Colorado success stories: Latisys

Success is in the "private cloud"


Posted 08.10.2011 in Colorado Biz Magazine

By David P. Mead

Editor's note: This is another in a series of Colorado company success stories as told by CEOs and business owners.

Latisys provides data center solutions, including colocation, managed hosting and managed services, that extend and enhance a company's IT infrastructure. Customers are primarily Fortune 1000 companies and government. Latisys, headquartered in Englewood, was listed on the Inc 5000 List of Fastest Growing Companies in both 2009 and 2010, and has enjoyed consistent 35 percent year over year revenue growth and 45 percent annual EBITDA growth.

It currently has 145 employees in four strategic geographical locations across the U.S, including suburban, non-Central Business District locations in the Orange County, CA, Chicago, Washington, DC and Denver markets. Since 2007, the company has raised over $225 million in debt and equity capital to fund its expansion. I recently had lunch with CEO Pete Stevenson, who shared some insight about Latisys' growth and opportunities.

Latisys was created as a consolidation of data centers. Historically, most consolidations - or roll-ups - don't succeed as ongoing entities. What has helped Latisys succeed?

We saw a consolidation opportunity in 2007 in a data services arena that was a fragmented industry. More importantly, there were three of us who set out to build a great company, work with the very best people, those we wanted to work with, and to have fun. It was fortuitous that, at this same time, we met with some private equity investors who saw a similar opportunity but had not yet met the right management team to back. The timing was right and it has been a great partnership.

Having major investors certainly helped you get started, but why do customers select Latisys?

We have several big advantages based on our strategy: The first is flexibility. We have a customer -focused service approach. We offer flexibility in contracts, for example. We understand that customers need to change over time, modify their needs, and do things that were not in the original agreement. We also invest heavily in developing automation and software tools that make it easier for the customer to access information and to do business with us. Second, we have a "power strategy." We have developed a physical infrastructure that is built for the future with lots of power and lots of high density computing capacity. Third, we believe in investing in capacity. We believe that in order to attract large enterprise customers you must demonstrate the ability to meet their current and future needs. Currently, we have the capacity to quadruple our business. Fourth, our people are the very best "A players" that can offer our customers the technical know-how and strategic direction, project management, and customer-focus they need.

You have spoken about the changing role of the Chief Information Officer?

The role of the CIO is changing rapidly to the purchaser and manager of resources and services - both internal and outsourced. Latisys is offering a suite of services aimed to help the CIO accomplish his/her goals within the enterprise and truly function as a strategic partner to the business.

You have accomplished growth both through acquisition as well as internal organic growth. Is there more M&A activity in the future?

We expect that to continue. We have some real advantages when it comes to acquisitions. We know what we are looking for so we don't waste time -either ours or our prospect's. We are credible because we are funded and have completed some acquisitions. We take the time to build relationships with the target companies. They know we will take care of both their employees and customers. They want to know they will be selling to a reputable firm that is committed to the customer.

What's in store in the future for the Managed Services Industry and Latisys?

We're really only in the second inning of the outsourcing business - of a 15-year trend. The industry will continue to evolve. Latisys needs to continue to have the right products and services. That means innovation in the "private cloud". A few weeks ago we made a major announcement that Latisys has selected HP CloudSystem as the core infrastructure platform for the Latisys Private Cloud. This platform is a key component of the firm's unified architecture that supports highly secure cloud services and enables a hybrid managed hosting cloud. In plain language, this means a highly secure, highly available and privately managed cloud for large enterprise customers.

Technology is very important. But we are in the "trust" business. If you don't have a customer focus, customers will not continue to grow with you and they will cap their business. We strive to provide a great customer lifecycle experience - from our pre-sales contacts throughout the process. We are very transparent and we have the customer's back and learn from our mistakes. Our culture is focused around the customer, teamwork, trust, and better communications. As we like to say, we make better decisions faster. 

Grandpa, what were you doing during the Great Recession of 2007-2016?

Were you a winner, a victim, or a bystander?

By David P. Mead

Flash forward to the year 2030...most of us will be playing with grandkids. I remember asking my two grandfathers what they did during the Great Depression – how they provided for their families, took on extra work where they could find it. While this current period in is no way a direct comparison to the depression, I do think we may reflect back on these times in much the same manner.

