a DSL company called North Point that was located in the Palo Alto exchange. He toured the exchange. One time, we are, you have to understand a normal carrier hotel would be these dark, damp, cold basement rooms. We built the Palo Alto exchange to be really pretty and have sliding glass doors and have a lobby area. It was really good for tours. The lighting was beautiful. And so we brought him through this and explained the model to him. Of course, the very first thing he thought of was this is big. This could be a really big, multi-billion dollar opportunity, as venture capitalist might do.

                                         There was another guy, one of the founders of a company that I knew named John Mayes. John had been one of the co-inventors of the PIX, which was the first network address translation device that Cisco acquired. John had been the only person I knew who had started a company and sold it to someone, in this case, Cisco. He also knew about the Palo Alto exchange and said, “Wow, this is a big idea. You guys should do it.’ For a year, Al and I would talk about it, like, “Should we do it? Can we convince Digital to do it?” We were very loyal to Digital.

                                         We kept going back to Bob Supnick, who was the VP of R&D at Digital at the time. We kept asking for permission to expand it, traveled around the world getting people excited about these as economic development opportunities, but it just, we couldn’t move. As a business unit, we couldn’t move the needle. And so right about the time that Compaq had come in and basically told us they were going to convert everything into dial up pops for their personal computers to connect to the internet, and we’re like, “Okay, that’s not what this is for,” we announced to Bob Supnick that we were going to quit and start Equinix.

Colby Synesael:               You had gone to Digital 1996, and just to give some people some perspective on timing, it’s in June of 1998, when you and Al leave Digital to co-found Equinix. Who are your main investors? You mentioned a few guys that had told you along the way this could be huge, but honestly, when I’ve tried to go and look back, I don’t know who thee core investors were that got this off the ground for you guys.

Jay Adelson:                    Well, we had some good advice. We didn’t get VC money immediately. We got some angels to just bridge the gap, because the old model anyway, was that you would build an initial business plan, get your core team together, get everything rolling, and then you go raise money because otherwise your value would be too low, and the investors would take too much of the business. We got John Mayes, another guy named Johnson Woo, Ed Caselle, who was the former CTO of Cisco. I want to say, I’m trying to remember who the other angels were. There was a couple other angels in there. Then about six months later, we brought in about $15 million in series A capital from Benchmark Capital, Cisco and Microsoft, oh, and Stanford University.

Colby Synesael:               Wow.

Jay Adelson:                    I can’t believe I remember all this. It’s a long time ago, man.

Colby Synesael:               You know I’m recording it, so it’ll feel asked in history now.

Jay Adelson:                    There you go. Yeah, it was a venture deal that was at a time during the .com boom, so there were venture deals being cut in every corner of, you’d walk into a restaurant in Palo Alto. You’d see entrepreneurs facing one direction and VCs facing the other at every table. It was a crazy time. Just to give you an idea that some of the other companies that were invested in the same fund included eBay, right, and other consumer internet businesses. Exodus was a big hosting company at the time. People were very confused over the difference between our model and the hosting model at the time, because hosting had gone public already. People knew that. But yeah, those were our early investors. Our first board of directors included Mike Volpi. Actually, it was Charlie Giancarlo for Cisco and then later Mike Volpi as CTO and Cisco, or CSO at Cisco, I think he was was on our board and Scott Krenz from Juniper. It was an Andy Rachleff from Benchmark. It was a good core team to launch the business.

Colby Synesael:               Very cool, so two years later in August of 2000, UIPO out and then you ultimately stay on for another five years, I believe it’s chief technology officer. That was the title that you had, but then you leave in 2005. Why leave? Was it simply your work was done, you caught this entrepreneurial bug and you wanted to do that again as opposed to see Equinix, ultimately to the company is today? I mean, what was the reason for leaving at the time?

Jay Adelson:                    Hmm. Yeah, that’s a good question. I mean, the context that’s important to understand here is that 9/11 happened. Now remember, we went public in August of 2000. The NASDAQ then crashes, so our stock becomes …

Colby Synesael:               Within 36 months or something, it crashes.

Jay Adelson:                    Yeah.

Colby Synesael:               Or soon after.

