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The power of Google
Internet company built a Web of secrecy to mask development plans
By Dan McCue
Staff Writer
It began with a phone call. That’s the one constant in the story of how Google came to South Carolina and ultimately decided a chunk of its future lies in the Mt. Holly Commerce Park in Berkeley County.
But unlike a telephone chain, where a piece of hot information is told to two friends, who each tell two others and so on, the calls made by Richard Fletcher, manager of the S.C. Department of Commerce’s business solutions division, in the Autumn of 2005 were an invitation into a privileged circle of company.
Fletcher needed to discuss a prospect he initially could identify only as Project Y. Among the first phone calls he made were to Santee Cooper and other power providers in the state.
Whatever project Y was, it would require access to an enormous amount of power and water to run and cool its operation.
“I think the most noteworthy thing at the outset, and what made this somewhat unique in terms of an economic development project, was that the first people Project Y’s executives wanted to talk to were the utilities,” said Rusty Reed, vice president of business development for the Palmetto Economic Development Corp., a 501(c)3 nonprofit controlled by Santee Cooper and the state’s 20 electric cooperatives.
“Typically, companies thinking of building a facility in the state will look at the market, access to customers, select a site and then ask to talk to us,” Reed said. “Project Y was different. The very first meeting they asked Rich to set up was with the three electric companies in the state, and one of the first things they said was that if the electricity doesn’t work, the project doesn’t work.”
Toward the end of that conversation, which took place at the S.C. Department of Commerce’s offices in Columbia, the utilities were asked to submit a list of 10 sites in the state where the electric grid is strongest.
“We still had no idea who we were talking to, but we had a pretty good suspicion that it was Google,” Reed said. “Again the emphasis in coming up with potential sites was on being able to deliver a lot of power to the sites in question, because they would be using a lot of power at the outset and would need even more in order to expand in the future.”
It was only later, after reviewing the list and paring it down to four possibilities, that Richard L. Weiss, Google’s senior team leader for strategic development of global infrastructure, revealed who he worked for and asked each of the other people who had been seated around the conference room table to immediately sign confidentiality agreements.
Being party to the biggest secret in the state in years was easy, because it’s simply part and parcel of how economic development deals are done.
“Once we knew Project Y’s identity, we also understood why market and local customers were relatively small considerations in what was about to transpire: Google’s market is the world and its potential customers are everyone in the world.”
Stage set before Google existed
Those agreements have now been lifted, except in one significant respect: All of the participants in this article are still legally bound not to reveal exactly how much electricity and water Google will use when it opens its Berkeley County operation next fall.
David Ginn, president and CEO of the Charleston Regional Development Alliance, who would come into the process of wooing Google further into the process, described the search engine giant’s deliberative process from this point forward as “the classic process of elimination” in economic development.
Google wasn’t looking to keep all 10 sites as active potentials for long. Like all companies looking at a significant capital investment, they wanted to winnow the list down to one site or none, he said.
And given their fast-paced, ever-changing industry, they wanted to make that determination in a hurry.
Andrew Johnson, Google’s East Coast regional manager for hardware operations, Weiss and other company officials visited four sites and quickly decided that only two were left standing—a site in Colleton County and a 520-acre site in the Mt. Holly Commerce Park in Berkeley County.
Weiss and his team started negotiations while the company continued to look for any fatal flaw that would eliminate either or both of the last two sites.
“We didn’t have a deal, but we knew the Berkeley County site was ready for development and knew it would pass the test,” Reed said.
Mike Brown, Santee Cooper’s manager of economic development, said the all important groundwork that led to Google’s finally deciding to invest in Berkeley County actually begun years before the search engine giant even existed.
“The reality is that piece of land would have been worthless to them had it not been for what transpired 10 years earlier,” Brown said.
What is now known as the Mt. Holly Commerce Park originally came together in 1997, after about two years of discussions between Alcoa Mt. Holly predecessor Alumax, Berkeley County and Santee Cooper.
Berkeley County wanted to develop more sites to attract industrial type businesses, Santee Cooper was eager to develop more customers and to fulfill its economic development mandate as a state-run utility and Alumax owned a significant amount of land that was far more than they would ever need for its smelting operation.
Santee Cooper loaned the county more than $5 million to create a workable infrastructure on the land and helped reduced the cost of spec development by having its in-house construction unit create the water, sewer and electric infrastructure.
Together, the three entities were able to develop 1,044 acres as the Mt. Holly Commerce Park and offer about 708 acres for sale to prospects.
To the three entities, the site offered everything a prospective industrial customer could want: a site with excellent infrastructure, a measure of privacy and a pre-approval, based on the completed site work, of many of the permits brick-and-mortar projects relocating to expanding companies ordinarily need to acquire on their own.