While many find themselves in unfortunate circumstances that may be somewhat beyond their control, there are many who can affect their outcome.

In a recent Wall St. Journal survey of economists over 50% of those surveyed do not expect that the output gap in the U.S. economy would be filled until 2016 or later.  For the past few years ago I have been concerned about what I saw as an economic malaise in the U.S. It now appears that we may be in for another several years of a long slow economic slog.

Victims and bystanders: Hope is not a strategy. Now my concern is more focused on a management cultural malaise that I believe has descended on a number of companies. Hunkering down has become a management skill. Many companies have rewarded tight cash management, not taking risks, expense reduction, and retaining customers at the expense of not reinvesting in R&D, new products, new markets, new ideas, and new business models. Staying the course and hoping for the best has become the strategy. Frankly, “hope is not a strategy.”

If you’re not going to grow, get out now. Some investment bankers are advising baby boomer owners with flat companies to sell now. If you are a business owner in your late 50’s or early 60’s and not planning to be creative to increase demand, then it might be wise to get realistic about your company’s value and get out now if you can. Business life will likely not get appreciably better for the next 3 - 5 years - and could get worse - for those companies that are standing still.

No, I am not pessimistic. To the contrary, I see lots of positives:

·        There has never been a time of greater opportunity

·        There is plenty of capital for growth and investment in good opportunities with good management

·        There are new ideas, new technologies, new business models that can change our lives

·        Technology is being applied in mature industries in transformational ways

Winners: Business innovators. We are seeing more disruptive and transformational business innovation than ever before. While these companies may not YET be enjoying great volume, they are proving out new models. We may well be looking at irreversible shifts in fundamental market dynamics – buyers now know more than sellers,  mobile devices are putting more power in hands of consumers, consumer advocacy can spring up overnight, real-time customer feedback is helping design new products in real time, dramatic reductions in friction are occurring in marketplaces. ; Industries, like many in distribution, that exist because of fragmented customers or disorganized or inefficient supply chains may now be at risk. The friction-less immediate and free flow of information is transforming and enabling lower cost, faster, customized business models.

Some of these companies are in your backyard. Companies such as the company with LED commercial lighting systems that have a 10+-year life with lower energy consumption, and the business that provides market research (unbiased consumer feedback with real people using real products in real environments)at greatly reduced cost, and the organization that provides cost effective online marketing to SMBs using crowdsourcing, are transforming their industries.

Winners: Business transformers. Transformation is occurring with some older businesses as well. One catalogue distribution business has employed new data manipulation techniques to better understand how, what, where, and why customers buy. The results have changed the way they go to market, the product/inventory mix, and the way products are supplied and delivered to customers. 

Many companies have suddenly found themselves in the “irrelevant middle”- they don’t offer highly differentiated value-added products and they aren’t the lowest cost provider of the commoditized products. Some of these companies have created new models to profitably serve customers at either end – very low cost, “no frills” providers of commodity products on one end, or highly customer-focused, value-added solution providers at the other end. Companies in industries ranging from metals distribution to medical devices to selling carbon credits are all wrestling with the same issue of transforming away from the “irrelevant middle.”

A better story for the grandkids. Want to create a better story to tell your grandkids? Stop being a bystander and take matters into your own hands. The old ways of ‘waiting for the economy to come back” are clearly not going to work this time. 

Is this overly harsh or do you agree with this assessment? What do you think? 

Birds of a Feather – Are you defined by who you “hang with?”

As life progresses, I seem to come more and more back to the lessons taught to me by my parents. Growing up in New York City, my parents were understandably concerned about whom we chose as friends – who we chose to “hang with.” My mother would always say “birds of a feather flock together” – smart people associate with smart people, honest people tend to be around other honest people, achievers group with achievers, etc.

Brands are like coffee beans. Several years ago, I read a book about branding by Scott Bedbury who was one of the primary architects of the Starbucks brand. He said, “Brands are like coffee beans, highly sensitive sponges that absorb whatever odor is around them. And they don’t discriminate between the good, the bad, and the ugly.” You are the sum total of all of the best experiences and the worst experiences of your customers with you, your employees and contractors, your partners, your suppliers.