Jay Adelson:                    Basically, here we were on this incredibly successful business. We had raised all this money, hundreds of millions of dollars. IPO went well, had great underwriters. Everything’s going well, revenue is growing. Despite that, the NASDAQ crashes, so stock is plummeting. Then by the time 9/11 happened, there’s a lot of stress being a founder of a company, watching your stock go to zero. Then IT spending just completely stops due to the .com crash. Then September of 2001 comes. I was in New York with Al. We were presenting to Morgan Stanley, I believe, and the World Trade Center thing happened. We were stuck in New York City for about, I don’t know. I think we split up. I ended up staying in Newark for about a week before I could get home.

                                         Everything changed. The government took a real deep interest in internet infrastructure and cybersecurity. I started getting roped into a lot of that stuff around anti-terrorism and spending a lot of time in DC, understanding that whole world. I don’t think that I signed up to that. I don’t think that I really wanted to be that person and have that kind of responsibility. I think that was part of it. I think the other part of it is I had three little kids. My first daughter was born in 1998, right, about two months before we founded Equinix. My second was born in 200, so he turned one on September 12th, 2001.

Colby Synesael:               Wow.

Jay Adelson:                    My youngest daughter wasn’t born yet, but she was born a couple years later in 2002 or a year later. I had these three little kids. I was never home. I was flying all over the world for Equinix. I remember specifically there was this really weird week where I got a call from some people I knew in DC and they said, “Hey, the Department of Homeland Security is forming a cyber security oversight committee. They’re having hearings on Monday. One of the big companies backed out. Can you fly to DC and testify before Congress and write something before Monday?” Right? I’m like, I mean, I’m one of those people. I feel I’m a patriot. I want to be, if somebody calls you from the government and says they need your help, my instinct is to do everything I can and try to help.

                                         So I call my wife who I think she had the flu and three kids there. I said, “Hey, I’ve been called to Washington DC to testify before Congress.” A lot of swearing back and forth later, she was like, “Okay, you have to do that.” I fly to DC. I spend a whole weekend writing this testimony in a hotel room. I do this thing, which is stressful and perhaps needlessly so, because I don’t know if anybody who was actually listening to us testify knew what the internet was. Then I get a call that my uncle passed away in Detroit, so I tell my wife I have to fly back. I fly to Detroit to his funeral.

                                         Then I fly back to San Francisco where my wife lives. My mother-in-law’s there helping my wife because she had been sick and the three kids. As I arrived, literally from the airport, my wife, Brenda, her grandmother had passed away. Literally, that day. This is all in one week. We fly to New York where she grew up. I remember it was a day later, she turned to me and she said, “We’re done with the Bay area. We’re done. It’s over. I need to be near my family. This is going to happen right now.” I’m like, “You’re right.” She says, “We’re not doing this, you’re not doing this thing where you’re flying all over the world anymore. You’re going to be home.” I said, “You’re right. Let’s do it.” And so we moved to rural New York. I’ve just pulled the throttle back on Equinix.

                                         That’s the best way I can put it. I was going into the offices. I tried to find other people to do what I did. I very intentionally pulled myself out of a lot of decision making at a time when I think the leadership at Equinix really needed the opposite. They needed people to come in and really lead this business on its upswing. Really, by 2003-2004, things were definitely turning around. Equinix stock was performing incredibly well, and so I think my plan was I was going to quit and become a school teacher. It didn’t quite happen that way, but that was the plan.

Colby Synesael:               All right, fair enough. Well, I appreciate the candor. I always think it’s really great to hear stories like that just to get a sense of where people’s heads are. We see all these figures at these companies. There’s a lot of pressure. There’s a lot of dedication to the job. There’s points where people just pull the parachute at least for a little bit and reset expectations and priorities. Clearly, you went back at it again, but for at least a little bit of time, you needed to step back, which I think we all could appreciate.

                                         If we go back to the founding purpose of Equinix, it was the, that unlike the telco operated data centers at its time, Equinix was neutral, as you’ve mentioned. If you flash forward 23 years later, where we’re at today, when you look at the way that third party data center sector has evolved, so maybe not just Equinix, you think we’ve maintained that level of intended neutrality?

