It Always Comes Down to Power

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It is hard to believe, but there is a significant amount of megawatts that goes unused in global data centers. On this episode, Raymond talked about this issue with Dean Nelson, the CEO of Virtual Power Systems.

Announcer: Welcome to Not Your Father’s Data Center Podcast, brought to you by Compass Datacenters. We build for what’s next. Now, here’s your host, Raymond Hawkins.

Raymond Hawkins: All right, well, Welcome to another edition of Not Your Father’s Data Center. I’m Raymond Hawkins at Compass Datacenters. We are recording today, Thursday, April 22nd, as the world continues to fight against the global pandemic. Month, I would say, 16 now, I think, 17. We continue to climb out.

Raymond Hawkins: Today, we are joined by the CEO of Virtual Power Systems, Dean Nelson. Dean, thanks for joining me today.

Dean Nelson: Yeah. Great to be here.

Raymond Hawkins: We’re excited to talk about all kinds of things with Dean, because Dean is infinitely smarter than me, and he will say things that I don’t even understand, but I hope that our listeners will track along.

Raymond Hawkins: You can, once again, answer our trivia questions by either emailing me at or you can tweet us @CompassDCS. Like always, we’re going to open up a three trivia questions. Then we’re going to let Dean run the show.

Raymond Hawkins: In honor of Dean’s time at Uber, we’re going to ask Uber-related questions, so Dean doesn’t get to answer. He is not eligible for the $500 Amazon gift card.

Dean Nelson: Aw.

Raymond Hawkins: But the questions, number one. Yeah, I know, heartbreaking. I know, Dean. What is the longest ever recorded ride for Uber? That’s trivia one, number one. How many trips a day at its peak does Uber handle? Then, what year was Uber founded, and like always, we’ll save trivia question four for the end. You got to email us all four questions correctly and you’re entered in for the drawing.

Raymond Hawkins: All right, Dean. That’s some fun Uber stuff. Dean, if you don’t mind, we’ve got folks that listen to us in Asia and in North America and in Europe. I think a lot of folks know who you are through either your time at Uber, at iMasons, but a lot don’t. Can you give us the Dean Nelson background, home, grew up, business, all of that. Then we’ll get into talking about what, I loved your phrase yesterday, “the data tsunami.” Tell us a little about you.

Dean Nelson: Yeah, so I was born in Minnesota and moved to Colorado when I was six, moved out to Arizona to go to school and then hit the California coast, and I’ve been here for 31 years ever since. So yeah, I’m old.

Raymond Hawkins: Got out there and liked it.

Dean Nelson: Oh yeah, this is a great place in the world, but my career, I’ve been doing this for 31 years now. I did 17 years at Sun Microsystems. I started on my 21st birthday in 1989, which is actually really cool.

Raymond Hawkins: Scott McNealy, all right.

Dean Nelson: Yeah. I’ve done podcast interviews with Scott that are iMason’s events and things, Andy Bechtolsheim, Vinod Khosla, Bill Joy, just all those folks. It’s a great thing. I always say that I went to the university of Sun, by the way, because I learned business and just strategy and all the other things, technology at Sun. They’re such a great foundation, but spent 17 years there. I did this-

Raymond Hawkins: What a great time to be there. Sorry, through the ’90s, what a great time to be at Sun.

Dean Nelson: Oh, the growth was incredible.

Raymond Hawkins: Unbelievable time.

Dean Nelson: It’s like the growth now, and they were just such an innovative company. I just love the culture and what they did. They dominated the internet, if you think about it. They put the dot in dot-com.

Raymond Hawkins: I was going to say, remember the dot in dot-com ad, right? That’s right. We’re the dot in dot-com. That’s right.

Dean Nelson: Then when the dot bomb happened, actually, ironically I left and went to a startup company in 2000 and was in a bubble of my own there for three years, which is incredible. But then, how would I say this? There were some factors that basically killed that startup, and that was my first experience with a startup. That was a really, I learned a lot during that.

Dean Nelson: I had a great time. Worked way too much, but loved, loved every second of it. I went back to Sun, spent another five years there, and then I left when Oracle took over. I went and joined eBay, spent seven years at eBay doing the Global Foundation Services, so data center, hardware, network, supply chain, running the budget, strategy, forecasting, all those elements to say really Metal as a Service.

Dean Nelson: Then I went and left and went to… I took a six months sabbatical between eBay and before I went to Uber, went and looked at colleges with my daughter and all that kind of stuff. It was great. I also started Infrastructure Masons at that point on April 2nd, 2016, and that was really to get my community back together.

