Equinix, Inc. (EQIX) Earnings Call Transcript & Summary

Well, welcome, everybody. Thank you so much for sticking around. It's actually a pretty great crowd so late in the day. It's been a wonderful day here at the second day of our Communacopia and Technology conference, and it's great to cap off what's been a really exciting day with Jon Lin, the Executive Vice President and General Manager of Data Center Services at Equinix. Jon, thank you so much for being here.

My pleasure.

All right. Can you just give us a little bit of a background -- overview of your background, your position at Equinix and some of the key initiatives you're focused on right now?

Yes. No, absolutely. But first, since Katrina is right there, I have to read this disclosure. Some of what I will talk about today contains some forward-looking statements. Please read our SEC filings for more information about factors that could affect these statements. Hopefully, none of those are about my background though. So I'll start off. So I've been with Equinix for almost 14.5 years, started in marketing, moved to corporate development and strategy, ended up doing the Verizon acquisition of that data center portfolio and subsequent integration along with the Infomart deal or Axtel deal in Mexico, the Bell Canada deal and then was President of the Americas for a couple of years. And then about 2 years ago, I took this role of being General Manager of Data Center services. So in charge of the data center portfolio globally now in terms of our capital allocation, around our strategy, around pricing, the product definition and the xScale portfolio rolls into me. And in terms of key initiatives that we're focused on right now, as you can imagine, a lot of different areas there. I think one is just continuing to drive towards better simplicity and efficiency for our customers about consuming our data center services. So really digitizing that experience, reducing friction for our customers and our employees to drive efficiency and yield. We talk -- you hear probably a lot about us talking about operating leverage. Well, a lot of that is just making that experience end-to-end faster and easier for ourselves and for our customers. Obviously, continuing to work and scale the xScale portfolio and making sure that we're doing the right things there and making sure we understand what the opportunities on driving that are. In addition, as you look at sustainability for all of the work that Equinix does for our employees and for our construction, our operations on an end-to-end basis, that's a huge area of focus for us, inclusive of how do we productize that for our customers. And you see some of the work we've done, both in terms of the green power reporting that we do, and I mean 100% of our customer RFPs at this point have some degree of questions about sustainability and making sure we've got great answers for that. But also just in our engagement with the communities that we're operating. Data centers are no longer a secret, right? And so when we're developing our projects, when we're actually going for permitting and entitlements, whatever we can do to make sure that we're engaging and showing, hey, we're world-class about sustainability, our design standards around that are obviously like incredible and all the work we're doing, but also how can we engage with the local community around sustainability. What do we need to do to make sure we're understanding of maybe it's a water risk issue, maybe it's a temperature risk issue, maybe it's how do we offload waste heat to the local community, like that's a huge area of focus for us as well.

Great. You mentioned the global responsibility you have. And Equinix really is the only global company that does what you do. You have 250 IBXs across 32 markets. Can you talk about some of the key secular trends that you believe are driving enterprises through their digital transformation now and over the next few years? And how are you seeing that manifest itself in the demand at Equinix?

Yes. It's like -- it's such a broad question in a lot of different ways. And first, I'll say it's, I think, it's 32 countries not markets, and it's 71 markets, and I have to say that because otherwise, our construction leader will kill me because it's more complicated than I give them credit for every day. But I think when you look at the landscape at large, everybody is working on how they're going to go ahead and take advantage of digital transformation. And I think it's -- we've got 2 sides of the business that are in harmony there. One is, obviously, our enterprise customers and how they can leverage our footprint in our locations, the interconnection that we bring to be able to transform their enterprises and deliver value for their businesses as efficiently as possible. That's digitizing their workflows. That's taking that data and then analyzing that and applying machine learning or AI practices to be able to drive value in terms of whether that's customer benefit, sales benefit, operational productivity, all of that yield, and doing that in a way that's private when it needs to be in terms of their own infrastructure, but also tapping into the multi-cloud out there. And so that's one half. The other half is our service provider business, right? It's still more than half of our total bookings is coming from customers that you would classify as service providers, the SaaS providers, the cloud providers, the network providers that are always out there trying to figure out, hey, how can we deliver more services to our customers and do that efficiently and drive additional revenue growth. And part of that is through our service offerings that make the interconnection easier to consume more of those products. And part of that is just expanding our geographic reach. We've continued to expand into more markets over the years. That's always been customer-led. They're always pushing us to how can we get to more locations so that they can offer their services to more customers faster.

