How Chris Downie is Unlocking the Growth Potential of The Market for Scalable Cloud Infrastructure
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Chris Downie is the Chief Executive Officer of Flexential a data center and hybrid IT company. Over the past five years he has overseen the expansion of the business from a regional player into a national and scalable cloud infrastructure platform that now includes 39 data centers that span most of the fastest growing population centers in the US.
“Growth in our industry is a function of capital and has to rest on a solid foundation of security, reliability, resilience and compliance in our industry, cautions Downie. “With that in mind, revenue growth has risen as a companywide priority in the past several years. I’d say growth has moved up to nine out of ten as a corporate priority when it used to be a seven during integration. We are on a path to realize the potential of the growth assets we’ve created so the next level for us is driving the double-digit growth that this platform can sustain. That’s up from single digits today.”
“When we created this company five years ago, we merged two platforms to create a national footprint that now includes 39 highly interconnected data centers spanning 19 markets and a cloud and managed services business across the nation.” says Downie. “We spent a lot of time on back-office integration to get the platform security, reliability, resilience and value right. Now we have a big opportunity to evolve our go to market model to accelerate growth. We’re building greater awareness of our new brand which moves us away from our legacy as a regional player to a scalable, national hybrid IT infrastructure provider that give our customers the flexibility to adapt to changing usage, customer growth and business models. We’ve increased our go-to-market focus on the customer segments where we can deliver the most value to clients.”
In addition, Chris points out Flexential is a market leader in a young and growing industry. “We are still in the early innings for the data center industry, and Flexential is on the leading edge of that. We can take advantage of both secular growth in cloud computing and the big shift to remote work, hybrid work and networking from anywhere in the wake of Covid-19,” says Downie.
“Growth provides us access to capital,” he continues. “Sustainable growth helps you earn the capital and capacity to expand.”
As CEO, Downie brings that capital investment mentality to the way the company manages its growth assets and investment. That includes his salespeople.
“We are in a capital-intensive business, so we focus a lot on our return on assets and the return we get on investment capital – which is north of 20% for us. I think of our sales machine as a growth asset, and we invest in developing our sales and channel resources and training them is central to our go-to-market approach and delivering our value proposition to customers. For example, we’re investing a lot of time making sure that our revenue team is positioning our product sets appropriately to the right audience and our audience could be at various stages of their journey of really consuming what we do. Some clients could be at the early stages of maturity and just getting out of a telecommunications closet in their office, which has no redundancy or resiliency. Other customers can be very sophisticated about outsourcing their IT infrastructure and will be trying to leverage more virtualized compute resources like cloud and be interested in the flexibility we offer,” according to Chris.
To unlock the next level of growth, Downie and his team have made changes to the sales force design and go-to-market formula. “We’ve been evolving our go to market for the last several years since we put the two companies together,” he continues. “As independent regional businesses we sold in a more localized fashion – just selling into their local communities. Since the transaction we’ve created a national platform that made our data center product in particular relevant to larger, national enterprise and technology consumers.”
One way Flexential changed their go-to-market formula was to create sales territories to align selling resources with the fastest growing cities in their national footprint. His sales team assigned the sales reps to those territories and allocated their focus 50% on customer acquisition and 50% on account development. To get the most out of their independent broker, dealer, and partner channels, they assigned dedicated channel managers in each of those market territories.
Adapting the coverage model to sell the full value of the Flexential platform was another challenge. “The new product platform has evolved into two distinct solution sets – cloud managed services and co-located data center services,” reports Downie. “Each of these product segments behave very differently in terms of how customers use them and the value they can deliver. We have folks on our sales team that can be good at selling one, but not as good at selling the other. So, we created a specialist overlay function to make sure that reps that were not as comfortable selling cloud and managed solutions have the ability to engage with the customers in their territories effectively to realize the full revenue and margin potential of our product portfolio and better communicate the unique value of concepts like Backup-as-a Service (BaaS) and hyper-scaling cloud management services.”
Another big way Downie is accelerating growth is focus sales and marketing resources on the specific segments, vertical markets, and customers where Flexential can deliver the most value. “Segmentation is a big growth drive in the markets we service,” according to Chris. “Our Ideal Customer Profile is a business that’s need up to 2 Megawatts of capacity and require data centers that are located near large population centers and fast-growing markets. For example, we’ve got 40 credit union clients using our solution across the country and there are multiples more in our geographies we are targeting specifically.”
“Price realization is a big factor in that equation,” he continues. “We can sell our capacity to anybody at a low price, but if we really pick the right folks, understand the continuum, and get the right vertical you can get a higher price because the value is there, and you are solving a problem. To do this we’re putting together reference architectures and solution architectures that are oriented towards specific customer issues. When we get that combination right – the right mix of products and services to address the problem statement for the financial enterprise, for the healthcare enterprise, and for the manufacturing enterprise, this will either accelerate consumption at the same price or lead to even higher price realization.”
Downie also believes that there is value inherent in the platform that his team can unlock. “I think we have a highly differentiated platform that with more awareness will be appreciated for its differentiation. We’ve invested in operating systems and processes that allow us to do things across 40 facilities in 20 markets to give our clients more scalability and flexibility. And so, we can bolt on any number of data centers and absorb that while maintaining the resiliency of our existing platform. We’re investing to bring a whole host of additional utility to our data centers, and this is a big part of our growth formula. For example, we provide virtualized compute resources that bring different forms of compute to bear dynamically to handle bursting workloads. One example is data protection type of services where if a client has an issue or failure with one location and you need to ensure that their other facilities and environments are still up and running,” says Downie.
Downie faces the ultimate growth challenge as the business leader accountable to owners and investors – balancing short term revenue performance with actions and investments that will drive long term future cash flows and maximize firm value. “As a business leader, trying to focus on long term growth is a challenge because as you make changes or tweaks in the business they need some time to manifest and private equity owners tend to have little patience” confides Downie. “We have to make decisions that are right for the long-term growth profile of the business – the sort of investments in assets and automation systems that are core to creating value in the platform. That tradeoff is never going to be convenient for us. I’d call it a healthy tension. I want to keep us focused on the long ball, but at the same time we need to set expectations of quarterly performance because if we don’t get there, then how are our investors going to believe what we’re telling them is important for the long haul?”
Chris Downie is the Chief Executive Officer of Flexential
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