Dean Nelson: Then I went and joined Uber and did that rocket ship for three years, which was incredible. I left in 2019 on my 51st birthday, so 30 years exactly in the industry, which was really cool. I wanted to move into something completely different, so I started doing advisory work and joining boards and those types of things.

Dean Nelson: One of them Virtual Power Systems, and during that initial period, they asked if I would step in as interim CEO. I said no five times, by the way, because I’d done 30 years of operations. But then I said I would. I stepped in and started doing this and found that I actually loved it.

Dean Nelson: I took the permanent CEO role in August of last year, and we did our first raise. I’d never raised money before, so totally different world, just such an important thing that we’re working on right now in such a massive market opportunity. I just love being in the middle of all of that, and of course, still doing advisory work for some Fortune 100 companies and other large private equity as well as iMasons. So that’s a long-winded answer to your question.

Raymond Hawkins: That’s a great background. Super. I’m doing the math as I’m sitting here listening to you, ’67, what year were you born? That’s me. I’m ’67.

Dean Nelson: ’68, yep.

Raymond Hawkins: ’68. Yeah, I was born July of ’67, so it sounds like we’re very close there as you went through the history. I stumbled into the technology business, complete accident, in 1986, and hate to do the math and realize how long I’ve been working.

Raymond Hawkins: I walked into the Mac lab at my university and said, hey, these are interesting and fun to play with, and ended up working in the Mac lab and becoming an employee of the university, and think about the Lisa came out in ’84. We were still very early in the personal computing world.

Raymond Hawkins: At that time at the university, the computer lab was the mainframe. That was the computer lab. This little Mac lab was like a play thing, and that was the beginning of my experience with technology, very similar life trajectory. I think when you and I both refer to Y2K, it means something different to us than then people that are running businesses today.

Dean Nelson: They call that the biggest non-event in history, by the way.

Raymond Hawkins: Yeah, I was sitting in a data center at midnight, that’s for sure.

Dean Nelson: Yeah, ditto. Yep.

Raymond Hawkins: But nothing happened.

Dean Nelson: You touched on something important there, which was happened into the industry, exact same thing with me. I just interviewed with different people. I went and got an associate’s degree in electronics from DeVry University in Phoenix. I spent two years getting that one, and then they hired half of my graduating class and I moved to California. Had no idea what Silicon Valley was. I just learned everything right there, that university of Sun was real.

Raymond Hawkins: Well, I’m with you. The getting to work at Sun and getting to see what Scott did and that whole business was just fascinating how they, not only at the early days, but also the early days of the internet, how they seeded so many companies with compute power. We could get way sidetracked into that. We’re going to have to end up doing three or four episodes. I’m convinced, Dean.

Raymond Hawkins: Let’s stick those stick to the focus. Let’s stick to Virtual Power Systems, appreciate your background. As you talk about why, and I liked you said it’s important work. Important, not just because let’s help businesses optimize how they manage power, but let’s be good stewards of the resources here on our planet. Talk to us a little bit about what Virtual Power Systems does.

Dean Nelson: We are a startup company that basically is virtualizing data center power infrastructure. The punchline is pretty simple. We unlock stranded power in data centers, but we do that through a hardware and software combination.

Dean Nelson: Let me back up to the stats. What’s staggering to me and why I think this is such important work is it ties to iMasons and our sustainability vision of every click improves a future. The reason it does is that we’ve done our research and found that there’s a baseline today of about 35,000 megawatts of capacity that’s built in the data center industry globally today.

Dean Nelson: That came from multiple vectors that we validated, everything from UPS sales to power draw those things. We’ve correlated all those back into this 35,000 megawatts. But the challenge is that, I believe, that at least to 10,000 megawatts of that is stranded, 10,000 megawatts.

Raymond Hawkins: Wow.

Dean Nelson: If you think about it, we’ve got 10 gigawatts of capacity out there, but now they are very good reasons of why it’s stranded, and that goes into the technology side. It really is about the stack. In all my jobs, we’ve been trying to drive efficiency and sustainability from the beginning.

Dean Nelson: There was a guy named David Douglas at Sun Microsystems, where he really went back and said, “This is about economics and ecology. You have to balance both. There’s not a choice between them.” He was absolutely right. It just took focus for people to go back and say, I can make a sustainable choice in how I drive, I build, I operate data centers and infrastructure.

Dean Nelson: When I look at that one, tying back to this strategy, if there’s 10,000 megawatts worth of standard capacity, how much embedded carbon do we add every time we perpetuate that problem, build another data center that’s 50% utilized? This isn’t people just being bad about, I just want to be inefficient, it’s literally the customer behavior.