And we saw that in the second quarter, very solid growth in net bookings, really good pricing dynamics, really great pipeline conversion. How is that tracking now as you're going into the back half of the year? Are you seeing that momentum continue?

Yes, definitely. I mean we're not going to comment on any quarter performance, obviously, but I would just say we're very encouraged by what we're seeing there in terms of overall pipeline and activity that's happening. I'd say coming into this year, what we saw from enterprise buyers was, one, a little bit of uncertainty from Q4 and Q1 coming into the year around what's the macroeconomic picture going to look like? What's really the impact going to be? Then the second part that we saw was kind of pricing from all of their suppliers included some of ourselves, has gone up. And so that budget that they had to be able to know what they could invest in to be able to deploy, to build that new set of projects, that was impacted. And again, it's -- you look at the SaaS providers at large, you look at the cloud providers, everyone's talked about how they've been uplifting pricing, right? And again, we've done that as well. And so that constrains a little bit around some of, well, how much do I have to be able to do the projects that I need to do this year. What we've seen though in Q2 and kind of going forward is now there's clarity around that, right? And I think that there's a lot more energy and enthusiasm there. And certainly, like all of the discussion around generative AI in the last 3 or 4 months now has created a lot of leeway for CIOs as they're thinking through their budgeting and process like how can we position what we're doing to be able to say it's setting us up for AI or being part of our AI workflow as they're kind of justifying their projects with their executive teams and their Boards.

If anyone had 7 minutes for the first time AI was mentioned, you win. All right. So that gives me permission to ask you a bunch of AI questions then.

Let me check ChatGPT.

You had a great analyst meeting earlier in the year, and you didn't overhype AI. There's a lot of great things happening in the business. Enterprise is investing in hybrid multi-cloud architecture is really what drives your business. But Charles would say, this could be upside. And it probably -- at some point, I think we all accept that it probably will be a driver of the business. As a retail colocation provider, predominantly a retail colocation provider, what is the thought process inside the company around the point at which AI does become a meaningful part of that conversation about what's driving the funnel?

It's a great question. I'd say it's in our conversations pretty much every day engaged with customers now, right? And I think, one, it's understanding for the enterprise. Are they ready to do that? What are they thinking about their use cases for AI inside their organization? And candidly, it's still early days for the enterprises around this, right? I think there's been a tremendous amount of like discussion and talk about what this can mean. A lot of enterprises are in the other stages of, do I even have the data that I need to be able to train something to be able to get value out of this. And so a lot of our conversation with the enterprise has been how can we most effectively and efficiently marry all of their different points of data together, right? And that's what we've been doing for 20-plus years. We're the most efficient way for them to effectively move data from their private infrastructure to the end user, from their private infrastructure into their multi-cloud environment, to their SaaS providers. And so we're that gateway for that opportunity where all of that data can intersect with each other. And that's the foundation for good AI, right? And you mentioned our Analyst Day. We had NVIDIA there with us, and that was kind of why they're so excited about working with us, and we're so excited about working with them. We've been focused around data for so long, and this is an incredibly powerful use case to unlock so much additional value for all of these things that we've already captured in terms of the data storage that's resident in our facilities. And so I'd just say, it is still relatively early days there. I think on the enterprise side and on the service provider side, like we're looking at that as 2 different flows. I think you look at the amount of interest and excitement about generative AI right now, about these large language models, that's a relatively latency insensitive, very, very large kind of compute set of infrastructure that candidly, that's not the retail business. That is perfect for our xScale portfolio, and we've talked about, hey, what that might mean for us as we think about launching in EMEA and looking at those requirements in the U.S. On the enterprise side, when we're talking with the technology vendors about AI, their actual requirements for an enterprise are relatively small compared to that. And I was in a conversation with a large pharmaceutical company about they're like pharmaco modeling exercise around AI. And that deployment was, call it, somewhere between 0.5 megawatt to 1 megawatt, which is, like, that fits really well into our sweet spot around the retail side, a larger footprint, but certainly well within the realm of what we're doing there. And our facilities are ready to go for that, right? This is exactly what we look at in terms of footprint that can fit into our facilities. It's at densities that are higher than our typical but easily accommodated within our facilities, and we're ready to go and talking with customers every day about that.

