Remember when startups simply needed data center space for internet access and web servers? Times have changed completely and TechLAB Innovation Center's Founder, Sara Rauchwerger, discusses these changes along with her hottest trends in this booming growth industry. Listen to Sara briefly discuss where we've been and dive deep into what's to come.
Ellis: Welcome to the vXchnge Podcast. I'm your host, Ellis Booker. Today's topic is hot data center trends. We're going to discuss how startup companies are leveraging data centers, and how this is going to play into the market and influence data center growth both in the United States and internationally. Silicon Valley may be the hub of tech sector, but when it comes to data centers, Cloud and mobile, there's plenty to talk around the world.
Helping us delve into these subjects is today's guest, Sara Rauchwerger, Founder and Managing Director of TechLAB Innovation Center.
Sara: Hello, Ellis. Thank you for inviting me.
Ellis: Sara can you tell us about TechLAB Innovation Center?
Sara: Sure Ellis. TechLAB Innovation Center works with early to mid-stage technology companies that have a developed, data-driven product or service. We focus on scaling up their business operations to the Cloud by leveraging ultra-fast and reliable state of the art technology in close proximity to their business here in Santa Clara, California. We also provide a rich mentor society on top of a huge ecosystem. Being in Silicon Valley allows us access to highly capable individuals who help provide guidance on business operation, business development and technology development. This ecosystem also includes corporate investors as most businesses depend on this injection of funding and an opportunity to establish partnerships. So this is the core basis of what TechLAB Innovation does Ellis. We work with all the companies that join our facility so participation is based on a selection process to better assure success.
Ellis: TechLAB has been working with the technology startup community for over a decade, and as you mentioned. I'm sure you've seen some evolution in how companies, especially startups, are shifting their approaches to data support. Can you tell us what you've seen, Sara?
Sara: Ellis, think back to the '90s when data centers initially just served web servers. These companies typically needed some space for internet access, times have changed dramatically. We have grown in leaps and bounds by leveraging on data centers in a completely different way. Market opportunities have come from the introduction and infiltration of devices. Mobile devices like laptops, smartphones, iPads, and television streaming ... all these different platforms are exploding onto the market. These devices need to be connected. So what happens? What happens when all of these devices need to be connected? They're streaming data, and that data needs to be stored somewhere and this helps bring about the evolution of cloud. You actually have two sides to this explosive growth. You've got the cloud computing, where technology companies build their platforms vs devices being connected through applications that are being built by technology companies. Let's talk about some recent trends ... there's virtual reality, self-driving cars, fantasy sports, gaming and wearables industry just to name a few.
Apple just introduced their Bio Watch which passes information through to your iPhone ... then you have drones, 3D printing, and a huge industry in IOT, the Internet of Things. All the data from these devices are then collected by other companies that analyze that data. This helps bring about big data analytics which provides strategic information from enterprise applications. Then you also need to consider security and privacy concerns. So entire industries are relying on the proximity, reliability and latency of the data center.
So all these trends is something that we've seen in the startup, and each startup is focusing on a different piece of it. For example, we've seen a lot of companies focusing now on big data analytics and what we've seen mergex between different companies. This is the case at TechLAB as we have one company that's been working on deep learning. Well, deep learning is actually collecting information, leveraging on sensors and cameras to look at what's around you. But in order to do that, you need another company that understands how to analyze and act on the collected data on a business side. So it's a huge change, huge impact on our industry, on our environment, on our life styles and this in turn impacts the growth of data centers.
Ellis: You mentioned the profusion of devices, and I just have a note on my desk here. According to Cisco's latest VNI Global IP traffic forecast, which they released in May, there will be something like 24 billion network devices and connections globally by 2019. That's up from about 14 billion in 2014. I suppose this phenomenal growth is in part behind these data center trends, as you mentioned. What's the most difficult thing that startups are confronting when it comes to data management issues and how is TechLAB helping them out?
Sara: Well, let's discuss the Cisco part because I agree it's very interesting. Cisco has a keen interest in this growth. They're betting on IOT for all these connected devices everywhere, which would actually require them to provide more servers and more network capabilities. Well, they saw this, it breeds a new demand on data centers that also requires a changing environment for the data center. They also have to update some of the opportunities and the problems that are faced by data centers. Now I'll give you an example, virtualization. It's been a hot topic for a while, and it's actually, funny enough, it was invented by IBM in the 1950's. It's not a new technology, so some of these ideas that have been around for a while, are now creating a new opportunity for a lot of these startup who are leveraging on some of the difficulties and issues they need to face in order to solve some of these problems. However, some of the problems are the tradeoffs, both on the business side and on the technical side. For example, another one is how to apply flash rendering on servers, the storage hierarchy. Securities and privacy which are huge today. How do you build these technologies so you can accommodate all these connected devices? You and I connected through mobile phones, through watching our TV at our home. It actually taps into our private lives. How do we solve these problems? So if you look at, for example, we have three companies in our center. One of them is working on storage hierarchy, they're looking at solving the problems.
