Mike Healy: Hey everyone, Mike Healy here. Welcome back to another episode of the Cloud Investing Podcast. I’m thrilled to have a special guest today, someone I’ve been trying to get on the show since we launched. Travis Flaherty is not just a guest but a key reason I’m involved in this sector. We’ve known each other for nearly 20 years, though we haven’t worked together much. Travis, thanks for joining us today.
Travis Flaherty: Mike, it’s a beautiful day, and I’m excited to be here. Thanks for having me.
Mike Healy: Absolutely. For those new to the podcast, we discuss investment opportunities—though remember, we’re not financial advisors. Our conversations are about exciting trends, and today’s focus is on data centers and fractional ownership opportunities within them. Travis, let’s kick things off by talking about how you got me into this space. You sent me a Facebook Messenger audio a few years ago that changed my perspective. Can you share more about your journey?
Travis Flaherty: Sure, Mike. A little background about me—I’m married, have six kids, and three grandkids with two more on the way. I’ve been an entrepreneur for 25 years, passionate about teaching people the importance of acquiring income-producing assets in today’s economy. Residual income, in my view, is key to achieving time freedom. Given the current economic climate, it’s not enough to just save money. Inflation is eroding the value of our dollars, so we need assets that generate revenue.
When I was a kid, my grandpa used to say the best way to double your money is to fold it and put it back in your pocket. While there’s wisdom in that, times have changed. The value of money is diminishing rapidly due to inflation. We need new strategies to preserve and grow our wealth.
Our banking system operates on a fractional reserve model, meaning banks can invest up to 98% of your deposits. They get wealthy using our money while the Federal Reserve keeps printing more, devaluing our savings. That’s what led me to the conversation we had. It’s crucial to find income-producing assets today, which is why we’re now discussing data centers.
Mike Healy: Exactly, and that brings us to the topic at hand. You mentioned how you started looking at different investment opportunities, like the digital space with crypto nodes, which are still producing assets. Now, we’re diving into data centers. The scale of this space is enormous. Can you explain where you see this going in the next few years?
Travis Flaherty: The data center industry is vast and growing rapidly. Ninety percent of the world’s data was created in the last two years. Think about that. Our devices need more storage every year—iPhones with terabytes of data, Zoom calls, Ring cameras, Dropbox—all these require immense data storage. Billionaires like Zuckerberg and Bezos saw this trend early and invested heavily in data centers. Companies are spending trillions on digital infrastructure, driving an unprecedented demand for data centers.
Mike Healy: Absolutely. You sent me a clip from Blackstone, highlighting how AI is driving this demand. They’re investing billions in data centers. This is the new oil rush. Just like people wanted to own oil wells, today’s opportunity lies in owning parts of data centers. What do you think, Travis?
Travis Flaherty: Data centers are indeed the new oil rush. We’re seeing a $495 billion industry poised to double in the next two years. Historically, a few giants like AWS, Google, and Microsoft have controlled 80% of the market. But we’re witnessing a shift towards decentralization, which opens up opportunities for smaller investors to own fractional shares of data centers. This is similar to how the breakup of AT&T in the 80s spurred innovation and competition in telecommunications.
Mike Healy: Right, and the analogy you used about self-storage facilities is perfect. Imagine if you could buy a unit in a self-storage facility and have someone else handle the overhead and tenant management. That’s what’s happening with data center units now. We can buy these units for around $15,000, and as data is stored on our units, we get paid. The potential returns are staggering compared to traditional real estate investments.
Travis Flaherty: Exactly. Real estate is great, but current market conditions make it less attractive for cash flow. Investing $15,000 in a server can generate $4,000 a month in revenue at full occupancy. Even at 20% occupancy, the returns are far superior to what you’d get from traditional rental properties. Plus, the demand for data storage is so high that companies are pre-purchasing data center contracts before buildings are even completed. We’re already seeing near-capacity levels in our first data center and preparing to open a second one.
Mike Healy: That’s right. The demand is so high that companies are renting space from third parties until their new data centers are built. This trend is reshaping commercial real estate, with data centers becoming the hot commodity. We’re in a sweet spot, and our goal with this podcast is to wake people up to these opportunities.
Travis Flaherty: Absolutely. Data is the oil of the 21st century, and cloud hosting is the combustion engine. The demand is exploding, and as more organizations move to the cloud, this demand will only grow. By 2025, 85% of companies will be cloud-first. This means huge opportunities for those of us getting in early. The decentralization of data centers offers better terms and pricing, appealing to businesses looking for alternatives to the current giants.
Mike Healy: That’s a powerful closer, Travis. For anyone interested in what we discussed today, reach out to Travis, myself, or whoever shared this podcast with you. We can help you make an informed decision based on the facts and information available. Thanks for tuning in, and we’ll see you on the next episode.
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Investing in data centers can be highly lucrative due to the growing demand for digital storage and cloud computing infrastructure in our increasingly data-driven world..