Let me just follow up on that then, because I think when a lot of investors think about AI and data center business model at a very high level, they think, well, that's going to be very power-intensive as they think about the training that goes on. As you pointed out, your facilities, your IBXs, aren't built for that. They serve a different purpose. Do you think there will be a point when we move -- when we're beyond the initial training phases, we're starting to get inference workloads, those are the types of things that may reside inside of Equinix facilities, that, that will actually start driving incremental power utilization because power is already a bit of a challenge for the data center sector.

It is. And I think there's 2 or 3 different like areas that we think about on the power side on kind of the micro level about that deployment itself. The density requirements for AI training are much higher, right, than our standard general purpose compute. But we do see that as a blend across all of the footprints that we see for enterprise demand. And even in our conversations on kind of a daily basis today, at the beginning of this year, I'd say like the very high-intensity workloads around GPU or high-performance compute were single-digit percentages of workload for what's coming into our facilities. Now it's very, very low double-digit percentages, right? So it's not like we're seeing a fee change overnight where all of a sudden, 80% of customer workloads are being AI-driven or GPU-enabled and need to be at 40 to 50 kW a cabinet. It's more like, okay, that's still a portion of that, and then they still have the rest of their general purpose compute that they're using for many different use cases. And so again, our facilities are well positioned to handle that. We look at our ability to bring liquid cooling to that -- those areas inside of the facility, both in terms of the flexibility of design to be able to support 60, 70, 80 kW a cabinet for certain deployments there. But that deployment right next to it might be a very low density deployment. It might be a network deployment that's 2 to 3 KW a cabinet. I think benefit of having a very heterogeneous environment for many different customers inside of that is we can help position that, right? And we don't have to, like, rip and replace all of our infrastructure out to be able to accommodate those workloads today. On a macro basis, as that kind of creeps up and the amount of power ends up being drawn at greater and greater velocity, it does change kind of the game in terms of our engagement with the utility providers. We're -- our conversations start with the utilities, even before we're entering the market as we're even thinking about land acquisition, making sure that we understand what the runway looks like around that and securing our power commitments there, in some cases, doing substation design or commitments around that construction work. And so -- and that's been, I'd say 3 years now, we've really been a very, very large focus around power as one of the critical elements. They used to just be land. Now it's land plus power kind of tightly coupled together. So we've got dual coverage. And so feel incredibly good about our runway and capacity to continue our growth, and we've made sure we've secured that capacity for the future. Now some markets are very tight, right? I mean you look at Ireland, you look at Singapore, it's very hard to get incremental allocations there. We're super proud of the allocation that we got in Singapore to be able to get incremental growth into that market. But that is a tight market. And so in those markets where it's being more tightly constrained, we're looking at what additional adjacencies we should be delivering there. And so we're going into Malaysia now. We've announced our expansion in Johor, which is right across the strait from Singapore. We've also announced Kuala Lumpur. And we think about that as, hey, how can we make sure that the entire economic growth that we can drive from that infrastructure, we can tap into power availability for that. The other areas like, again, maybe circling back to the U.S. a little bit, when we think about the xScale program, in particular, and what we might need to think about for some of these really large requirements out there, the reality is we are hearing from some of the hyperscale customers, they're no longer thinking in like dozens of megawatts. They're thinking in hundreds of megawatts for the scale. That is going to be incredibly difficult or almost impossible. The solution in some of the metros that they're existing today, and so that perimeter that we're thinking about in terms of where we should be looking about land and power capacity is starting to widen a bit from our previous work on like xScale in Europe, it's very tightly coupled with our retail campuses. I think when we're thinking about this next gen, it's going to be both. Some requirements are going to be tightly coupled with our retail campuses, and some may actually be like very large campuses somewhere else.