Another one is encryption technology for security, which I think is huge. It's very interesting because we're all worried about security and we've seen some of the things that have happened, for example, with Target. So how do we leverage on that? We're working with these particular companies at TechLAB to create an opportunity both from the data center side of providing these services for companies. There's so many apps out there that are being built that are now being installed on our phones. Our phones have become a life style, a way of living and doing things every day of our lives. So the challenge is on both sides of the pond. You've got the consumer side and then on the other side, you've got the enterprise side. So at TechLAB, what we're focusing is on solving both problems. So we have both the, If I look at it from the consumer development side, to as simple as apps down to developing products and services to enhance data center services to these end users.
Ellis: Right. For me, and just watching from the outside, one of the fascinating things is, and we could spend probably two hours talking about how cloud API's are changing what startups do, but in the old days, you had to build all these applications on premise, right? And create all this infrastructure on premise, and now thanks to cloud and the data centers that make all that possible, you can create a service offering by coupling together all these interesting things. Google here and security there, and bang, you've got a business, right?
Sara: That's correct. It used to be that it took, from an investment perspective, it use to take between three and five years to build a business. Today, the expectation on an investment side is 18 months turn around. So if you look at the process of building...I'm going to look at as simple as an app, you shouldn't spend that much money to build an app. You do the development, the challenge naturally is then, getting these applications into the market, but with cloud, with social media today, the penetration of all these opportunities to get you into the market from companies like Box allows you to put all the documents and share them among your peers has become so much easier relative to what it used to be, so the time scale is much faster.
Ellis: Right. Well you mentioned Box. Yeah, you mentioned Box just now as an example of a company which I don't think existed three years ago. What are some of the interesting ways, especially startups, the companies you're working with, are leveraging the data center. Can you give us some examples either in states or elsewhere?
Sara: So for example, we were working with a company that's building an e-commerce platform. This company targets moms in the community who would like to buy clothes for their children, when you're pregnant. It's just a basic app but if you look behind the scenes at the logistics of this app, it's huge, because we're taking what used to be the bricks and mortars of going to the store and buying it, onto the cloud. Everything is in the clouds from the purchasing down to the shipping, to collecting the product and putting it in, from the manufacturers all the way to the door of the consumer. That process is all in the cloud today, so imagine the data that's being collected behind the scenes. If you look at what the startups are doing today, initially they start with Amazon. They go onto a cloud platform that Amazon built for it's first startups. It allows them to get the process started, but at the next level, there's going to be a point where scalability is very important, so what you need to do next, when you start looking at the financial perspective of what it takes to scale business, leveraging on cloud platforms like Amazon, it becomes extremely expensive. So you have to get off that system. What's the most efficient is getting your own platform, your own servers, your own network and that's when you move to the data center because it's about scalability.
Scalability's also about controlling your environment. Leaving your platform on Amazon is not sufficient. So the way TechLAB leverages some of these companies is by getting their business aspect going. For example, the e-commerce company targeting moms has 30 thousand users, they need to move it to the next step. Thirty thousand users to get to the next step requires a huge backend platform that can work effectively and quickly. As a consumer, again this is an E-commerce platform, when I press the buy, I want everything to work.
Ellis: Right. And the latency questions are there, too. You don't want to have a two second delay, but you...I love the E-commerce sites that warn you not to hit the purchase button twice because you're impatient. Right? Because their data center is not keep up with our one button immediate satisfaction, and we get annoyed when it's a second and we hit it twice and then we get charged twice or something along that line.
Sara: Well from a perspective of a technologist, Ellis, that example is likely a startup and not a more advanced company. I say this because the more advanced company would move their infrastructure into an environment and a data center where they control latency. They control the servers. They control everything that's in there. They're not relying on cloud services like Amazon or Google, there's IBM Blue Mix that provides all of these platforms for the startup community, SAP. There's a lot of these platforms that the startups are leveraging, and the reason they're doing this initially is because naturally, it's easier to invest in infrastructure. Investing in a state of the art data center is typically not the first thing you're going to do because you want to make sure there's a business opportunity. Once you get the traction, then you move into the cloud. So our mission at TechLAB is to get you through that hump of getting that business traction so you could then scale your operation and when we say scale it's, "All right, it's time to invest in servers. It's time to build that platform and be a serious company."
Ellis: And speaking of that platform, that control of your own data destiny, let's call it. Is TechLAB's partnership with vXchnge. Can you tell us about that partnership, Sara, and what vXchnge has brought to the table?
Sara: It has been extremely valuable, and that's the reason TechLab partnered with vXchnge. vXchnge has the infrastructure and the network to provide this to our tenants. I say our tenants but it's truly our whole ecosystem that's working with us, and that's where we see the value. Naturally it increases both our businesses and it helps the companies leverage a state of the art data center which is very important because the infrastructure is set for them and they can just go in. One of the companies that walked into vXchnge, one of our companies, it didn't take very long. They brought their servers. They set it up. The power was sent in. Everything was setup very quickly. So we see a huge benefit for our companies because of the seamless process.
Ellis: Thanks, Sara. And that's all the time we have for this episode of the vXchnge Podcast. If you'd like to hear other podcasts or suggest show topics, please visit the vXchnge link that appears above. Thanks all for listening.
Sara: Thank you, Ellis.