Raymond Hawkins: When I hear the term stranded power as a data center guy, I think of somebody who I’ve built them a data hall, and we put four megs of capacity in there. They filled the data hall with racks and their racks are all done. They don’t have any more physical space, but their only drawing down three megs of power, so that megawatt is stranded.

Raymond Hawkins: I built the infrastructure, but they can’t use it because they can’t put any more physical compute in the room to utilize that other megawatt. I think of that as a traditional stranded. I think you’re talking about that, but also something else, is that true?

Dean Nelson: Yeah. It’s a little bit… Let me fine tune it, and I’ll give you an example. At my last two jobs, we would build out these standardized zones for cloud deployments.

Dean Nelson: We had an on-prem cloud instantiation. For example, at Uber, we’d have 576 cabinets. That was the zone. There’s 480 cabinets that were for the compute, the storage elements, the standard components. Then we had 32 racks that were actually the network, and then we had 64 racks that were going to be for overflow and flex and lab and test environments and that kind of thing.

Dean Nelson: When we rolled that in, we had really tightly coupled hardware to the shared platform that the developers would be utilizing. The whole point is the shared platform was shared, and so we would be able to drive the utilization up, etc., by matching that. Then, of course, we optimized with the hardware and then we matched to the physical data center power footprint.

Dean Nelson: When we’d roll those out, the concept here is that we’d be able to get high utilization, but the reality was this. We still have multiple locations, and we have this replication factor, which means I have to have a certain amount of stuff in multiple places in case I’ve got a region fault. Where I have more than two zones that fail in a region, I have to fail over to the other region.

Dean Nelson: The problem is that everyone would buffer the buffer and the buffer and the buffer again. That’s what leads to it. Low utilization is usually mismatched because of just the applications and the type of hardware, but also because they have disaster recovery and all this headroom, this safety built into it. The problem is that we keep perpetuating this problem, again, meaning that-

Raymond Hawkins: Yeah, Dean, no one gets fired for buying too much. People get fired for when it goes bump in the night, it doesn’t work. That’s what people lose their jobs over, so they buy all this buffer room. They’re buying buffer room, as frankly, job protection, which I understand the motivation, but it may not be the most cost-effective or the best stewardly decision.

Dean Nelson: This sounds very familiar to trends that happened 10 years ago, which was, that’s my server. I’m unique. That’s my network. That’s my story.

Raymond Hawkins: That’s right.

Dean Nelson: No, no, no, no, no, no. I can’t share with anybody else. I’ll have noisy neighbors. They’re going to impact my-

Raymond Hawkins: Don’t put another application on here. I don’t want it bumping in with my application, because then when something goes wrong, I don’t know who to blame. That was why people would argue against virtualizing a server or virtualizing the network.

Dean Nelson: When you look at it today, it’s the de facto standard. You wouldn’t go build dedicated hardware for all of your different applications and things. That’s what cloud’s based on. That’s what all of the efficient, even on-prem data centers are doing.

Raymond Hawkins: It’s back to your shared resource that you did in your design. We’re just doing that everywhere now across the network and across the infrastructure, the compute infrastructure. Absolutely.

Dean Nelson: The critical part to really look here is that it’s not the data center engineers or operators behaving badly. It is that they have things pushed to them that they have no other choice but to manage. In other words, when they say this hardware’s going to draw 15 kilowatts and it draws 5.3, they still have to be able to allocate more in case something draws that kind of power.

Dean Nelson: But here’s, again, the reality, we had a full region failover that I’ve experienced multiple times. People think that, because of disaster recovery, well, if I’ve got all these load in one place and it fails over to the other one, I’m going to have a doubling of the demand on the other side, so I have to have all that headroom.

Dean Nelson: We had to failover, peak volumes, and we had less than 10% increase in actual draw in the other region with the whole world failing over.

Raymond Hawkins: Wow.

Dean Nelson: Think about that for a second. That shows the buffer [crosstalk 00:14:04]

Raymond Hawkins: Yeah, so it just tells you an under utilization. Yeah, that’s right. It shows the under utilization. Yes.

Dean Nelson: Yep, so whether it was the data center to the hardware, to the shared platform, to the applications, those buffers all the way up. Low utilization is a big one, but so is redundancy and buffers. When you add all that up, that’s where this 10,000 megawatts is coming from.

Raymond Hawkins: Yeah. The cumulative effect of everyone’s buffer, the cumulative effect of everybody’s safety net. That’s right. That’s a great… I love that analogy that when you brought that over, even though, and let’s just make the numbers simple. Hey, we’ve got a megawatt of load here and a megawatt of load here. This one goes down, we’re going to move it over.