And how are you thinking about increasing. You already have a pretty significant focus on renewables, but that's one way to deal with power scarcity, which is to generate it yourself. How is that influencing where you're thinking about putting your facilities, particularly your xScale facility?

It is. I didn't like. We could go, I don't know, for the next hour talking about power and kind of diversification strategy around that and what that might mean for on-site power generation. It's -- there's no great answers around that, right? Unfortunately, I think there's no easy button otherwise, I think you'd see a lot more people in the data center space trying to get returns. But -- and so it's a complex tapestry. Like on-site power generation, in general, and I can't think of a use case where it's -- other than directly adjacent to hydro maybe, but like -- where you can get really renewable energy. But for the most part, on-site power generation, you're going to have to find some set of offsets, right? Solar and wind have the problems of nonavailability during periods of load, and there isn't really efficient energy storage mechanisms to offset that on a local generation basis. So a lot of the work that we look at on-site power generation does end up needing to go ahead and be offset VR PPAs and kind of the other arrangements that we have to make sure that we've got really good stories about our renewable coverage and what that means for our customers. As you'd imagine, especially for the hyperscaler customers, they have a tremendous set of commitments on their own power consumption. And obviously, that flows into their suppliers as well for this infrastructure. So we're partnered tightly with them to make sure that we understand what that will look like.

I want to go back and talk a bit more about some of the day-to-day conversations you're having with your customers. And when you look back over to last year and one of the areas where you've had a lot of success is driving price. And you've been able to do it as a mechanism of offsetting some of the inflationary pressures that your business is seeing, particularly on the power side, but it also seems you're just capturing more value for the services that you're delivering. And as you're engaging with customers, how are you finding their responding to where your price points are? And do you think that you're going to continue to be able to capture that pricing leverage going forward?

First, it starts with understanding where we can fit inside of that value chain and what value we're providing with the customers. And our conversations for our retail customers, it's always focused around what can we build to help them with whatever they're solving from a business need perspective. And so it's really not a cost-plus play around our conversation. And our pricing relative to market has always been at a substantial premium to the other retail providers out there or obviously to the wholesale market. And I think customers understand that. They accept that, and they're getting multiples of value compared to the cost that they're spending with that, either in terms of revenue generation for their business or in terms of direct revenue generation from their deployments with us in the case of the service providers, or for the enterprises in terms of either cost efficiency or revenue generation from the cost takeout around more efficient multi-cloud access or again, that productivity and yield that they can get from having lower latency for their applications. And so that value pitch is incredibly strong. I think inflation is affecting everybody across the entire landscape, right? And the entire infrastructure world for IT pricing has gone up on all [indiscernible] and I mentioned that earlier around like SaaS providers, the hardware vendors themselves are charging more. Networks equipment is increasing in the cost. So that entire stack is increasing. And I would just say like the colocation element of our business is a pretty small cost component compared to the total amount of investment that happens inside of the investment for our customers in that footprint, right? They've got servers to buy, network infrastructure to buy, software to layer on top of that. And at the end of the day, like our value promise that was incredibly strong there. And so that continues to be very strong. I think we -- it's never a super positive and like happy conversation when we're talking to customers about like uplifting and what that means in terms of rate perspective, but they're digesting that well. And that's separate then, I would say the power price increase that we pass through, that we were very transparent around. That ends up being an outsized utility cost we're providing on a pass-through basis there. Again, we had very -- we were ahead of plan candidly, around that. And I think the amount of again, friction that we had experienced around that was below what we were expecting. It's again, never a pleasant conversation, but we spend a lot of time communicating with them ahead of time, giving them the visibility like 4 months in advance that there was going to be some action happening there, giving them a range and then finalizing on a number there. And so we've got -- we've built a lot of trust, I'd say, with those relationships with customers around. They understand where that's coming from, and they understand what the plan is going to be.