Jay Adelson:                    Well, neutrality is an interesting, that’s a very interesting word. I have found that a simple rule is, do you compete with your customers? Because in all of this discussion around what net neutrality is and neutrality in general and the Switzerland of the internet and all these terms we throw around, the reality is, is that the conflict of interest is the issue. Is there a situation where your business will do better due to the failure or maybe the restriction of another? I think that in order to have the trust of your customers, you have to make sure not to cross that line.

                                         And so, yes, I think that a lot of the data center companies that exist out there, whether they have networks or not, are able to maintain that level of trust with their customers. It is not as complicated as it was, I think, in the late ’90s coming out of this hierarchical model of the internet to one where it was a playing field, because back then there was so much distrust. People had been price gouged so much that it was either going to be the government was going to regulate it and make sure that it didn’t happen, or we were going to have to self-regulate and do it in another way with neutrality.

                                         And so here we are all these years later and data center companies, there’s so many, Digital Realty and all of these guys, CoreSite and if you look at the ones that were acquired by Equinix over the years, like Switch and Data and Telecity, I think that in the context of their time, wherever their time was, I think they all did maintain that level of neutrality. The questionable ones were these mixed telecom hosting, but they weren’t trying to solve the same problem. If you’re trying to solve the interconnection problem, then that neutrality meant a very specific thing. You can almost take the stack, the protocol stack, and you can figure out what the neutral model is, almost anywhere from the physical layer to the application layer. I think that as we get into this more cloud, multi-cloud, hybrid cloud, whatever cloud universe, the same rules apply depending on where you sit in that supply chain. There is a important rule you must not break, which you must not compete with your customers.

Colby Synesael:               Equinix, in recent years, has introduced Equinix Fabric, which enables connectivity across regions, and then Digital Realty, which you mentioned just last week announced its purchase of the engineering team and IP of a Pure Port, which is, in my opinion, was striving to be more like a Megaport. Is that a logical next step for the sector to provide those types of services?

Jay Adelson:                    I think so. I think that there is increased complexity in accessing all of the services and microservices that you need as an enterprise today. I would even take that a step farther. I would say to deliver a network service, there’s even a complexity in delivering that. And so the question is how can you abstract the consumer or the enterprise from that complexity, and yet give them enough control over the outcome. And so if you’re a data center provider, the problem is that you’ve got a thousand different participants in your exchanges or your co-location. They all have different types of services. They’re all very complicated. They operate at different layers of the stack.

                                         If I’m an enterprise coming in there, it’s basically useless to me. I came from a world of transit where I just popped a wire into a hole in the wall and magic happened. Now I’m in this new world of hybrid cloud where I am expected to trust services on a network at a level I’ve never expected before. And so I think it’s important that whoever is talking to that customer provide them that level of trust and confidence through that abstraction still. Sometimes that means operating a form of a network or maybe a portal of some kind to allow you to configure it or usage based billing.

Colby Synesael:               It’s a really great and interesting point, which is, I’ll use Equinix just as the example, but they’ve earned this trust from their customers, this view that they know what they’re doing, that they’re capable, that they’re there to help their customers, and to the extent that they’re offering you, some of these connectivity services, the customer might feel very comfortable and want to buy those from them because there’s that established trust that they know that if they’re getting it through Equinix, there’s been some vetting, there’s been some level of expertise that’s gone into making sure it’s going to work the way that it’s being described.

Jay Adelson:                    Oh, 100%. Actually, Equinix, I don’t know the whole story behind the other companies, but I do know that when Equinix, Bill Long who was in charge of interconnection there, Peter VanCamp and Charles Myers, I talked to all of them as they were formulating this thought. I remember it was a concern. I think, that they all had what would happen and would there be a misunderstanding. And so to their credit, they went to their largest customers, including their network customers and said, “How do you feel about this? If we do this, what do you think? If we start offering some of these services to make, first of all, would you consume it yourself? Would you participate on this?” They did the same thing with cloud exchange. It’s very much a position of trust that they took great pains to maintain. I think they did a really great job. I always dreamed of being able to offer the services that they can offer today. I mean, it’s really cool. We tried to some extent within a data center, but yeah, I do think that they have gone to great pains to make sure that they didn’t cross that line.

Colby Synesael:               How does, so you’re on the board of Megaport, how does Megaport fit in this? I mean, what role does Megaport, packet fabric, a console, what role do they play relative to what we just described as the role that perhaps Equinix has the right or should play?

