For the last two months or so, we have been looking over the contract for 530 W 6th Street. Although I can’t go into it much more than that, lets just say we noticed a few clauses which alarmed us and decided to have our lawyer look into it a little more. Fortunately our lawyer knew a few people who are in the data center negotiation market and they have definitely been helpful within this process. Since our leasing agreement is for 5 years, this is definitely a serious agreement which we needed a pair of qualified eyes to view. Agreements should be completed within the next few days and the cage itself was said to be ready within a week.

A few months ago we scheduled a walk-thru of the 530 W 6th Street building with building management. Apparently the realestate side of the building is managed by a large company named, “Colliers International.” Our day was locked in and ready to go. Once we arrived at the building for our meeting date, I decided to call the representative at Colliers and too our amazement he had completely forgot that a meeting was scheduled that day. In an attempt to keep us happy, he went ahead and contacted the building engineer who instead provided us with the walk-thru.

As the walk-thru was conducted the building engineer was able to provide more information on infrastructure then the Colliers representative would have been able to. He touched basis on several different aspects of the building and why purchasing a space which already had the infrastructure intact would be better than trying to build out one ourselves. He also stated that working with union based electricians would be better than working with non-union as he has heard of various problems which have occurred in the past with electricians who were non-union, not completing projects properly.

Long story short, we couldn’t get any information about pricing this day. This definitely was not a good sign. We started to debate whether or not the building would be one that we wanted to use, since the sales rep didn’t even have enough courtesy to even show up! Anyhow, I will elaborate on this later.

It’s been a long time since this blog has been updated! Guess what? We are back! It’s been a long wait I know, everyone was itching for the anticipation to see if this entrepreneur could pull off opening a data center in the Los Angeles area. During the transition I went from owning a hosting company in Downtown, Los Angeles to selling the company and working as a Systems Admin for a small business in the Glendale area. After much talk about needing additional space with the company I now work for who currently has a cage on the 19th floor of One Wilshire we found the perfect expansion area right across from the current location. A large building located at 530 W. 6th street! Stay tuned as I will be detailing every experience which occurs with this new data center cage expansion space from getting the proper cross connects to apc units we are well on our way to calling this new place home.

Since we are running out of power within our One Wilshire cage, we decided to look into an option which would be close to the One Wilshire building and find something comprable if not cheaper in pricing. After talking with a few of my contacts within the webhosting world I decided to take Dan’s advice from Webnx. He currently operates his company out of a few cages and suites within that building, so I figured it would be a good choice for our establishment to look into. He also stated to talk with LinkLINE as they would be able to help us with a few of our requirements. We decided to contact LinkLINE and eventually received a phone call from the sales director:

Renato O’Neal
Sales Director

LinkLINE Communications, Inc.
Email: roneal@linkline.com
Cell: 909-322-1545
Direct Voice: 909-972-7012
Fax: 909-972-7135

I figured I would list his contact information incase anyone else needed a point of contact. Anyhow, Renato promptly scheduled a walk-thru with us and we had a chance to view the portions of the buildings which LinkLINE operates. He was very informative and any of the questions he may not of known were answered shortly after our meeting. We received the pricing for the space but it was not far off from what we currently pay in the One Wilshire building, so we decided not to move forward with LinkLINE. When we researched a little further into the building and the operations behind it, we found out that the building itself also offers cage space and we would have the benefit of going directly with the building as opposed to a reseller which in the end would be cheaper.

After working with a number of folks to shed light on what is trying to be done here in the Los Angeles area, I have started to progress forward in a strategic manner rather than jumping head into the wonderful pool of data center sharks. Thanks to the connections made with this blog, I will be moving forward with cage space next to the One Wilshire building. This cage space will be split between a partner and I allowing us both to share the costs of space, power and bandwidth together.

This move will not only benefit my current operations but it will create a live scenario on what to expect during expansion phases.

What does this mean?

This means that 600 W. 7th Street is no longer an option at this time. I feel very comfortable in stating this due to several of the building setups offered by the management of the building not being competitive enough for smaller commits. Unfortunately I will not be able to get into pricing on the new location, but I can say that it offers everything needed and provides me with enough space for 3 cabinets in a secure location. This is definitely a progressive growth move as I have recently received a number of inquiries about co-location from parties interested in the LA area.

The other day an associate of mine messaged me a link in regards to a data center which had been flooded in Canada.

http://www.youtube.com/watch?v=Oe0toAEmp98&search=servers

After viewing this link, I realized how real the threat of a natural disaster could be to any company let alone a data center. Whether the owners of this basement based data center had liability insurance or not is irrelevant, the real question is did this include flood coverage? As we all know when it comes time to file a claim with the insurance company, different terms are thrown back and forth and guidelines surface which did not seem like they existed upon signing. I am speaking in a general manner because many people do not study the different insurance policies before moving forward with them.

