XXXX, 2002 -- Feb. 6, 2002 -- Having modest ambitions has turned out to be a blessing in disguise for Peak 10 Technology Gateways, a regional colocation and hosting provider focusing on second-tier markets in the Southeast.
Founded in March 2000 by telecom veterans Nicholas Kottyan and David Jones, Peak 10 is now positioned to expand, having already outlasted nearly all competition in their core markets of Charlotte, N.C. and Jacksonville, Fla.
Peak 10 operates an 8,000 square foot data center in Jacksonville, and has a 13,000 s.f. facility in Charlotte.
"Everybody told us we were crazy for building these wimpy little data centers," recalls Kottyan. "Now we're glad we've got these wimpy little data centers, because now we don't have 40,000 square feet to fill. We didn't go out buying million-dollar EMC boxes hoping someone might come to need them."
"We saw people throwing large amounts of money into these (data centers) and gold-plating everything," said Jones. "The issue for us was the profitability of the business. That philosophy has been the thing that's kept us alive in the marketplace."
Kottyan is a "serial entrepreneur," having started and sold three companies, including Teledial America (now part of Qwest) and Phone America (now part of WorldCom). Jones was involved in two previous startups, and has 15 years of executive experience with companies including MCI and Telecom USA.
The pair saw a market for small to medium-sized business customers in secondary markets in the Southeast.
"We believe that people would much rather have their equipment down the street than halfway across the country," said Kottyan, an avid skier who named the company for the Breckenridge, Colo. mountaintop where he conceived the venture.
"In a lot of cases, we're dealing with the small to medium business market that has a lot of trouble getting the attention of a company like (hosting market leader) IBM," he added.
The present telecom train wreck was hard to envision back in early 2000. But Peak's 10 executives say they still see plenty of opportunity.
"We're pretty bullish, and quite honestly, the fallout has been both good and bad," said Kottyan. " In Jacksonville and Charlotte, the competition has essentially been eliminated. There's also a fair amount of data centers available at attractive pricing."
"On the bad side, we've had to answer a lot more questions related to our financial background," he added, noting that customers are seeking financial stability in a provider.
Peak 10's decision to build smaller data centers was actually a financial decision, rather than a strategic one. With initial financing of $1.8 million from angel investors and a second round of $3.8 million in venture funding in August 2000, Peak 10 had to think small.
Having received an additional $18 million last year, the Charlotte-based company can now afford to do some shopping. Kottyan and Jones say they will soon announce an expansion into two additional cities, where they'll stick with the playbook from Peak 10's first two markets.
"We came along at about the time a lot of the dot-coms were starting to get real shaky," Jones recalls. "If we had raised our money earlier, it might be a different story. Lucky or good, we definitely tailored our strategy.
"It's pretty obvious to us that no one created the perfect model," he added. "Our business approach is that we're a local player, and believe those relationships are what, at the end of the day, will determine your success."