Jay Adelson:                    Well, I do think there’s a physical and a virtual, right.  I think that if you just look at, from a practical standpoint, what it takes to deploy an international presence across, in sometimes hundreds of data centers around the world, it’s not, it is unreasonable to expect that every enterprise and every network service provider is going to actually go through that process themselves. Then within that problem set where there’s this boy where you need to solve these problems, to be able to do so in a way that still gives the enterprise control over that network but virtualizes that presence is really a fascinating, a fascinating concept because it satisfies that CTO, CIO, head of security need to sort of control the details, but it doesn’t require you to actually physically be there. And so I can sit in front of a computer with Megaport and with a few button presses, deploy an international backbone and have virtual presences everywhere I need them to be. That means that the company like Megaport or whoever it is, has to physically do that infrastructure and place those locations and operate it that way.

                                         But it also required a technology evolution, both on the client side and on the service provider side, because in order for them to really automate that kind of thing, companies like Amazon and Microsoft and Google needed to start offering their services in a way that could be directly cross connected. That took a while. Once that happened to be able to automate it using software defined tools that took a while. Then on the flip side, on the client side, on the enterprise side, the SD WAN revolution, of course and really getting to a level of well certainty and reliability that would allow you to have that kind of fine tune control and speed, speed of deployment now is everything. I just can’t believe how fast these things get lit up. Just ordering an MPLS connection back in the day would take a month, a month and a half. Now it’s, you’ve already got Comcast in there, so you’ve got SD WAN. Let’s go. Let’s light it up. It takes a day.

                                         It’s a different world. Megaport is a really interesting company because I think that they culturally are all about creating these still abstracting you from the complexity, but giving you as much control as you want. Their partners, I think pretty much prove the point because they’ve got some pretty credible players on their platform.

Colby Synesael:               [crosstalk] Vince has done a great job. I also have admiration for what they’ve done. It sounds like your description is that they’re really complimentary to what Equinix is doing in further expanding the touch points, if you will, on behalf of the customers that are looking to go or wherever it is, they’re looking to go. Are you familiar with network as a service companies like Aviatrix and Epsilon and L Kira? Admittedly, that’s starting to get into the software/equipment technology side for me. I’m starting to learn. I’m ramping, but I’m just curious if you have opinion of companies like that and where they fit within this conversation.

Jay Adelson:                    Well, as I was saying before, I think within that abstraction that we give an enterprise consumer of network, there’s different specialties. Certainly the deployment of a network automatically is maybe one common thread or the ability to connect to certain types of cloud services is another. But different networks have different capabilities. Some offer security. Some offer special tools around hybrid cloud management, storage, all sorts of, compute. There’s so many companies in the space. If you look across the portfolio investments, across Silicon Valley, right now, you will see hundreds of companies that have hybrid cloud in their company description, right? Now, are they all the same? No. I mean, everybody’s got an angle.

                                         I do think that there is value to these companies. Some of them will appear on platforms like Megaport or something like a cloud exchange. I think others are basically stepping into that space to try compete with the Megaport’s and actually roll out their own networks and their own infrastructure and software. But there’s a lot of room in here for a lot of value to be offered.

                                         What’s interesting is back in the day, I know I’m like, as if I’m talking about ancient times, but you would often get in the early ’90s, if you wanted to connect the internet, you would sometimes find a little floppy disc at your local grocery store. You’d take it home. You’d put it in. It would be a mom and pop shop that was set up in your local city. They bought internet conductivity. They call themselves a tier three. They would buy it from somebody like maybe NetCom. Then NetCom would buy it from somebody, maybe UUNet. Then UUNet would buy it from somebody, maybe Sprint or whatever. I mean, I’m using, those in the internet history know that that is not accurate hierarchy right there. But the idea was, is that from a consumer standpoint, I didn’t know the difference. It was transit.

                                         Nowadays, it’s not that different in that these networks services often buy their product from another network service provider who’s making it easy for them to offer their value add on on top of it. And so some of the customers, if you’re a banking institution, you might want to have very specific control and understanding of who sits between you and how many layers of network hierarchy are there between me and in the end. I think that some of those players are tier three and some are tier two and some are tier one.

