News and Updates
Chicago Sun Times, March 2011
Last Modified: Mar 22, 2011 12:13PM
Chicago has quietly become one of the nation’s top sites for a silent but critical component of Internet and cloud computing — data centers — and one reason is the region’s relative scarcity of natural disasters such as the Japanese earthquake.
Data centers are cavernous, temperature-controlled, fortress-secured buildings that house the web servers, network services and storage equipment that companies need to transmit, store and back up data. They house the workhorses that undergird companies’ e-commerce, information technology services, financial and social transactions and other everyday functions. The workhorses belong to companies such as Microsoft, Google, Level3, AT&T and other major high-tech and info-tech companies.
Data centers have become the Chicago region’s biggest ComEd electrical customers, replacing the steel mills of a decade ago.
And they are attracting two precious resources: Hard-to-get private-equity money to finance their construction, and young people intent on developing technology success stories to rival Groupon. Two of the local companies — SingleHop and Steadfast Networks — got their start in their founders’ dorm rooms as start-ups hosting websites for popular bloggers and small businesses.
Chicago is home to four data centers, with at least two more on the way. The suburbs have at least eight data centers.
“Chicago is in a unique position because it is a hub of communications and transportation, and is one of the safest environments for data-center investments compared with earthquake and hurricane-prone parts of the country,” said John Lee, executive vice president at Hostway, a data-center hosting and managed-hosting company that operates a 30,000-square-foot data center at its headquarters at 100 N. Riverside Plaza.
The closest area of earthquake activity is the Wabash Valley fault zone in southern Indiana and southern Illinois near Vincennes, Ind., said Purdue University Geophysics Professor Robert Nowack. That’s about 240 miles from Chicago. Though a 3.8-magnitude earthquake occurred last year in Elgin, about 35 miles northwest of Chicago, that area is not recognized as a quake-prone zone, he said.
Karl Zimmerman, a 27-year-old native of Fond du Lac, Wis., runs Steadfast Networks, which has grown into an $8 million-a-year, 30 employee company that manages web hosting and managed IT services for small and medium-sized businesses, including a growing number of financial institutions. Local clients include WBEZ Radio, the MacArthur Foundation and the Museum of Science and Industry.
About eight months ago, Steadfast set up a 6,000-square-foot data center at 725 S. Wells in the Loop, and intends to double the space by early 2012.
Steadfast touts its month-to-month contracts that give clients pricing and data flexibility, and its green initiative, including a partnership with CarbonFund.org, that uses efficient cooling systems, variable valves and speed fans, economizers and other equipment so that it operates carbon free. The company also encourages employees to take public transit, and uses a local supplier to cut down on the amount of packaging and transportation needed for equipment.
Zimmerman has become a success despite having dropped out of Northwestern University after two years and one quarter, and voluntarily keeping his salary on the lower end of his company’s professional salary scale.
“I look at everything long-term,” he said.
Another Chicago-based hosting company, SingleHop, grew out of a web-hosting company that Dan Ushman and Zak Boca started from their college dorm rooms — Ushman at Southern Illinois University and Boca at Western Kentucky University. Ushman left college as a sophomore; Boca as a junior.
The two men — Ushman, 27, and Boca, 28 — have no debt and run a profitable company recognized as the second-fastest-growing in the Chicago area and No. 3 fastest-growing IT firm nationwide in the 2010 Inc. 500 listing. SingleHop, with $19 million in yearly revenues, hosts 7,000 servers — 4,000 in Elk Grove Village and 3,000 at 601 W. Polk St. in Chicago — for more than 3,500 clients in more than 100 countries. About 40 percent of SingleHop’s business is providing infrastructure to other web-hosting companies.
SingleHop has made its name by pioneering energy-efficient Atom processors and, just recently, offering a cloud-hosting platform that blends dedicated hosting with cloud elasticity.
“It is easy to get into the business of shared hosting, but the hard part is to grow,” said Ushman, a native of Buffalo Grove. “And to become a successful dedicated web-hosting provider is much tougher.”
“There is really nothing virtual about the data that travel the Web,” Hostway’s Lee said. “It all has to come to a destination, and that’s the data center.”
Hostway has grown from operating a single data center for small- and medium-sized businesses 13 years ago to operating nine today, including 15,000 square feet of its Chicago center that is open to other companies. Hostway employs 700, of whom 100 work in Chicago.
Initial Infrastructure Equipment Deployment – July 2010
New Downtown Chicago Data Center Development - January 2010
Chicago, Illinois, January, 2010 – Digital Capital Partners, LLC (DCP) announced the development of a new state-of-the-art wholesale data center in downtown Chicago located at 725 South Wells near other major Chicago data centers. DCP has retained MDI Access, a Data Center Design/Build firm, to further develop the Wells Street property into eight custom built data center spaces for future tenants seeking capacities of 400kW to 750kW deployments, resulting in densities of 100 to 150 watts per sq ft.
The 55,000 square foot eight-story building at 725 South Wells sits on the fiber-rich “F” ring and has approximately 10 carriers entering the facility via three diverse fiber entrances. Each tenant will have access to three separate fiber risers. Construction of a new 4 MW diverse path Com Ed service is underway with scheduled completion for October 2010. Construction is also underway for the building’s second full floor tenant.
DCP plans to market the facility to content companies, managed service providers, collocation providers, enterprise users, and financial institutions that are seeking high quality custom-built space.
DCP is owned by Anderson Pacific Corporation, a Chicago private equity firm; Fiberlink, LLC, a regional dark fiber provider; a consortium of independent Midwest telephone companies; and individuals specializing in the telecommunications and data center industry.
For more information please visit: Digital Capital Partners LLC
Contact: Christopher J. Jensen
Phone: 312-602-5488
Email: chris@andersonpacific.com