Raymond Hawkins: Well, wait a minute. It was a megawatt on face plate. It wasn’t a megawatt on draw. Once all the headroom got taken out and it was just actual load, it came over, and it was 300 kilowatts. To put numbers on it, I’m just making the numbers up, but that’s what you’re saying.

Raymond Hawkins: Your megawatt over here that also only had 300 kilowatts of draw, now goes up to 600, and you still got headroom. It’s that collection of headroom on both sides. Wow. Okay, I get it, all right.

Dean Nelson: But also that 300 and 300, don’t go to 600.

Raymond Hawkins: That’s right. There’s redundancy in there as well. That’s right. That’s right.

Dean Nelson: The whole point of what we’re doing here is that applying software defined methodologies to a data center seems weird. Everyone looks out of this, it’s a physical environment. I have these dedicated elements, but you have stranded pools of power everywhere in the data center.

Dean Nelson: The way we approached it is that you have the ability to have distributed capacity. We have the thing called power bursting, that is actually installed right at the PDU or RPP. We inject current in parallel. We add power where you’ve got the stranded capacity.

Raymond Hawkins: I gotcha.

Dean Nelson: That’s one element. Then we have another thing called phase balancer. Anybody who’s run data centers has had to deal with the rebalancing of power, because of customer decisions or single-phased hardware or low utilization changes. You physically are now moving them from one panel to another.

Dean Nelson: What our product does here is it takes this imbalance and corrects it at the PDU, so upstream to the UPS, perfect balance all the time, 24/7.

Raymond Hawkins: Oh wow, okay.

Dean Nelson: By the way, every data center in the world has phase imbalance problems. It just comes down to percentages. I look at that going, now the sheer nature of people, making decisions on, I have to have this pair of PDUs with these racks over here with this nameplate expectation. Even if I derate it down to this amount, I’m going to have this kind of buffer in it. So they do buffers of buffers.

Dean Nelson: Then you’ve got them low utilization on the compute, and then you have the redundancy. Again, you never get past 50% in a pair of PDUs, and most likely, it’s 20 to 30%. You have all the stranded capacity at that pair of PDUs. Well, how do you get to it? Well, you inject current, and you balance phases and you reclaim 30 to 40%.

Raymond Hawkins: Unbelievable.

Dean Nelson: Safely without compromising the SLA, because this also improves the SLA because you have distributed capacity. It’s not a UPS. It’s meant to augment because it’s for those ride through moments. When I have a failure on A and things fail over to that one, if I had imbalance and I’m at 93% utilization on those circuits, I’m going to trip the other side. If I balance it, I’m at 84%, and then I’ve got surge capability within power bursting. In the end of it, you’re actually increasing your SLA, so our software orchestrates all those elements.

Raymond Hawkins: Dean, you said something at the very beginning, as you were describing the bursting and the balancing that I thought was great. You said, “Raymond, people ask, ‘Hey, we’ve got physical elements in there. How can we virtualize them?'”

Raymond Hawkins: Well, Dean, we got asked that when we were talking about virtualizing components inside a server. We got asked, “Oh no, no, no, you can’t virtualize my memory. You can’t virtualize my storage. You can’t virtualize my network.” We’ve lived through all those iterations. A network is a physical asset, but we had to live through getting people comfortable that we could virtualize the bandwidth inside of a network.

Raymond Hawkins: We didn’t have to give you a dedicated port that nobody else touched that port. It’s interesting, because I’m in total agreement with you that you have to first get people comfortable that, hey, your physical asset can be shared without impacting your SLA. That got lived through memory, disk, processor, and network. It’s the exact same conversation.

Dean Nelson: If you think about the parallel to that, you had to win the hearts and minds of the engineers, because they were the ones going, “My job’s on the line, not yours.”

Raymond Hawkins: “Don’t take my stuff. Don’t take my assets. I need to hold it.”

Dean Nelson: “I’m special.” The thing is that you apply that same methodology back over to the power side. Think about, like you said, nobody gets fired for over provisioning or for being conservative.

Raymond Hawkins: That’s right. That’s right.

Dean Nelson: But flip this around now. Here you’ve got the, this is the product, the engineering challenge, the inefficiencies that happen in a data center because of behaviors of other people. By the way, for co-location companies, it’s all because of their customers and I was that customer.

Raymond Hawkins: They’re trying to take care of that customer. That’s right.

Dean Nelson: Right, because in the end of it, the SLAs that they’ve got is penalties if they don’t meet those SLAs.

Raymond Hawkins: It’s money.