In certain parts of Los Angeles it is required to have general liability insurance for something as little as office space. For the standard policy covering sensitive equipment you are looking at $1,000 + a year base. This is a very general number and varies drastically based upon your coverage needs. This number was only stated to give you a ballpark figure of what a typical general liability insurance policy is priced at. When looking into the tech suites at 600 W. 7th Street, I was quoted a decent amount for the space available considering my cabinets are located in the same building. Then we progressed to the requirement stage and I was forwarded this:

A. Commercial general liability insurance (including contractual liability): $2,000,000 million single limit; $5,000,000 million aggregate limit

B. “All Risk” Personal Property Insurance: Full Replacement Value of Tenant’s Personal Property in Tenant Space.

C. Workers’ Compensation Insurance: in accordance with the laws of the state in which the Property is located, and Employer’s Liability insurance with a limit not less than $1,000,000 Bodily Injury Each Accident; $1,000,000 Bodily Injury By Disease - Each Person; and $1,000,000 Bodily Injury By Disease - Policy Limit.

D. Rental Loss Insurance: $3,000,000

E. Business Interruption Insurance: $2,000,000

Each of these points were important to moving forward with something as simple as a tech suite which consisted of less than 200 sq. feet of usable workspace. Considering I would have at least one employee working out of the suite with me, worker’s compensation needed to be factored in for both myself and the employee in case of any on site injuries. Points A-C were mandatory and points D-E were optional, meaning the owners of 600 W. 7th Street required for A-C to be met 100%. To cut a long story short and only basing the costs on points A and C, the policies alone would of been over $3,000 a year for a space which could barely fit two desks!

The only positive side of this, would be the fact that any of your equipment which is located within the building is also covered under the quoted policy. All said and done, we went with another location which did not require insurance. This is perfect for my team due to the fact that we will not have any equipment based within the office space and everyone working within this office space will have laptops which they can take home. I figured this would interest some that were concerned with insurance policies which directly related to running a colo based company.

One of the biggest areas that people tend to overlook in any business is networking. This can be the most crucial area of your given business. In the past few days our co-location segment received a number of large orders that we would not of been able to fill on our own. The commit level for bandwidth on these orders were above a few gbps and the customers who requested such a quote were ready to move at any given second. Due to the nature of the situation we debated on how quickly we could either build the infrastructure the customer was looking for or pass the request along to a provider who was capable of handling such a request in a limited amount of time. Obviously, the latter choice was the one we selected.

With the help of our trusty industry rolodex and the connections that DataCenterStartup.com provided us with we were able to move forward with a quote which was quite competitive in the eyes of the customer. Unfortunately, large customers like this are very sensitive with time and are itching to move fast. It was to our disappointment that this large request had already been fulfilled by another provider before we could even get a proper response back regarding certain specifications.

If this deal had moved forward, we would of received 10% of gross profit monthly. There is money to be made as a middle man and it is always good to have a solid team of people to depend on, giving your company the ability to fulfill orders both small and large. In the event that you can not handle the request, then the best decision is to forward it to someone that would be willing to provide a referral rate, otherwise you may lose the order all together.

Recently the site has received a number of SPAM submissions. It is quite sad to see a number of folks try and ruin a good thing by submitting replies to certain blog entries which are strictly geared towards garnering traffic to their given sites. I will continue to moderate posts due to this issue.

A number of you have extended your hand in an effort to help with this dream. I appreciate each and every one of you and would not be able to accomplish such a feat without your help. In the next few weeks I will be contacting those of you who have offered to help with questions which will be closely related to the business plan. I want to pool the knowledge together from all of you and come up with a rough draft of the business plan to advance to another stage in this data center development. Feel free to email me if you want to be a part of this process. I am going to mention each and every one of you who have taken the time out of your busy schedules to make this dream a reality.

Email: jthompson@datacenterstartup.com

After talking to a number of people and reading various books, I have concluded that a bank loan would be sufficient for this matter. Initially, I will start slowly with the bank by taking out a small personal loan. This loan will be paid back within a one to two month period. I will then take a second personal loan which will be larger in value and pay this back in the same amount of time. After this has been done, I will approach the bank to find out business loan options for my company. Since my company has established net income and credit for over a period of a year now, I can approach the bank with a business plan at this time to show them what the loan would be used for. The business plan will be complete with all details and financial break downs.

I will keep everyone updated on the progress of the personal loan process. The first loan will most likely be $500 and I will progress up from that. I also plan on scheduling some meetings with a few loan officers to get the feel of what they expect out of a business during this process. This should be a great learning experience and very helpful with the creation of this dream.