With shifting markets easily weeding out the strong from the weak, DataBank has proven itself as a force in the data center sector. In today’s episode, Carrie Charles sits down with none other than DataBank’s CEO, Raul Martynek. DataBank had 6 data centers in 3 markets when it was acquired in 2016. Years later, Databank is now one of the largest private data center platforms in the US, with 65+ data centers located within 100 miles of more than 60% of the US population, modular/micro-data centers that can be placed beneath any 5G tower, and 20 major interconnect hubs.
Raul takes us behind the curtain, sharing what drove this growth in just a short period of time. Next, Raul and Carrie discuss DataBank’s strategy for attracting, engaging and retaining talent in this new world of work. Finally, Raul looks at the future, sharing his thoughts on the next stage of evolution for the internet and the convergence of digital infrastructures. Hint: the next ten years will be just as much of a change as the last few years.
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The DataBank Difference: Behind the Curtain with Raul Martynek
Thank you for joining me on the show. I’m glad you are here. I’m very happy to interview the CEO of DataBank, Raul Martynek. It’s so nice to have you on the show, Raul.
Thank you for having me, Carrie. It’s great to be here.
I have been wanting to have you as a guest for quite a while. I’m excited about this interview. First of all, I want to learn more about you, and then we are going to talk about the DataBank story. Tell me about your journey and how you got to where you are. I want a cool story in there somewhere.
It’s a long journey. I will make it a short story. Let’s put it that way. I have been in the space for over 25 years. I got into it in a bit of a happenstance type of way. I was working on Wall Street, believe it or not, doing foreign exchange trading. I was not happy with it and was looking for an entrepreneurial type of venture. I had a friend that was starting a reseller.
This is in the mid-‘90s before the commercial internet and when things like voice and data were big things. I joined him in ’94 or ’95. That’s how I ended up in the space. It was right around the advent of the commercial internet. It was a CLEC. I started on the telecom side. It’s a business. I was there for thirteen years, in and out of the dot-com bubble, which was an interesting experience.
I always ask a lot of the new people that we hire, “Where were you in 1999?” They were like, “We were four.” The collective memory around that experience has disappeared but in any event, I sold the business in 2007. We raised venture capital or private equity money at that time. What I have been doing since then is running businesses for sponsors in the space.
I went from telecom to fiber and ran a fiber business in Dublin, Ireland, for a couple of years Ireland, which was an interesting experience. I commuted to Dublin from New York for two years and then ran a hosting business called Voxel, which was a great experience. It pivoted my trajectory out of telecom and fiber and more into cloud and data centers. I ran that for a couple of years. We sold that to Internap.
As you’re growing, you need to spend a lot of capital to build those facilities.
I went off on my own and did a bunch of business in Sub-Saharan Africa, working for the government of Cameroon on a variety of projects. It’s too long of a story in terms of how that happened but it was a great experience in terms of seeing how the internet evolves in a more developing continent like Africa and then juxtaposing that with my experience in the dot-com bubble.
It was one of these things where it was like, “I know what’s going to happen because we have seen how these networks and this internet infrastructure evolves.” In any event, I did that for a couple of years and then ran a data center business in the New Jersey era that we exited out as well. That’s when I reconnected with DigitalBridge. Marc Ganzi and I have known each other for twenty-plus years. My partner in my telecom company was a partner with him in their first venture.
I met Marc, Alex Gellman, and a lot of the other folks socially. They were in towers. I was more in the data center and cloud. Our paths weren’t connecting but when he started DigitalBridge with Ben and they were going to invest across the whole digital infrastructure sector, including data centers, that’s where my experience was relevant. I joined DigitalBridge at the end of 2015.
At the time, they had invested in a couple of businesses in the tower space and ExteNet, which is small cells. I get to invest in the data center space. I joined a team with Mike Foust, the Founder and CEO of Digital Realty, and John Mock, an investment banker in the space. We were tasked with, “How do we invest in the data center sector?” We identified DataBank in 2016 and acquired that business then. I worked on the Vantage transaction, which is another DigitalBridge portfolio company.
