Editor’s note: Charlotte Beat is a regular feature on Wednesdays in Local Tech Wire. What a scenario. Despite a sluggish economy, a two-year-old company is in the midst of its first major growth spurt, and the founding chief executive officer leaves to pursue other interests.

Time to panic? Are investors holding their breath? Not at Peak 10.

In fact, the attitude is to stay the course and to continue full speed ahead.

Concurrent with co-founder Nick Kotttyan’s announced departure last week, the company announced that co-founder and COO David Jones would become president.

Peak 10 is a data services provider for business critical applications, providing such services as simple hosting and co-location, complex web and application hosting, storage, security and comprehensive monitoring and management. These services are currently offered at three data centers, located in Charlotte, Jacksonville and Tampa, which opened in June.

Growth continuing

In the announcement about the leadership changes, Peak 10 also said that the Charlotte and Jacksonville centers had become operationally cash flow positive, with about 100 customers. A fourth center will open by year’s end at a yet to be disclosed location. Jones says it will be either in the Carolinas or Florida.

“We’re not concerned about Peak 10 at all,” says David McLean of Frontier Capital, one of Peak 10’s major institutional investors. “David’s been there as chief operating officer since day one, and we don’t expect the company to miss a beat.”

Peak 10 Director of Marketing Beatrice Edwards calls Jones “a different breed of executive, a visionary and an implementer.” She says that one day last month, in preparation for a major installation of equipment for a new client, Jones was at the machine shop at 6:30 a.m. picking up a special frame and then spent the morning spray painting it so everything would be ready for the client’s arrival that afternoon.

Jones will miss his partner, but he also says business goes on.

“Nick and I spent 2-1/2 years side by side, joined at the hip, starting the company, and there’s no doubt he’ll be missed,” Jones says. “But we were also realists — no one is indispensable. It’s the team that makes the company what it is — people are given responsibility and accountability, and it’s an open environment with no silos.” Kottyan will remain on the board and a significant financial investor

For example, each data center’s general manager is fully responsible for his center’s operations. CFO Brian Noonan is an original member of the executive team.

“After 17 years with technology and telecom start-ups, I have learned to never be surprised by what highly effective people might do,” Jones observes. “Nick’s and my friendship remains as strong as it ever was.”

Anticipating changes in the market

In an industry where, according to Jones, 80 percent of Peak 10’s competitors, such as Qwest, are in financial trouble, Peak 10 is one of the few expanding rather then shrinking.

“A number of our competitors overextended their capital, and when the economy slowed, they didn’t have enough money to operate,” Jones says. “We used restraint and were careful not to over-estimate market needs. We used a practical approach and strategically designed our business to accommodate changes in the economy.”

It’s taking about 20 months for a center to become operationally cash flow positive, a bit longer than anticipated, Jones says. Although sales are being affected by a slowdown in the decision-making process – “We don’t make as many sales as quickly,” he says – Peak 10 does continue making them

“Although subject to market trends, our services are utilitarian in nature — we are providing a service essential to a company using data and technology,” Jones adds.

Edwards, the head of marketing, says that companies are finding it less costly to outsource co-hosting and other IT services than keeping them in-house.

Companies who first heard of Peak 10’s services a year or so ago are also coming back, having become more aware of the need for them. The events of September 11 have also been an incentive. Explains Jones, “Right after 9/11, people were in shock. But now, they’re becoming more aware of the need for business continuity and disaster recovery and are looking for reasonable solutions.”

Jones plans to keep adding new centers in 2003. Each new center initially draws on Peak 10’s resources, but the company is well funded, with four rounds of venture funding under its belt. The first two rounds were from angel investors. The third round, in February 2001, was $18.5 million from Frontier Capital and Seaport Capital and remains one of the largest venture funding deals in Charlotte’s history. The fourth round, from the same institutions, came this March and was for $8 million.

“We knew we had to produce this year, generating cash to run the business, give us more flexibility and control our destiny,” Jones says. “We are very confident about entering 2003.”

Peak 10: www.peak10.com