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Failed expansion tips Green Global Solutions into administration

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Sustainability company cut down by lack of interest in speculative growth drive

Creditors have been left demanding AUD$1.8 million (USD$1.33 million) following the closure of Green Global Solutions, a data center operator that failed after an unsuccessful speculative expansion.

The sustainability-focused provider of IT infrastructure and services was launched in 2011 by Bob Sharon, an industry veteran who served as one of the judges at the DatacenterDynamics Awards in Asia-Pacific region in 2013 and 2014.

As part of ambitious plans to break into the market of servicing commercial facilities, Green Global Solutions doubled the number of employees and financed a sizable promotional campaign to support its push for growth, iTnews Australia reported.

However, a lack of interest drew insufficient level of investment to sustain the spending. After it entered voluntary administration, the company was wound up in May 2016.

Out of pocket

green global solutions logo

Founder Bob Sharon invested $1.5M in the company before it entered administration

Source: Mythica Creative

Sharon himself is owed AU$1.5 million ($1.1 million) he invested in the expansion. Telecoms company iiNet has been left out of pocket by $53,000 ($39,175), ANZ Bank by $35,000 ($25,870), and the Australian Taxation Office by $80,000 ($59,133).

The founder said market tests had suggested the expansion would be a success, and convinced him to proceed.

Green Global hired engineers, control workers and IT staff, and created the software required to analyse the performance of commercial buildings.

“The problem was that the people with the money weren’t sold on paying five or ten percent more upfront for an energy system that would save millions upon millions over its ten year life,” Sharon said.

The upfront fee that commercial customers were required to pay came in addition to recurring maintenance and energy consumption fees.

Because the professionals managing capital expenditure within any potential customer company and those managing operating expenditure were often different, Sharon found it difficult to convince the former to invest the upfront fee.

“People wanted all the bells and whistles for the cheapest upfront price, but the reality is that the energy efficiency, carbon footprint and maintenance costs end up being a lot higher [when the price is] cheaper upfront,” Sharon said.

“Customers weren’t considering ongoing maintenance and ongoing consumption of the equipment they were buying.”

Angels investor

Green Global spent about AU$2 million ($1,477,900) on staff, branding and technology before it cut back to a skeleton staff servicing its traditional data center clients.

It continued to operate a big data analytics platform licensed from US firm SkySpark.

Before entering voluntary administration in May, Green Global Solutions was the subject of an investment bid by an unnamed organization, but finance was not secured in time for the deal to go through.

“We went into administration thinking maybe we could trade out, but the advice was not so,” Sharon said. “So it was decided that the way forward was to wind up.”

Sharon is now working on a side project that supports entrepreneurs experiencing business difficulties, Entrepreneur Angels, as well as considering his options to re-enter the sustainable data center market, he told iTnews. It has not yet been decided whether or not Entrepreneur Angels will operate as a for-profit organization.

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