We closed that in the spring of 2017. I transitioned to be the CEO of DataBank. When we acquired the company, it was a relatively small platform. It had 6 data centers in 3 markets. We bought the business for $320 million. We are one of the largest private data center platforms in the US. We have about 70 assets in 27 markets. We announced a recapitalization of the business at close to a $6 billion valuation. It has been quite an evolution over the years. It has been a great experience.
Much has happened in such a short period. I’m curious. What do you feel drove that growth in such a short period?
One thing in our space that is very similar across the digital infrastructure sector is access to capital. We are voracious consumers of capital, especially if we are growing. It’s paradoxical. The more you grow, the more capital you have to deploy because you must build these data centers. In that business model, we deploy a lot of the capital upfront, and then customers lease that over decades. That’s how we earn a return on that investment but what it means is that as you are growing, you need to spend a lot of capital to build those facilities. That piece has been unquestionably a key part of our success.
The other part is execution. This space is no different from any other sector. It’s a very competitive space. There are a lot of companies doing what we are doing. There are a lot of bigger companies doing what we are doing. I have always been a believer that best-in-class execution ultimately is the differentiator between companies that make it and companies that don’t.
When markets are doing well like in the bubble era or even a few years ago, the rising tide lifts all the boats. It doesn’t matter if you are best-in-class but as things get a little tougher and as the market gets a little more competitive as it’s no longer such a new thing, then all of a sudden, the wheat gets separated from the chaff. The best executing businesses, in my view, are the ones that survive and thrive.
Who executes? People. I know that we are having so many challenges with the workforce and attracting, engaging, retaining talent, and hanging on to our people. What have been some strategies that have worked for DataBank that helped in this Great Resignation and also the ability to track key people?
That’s a great and top-of-mind question for all business executives at this point. Think about ourselves, “Why do we want to come to work during the day? Why do we want to spend 8, 10, or 12 hours at work working?” Compensation is a big part of that. You always have to have a competitive package for folks that are performers but it’s way beyond that. It’s about the culture in the business. It’s about the purpose that you can give people for spending all that time day during the day with you.
That’s something that I have been very focused on in my entire career. Going back to the bubble era, everyone was doing well and raising capital. Everyone was a “millionaire” on paper. This thing rose. All of a sudden, it changed in months. You had this collapse and then this period after the dot-com bubble, which I like to call the Bataan Death March because if you weren’t able to survive on your two feet, you didn’t make it. There was no more capital.
Best in class execution ultimately is the differentiator between companies that make it and companies that don’t.
At that point was when we went through a significant retrenchment. We had to take the company from 400 employees to 80 employees in 9 months, which was not fun. We were wiring to World Trade Center, believe it or not. It was going to be our big revenue opportunity. That disappeared. All of a sudden, we were faced with existential death where you had twelve months of the runway because everyone was EBITDA-negative back then, yet you had to figure out how to get out of that wilderness. Ultimately, it’s about the people that you have and the culture that you build.
That experience made an imprint on me. Figuring out how to attract talent, bring it into an organization, nurture it, and then create an environment where that top talent wants to thrive is the key to success. Along the way, you pick up different tools. You get introduced to different things. There are so many different management books, programs, approaches, and all that stuff. In my view, you have to pick something that works for you and something that you can embrace and that you can get passionate about because otherwise, it becomes fake.
I got introduced a long time ago to a book called Topgrading. It’s still on my desk. One of my keyboard members from way back yonder introduced me to it. It’s a great book because it’s about this idea around A-players. The word A-player now got into the vernacular out there but there’s a definition. The definition of an A-player is the top 10% of the talent of the given job description at the given salary range. It makes a lot of sense because the world is a bell curve.