To what extent do you think that reflects where enterprise customers are in their IT transformations? And I'll explain what I mean. For a very long time, one of the great drivers of your business was that enterprises hadn't done this yet. They were going through the process of beginning to transform from their old IT model to a hybrid multi-cloud model. Are you finding that a sufficient bulk of enterprises have transitioned to the model such that they kind of have to pay it? In other words, this is our model. These are the partners we want to work with. And if pricing is going up, then pricing is going up. Or are you still finding that there are a big bulk of enterprises that just haven't done this yet and maybe pricing is deterring them?

I think it's somewhere in the middle of that. I think the stats like 58% of the Fortune 500 or 41% of the G2000 are now customers of ours. So that certainly means we've gotten pretty steady and like widespread adoption of what we do and what value we provide as kind of a best practice around infrastructure deployment for the enterprise, but that doesn't mean there's obviously still some coverage there that we need to get and still some relationships we need to build there. But I would say the increased amount of trust and transparency around that value and also that tighter relationship now with some of the technology providers that they're really working with, like we've obviously done our announcements with Dell and HPE and Cisco along with AWS and Microsoft around, hey, what does -- and Google and kind of every service provider that matters really from a technology perspective for the customer. This -- like what we've built from our digital transformation story around multi-cloud connectivity and the access to the technology ecosystem, not just of today that they're using, but also knowing that we're future-proofing all of their investments for tomorrow because whether it's, let's say, 2 months ago, it may have been Dell. And 4 months from now, it's going to be Hugging Face. That's going to be a part of the ecosystem of Equinix and the value that they're going to be able to tap into. And so that future-proofing story for them is incredibly powerful as they're thinking about the flexibility they will need for their infrastructure. Many of our customer contracts, while shorter in length, they're still 2 or 3 years. If you ask a CIO what their infrastructure is going to look like 3 years from now, the level of fidelity around that is going to be relatively low, right? And so that opportunity to know that they can flex with us to be able to consume different services, different ecosystem partners around that and be able to get that delivery that they need is a really, really strong selling point for them.

Got it. Right. Your job description, we looked up your job description.

Oh, no.

It includes driving operating leverage from Equinix's market-leading interconnected colocation franchise. So the question I have here is, I think some of the operating leverage in the business has been masked to a degree over the last year or so because you've been investing in some of your new growth initiatives. And Keith has talked a lot about that. How do you think about the natural operating leverage in the business? Where are you really capturing it? And what are some of the things you're doing that can flow through a bit more even as you continue to invest in these growth areas?

There's a couple of different areas there. I mean, one, and kind of near and dear to my heart around sustainability, is just operating our data centers more efficiently, right? And that's a combination of not just how we're defining our product and what we're building there, but also how we're operating the facilities and using the data that we have to actually inform our sites to be able to drive better efficiency. So when you see the PUE improvements that we list and talk about on our sustainability side, well, that's actually less utility we're consuming to deliver the same amount of revenue for our customers, which ends up driving operating leverage in a great way and it's also great from a sustainability basis. We're not wasting as much power, right? You may have seen -- we talked about at the end of last year, our plan to actually move our environmental SLAs from the current like Azure-recommended level to Azure allowable. That means we're actually talking about like allowing a broader range of operating environments in -- from a temperature basis at our facilities. Again, that's a great sustainability play because we're -- like the entire industry is overcooling their data centers today. And we were the first out there in the market and say, like, this is not going to make sense, we're going to move this over the next several years. We're going to work tightly with our customers and the technology providers, but that's another area where, again, we can drive operating leverage from just savings on utility that right now is not actually productive and it's waste for the planet. In terms of additional areas, a huge amount of work for my team in -- at the company is around how do we drive digital transformation to make things more automated, more efficient and more frictionless, and I mentioned that around -- or making it easier for our customers' employees. The more that we can do that and the more we can drive that run book, it's going to continue to be a scale point for us. We're going to need less bodies like it to be able to operate and grow that business and kind of -- we're talking about like flattening the curve around that, right? It's just the staffing levels that we'll need will be able to be reduced because we're going to be able to drive activities more efficiently there and just continued work around that. And the same thing on our G&A side. Like, hey, if we can actually digitize a lot of our internal processes and workflow, then we can go ahead and like have these people be released to actually do higher value work inside the company.

