Interview with Mike Velotta of Lore Systems

I am happy to announce a new sponsor to LeveragingIdeas: Lore Systems

Lore is in the managed services space, providing hosting, consulting and infrastructure services to businesses of all sizes. I am super psyched to have Lore on board because I personally know the company and they are doing some really interesting stuff. I am hoping to do a number of interviews with Lore’s founder, Mike Velotta.

Me: I know you are a tried and true entrepreneur. Can you give us the back-story on Lore?

Mike: Absolutely! Around 1994/1995 I was an engineer for Microsoft and we were starting to get creamed by Solaris, Oracle and Netscape who were all making servers, databases, etc. Microsoft was losing market share but had the foresight to know that a huge boom was coming. They came up with a strategy of creating spinoff businesses focused on Microsoft infrastructure (providing co-located and managed hosting for windows environments) but without pushing the Microsoft brand. It was an awesome opportunity…Microsoft was basically our VC and life was great.

However by 1998, Microsoft left us on our own and by 2000/2001 the bust had set in; we were in a tough spot, suffering through an identity crisis of sorts. It was tough going for a while and forced us to get creative. We began to diversify into services and scored some great partnerships with Juniper, Dell and Cisco. We really focused on hiring people who were of an entrepreneurial mindset and things began to turn around. By 2004 we really hit our stride with 40+ employees. We’ve kept up a highly profitable business ever since, growing at least 20% a year.

Me: What’s the biggest trend you’ve been observing in the managed services business?

Mike: Anything to reduce energy consumption! Shockingly data centers uses 20% of the North American power grid. That’s more power than manufacturing or factories. The problem is that wattage per sq inch continues to skyrocket, as hardware gets smaller. Intel’s newest chips will use more power per square centimeter than that coming off a rocket nozzle on a spaceship…seriously. It’s an enormous output of heat. So glycol based cooling, virtualization (only uses 5% of CPU) and use of the cloud need to be embraced to allow for better scaling. We may also see more focus on the geographical location of data centers, for example, in areas where wind or solar can be taken advantage of. The only issue is that you need to get the fiber optic cable out there!

Me: What’s the biggest myth surrounding the industry?

Mike: Definitely the biggest myth is that it’s okay to make provider decisions based only on price. The issue is that there is NO regulation in managed services. Not all firms are built equally; in fact many facilities are not kept up or tested. For example, Go2Meeting went dark for 2 days; talk about a painful business mistake! Always take a tour — it will be obvious if the facility is up to snuff and could save you a huge headache.

Me: And I need to ask…how are you guys holding up during this economic downturn?

Mike: We’re doing really well! The managed services business is incredibly resilient for a few reasons. First, we’re somewhat insulated being a ‘utility.’ Second, we’re usually the first bill paid, and the last one canceled because being connected is now the lifeblood of almost all businesses.

I’m planning to follow-up with Mike on topics such as Green IT and Virtualization. As a web entrepreneur I’ve come to realize the importance of understanding trends in the managed services space. Energy usage and data protection are major issues. Having a relationship with a great firm like Lore is invaluable in helping to scale and grow your businesses. If you’d like to learn more about Lore and their services, you can email Mike personally ( or visit their website at


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