Ultimately, like sports, artists, and anything, there are some people that perform well while other people don’t perform as well. The idea of that book is that you must focus on making your entire organization A-players, identifying them, recruiting them in, nurturing, growing, and having them thrive in your company. That’s something that stuck with me over the years.
We talk about that a lot. We try to think about what it means to have A-players on your team. Part of that is the culture piece, which is something that you can do in two ways. You do it the organic way, where you simply focus on hiring great talent, bringing them in, and letting them imprint their personality into the business. You get there over time but it’s slow.
When I got to DataBank, we had done a couple of acquisitions and then followed up all with one. We did one when I got here. In 2019, we had this set of tribes in the company. You had different companies. They all had their lineage and history. The folks in those companies had their view on things. It was obvious that we weren’t hitting on all cylinders, and we wanted to try to create a unified culture and language for the company.
That’s what we did. I hired a consultant who is someone that I worked with at InfoHighway and now works with us and runs our marketing and culture group, JP Laqueur. After we had worked together, he spent a long time thinking about the brand and doing brand engagements. A brand is one side of the coin, while culture is the other side. You can’t have an authentic brand without an authentic culture and vice versa. Think of any iconic company out there. They have a personality to them.
What we had at DataBank were too many personalities. We went through this arduous year-long process to try to understand who we were. In our case, we used a method based on archetypes, which are characters that everyone identifies with like a hero, a sage, an explorer or a magician. Everyone exhibits these characteristics to some extent. That was a way for us to understand the DNA of our people.
We identified our dominant characteristics. Every characteristic has positive aspects. It also has these shadow aspects. People that are hard chargers, heroes, and want to rescue customers are also the types that will snap at people because they are so intense about things like that. We went through a process where we had some group sessions to understand that, surfaced that, and did some surveys.
Ultimately, it boiled down to the top 30 people in the company. I remember we got into a room over the course of six months a couple of times and talked about what was going right, what was going wrong, and who did we want to be as a leadership team in that company. We call those leadership behaviors. We boiled it down to a set of four that are our guiding principles in terms of how we treat each other, our peers, our subordinates, and our customers even.
It’s painful because what happens when you do things like that is that some people don’t fit in. That’s the other part of building culture. It’s okay if it doesn’t work out for everyone. It’s probably necessary because, almost by definition, if you don’t have any of that change occurring, then why did you think it was a problem in the first place?
It took a while. At this point, we have a defined identity within DataBank. We have a way that we treat ourselves and our customers. When we hire new people, we tell them, “This is the DataBank way. Here’s what our cultural attributes, leadership behaviors, and cultural cornerstones are.” People have to embrace that and think that’s a good thing. It makes a difference in companies where you have thousands of customers and tens of thousands of touchpoints every month with customers.
You can’t have an authentic brand without an authentic culture and vice versa.
How do you make it so that service technician, data center technician or not-technician presents a great impression? Think about your experience with large organizations that you respect in terms of that engagement. That, to me, boils down to building something that is a reflection of the people within the organization and a common acknowledgment that this is the way we are going to move forward.
You are so passionate about this. Everyone says it starts from the top. I was writing notes as you were talking but one thing that you said a couple of times was the word nurture. That is key. Can you talk a little bit more about how you nurture that talent, especially in our world? The generations are very different. There’s generational conflict. There’s a lot going on.
It’s a constant evolution. Number one, it starts with the A-players. There’s a way that you can identify people that are in that top 10% across a certain set of skills. You want to attract those people to your organization. Once you get them in there, then performance happens, and people start to get into managerial roles. What we have done is we have invested in leadership and development. We have a dedicated leadership and development organization.
We try to think about the largest groups within the company. In our business, it’s the data center operations. We have a lot of folks that manage those 65 data centers and take care of our 3,000-plus customers. We have come up with a structured training program for that group from a data center tech 1 through 3 and a data center manager, and a regional manager.