Recently, I questioned why a colleague referred to a client a firm known for trying to be all things to all people, therefore delivering lower quality services. The colleague replied, “because they provide us with referrals.” If you have no standards of excellence for your referrals, what does that say about the quality of your firm? And if a company with a spotty reputation refers your organization, what can someone infer about you and your organization?

Some folks may think that this is too strong a stance. There are numerous people out in the market that did not make the cut as a partner or associate of our firm. We have built our firm’s reputation over the last 30 years by recruiting and retaining only the best talent that is focused on client service, maintaining a high degree of integrity and professionalism, and seeking to associate with those of like mind. We only refer to our clients and friends those that demonstrate similar qualities.

Is this old-fashioned. In this era of social networking – Facebook friending and LinkedIn connections – there seems to be less concern for standards. People connect or friend with anyone and everyone who asks. One of my sons says that people no longer make judgments about you based on your associations – that it’s an old-fashioned notion.

Is that true? Does my mother’s “birds of a feather” caution still hold? Or, has it gone the way of the rolodex?

Networking: It's all about building relationships

By David P. Mead

There have been many articles written about networking - especially during this economic downturn. In recent weeks, I've read that you should join an executive golf networking group, connect with anyone who asks on LinkedIn, you shouldn't spend time with the same people, etc.

Brad Feld recently wrote about the disturbing trend to transactional encounters rather than relationships. I am not sure if the trend to transactional reflects a need for immediate gratification, is a sign of desperation, or if people just didn't listen to lessons their mother taught them.

The truth is, there is no easy path to developing a meaningful network. It's not about collecting business cards or golfing partners or meeting as many people as you can. It's about building relationships. In the current social networking world, some people seem intent to "friend" everyone and feel that the moment they meet you, they are "entitled" to tap into your network.

The following are some observations I've made over the years about building relationships:

1. Be a giver not a taker
Make deposits before withdrawals. Nothing turns people off faster than someone who gives you a download of their needs with little or no regards for yours. Take the time to understand the other person's needs. Seek to help them first.

Help people. One very successful investment banker has made it a point to know all of the leading surgeons and researchers in the medical field so that he could help the families of colleagues in his network. Another person helps find jobs and internships for children of colleagues and friends.

2. Go deep
Get involved with organizations and make a difference. People will make decisions about you based on how you engage with not for profit and community organizations. If you get involved and make a difference, people will take notice. If you merely distribute cards and look for introductions, they will notice that as well. We have made it a point to participate in organizations where we can get things accomplished and use our skills to advance the organization's vision and mission. Our consulting firm is all about execution and getting results for clients - people do notice that we do the same thing within the community. Want people to see you as dependable, creative, a leader? Superficial "fly-by" participation will not do it.

3. Deliver on your promises
If you say you'll do something for someone, make sure you follow-through. People want to build relationships with people who are dependable.

4. Do it for the right reasons
Some people call it creating good karma, others say it's doing the right thing. The key is that if you go out of your way to help others -it will come back. Perhaps not today or tomorrow, but it will come back.

5. Say thank you
Your mother taught you always to say thank you when someone helps you. People want to know that were helpful and that you appreciate their efforts.

6. Stay visible
Many folks in transition are visible in the community only as long as it takes to find the next job. It is likely you will need to network again in your lifetime. Create a positive lasting impression. Otherwise, why would someone ever want to help you again?

Colorado success stories: Albeo Technologies

Haitz's law, clean tech, niche focus contribute to Albeo's growth
By David P. Mead

Editor's note: Albeo Technologies was recognized as a 2010 Colorado Company to Watch and Jeff Bisberg, CEO, has been recognized as a 2011 Ernst & Young Entrepreneur of the Year regional finalist.

Most of us familiar with the computer industry know Moore's law which postulated that the number of transistors on a chip doubles about every two years. But how many of us have ever heard of Haitz's law? Haitz's law, which states that the performance of an LED doubles every two years, may explain not only the exponential growth of the LED lighting industry, but also the future growth of Boulder-based Albeo Technologies.

Albeo Technologies designs, manufactures, and sells energy efficient LED lighting solutions for industrial and commercial buildings, including warehousing, data centers, etc. Albeo Technologies has enjoyed growth of over 100 percent compounded annual growth over the last three years. Between 2009 to 2010 the company grew by 3.5 times. When I met recently with Jeff Bisberg, he was enthusiastic about the growth prospects for Albeo.