However, while some small companies moved into the park, it was a little slower to develop than anticipated, Brown said.
“We knew it was a long-term project,” he said. “We also knew that because of the transmission infrastructure at the site, it was probably one of the strongest parts of the power grid in the entire Southeast.”
And when Google came to call, the Mt. Holly Commerce Park had one other thing going for it, something quite fitting in dealing with a company at the forefront of the innovation economy.
While preparing the site for what they believed would be an industrial tenant, the three partners had all the geotechnical work done of the site, identifying and surveying wetlands, performing an archeological survey and identifying any and all endangered species issues on the property.
By the time Google came calling a decade later, the partners were able to hand company representatives a CD-ROM containing all that data.
“That’s a really important ability to have, and it’s what I think gave us an additional edge over Colleton County,” Brown said. “If you don’t have those things taken care of, the prospect walks away from a site visit thinking they still have a lot of work ahead of them.
“In Colleton County, they have a beautiful new commerce park, but it was not as ‘shovel ready,’ if you will, as Mt. Holly was when Google came to take a look,” he said.
Alcoa gets a call
Not long after Google’s initial meeting with the utilities, Mark J. Dunlay, plant manager of Alcoa Mt. Holly, was working in his office when he too received a call from Fletcher.
“He said, ‘Can you meet with some folks in Columbia tomorrow?’” Dunlay recalled, adding that he was initially reluctant to do so because it was a busy time at the plant.
“Richard said, ‘You don’t understand, the governor wants you to come and talk to these folks tomorrow.’”
The next morning Dunlay sat in the same conference room where Weiss had met with the utilities and, after a somewhat vague discussion about the economic development project at hand, the man from Google asked everyone but Dunlay to leave the room.
“That’s when he told me the project was Google and slid a confidentiality agreement across the table for me to sign,” Dunlay recalled.
While Google’s penchant for secrecy is largely attributable to the highly competitive nature of the tech industry, the company also strongly values interpersonal relationships founded on trust, Dunlay said.
He immediately felt comfortable with Weiss and, after two years of acquaintance, believes the feeling is mutual.
“We kept a tight lid on this, even after the media began to make inquiries stemming from the paper trail that was developing,” he said.
That paper trail led to Dunlay because his signature appeared on the sales agreement between Alcoa Mt. Holly and what by then had gone from being Project Y to Maguro Enterprises LLC.
“Last year, shortly after Christmas, I remember calling Rhett (Weiss) and telling him the press had followed the paper trail and was on to them,” Dunlay said. “From that point on, I think we all knew it was only a matter of time before they had to make a public announcement.”
More than selling Google the land and keeping its secret, Dunlay and Alcoa Mt. Holly served as a sounding board and information source for Google about doing business in the Lowcountry.
“I think that input was important to them because we are a large business in the area, we can speak in a common language about common concerns and we walk in the same shoes in many respects,” he said.
“At the same time, they know we have an interest in keeping the Lowcountry special. They knew we wanted a good neighbor that was going to commit to the region for the long haul. I think that also heightened the appeal of the area for them,” Dunlay said.
He also said Google seemed particularly impressed with the public/private partnership that created the Mt. Holly Commerce Park in the first place.
It showed not only that we have a business-friendly climate, but also that it’s historically been the case,” he said.
Mission accomplished
Google ultimately bought all of the developable land that remained in the Mount Holly Commerce Park and immediately set to clearing the initial 200 acres of the 520 acre parcel.
Skip Strickland of Berkeley Electric Cooperative, which will take the power generated by Santee Cooper and deliver it to Google, ultimately took over the utilities’ side of the discussion.
The first phase of the project, a data center to process Google search requests, is scheduled to open by the end of the year.
When the entire facility, presently conceived of as two large buildings on a large campus, is completed in the next six to eight months, it will employ about 200 people.
“I think this economic development process really does show the importance of everything that goes on behind the scenes,” Reed said. “It’s also very gratifying that nobody violated the confidentiality agreement.
“You know, ultimately, 30 to 40 people knew what was going on, and yet the prospect’s wishes were respected to the very end.”
Brown now views the Mt. Holly Commerce Park as a mission accomplished, and while at times the decade-long history of the park seemed long indeed, “10 years really is a very short time to go from large-scale development to completion.
“Economic development is such a key part of our mission at Santee Copper that when you can sit back and say you played a decisive role in bringing Google to the state, you really feel tremendous satisfaction. Google is going to have a tremendous impact on the state, and it speaks to everyone’s hope of South Carolina’s being at the forefront of the innovation economy in the future.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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