Dean Nelson: There’s a very, very real business case behind why they do what they do. But if you start to apply that methodology to it, all of a sudden, flip it around to the business side. If I’m using 50% of the capacity I built in a data center at eight to $10 million a megawatt. The yield, the return on that investment itself, I have half of that money sitting on the table.

Dean Nelson: Imagine if you’re able to go say I could actually drive the utilization up overall as a colo business safely without compromising my SLAs. Here’s the other thing that’s really interesting too, that I don’t think people have quite grasped, a few have, but others in the industry haven’t yet.

Dean Nelson: If you are able to do that, your cost per kilowatt can go down in your RFP responses. Yet, your margin can be maintained or increased, and your performance can be maintained or increased. Suddenly, you have a competitive advantage, so that’s on the colo side. When you look at it, it’s like, how do I go back and give low prices to my customers, but still make money? Because there’s a race to zero right now, especially in the hyperscale side.

Raymond Hawkins: Our industry is getting commoditized. There is no question. That’s absolutely right.

Dean Nelson: Yet, it’s growing like never before. It’s so big. When you got markets that are really getting hit on that cost per kilowatt, how do you stay competitive? You must rethink how you’re doing these models, because the fixed element of doing it this way, dedicated power and things, it’s going to impact the business.

Raymond Hawkins: Dean, when we talked about virtualizing inside the compute world, you nailed it. We had to convince the engineering side of the house. Those guys had to get comfortable. They had to lose the “I’m special” badge and go, no, I get how I can have the cycles I need virtualized. They had to buy off before anybody else would sign off, and we’re going to have to live through the same thing at the data center power level.

Raymond Hawkins: the smart guys who say, “Yep, that’s resilient enough. That’s available enough. That’s enough capacity,” are going to have to understand and get what we’re doing here. When they do, I’m with you. I like the fact that, hey, we can do it at a cost effective manner and still be able to have a margin.

Raymond Hawkins: Because at the end of the day, the industry needs us data center providers to be profitable, so that we’re here next year when they grow again and then the year after that, when they grow again, because I teased with the data tsunami comment, BEcause that’s coming. The data tsunami is coming.

Raymond Hawkins: I really, really, really love the tutorial around what Virtual Power Systems is doing. we may just do two or three shows just on that, on bursting and on how to keeping things in phase. I think that’d be fascinating.

Raymond Hawkins: Let’s switch gears and talk about the data tsunami. Because at the end of the day, we’re talking about being good stewards with that power. We’re talking about how do we go get that 10,000 megawatts and utilize it better? That’s what VPS does. Let’s talk about why it’s so important because of what’s coming.

Dean Nelson: IDC predicted, a lot of people have seen these things, that we would have 44 zettabytes worth of data generated every year by 2020. They just updated their report, and this is all pandemic driven, by the way, if you think about it. It was 64.2 zettabytes generated last year.

Dean Nelson: It wasn’t a 10x increase, because they had 4.4 zettabytes back in 2014 or 2015, whatever it works out to be, in that timeframe, 10x growth. It was actually a 16x growth now to 64.2. They had predicted with that 10x growth, 175 zettabytes of data generated every year by 2025, which is huge to begin with. If you do the math itself, it’s massive amounts of data.

Dean Nelson: But now if you extrapolate and take that same 16x, we’re going to be at 255 zettabytes by 2025. Now, that’s assuming that we’re doing the same things we’re doing today. Now, people have said that the pandemic was a a one-time event, a bubble. That’s not the case. That’s the new baseline.

Raymond Hawkins: Let’s take 30 seconds on that one. It was early in the pandemic, so this is June or July. I had someone on the podcast and they said… I don’t remember who it was, but I want to give them credit for saying that. They said, “Raymond, we’ve seen three years of IT transformation in three months.”

Raymond Hawkins: I completely agreed with it then, and it’s continued for another year. But to your point, we’re not going back to that. In other words, we’re not going to undo that transformation. We’re not going to stop doing Zoom calls. We’re not going to stop doing work from home. We’re not going to stop doing telecommute.

Raymond Hawkins: To your point, that’s the new baseline. From a how much data and how we interact with the data, how we access the data, we’re not unwinding that three years of transformation.

Dean Nelson: No, absolutely not. This is the thing, that represented half the world’s population. There’s at least another 2 billion people that are coming online in the next couple years across APAC, LATAM, Africa, alone.

Raymond Hawkins: Just new users, forgetting the other transformational effect. Just new users are coming and their devices, with a device in hand, or like us, an American, multiple devices in hand.