Colby Synesael:               In the last few minutes we have left, I wanted to kind of just move topics and talk about something just real quickly, maybe wet the audience’s appetite here, then we’ll move on. But in your current role at Center Electric, which is your VC firm you note that Center Electric believes that the internet of things or IOT is the most revolutionary expansion of computing since the dawn of the personal computer. The things themselves are a bellwether of the internet’s third wave. What do you mean by third wave?

Jay Adelson:                    Well, it’s sort of like a pendulum. If you think of it, back to that hierarchy, we went from the edge and really the concept of basically disconnected to the core again, and then now we’re back to the edge again. I feel like the IOT revolution is really about not just connecting your refrigerator, it’s really moving that source of compute from the core to the edge. As that happens, you still need a core and you still need all of these different parts of the supply chain. But if you just think about crypto, just this is the only time I’m going to mention crypto, just as an example, it’s a distributed platform, right, where we are no longer dependent on a core database sitting in a cornfield some place.

                                         And so I think IOT, at least in my opinion, was the marketing term we all used in 2010 to really describe this move to connect everything. We didn’t really understand the value of that really. Then autonomous vehicles in a bunch of different applications and crypto and other things really started to play into this distributed world. Internet people know about distributed systems. We’ve been using them forever, but even in those distributed systems, they sat on servers and racks some place, right? That world is gone. Really the data center has moved from a single location to being everywhere. That’s, to me, the third wave. We made investments as a venture firm in companies that were, I guess you could call them, ingredient technologies towards that end. I am not a venture capitalist anymore. I still operate that fund with Andy Smith who I co-founded that with. We still have good relationships with those portfolio companies. But I do think that in a way we’ve moved on, like that has happened now, and it’s expected that everything has compute in it, including a pinball machine.

Colby Synesael:               Well, why don’t we end with that then? So if anybody, we’re conducting this interview over video. I could see that behind Jay, he’s got a handful of pinball machines. This is the lightning round, Jay, so we’re going to try and keep it to 30 second answers, but first off, what is Scorbit?

Jay Adelson:                    Scorbit is a connected pinball platform. It’s basically like X-Box Live, but for real world games like video games and pinball machines.

Colby Synesael:               You own Scorbit. As part of my own due diligence, I saw there was an article in Fast Company back in June of 2019 if anyone wants to look it up, but Scorbit is your passion project right now, it sounds like.

Jay Adelson:                    That’s right, me and two buddies, Ron Richards and Brian O’Neill. We got into this because we all like pinball. We love the community. We noticed that each pinball machine in the world is a computer and none of them were connected. We thought, “Well, it would be fun, just as a passion project, to see if we can create an overlay.” This happened in parallel to me and my son, my son and I started restoring pinball machines together. The article goes into that a little bit more detailed, but my son has helped me with the business and my other kids and my wife. Ron and Brian and I have, we launched the business officially in September of 2020, right in middle of a global pandemic. Now we have thousands of pinball machines around the world that are connected and all trading scores and challenging each other and unlocking achievements on games that were made in the 1970s or 1980s or 2000s.

Colby Synesael:               There you go.

Jay Adelson:                    Super fun.

Colby Synesael:               Two more last questions. When do you think you’ll be ready to travel again to attend some type of industry event?

Jay Adelson:                    Well, so I think that assuming I can get vaccinated before the summer, I still think I’m going to have a hard time getting back into the swing of things. I would say probably would be next year before I started attending regular events. Unless it’s a pinball event, in which case I might make an exception.

Colby Synesael:               Fair enough, and then my last question, when you tell people that you co-founded Equinix, how many of them think that you mean the gym Equinox?

Jay Adelson:                    About 95% think I’ve founded the gym and are more impressed with that than I founded a $50 billion. Nobody even knows what, and so I just go with it. I just roll with it and hope that they think I’m more physically fit as a result.

Colby Synesael:               Nice, very cool. Well with that, we’re done. Jay, thanks so much, really appreciate your time. I look forward to seeing you in person, apparently at some point in 2022.

Jay Adelson:                    Yes, it was wonderful participating. Thanks so much for having me.

Speaker 1:                       Thanks for joining us. Stay tuned for the next episode of Cowen Insights.


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