Kao Data's Doug Loewe talks about becoming its new CEO, AI growth and the journey into next-tier markets.
It’s January 2024 and Kao Data, the UK specialist developer and operator of data centres engineered for AI and advanced computing, has named Doug Loewe as its new CEO.
An accomplished international business executive with a reputation for entrepreneurialism across start-ups, scale-ups and real-estate investment trusts, Loewe has built and led several high-performing technology businesses.
Most recently, he was contracted by global asset manager Macquarie Asset Management, where he helped to align the company’s global data centre portfolios – a strategy that has generated billions of dollars in relation to deployed megawatts, growth and revenue opportunities across the US, European and Asian data centre arenas.
When asked what it was about Kao Data that enticed him and why he sees the company as having major prospects, Loewe answers in his typically straightforward style, while addressing the complexities of the market. In basic terms, he believes Kao Data is perfectly placed to navigate the host of challenges faced by the industry – partly due to its ability to think ahead in a market where traditional mindsets still trouble the sector.
“In recent years, the company has certainly punched well above its weight both in terms of its size and scale, and in the customers it has secured,” says Loewe. “You only have to look at how it worked with NVIDIA to deploy the Cambridge-1 supercomputer during the pandemic to know that AI and high-performance computing [HPC] are far from a new trend for Kao Data, but rather built into its production fabric. It’s established itself as a pioneer in this regard.”
Entrepreneurial values
The organisation, founded in 2014 by Goldacre Noé Group and led by Kao Data’s now-chairman David Bloom, has held entrepreneurial values close to its heart since inception. In line with this, it took what at least appeared to be a considerable risk in deviating from the traditional hyperscale availability zones of West London to establish a new data centre hub in Harlow, Essex.
In hindsight, that risk was fortuitous, with the company securing multiple contracts from a host of world-leading organisations, many of which were research-intensive HPC users that had found a home in the Oxford-Cambridge Arc. These include NVIDIA, InstaDeep, recently acquired by biotechnology company BioNTech, and the European Bioinformatics Institute.
Nearly a decade later, Kao Data has grown from a single-site data centre operator into a portfolio business that includes more than 160MW of IT load either currently operational, under-development or planned, and a £350 million investment in Greater Manchester.
In doing that, the company has galvanised a reputation as one of the sector’s most fearless market entrants. It pioneered the adoption of the Open Compute Project’s OCP-Ready principles in Europe and became the region’s first operator to transition to 100% renewable hydrotreated vegetable oil. Kao Data has also established a dedicated campus for AI through its specialist connectivity partners and NVIDIA DGX-Ready architecture in Essex.
European frontiers
Meanwhile, the company has spoken about its platform expansion consistently for over a year now and is poised to share new details regarding its European strategy in 2024. However, Loewe remains considered in his response on what’s planned, without alluding to specifics that might reveal the extent of the company’s new continental locations. He also talks of the congestion in the 'FLAP-D' markets of Frankfurt, London, Amsterdam, Paris and Dublin.
“The sector is on an entirely new trajectory in terms of growth. Where once there was an unlimited opportunity, the industry is beginning to run into some major constraints, especially if we look at what’s taking place in the FLAP-D markets,” says Loewe. “These locations are completely saturated by cloud providers and present challenges for European data sovereignty, as well as access to adequate land and renewable power – all of which is exacerbated by the growth of AI.”
He adds: “It’s a major inflection point, and while we at Kao Data have developed both an incredibly strong value proposition and a demonstrable track record in developing data centres engineered for AI, the industry remains divided on so many topics: where do we build next, what will the high-density architectures of the future look like, what blended cooling solutions should we use, and how can we grow with sustainability, ESG and renewables front of mind? These are the questions we’re looking not only to answer at Kao Data, but to lead on – and I believe we will.”
New hubs
The conversation inevitably leads to the potential of secondary markets – or “next-tier hubs”, as Loewe positions them – and the need for low-latency connectivity to support AI. Yet the concept of tier-two markets is something the new CEO is quick to challenge, especially when they’re talked about in a way that appears to present them as less desirable than primary hubs.
“The terminology around tier-two markets implies that these destinations are far from the same calibre as the traditional data centre hubs, when the truth is the opposite,” says Loewe. “Many of the next-tier markets in Europe are where the next wave of action is, and it’s one of the key reasons we’re deploying in Greater Manchester.
“Right now, for example, all the UK trends point north, and the UK is the only major European country with one primary data centre hub [London]. This puts it at a major disadvantage compared to its European neighbours – and all the more so when you consider the dramatic energy constraints in West London.”
Loewe elaborates on the additional options on the continent. “In France, you have Marseille as a natural ‘plus one’ to Paris, and Berlin is beginning to provide relief to Frankfurt in Germany. Right now, what the UK needs is to diversify and accelerate its investment, and we’re leading from the front in Greater Manchester, which has all the key ingredients – power, land, connectivity, talent, enterprise, research and academia – to be the UK’s next-tier technology hub.
“Ultimately what’s needed is a shift in terminology, which is one of the reasons I like the idea of ‘next-tier’ markets. It portrays something of a new frontier and a pioneering journey, which symbolises the current state of the AI market perfectly.”
Shifting workloads
On that note, the conversation turns towards generative AI and where else could be a prominent hub in Europe. To that effect, Loewe tells the story of the ‘Mediterranean mesh’, a burgeoning term for data centres deployed across southern Europe and around major subsea cable termination points in the region.
It also turns out that not all AI workloads need the size and power of hyperscale data centres, depending on whether they are used for AI training or putting that training into practice – known as inference. This means that the industry may see the emergence of ‘distributed AI’ models proliferated within smaller, edge-type facilities or that, depending on inference and training, may not need the traditional resiliency provided in legacy infrastructures.
“Whereas large language models initially need significant amounts of power and compute, once the model’s been created and trained, portions of the workloads can be moved to an inference-based system, which will be localised and near to the user community,” says Loewe. “This means that generative-AI workloads can be placed almost anywhere provided the data ideally remains sovereign. That creates a plethora of opportunities across Europe and around, for example, the Mediterranean – thus allowing applications to be deployed outside of traditional availability zones.”
Steering ahead
It's at moments like these when Loewe’s entrepreneurial values shine through, and you can see he’s excited by the opportunity to diversify and scale.
“Looking forward, it’s my role to ensure we continue to replicate the successes of our platform in next-tier hubs across Europe,” says Loewe. “I truly believe that right now, there’s a significant opportunity for sustainable, highly scalable and secure infrastructure in places that have not been traditionally sought out by the industry.”
And he adds that Kao Data has the right tools to take the market forward. “It’s this relentless ability to see the opportunities where many see risk and to stay one step ahead of the adoption curve that’s served Kao Data well,” says Loewe. “From where I sit, it’s clear those values and this approach will make a material difference as we seek continued success in new markets.”