Part of it is having some type of formal, relevant, and topical type of training program where you can objectively tell people how they are doing, where they need to work on, and what they are doing well at. That’s part of it. The other part of it is trying to figure out a way to surface the reality, especially in a larger organization. The challenge with these larger companies is that as a CEO, a Level 1, or L1, you don’t know what’s happening five rows below you. Everyone is busy. How do you do that?
You have to come up again with a set of things that gives you some type of pulse there. Number one, we do two all-employee surveys every year. They are based back on that cultural program that we did, where we measure ourselves across a number of areas and the set of questions we have been asking since 2019. We can see how we rank on a scale of 1 to 5 and then how that changes over time.
During those questions, we allow people to have open-ended comments. We take all that information. JP and his partner Paul distill it. What we do is eliminate any identifying remarks where someone called someone else specifically as a name but we don’t delete anything. We publish it. We let everyone read the good, the bad, and the ugly. It’s the way you have to deal with people because we don’t want to be dealt with in any other way other than transparency and the truth.
It’s painful sometimes to read these things because you put so much energy into what you do and then hear about it experienced. What you do is you take that experience, and it gives you clues on how to change. We do a similar thing with management. We have twice a year an L1 and L2 meeting where the top managers in the company come together. We have, based on our cultural attributes and performance attributes, a performance matrix.
What we will do is have the L2 folks tell the rest of the group there how they rank the people that report to them. There’s nothing better than sunshine. There’s nothing better than that open forum to help identify scenarios where someone might be doing a good job of reporting up but might be challenged reporting sideways or reporting the peers. You have to figure out ways to get to that truth within a large organization. That then surfaces your talent. It becomes clear at that point.
You’ve got a whole setup, “Do they know the job? Do they have good analytics skills? Do they have good technical skills if that’s what they need?” You have to check all those boxes but then there’s this squishy box around, “Do they have the right stuff in terms of building a high-performance team and making an impact, not just within their department but outside their department?” That’s what I see. The best managers make an impact outside their department.
That’s how you surface those. That’s the fun part of the job, frankly, because you get to see people develop into new roles and see them grow from a professional and an economic perspective. Think about yourself. That’s what you want out of your job. You want the opportunity to learn, advance, collaborate, work with people that you respect and care about, and deliver a product or a service that you are proud of. If you can do all that, then we all want to make money. We all love making money but that makes everything so much sweeter.
I’m curious about your insights on the next stage of evolution for the internet. There’s the convergence of digital infrastructure. I would like your view on that.
The best managers make an impact outside their department in addition.
There’s a great question. I started a dial-up. I think about the internet as a large-scale structure. It’s the universe. It’s a galaxy. It’s got all these pieces. It moves. It has a set of rules also that end up occurring. The internet is amazing. It has been around for years. At this point, no one can envision it not being here because you can’t live your life without it in our world. It has only been a blink of an eye when it comes to even economic history.
The most impactful feature in my view of the last few years was the advent of the public cloud. That would also be coupled with the widespread use of mobile data and applications. If you think about 2012, the iPhone came out in 2007. A lot of people didn’t adopt it until the early 2000s. The early 2000s was when the public cloud as a thing started to occur. Fast-forward to now. You have ubiquitous mobile communications and this dynamic around the public cloud where we have a set of locations that are incredibly important.
When I think about this question, I also think about it from the perspective of what DataBank is doing. The next ten years, in my view, are going to be as dramatic of a change in internet architecture as the last few years. It is true. We already know what it is. It’s called the edge. I like to remind people to go back a few years. Everyone was talking about the public cloud a few years ago. If you go back into a little time capsule in 2012, everyone was talking about the public cloud.
Amazon is out there already. They have been out there for 5 to 6 years at that point but you had all these other players join like Voxel, GoGrid, and SoftLayer. Microsoft was starting to launch. It was unclear what this public cloud thing was going to be. Fast-forward now, it’s the dominant feature of internet infrastructure from a data center perspective, a fiber perspective, and a networking perspective.