Dean Nelson: This is where I think people also get a little mixed up is that the internet was built for people to do things, but there’s only 8 billion, only 8 billion. The new internet, what’s going on right now, what’s happening with 5G, what edge is going to be, what’s happening with the edge deployments and also with quantum computing, because that’s just going to explode processing. This is about machines talking to machines. This is not about humans downloading movies faster. Everybody uses that analogy.

Raymond Hawkins: That’s right, and it’s so narrowly focused because today we think of connected, you’re talking about zettabytes, it’s really a function of how many devices are interconnected. We think of devices interconnected as my iPad, your laptop, my phone, your car, my Nest thermostat. Well, that’s what we think of connected devices.

Raymond Hawkins: But that Nest is the beginning of devices talking to devices. You and I may have five or six personal devices, but that growth of devices talking to each other is where we’re going to see this exponential growth.

Dean Nelson: There’s a couple of factors that are rolling into this. If you think about, there’s 8 billion people and half of those people are on the internet right now. Great, that’s going to drive up. We’ll have more use.

Dean Nelson: But they’re predicting right now, there’s going to be 125 billion things, the internet of things, connected by 2030. Just think of the ratio, you’ve got 8 billion of people connected through devices. Then you’ve got all these actual things. This is smart cities and all the other initiatives, this is also smart factories, smart farming, smart everything.

Raymond Hawkins: And your refrigerator and your television talking to you, everything.

Dean Nelson: Just every household will have hundreds of devices, but think about what’s behind that. They’re saying there’s going to be over a trillion sensors of those things, communicating. Again, the machines are talking to machines. Why are they talking to each other? To enhance the human experience and increase engagement, so it’s not about the movie download. It’s literally about how are you going to change your behavior?

Dean Nelson: Let me give you an example of this. I get a lot of people debating about edge, oh, there’s nothing there. We could do it with the cloud. We could duh, duh, duh, duh. It’s frustrating in the conversation, because I don’t think people see it yet.

Dean Nelson: The reason that this data tsunami is really coming is that those smart cities and those initiatives are going to be generating massive amounts of data, but not all that data needs to go back to the core.

Raymond Hawkins: Here, here.

Dean Nelson: About 70% of it will be dropped. The analogy I use, when I was over at Uber, we built up the depots for the autonomous car data ingestion. We had to go back and orchestrate to be able to say that, X amount of hours a day, they come in, they land, but the cars were generating so much data that they couldn’t do it over their cell connection.

Raymond Hawkins: Yeah. The physical download had to be connected.

Dean Nelson: Right. We’d have all these cars come in and then we had surges. We’d do a hundred gigabit bursts out of these cars, and so four terabytes a day each, etc. They come in, dump data, go out again, but all that data, when it comes in, you don’t need all that data. If you think about an autonomous car, there’s eight cameras on it, and they’re recording everything.

Dean Nelson: The same car is driving down the same road, doing the same thing, unless they see an anomaly or a delta, meaning I could not interpret that thing, that person, that movement, that interaction. All that other data, you keep a copy of it, not 150 copies from those cars that are going 24/7. There’s a huge compression that’s going to go down, but where’s it going to be done? All at the edge.

Raymond Hawkins: Right, right.

Dean Nelson: Because the cars won’t have enough power in them to actually do that deduping. Then when it gets into the edge deployment, where they’re going to have this on compute, that’s where this thing’s going to say, drop, drop, drop, drop, drop, drop, drop, send what I care about, because if all that data had to go back-

Raymond Hawkins: Send change. Send the anomaly. That’s all that’s going to have to get transported, because otherwise we’d crush the network with that. You talked about the car, I think you said four terabytes. People can’t comprehend how long it takes to download four terabytes, and to try to do it… I’ve got it, 5G’s going to be awesome, but trying to do it wirelessly, and that’s just one car on one day’s drive. The amount of data is astronomical.

Dean Nelson: That’s the part where the other element that is really going to blow this open. Everybody talks about 5G and all these advancements, but when you break it down and you look at what 5G is going to bring, it’s going to be 10 times faster from a latency standpoint, a hundred times more bandwidth. I can gracefully go to New York 10 times faster, and I could do it in a hundred lanes wide. Wow, right?

Raymond Hawkins: Yep, yep.

Dean Nelson: That also is a hundred times more concurrently connected devices. Think about that. This is why all these things out there. Now, it’s not, again, you downloaded the movie faster, great. It is about your fully immersive experience that’s going to happen at the edge.

Dean Nelson: The analogy I give in this one is that, just think back to when the App Store started, did people believe there’s going to be billions of apps and everybody was going to be engaging in that? No. Why did it happen? Why did it work? Because they had an open platform that allowed all of the developers to go back and do something.

