The modern data center business emerged in the ’90s, with a subsequent boom and bust in the early 2000s. Fallow facilities were being absorbed as late as 2007, with gross inventory growth essentially static. Equinix was a fortunate survivor, raising money via a public offering in 2000 and reaching a valuation of approximately $432 per share in today’s terms on the NASDAQ — yes, Equinix peaked at over twice their current valuation with just $20M or so in revenue. Similarly Digital went public in 2003, making the company just over 11 years old.
The relatively nascent nature of the industry has produced some shocking investment debacles perpetrated by some of the nation’s most respected brands. Long-term, fixed asset investing is risky, and in the contemporary data center industry, self-taught IT staff are applying IT budget cycles and investment analysis to 20-year fixed assets of upwards of $50 to $100 million or more. This perfect storm has resulted in an industry where over-provisioning by 100% or more is commonplace, with most CFOs disavowing responsibility and “leaving it to the techies.” Well respected enterprise and Internet firms, such as Intuit, Dell, and Zynga have grossly over-invested in data centers.