And yes, I mentioned this as part of framing the question that one of the reasons we haven't seen quite as much operating leverage as the business has is because of the investments you've been making. What are you finding is the receptivity to your customers around some of those growth initiatives, whether it's metal or some of the other areas you've been investing?

Yes, I think it's early days, but very encouraging signs around our digital services initiatives. And like I -- when we look at our internal metrics in terms of like customer sign-on and incremental use cases that are being adopted by metal, in particular, like it's actually ahead of plan there in terms of we're seeing -- what's interesting and exciting about this is in the past to be able to get a customer, we had to spend months or quarters in a sales cycle to be able to talk to them and say like, okay, well, here's what it looks like. And then they also need to be in a buying cycle for data center, right? And they may not be in like a tech refresh cycle that corresponds with the need there and like the friction level of actually deploying and buying that set of infrastructure and gear, getting that into a colocation facility. That first sale is pretty tough to be able to do. We're still doing that every day, obviously, and still getting great success around that. But on the digital services side, being able to expose the value of Equinix and then have a customer go do deploy that Equinix.com. You guys can all go there now and like buy a server in London today, right now, in 5 minutes, have that deployed in live and be interconnected to fabric and be able to access all of our interconnection value, is an incredibly powerful value prop for our customers to be able to experience. And what's really exciting about this is, one, it's great for new customer acquisition; but two, we're seeing customers in personas inside of our existing enterprise like large financial institutions. We're talking with their trading engines. We're talking to with our website properties. We may not be talking to entire swathes of their enterprise application developers, well, our digital marketing is talking to them, and they're actually signing up and actually trying that, signing up, getting a server. And now we've got a whole new set of conversations and access to an entire set of infrastructure that otherwise we wouldn't have known to be able to get to and penetrate in or it would have taken us a very long time to do. And so that's a really powerful vehicle for us.

Your digital services are not currently available across all of your portfolio yet. That's something that -- some of them are still very new.

Yes.

Do you think that there is ultimately going to be demand for them to be ubiquitous? Or do you think you're going to find that there's a regional element to some of these features?

I think there is some degree of regionality and certainly on a statutory and regulatory basis, there are some markets where like we probably won't be able to offer. But I think over time, you're going to see more and more ubiquitous coverage. And we're at -- I think we're at 30-plus markets now around the world, right? So that's -- and that's all of the major markets that we're covering there. And so it is one where we are seeing receptivity and interest and excitement around that globally.

A key reason so many of your customers are in your facilities is because of the ecosystem that exist. And of course, as the ecosystems create density, density creates more ecosystems, you sort of mastered this virtuous cycle at Equinix. What are you still doing today in order to foster a rich ecosystem environment?