In the next ten years, you are going to see the internet decentralize and go back a little bit to where we started. As an old dog, I was telling old stories. Years ago, every office I went into in America had a data center. It was called a computer room. What happened is that this stuff moved to a small number of public cloud locations and multi-tenant data centers like DataBank.
It’s good that the pendulum is going to swing back. We are going to have it much more decentralized. It’s going to be similar to the past but very different. That is going to be the defining feature, along with 5G and the emergence of the real-time internet. In 5 to 10 years, this idea around latency is going to be a distant idea because, with 5G and this decentralization, you will have the ability to have real-time applications and real-time use cases that you can have. That, to me, is pretty exciting because it means that the next ten years will be as much of a change as the last few years.
I want to ask you this. What is your why? You jump out of bed every morning, probably at 4:00 AM. You have so much energy but what is it that drives you to do what you do, work so hard, and take care of your people the way you do? What drives you?
Number one, I came from the ground up. In those early years, we struggled a lot. It was very painful. You are so happy that you can get to the spot that you get to. When you finally get there, do something about it. Create an environment for what you can change where people can have a positive experience. Dealing with people within the company and dealing with our customer base is ultimately what gets me up in the morning because that’s fun.
I enjoy working with my coworkers and my partners. I enjoy winning. Set your sight on a goal, be able to accomplish it as a team, and get there. It’s great when you get great feedback from customers in terms of, “You are a good company. You deliver a great service. It’s a pleasure to do business with you.” Those are the three things that ultimately make it worthwhile in investing all that time and energy.
I have heard many wonderful things about you. I spoke to someone once too who was a leader at DataBank. She said that your mentorship mattered so much to her and made all the difference. I was looking forward to this interview. I want to thank you. This has been phenomenal. I’ve taken many notes that I’m going to implement here at Broadstaff. Before we leave, I would like to know, and I’m sure everyone wants to know, how we can find out more about open jobs at DataBank.
On our website, we have an About Us page, and then there’s a Career center there. We are looking for great people that want to be passionate about what we do and build a great business. We would love as many folks as possible.
DataBank builds A-players. You will have a positive experience there. I love it. There’s so much value in this interview. Raul, thank you. This has been a pleasure. You are an extraordinary leader. DataBank is an extraordinary place to work. Thank you for being on the show.
Thanks for having me, Carrie. I appreciate it.
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About Raul Martynek
Raul Martynek joined DataBank in 2017 as the Chief Executive Officer. In this role, he defines the strategic direction of the company and its operations. Raul is a 20+ year veteran in the telecom and Internet Infrastructure sector. He most recently served as a Senior Advisor for Digital Bridge Holdings LLC. Prior to Digital Bridge, he served as CEO for New Jersey-based data center and managed services operator Net Access, LLC. Net Access was acquired in 2015 by Denver-based data center operator Cologix. 5Prior to Net Access, he was the CEO of Voxel dot Net, Inc., a global managed hosting and cloud company, which was acquired by Internap Network Services Corp. in 2012. Mr. Martynek also served as the Chief Restructuring Officer of Smart Telecom, a Dublin, Ireland-based fiber carrier which was acquired by Digiweb in 2009.
Before that he evaluated investment opportunities in the telecommunications and Internet sector as a Senior Advisor at Plainfield Asset Management, a $4B hedge fund. Prior to Plainfield, Mr. Martynek spent 13 years with telecom and Internet provider InfoHighway Communications Corp; first as Chief Operating Officer of Eureka Networks and then as President and CEO of InfoHighway. InfoHighway was acquired by Broadview Networks in 2007. Mr. Martynek earned a Bachelor of Arts in Political Science from Binghamton University and received a Master Degree in International Affairs from Columbia University School of International and Public Affairs.
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