Rachel Stack joined Cologix, a data center colocation services and interconnection company based in Denver, as CFO in the midst of the pandemic. She faced the same challenges of so many during that time—including adapting to entirely new work arrangements—but also something many didn’t experience: an extraordinary increase in demand for Cologix’s services.
Stack spoke to StrategicCFO360 about how she navigated those challenges, how her financial strategy has adapted to meet the inflationary and other headwinds that have come since and what she means when she says CFOs need to be “the glue” of the organization.
What challenges did you face when you joined Cologix as CFO?
I joined Cologix as CFO mid-pandemic in July 2020. I think the biggest challenge for all of us at Cologix was that despite the global crisis of the pandemic, when businesses turned on a dime to adapt to remote work models, there was exploding demand for bandwidth and internet connectivity from virtually every organization. This presented a tremendous market opportunity for Cologix as an edge data center provider.
But it’s important to remember that hypergrowth also presents tremendous challenges for organizations. Rapid scaling requires the entire organization to pull together in close collaboration and clear communication, starting with leadership and extending throughout the entire organization. And as always, you need to keep that same intense level of collaboration with your customers and partners.
Specific to the role of a CFO is the importance of connecting all of the dots across executive leadership, finance, HR, sales and marketing, who all play critical roles in a company’s health and growth, especially in a volatile economy. A CFO’s role is to tie all of this together from a finance perspective. It’s what I call “being the glue,” which I find is an effective way to meet challenges head on and maximize every opportunity.
What are some of the key foundational elements that have helped Cologix maintain its strong growth trajectory despite such a challenging economic environment?
Cologix needs to build to expand data center capacity, power our facilities with economical and sustainable energy sources, and finance strategically to keep costs down every step of the way. These three elements are foundational to growing the data center capacity our customers need while maintaining our strong growth trajectory.
How have the inflationary environment, rising interest rates and looming concerns about recession impacted Cologix and its finance strategy?
Economic headwinds, and particularly rising interest rates, have a big impact on the data center industry, which is all about building new facilities and expanding existing capacity to meet market demand for growing bandwidth and internet connectivity. To navigate such a volatile economic climate, organizations need to be agile for the short-term while keeping an eye on the horizon for what’s coming next so they have the financial resources to adapt to fluctuating conditions.
For example, when I joined Cologix in 2020, the finance team and the entire organization maintained a laser focus on driving double-digit revenue growth through targeted acquisitions and new developments in existing and new markets.
As inflation began to rise, spurring the Fed to raise interest rates, we repositioned the company finances to strengthen Cologix’s flexibility to maintain rapid growth and minimize the impact of rising costs.
Cologix accomplished this with a $3 billion equity recapitalization transaction to support future expansion. The finance team also led a refinancing strategy that reduced the interest rate on all company debt by half. Completing Cologix’s $1.65 billion asset-backed securitization transaction reduced the cost of capital while increasing our access to additional capital with current and new investors, fueling our growth strategy.
What are some lessons learned from your career that you’d like to share with CFOs and finance leaders?
An “ah-ha moment” for me is that your experience and knowledge as a finance leader are very important, of course, but I’ve found that soft skills are invaluable. Soft skills encompass many things such as the ability to communicate clearly, being an exceptional listener, being able to incorporate feedback and diverse perspectives into your decision-making, patience, curiosity and teamwork.
I’m fortunate to work with an executive team with diverse perspectives and experiences. Our CEO, Laura Ortman, has 25 years of experience in the software industry and IT business operations. Dawn Smith, Cologix’s president, is also a lawyer and former chief legal officer for various technology companies. Prior to her business and legal career in the technology industry, Dawn served in the U.S. Navy.
I’m thrilled to be the connection point among our amazingly talented leadership team to ensure we’re all on the same page with a finance strategy designed to keep Cologix on a strong growth path with the flexibility to adapt to changing conditions.
That’s being the glue. It’s one of my favorite aspects of being a CFO and why I love it so much.
