Data Center Executive Conversation Series: John Sheputis
Looking beyond the checklist
|John Sheputis, founder of Fortune Data Centers|
The ingredient list might include formal education and IT, real estate, finance, energy, and engineering experience blended with diverse, progressive professional experience, altruism, humility, purpose, and perspective. How might we create someone with all those attributes?
Let’s start with humble beginnings, someone from St Louis, MO, perhaps, and the child of an engineer and the grandchild of a coal miner, just for effect. Our future CEO would have the high school grades needed to earn in-state tuition at The University of Texas in Austin. Dad’s rule is that this future CEO self-funds college. With a bit of scholarship money and work, our candidate graduates college with electrical engineering and computer engineering degrees, which is great timing as computer sciences had just evolved out of Humanities. We want our future CEO to be ahead of the crowd. We sprinkle in the electrical engineering degree to boot.
CEOs are typically book smart and streetwise so next on the candidate’s list are a few consulting gigs before he attends Northwestern University’s esteemed Kellogg School of Management, earning an MBA as well as a Masters of Engineering Management from the McCormick School of Engineering. Almost by design, the pedigree grows.
The next step is classic. Let’s get Gemini Consulting to hire our future CEO right off campus to play IT consulting executive, the benefit of which is exposure to a variety of company environments, situations, required solutions, and access to top management at each assignment.
Let’s throw some gas on the experience fire and have our ideal candidate go to work in the energy services business at Enron, which at the time was akin to a particle accelerator for innovation, creative thinking, new perspectives, and cutting-edge thought leadership. Enron was looking to hire traditional consultants but with a spin, to involve principals in their own transactions. A combination of corporate genius and individual hubris, Enron’s substance was its enduring change in a variety of industries, including deregulating the energy business, where our CEO focuses. Our hypothetical CEO would later quip, “Enron was fine when I left in ‘99.”
John Sheputis' three wishes for the data center industry
Sheputis is founder of Fortune Data Centers
At some point our candidate needs to get to the task of building his own business. This internet thing is happening in CA where, coincidentally, our future CEO’s spouse grew up. So we pack our bags and move to Totality, an early managed-service company. In fact, let’s make it one of the first companies to deliver managed services over the wire and be physically separate and independent from the data center. To continue our future CEO’s storybook of success, we knock Totality out of the park and sell it to MCI, which is now Verizon Business.
He needs two more contributing successes before we get to our big story. Let’s throw in a turnaround story by recapitalizing BeVocal, a firm in revenue decline. BeVocal starts growing again and is acquired by Nuance. Then our future CEO succeeds again with SolidCore Systems, a company with good technology that required ‘big boy pants’ before selling to McAfee, now Intel. A shout out to Jason Robertson at CRB for the ‘big boy pants’ moniker I love to borrow.
Funny thing is, this is exactly the background of one particularly accomplished CEO, John Sheputis, founder of Fortune Data Centers, headquartered in Silicon Valley. John founded Fortune in 2006 by rehabbing a media fabrication facility (a “fab”) in San Jose and has since developed another in Oregon. In 2006, everyone was finding old data centers and adding power. Fortune’s first facility had the power and cooling infrastructure, and he, knowing the grid from his Enron days, knew he could bring the fiber. He employed a similar site selection philosophy and approach in Oregon.
Beyond the professional success, what impresses about John and Fortune are his social altruism and awareness of corporate responsibility. Look up Fortune’s accolades and you see a different story; they do not always promote the next customer acquisition, but often talk about the progressive characteristics of their data centers as recognized by Uptime’s M&O Stamp of Approval, a $500K award from the Energy Trust of Oregon, a refund of nearly $1 million in utility rebates, as well as other industry articles, an upcoming article in the Economist, of all things.
When we actually got John to sit still for a moment, he was presented with the Data Center Genie proposition of three wishes for the data center industry. Not unexpectedly, he turned it into four without the Genie’s permission. “Ask for forgiveness” is probably on the first page of the successful CEO bible.
Wish 1. Providers have to realize that this is a branded services business. All data centers go through a responsible process of design, construction, finance, and IT. But what makes them different? More attractive to a customer? Lots of consumer product companies build refrigerators, but why is the GE brand so popular? Because of the assumptions we associate with the brand. Why is Starbucks so popular? Are its grounds and hot water really that much better than its competitors’? No, but you can expect a consistent quality and experience no matter which store you pop into. Give a nod to Mike Manos’ ‘soup can’ data center analogy, over time the amount of technical and operational detail will be minimized and I’ll be exposed as an engineer masquerading as a marketer.
Wish 2. Our industry suffers from a shocking shortage of data. There exists a cacophony of noise that gets in the way of valuable data to help investment and lease vs. buy decisions, and yet many firms consistently struggle to make this decision. Both developers and enterprises routinely misjudge the cost, risk, time, and effort to build and operate a quality data center. Supply and demand imbalances exist, but they aren’t easy to spot. Hopefully over time, we’ll gather enough data to provide feedback to decision makers, and we can make better resource allocation.
Wish 3. Increased collaboration between utilities and data centers on rates tariffs. The Enron experience helps me work to advance relationships with utilities and promote the recognition that the data center is a unique class of consumer. Most consumers take the energy business for granted – like a residential ‘rate taker.’ But data centers are unlike most residential and commercial customers. Most consumers consume at peak hours and have no capacity to self-generate. A data center’s consumption is nearly constant, meaning the majority of the power use is off peak. As most rate schedules assume otherwise, the tariffs distort the real cost of power, meaning the data centers are over-paying. Utilities that offer direct access will get more data centers. One-third the cost of a data center is backup. Data centers are actually a more efficient and price effective option to add power back to the grid but play no role in merchant delivery of power. So there remains a regulatory inefficiency, which reminds me of my second wish regarding a lack of knowledge and education of the market and brings up a fourth wish.
Wish 4. A greater appreciation of Day 2, by the finance community, by the owner, and by the customer. There is so much more focus on how the data center is built vs. the operating considerations. How you run the data center actually matters a lot. This remains an underappreciated science. The operational staff that run data centers are the unsung heroes of the market.
Given John’s education and experience pedigree, he could really be any kind of CEO he wants. He’s a fit man. He runs to manage stress because he can’t often find or fit in a good basketball game between Fortune, airports, and his family. Our meeting was casual, but he did note the shoes he wore to dress up his jeans, white oxford, and black vest. I’ve seen him in a suit, but I don’t think that the French cuffs are coming out anytime soon.
There should remain little doubt about the humble nature of John Sheputis, a man from humble beginnings in St. Louis, the heart of the Midwest. One need only be fortunate enough to receive one of his business cards. For the longest time John avoided putting a title on his card or any adding any purposeful association to his role at the top of the Fortune org chart. It can attract the wrong attention and invite distractions from staying the course. But the investors suggested that a title on his card is good for business and ensures respect from the right people. Eventually John conceded, but not likely in the manner the investors had supposed. His self-proclaimed title? Man of No Significance.
Entertaining, amusing, cajoling, and delightful, yet I still couldn’t agree less about the aptness of his title.