Dean Nelson: When 5G opens up those flood gates, what are they going to do at the edge? They’re going to come up with millions of experiences that are going to engage everybody, machines, all that.

Raymond Hawkins: Here, here.

Dean Nelson: And that, here’s the data tsunami.

Raymond Hawkins: You go back to the beginning of the App Store. I remember when people joked, oh yeah, there’s an app for that. It was sort of comical of what new ways of interacting with our world, which is what you’re saying. There’s a different way if you digitize this interaction.

Raymond Hawkins: I’m going to give a silly one, Waze is a perfect example. There, in my pickup truck, there are two folded maps. There’s a map of the state of Texas, and there’s a map of the United States. My kids literally don’t know what that’s for. They pick it up, and they fold it all out and they’re like, “Dad, what is this?”

Dean Nelson: Pretty picture.

Raymond Hawkins: I’m like, “That’s a map, guys.” They’re like, “Well, what did you use this for?” I’m like, “What do you mean?” The concept… “It’s so you could figure out how to go somewhere.” They’re like, “Dad, why would you not do that on your phone?”

Raymond Hawkins: Think about it, Dean, that’s just been in 12 years. 12 years ago, 15 years ago, there wasn’t an App Store. There wasn’t a smartphone, and that’s a simple, real-world example. You don’t use a map anymore. You use Waze.

Raymond Hawkins: I’m still driving somewhere. I still need directions. But the way I interact with it, and what my map told me was this is where the road went through Jackson, Mississippi, to get me to Atlanta. Now, what Waze tells me is there’s an accident three miles ahead. There’s police seven miles ahead, not that I ever speed. There is a traffic jam. The road construction is slowing you down.

Raymond Hawkins: It’s changed the way I interact with what used to be a hard to fold up map, and that’s a simple, real world example of everything you’re saying. When you unleash the thought process of 8 billion people and go, how can I interact with my world differently? Oh, by the way, like you said, I now have a hundred lanes and I’m going 10 times the speed instead of 60 miles an hour, I’m now going 600. Instead of two cars, I’m now got a hundred cars. Things are going to change. There’s my prediction. Things are going to change.

Dean Nelson: Raymond, I think you might be right.

Raymond Hawkins: Yeah, yeah. I could be onto something there.

Dean Nelson: It’s quite possible.

Raymond Hawkins: Well, I’ve made some bold predictions before, Dean.

Dean Nelson: That’s right, that’s right.

Raymond Hawkins: I do joke occasionally when people ask about our business. I’m like, “We’re pretty bullish on the internet. We think this thing’s going to stick around.”

Dean Nelson: I actually want to touch on something that you said there too, because this, the edge definition… We talked about people saying movies and they don’t need to have this, but everyone says that the edge is going to be about fully autonomous vehicles and flying cars and all those really cool whizzbang things that are coming. They will be, but not right now.

Raymond Hawkins: I hear you.

Dean Nelson: People are saying, “Well, I don’t really need it yet.” Well, what you do need, so take the autonomous car example, now take the autonomy of it. Just say smart vehicles.

Dean Nelson: I have a Tesla, and so that Tesla has a certain amount of power in it. It has a certain amount of processing. It has a certain amount of sensors or all the different elements within it, and then it can calculate and do things. But it’s autonomous, meaning it makes its own decisions, and you’re still interacting with a human.

Dean Nelson: The edge has got real use cases today that are requiring compute to be very close. The number one is public safety. Cities and smart city initiatives are rolling out edge, because whether it’s people walking or cars or anything with emergency vehicles that have to get through something, it’s about traffic management.

Dean Nelson: Edge is going to give that real-time thing. You gave an example of Waze, and so when you suddenly have the ability for all of these smart vehicles and smart intersections to be able to now see who’s walking, see who’s driving and mesh networks that allow them to communicate with each other, instead of going 150 milliseconds round trip to the cloud, all of a sudden you have this ability for them to orchestrate.

Dean Nelson: Natural disasters are one of the big ones that come back up. If we have some type of a hurricane or other things like Katrina and those things, we lost connectivity, we lost power. We lost all those. Edge is going to provide the ability to orchestrate to keep those things up.

Dean Nelson: Drones will be able to go out immediately from those things to find out emergency situations where people can’t. The orchestration of all that stuff in emergency situations is really critical. Then there’s data exchanges between all these different departments at city governments.

Dean Nelson: Look, the point is, there are hundreds of billions of dollars of investment coming into cities, and that is going towards edge computing, connectivity, and the ability to orchestrate with these actual divisions. Then you’ve got all the commercial side of it. If there is compute on the corner, do you think that that restaurant, that coffee chain, that other ones, and they could use that one, if it was available to them, what would they do with it? Kind of like the App Store.

