In late 2006, Dan Caruso and a small team, including current execs Matt Erickson and Sandi Mays, secured modest office space above Nick-N-Willy’s Pizza just east of the Boulder Mall. The entrepreneurs, all telecom veterans, focused on a trend that would underpin Zayo’s investment thesis: Demand for fiber bandwidth was exploding, driven by global expansion of the Internet — and its growth trajectory appeared to be unalterable.
With the support of early investors, Caruso and the team founded Zayo in 2007, with a plan that went against convention at the time. “We didn’t want to be a traditional telecom company, providing ‘last mile’ services. Instead, we sought to provide raw fiber, wavelengths, ethernet, IP, and technical space to those entities that needed a whole lot of bandwidth to meet the growing demand,” said Caruso.
To build the business, Zayo acquired “fiber orphans” — companies with fiber in isolated markets that had survived the telecom meltdown of the early 2000s, the result of an overbuild that seems prescient in retrospect. The consolidation approach enabled Zayo to knit together a nationwide fiber backbone, with an extensive footprint in major metro areas, which included data center facilities — key interconnection hubs. Between 2007 and 2013, Zayo acquired 25 companies.
Additional acquisitions in 2014 and 2015 enhanced Zayo’s U.S. network and added European assets. This year, Zayo completed its acquisition of Canadian Allstream, which added a trans-Canadian network, providing unique cross-border connectivity.
Today, Zayo’s fiber footprint has expanded from its first 4,800 fiber miles to more than 110,000 route miles, extending to more than 35 countries through its global reach partnerships. Its data centers, providing hosting, cloud services and interconnection, now number close to 60. More than 7,000 customers, including some of the biggest names in wireless, media, the Internet, healthcare and finance, rely on Zayo’s communications infrastructure to deliver their content to homes and businesses across the globe.
As Zayo enters its tenth year in business, its original investment thesis has proven formidable. Driven by bandwidth-intensive communications and entertainment, Internet traffic is expected to continue on its growth curve. High-capacity infrastructure is powering transformative innovation in healthcare, transportation, computing, media and business, moving the big volumes of data generated in telemedicine, 3-D printing, high frequency trading, immersive media and gaming. Fiber bandwidth was even used in a successful test of quantum teleportation last fall.
From a financial perspective, the progress has been equally impressive. The company has eclipsed $1.4 billion in annual revenue and $800 million in EBITDA. Zayo went public in October 2014, and today has an enterprise value of over $10 billion.
“We didn’t want to be a traditional telecom company, providing ‘last mile’ services. Instead, we sought to provide raw fiber, wavelengths, ethernet, IP, and technical space to those entities that needed a whole lot of bandwidth to meet the growing demand.”
Zayo’s growth story has attracted high profile attention. The company was the top pick in MSN Money’s April feature, “The Most Successful Company the Year You Were Born” — joining many of the leading tech and telecom companies. Last year, Caruso was the Gold Stevie Award Winner in the 2015 American Business Awards.
The company has been recognized not only for its business achievements but for its community involvement and philanthropy — rare for a start-up in rapid growth mode. Last year, Zayo received the Colorado Governor’s Inaugural Citizenship Award for its significant, positive impact in the community to promote entrepreneurship, draw underrepresented groups to STEM fields and empower Colorado’s technology community.
“Boulder is an incredible entrepreneurial community, and I enjoy being immersed in it. I am excited to see this innovative energy spreading across the front range, through Startup Colorado and other initiatives,” said Caruso. “I am proud that Zayo is a vibrant example of our community’s robust startup ecosystem.”
The formula for continued growth? Caruso believes that the company should remain true to its entrepreneurial roots and core business. “We are laser-focused on providing communications infrastructure services to carrier and enterprise companies rather than trying to be everything to everybody,” he said. “These next 10 years will be no less exciting, as the bandwidth explosion will continue to enable innovation in entertainment, healthcare, commerce, and scientific discovery. Zayo’s talented team, incredible assets, and entrepreneurial approach position us to power continued innovation and progress.”