What are some of the benefits of Albeo's LED lighting?

LED lighting saves energy, is cost effective and has significant environmental benefits. Energy and cost savings can be as much as 57% with the Albeo C-Series which represents significant savings over the total lifetime of the fixture and contributes greatly to a short payback period. Third-party independently tested, Albeo lighting can last up to 100,000 hours, reducing the need for costly maintenance and replacement bulbs. Environmental benefits of Albeo LED lighting include reduced carbon emissions and no mercury.

How is Albeo's market approach different?

There are several differences. First, Albeo is a pure LED lighting company. We specialize in LED lighting technology. We do not offer LED lighting only as an alternative to a core line of fluorescent lighting; Second, most LED lighting companies are going after the home market, while we have an industrial and commercial focus; Third, Albeo has designed a flexible system so that it is very easy for us to customize. We can deliver the "exact solution" to our clients. We focus on meeting the specific tradeoff of energy, light, and cost that the client needs.

Our initial strategy was to focus on small niche markets (such as kitchen under-cabinet lighting and case lighting for jewelry stores) which had little significant competition, and where we had access to early adopters. One pivotal strategic move was to shift to larger high bay fixtures in big spaces - commercial and industrial applications. These folks really disliked florescent lighting and were actively interested in finding an alternative.

Did the current recession have an impact on your growth?

Following the 2008 construction slowdown, many of our prospective customers grew risk averse. Albeo grew at a slightly slower rate. What saved us was the diversity of our channels. Instead of initially choosing one channel, Albeo's strategy had been to explore several channels. During the construction downturn, we focused on the direct channel rather than the A& D spec channel which carried us through 2010.

You've had some very big customer wins over the last year.

LED lighting is getting closer to a tipping point which is providing access to larger jobs. We just completed a very large installation at a Caterpillar manufacturing facility in Indiana and we were awarded the contract for lighting for the 8th largest data center in the world in North Carolina.

You attribute much of Albeo's success to your team and the culture.

We have a team that is familiar with the needs of working with large customers- selling, delivering, and servicing "referenceable and leverageable" large enterprise customers. We also have a bias for action. This means quick decision-making, a willingness to get things done quickly, to get customer exactly what they need so that we can take advantage of the window of opportunity.

What are the keys to continued growth over the next 5-10 years?

We have benefitted from the green momentum which has fostered the drive for sustainability and profitability in large companies. There are two areas critical to our continued success: The first is further channel development. Albeo needs to broaden the recognition as both a brand and as a solution provider. We will continue to showcase our large accounts. We have an accelerated use of PR so that we get higher Google ratings in searches; the second is to continue product technology development. If we were to use a mobile phone analogy, the LED industry is in the large "brick phone" stage. We're about to enter the smartphone phase. We just closed our first order for a wireless Zigbee enabled intelligent lighting fixture, with motion sensors, which monitors energy consumption, and provides real time information for the facility manager. How this intelligent fixture will evolve in the future is still to be determined.

Colorado success stories: Source Office Products

Editors Note: Source Office Products was recognized as a 2010 Colorado Company to Watch.

Faced with a difficult economy in 2008 with existing customers forecasting 15-20 percent reductions in volume, the leadership at Source Office Products had to make a decision. Most organizations were cutting staff to reduce expenses. However, as Chairman and Founder, John Givens recently told me, "We felt we were already operating efficiently and would be cutting muscle. So we decided to hire and grow. We began to sell more lines of business to those customers who already liked doing business with us."

While it might seem counterintuitive to some, for Source Office Products, the strategy worked well. Source, founded in 1990, grew revenues 40% between 2007 and 2010 and is enjoying an anticipated growth rate of 18% in 2011.Source Office Products is a regional single source provider of business to business office products and services including office supplies, multifunction printers and copiers, managed print services (document management), web-managed commercial printing (business printing & marketing collateral), office furniture, and coffee services.

How is Source Office Products different?

Source Office Products seeks to tailor a solution for each client. We combine a strong commitment to superior IT systems and business processes with a commitment to serve each client as they want to be served. Each client has different priorities and pain points. Our account managers meet with each client 2-4 times a year to assess their needs.