Raymond Hawkins: Yeah, not only what would they do with it, but what do they not need now on prem anymore, right?

Dean Nelson: Exactly.

Raymond Hawkins: They now go, hey, I can get this as a service, and that’s the thing, I think that when this infrastructure gets built out and just like you said, we got to convince the engineers. When people regularly go, you know what I can get? Just like when I turn my light switch on, I always know the electricity comes on here in North America, most of the time. When I was in California, you don’t always have that, says the Texan with a seven-day blackout.

Dean Nelson: Wait a minute, wait a minute, I was going to say.

Raymond Hawkins: [inaudible 00:35:22] anyway. When people trust that, hey, I can get the compute for my business on the corner, from that locally provided device out on the street corner, and I can build a service, a reliable, predictable service so I build around it. That’s coming.

Raymond Hawkins: That ability to go, I don’t need my own cash register. I can do a thing there that allows me to interact with my customer. I think about the ways to interact with my customer. I’ve got a sensor up there and my guy’s got an app, and he says that he comes to my coffee shop on a regular basis. Well, I’m going to know when he starts walking towards me, when he’s three blocks out, I’m going to crank up his, I don’t drink coffee, but his mocha latte thingy. The ideas are limitless.

Raymond Hawkins: I like your point about safety and traffic flow. You made a comment earlier, every click improves the future. We’d like to say at Compass, we make lives better, and truly do. If you could manage the fire engines to a fire faster-

Dean Nelson: You save lives.

Raymond Hawkins: … because of management, you’ve saved lives.

Dean Nelson: Totally.

Raymond Hawkins: You’ve saved property. You’ve saved people’s livelihoods. If there’s a mass tragedy and you could get people routed to the right hospitals, where there’s emergency room staff and the appropriate kinds of care, these kinds of decisions where now are getting done on radio dispatches, can be done, not just by recognizing the traffic patterns, but by managing those traffic patterns and sending a message to that ambulance, turn right here and go that way. That’s the shortest route to the emergency room with the right facility. That’s the kind of thing coming.

Dean Nelson: All these pieces are going to tie together, and they’re going to tie together at the edge. It’s because about local decisions to be able to be made immediately.

Dean Nelson: Now, one thing I wanted to clarify, so this goes back to the App Store again. If the App Store didn’t exist, we wouldn’t be able to do the things we’re doing now. If the edge rolls back out, and those companies that have all these retail locations out there suddenly have an option to use it. It’s not about them getting something cheaper. The cheaper’s going to be there, but also they suddenly have the ability to say, oh, I have that one. What else could I do here?

Raymond Hawkins: Here, here.

Dean Nelson: I talk to these companies a lot and they say, I can’t justify edge computing in my store because I don’t really have the use cases for it.

Dean Nelson: We’ll flip it around to say, you have access to all this capacity, literally a hundred feet from you. What could you use it for? Oh, well, I could do this with inventory management. I could have all my associates actually interacted with the customers longer or faster and more than they would have doing the back office things. Interesting.

Dean Nelson: It opens up and it allows them to do things, because just like I said with 5G, when you suddenly have compute and that speed and performance at the edge, those developers are going to create things.

Raymond Hawkins: That’s right.

Dean Nelson: I always use this example, like [crosstalk 00:38:05]

Raymond Hawkins: Things we’ve never thought of, exactly.

Dean Nelson: Right, Pokémon GO went overnight massive. That was one application. Well suddenly, when it’s 10 times faster and a hundred times more bandwidth, what do you think they’re going to do? Massively immersive experiences that are going to drive engagement from people everywhere and drive more and more things and more and more sensors to consume more things.

Raymond Hawkins: Here, here. Well, Dean, I want to be sensitive. I know you’ve got a clock we got to manage. Thank you so much. I think we could do two or three more hours. We’d love to have you back, love hearing about what Virtual Power Systems is doing.

Raymond Hawkins: We want to talk about iMasons the next time we can get you. This data tsunami is a thing, the edge is a thing. There’s so much knowledge between your ears. We’d love to have you again.

Raymond Hawkins: We’re going to sneak in one more Uber related, in honor of your time there, trivia question. Question one, longest ever Uber ride; question two, at their peak, average rides a day; question three, the year they were founded; question four, who was that founder?

Raymond Hawkins: Dean Nelson, CEO of Virtual Power Systems, thanks so much for joining us, and we look forward to having you again in the future. We’re not making you commit to it, but we’d love to have you back. Thanks, Dean.

Dean Nelson: Thanks, Raymond.

Raymond Hawkins: Take care.