I think part of that is the patience that you need to be able to look into the market and see what emerging trends are around that, and investing in areas that may not provide like very, very direct line to, hey, this is going to be this quarter's booking, right? And so we spend a lot of time and energy between our business development teams, our CTO team around emerging market trends, around technology and where that might take us. And I mean, again, we talk about AI now in our Analyst Day in 2021, we had Jensen as part of that Analyst Day talking about AI and Launchpad as a Service to say, you can now experience AI training models provided by NVIDIA at Equinix facilities. And 2 years ago, everyone was like, I don't even know what that -- why was he on your analyst call. And it's like, okay, we were a little bit ahead, but that's how we're thinking about that. The same way like the amount of investment in energy that we spent with the carriers around 5G and what that could translate into around edge infrastructure, what that could translate into. And so being willing to have those conversations very early and do that in a neutral manner with, again, all of the technology providers, both for today and potentially for tomorrow and to say like, this is what we see in terms of market insights around customer behavior. How would you see that evolving? What can that translate into? We spent a tremendous amount of time over the last 3 or 4 years around connected vehicles, around the entire supply chain, around automotive industry and what does that data flow end up translating into. And that's translated into great like actually bookings from the automobile manufacturers and the supply chain around that. But we haven't even scratched the surface yet about what that means in terms of the total telemetry that, that can be delivering. And that's an ecosystem for tomorrow. And if in -- not all of those will hit, and that's okay for us, right? We're not counting all of those. But I think that patience and willingness to go ahead and invest and look for those areas means that we've got a pretty broad net out there across many different areas so that we can capture the broad strokes of that demand.

What's really unique about your business is not just these ecosystems, but these ecosystems exist throughout your IBXs globally. And the business just continues to become even more global. More recently, we've seen you expanding into some emerging markets, whether it's Nigeria or India. Can you talk about some of the unique challenges that you've encountered operating in those markets? How do you deliver the same Equinix experience in those regions?

Yes. It's a couple of different areas there. One, we talk about M&A. And like as we think about emerging markets and kind of the risk associated with that. In some cases, our preferred method is actually M&A because we can then find a team that we trust around both the adherence to our ethos and values the way that they treat customers and also their operating experience around delivering there around very, very complex environments. And certainly, MainOne in Western Africa with Funke Opeke, who's just an incredibly powerful leader and Manoj Paul in India from the GPX acquisition. If we didn't have them, it would be -- and we tried to kind of go in there brute force on an organic basis, like you're going to pay a lot of dumb tax to be able to get in there before you get it right. And like the ability to accelerate our learning, and then it's, yes, we may be paying a premium to be able to have that entrance, but the next multi-hundred millions of dollars that we're going to be on investment, the derisking of that capital because we acquired a team that knew what it was doing and know how to get s*** done is like incredibly powerful for us. And so that is a huge driver. And that -- the complexity can be anything from permitting. It can be anything from power procurement. In many of these emerging markets, they've never seen data center requirements. I remember I was in LatAm, and I said, no, we need probably 15 megawatts, and they're like, that's not a real number. Like no, that's absolutely what we're going to need. Like here's the load ramp. Here's the projection for us. I was like, okay, we're going to have to think differently about that. And so like then we need to work with the local utility provider to do that. Again, having the feet on the ground and that experience around that is incredibly important for us and incredibly powerful.

And are you finding that the customer demand is materializing in those markets as you show up and bring the Equinix model in?

Yes, absolutely. One, I would say we are very customer-led in terms of what markets we're going into. 90% of the time, it's because we've had many, many multinationals or the hyperscalers ask us, hey, can you show up in this market because it's extremely hard for us to find reliable solutions around this, and we really need your capability. And then you hear that enough times and you're like, okay, we should probably go to this market. And then we got to find the right opportunity for that vehicle. But any time we're going into a market, we've been looking at these markets for years before we end up stepping into that. As many of you know, we're a pretty conservative organization. Like -- and when we go into a market, it's not like a tech company going into a market. Like these are assets that we're going to be in there. As soon as we deploy the capital, that's -- we're making a 30-plus year commitment. We want to be here for the long haul, right? So we're going to be pretty measured about where we're going into and like exiting the market is incredibly painful for us. And like we want to make sure, like, hey, we're making the right bets in the right markets and then going in there. And then once we have made that decision, like we're going in and we're going big, right. So...

All right, Jon, it's been a great conversation. Thanks so much for being here.

Absolutely. My pleasure. Thanks so much, Brett.