Then we develop customer-specific programs and solutions. One client may be growing rapidly and office products are a relatively small percentage of the total expenses. That client may be looking to make things easy, simple, and convenient. Another client that is a more competitive environment may need us to provide the lowest cost solution. With automation and IT, we can provide 'mass produced customization'. Process and work flow is very important since minimizing the number of times people touch the order leads to higher quality, speed, and efficiency. We stress automation with both customers and our suppliers - greater than 94 percent of our business is conducted online in real time by customers.

This carries through to your culture which is very customer-centric.

Ultimately our biggest difference is that we hire the most experienced and talented account managers and provide them a lot of autonomy and the freedom to serve the customer. We let them act as entrepreneurs and we manage to results through reporting and automation. We have a very egalitarian culture. We work hard to make certain that every team member knows how important and valued they are. Management's role is to remove obstacles for team members so they can do their jobs better. We stress what I call "cross-lateral pollination" which means people from all areas are involved in team selling and team implementation.

Founders sometimes have difficulty giving up control. You brought in management with significant growth experience.

In the growth of every organization the best leaders must learn to follow. They must be willing to follow the advice of people they disagree with when the consensus of those they trust goes contrary to their opinion. They must serve the team by continuing to remove obstacles and hurdles that impede success. They must be acutely aware of their limitations and highly alert to the extraordinary qualities of those that make up their team.

Given our growth, it was obvious that we need a seasoned leader to help us assemble the team and integrate corporate resources necessary to provide effective support for our internal and external customers. Ken Larson, our president, has already taken the journey of growth in his career and has very strong opinions about what needs to be done and why. His core ideology and deep genuine passion aligns incredibly well with our high performance culture and guiding principles. Peter Burch, our CEO, puts the team and the organizations success ahead of all else. His knowledge, skills and ability to integrate various departments and team members are beyond impressive. He allows leaders to lead. Peter has high expectations and is constantly working to improve. He is all about taking responsibility and owning your work.

What are the keys to continued growth over the next 5-10 years?

We have to execute well and manage successfully what we've undertaken in the last 2 years. We've added Managed Print Services (document management), iPrint (commercial printing), and the Coffee division. Mergers are also important. To date, we have done three mergers, including Wyoming Office Solutions and a recent merger with Valley Office Supplies in Grand Junction. We need to integrate these well and to identify other possible mergers that have good cultural fit and strong entrepreneur-owners who want to grow with us, and can support our objectives as a regional SINGLE SOURCE B2B provider.

When did it become OK to just be OK?

A funny thing happened during the last four years of the recession. It seems that it has now become OK to just be OK. It appears that we have re-defined success at much lower levels of expectation than prior to the recession. It shows up everywhere in our language. A few examples:

· “Flat is the new up”

· “We’ve maintained our position”

· “We’re up from last year” (but up is still well below 2008 or 2009)

· “We’re holding our own”

· “We’re doing well…considering the economy”

Is it true that we no longer seek to achieve new heights or lofty objectives? Have we become less powerful, less motivated, less capable, and less confident? When was the last time a leader advanced a bold objective like “Put a man on the moon in the next decade?” How would we react if someone did advance an idea so bold? Would we snicker and roll our eyes? Do we now feel powerless to take on such a significant challenge?

We not only no longer expect and demand greatness; we have become tolerant of mediocrity. It now seems unfashionable to differentiate between levels of performance. People are incapable of providing and accepting constructive criticism about improvements. We congratulate each other for mediocre performance. The overwhelming us of the word “awesome” is one example.

I seldom attend a meeting anymore where someone is not congratulated for an “awesome” performance. It doesn’t seem to matter what the performance level is, the response is still the same: Someone who can’t get the basics right for an event or project is congratulated on an awesome job; a leader who barely maintains an organization’s or government entity’s status is saluted for an awesome term; the president of a company who avoids risk and therefore doesn’t make a mistake is saluted for maintaining the status quo.

Certainly there are pockets of exciting opportunity. I see these everyday as our consulting firm works with the firms who are becoming Colorado success stories. However, this innovative segment is less than one-third of the economy. It is a different world with the mainstream two-thirds. Is this malaise of mediocrity the product of the “everyone gets a ribbon” generation, or “grade inflation,” or just lowered expectations? Is this condition temporary, or are we witnessing a seismic cultural shift? Has our collective desire for greatness and achievement been battered and diluted by economic stress?

Is it just me, or has it become OK to just be OK?