Top company by employee – 34 – Rackspace Hosting – Texas US
Industry: Information Technology
Ownership: Publicly quoted/held
Previous rank: 74
2011 revenue ($ millions): $1,025
What makes it so great?
The IT cloud company’s stock jumped from $43 to $74 in 2012—good news for employees, all of whom get stock options upon being hired. The company also rewards top sales performers with free weekend trips.
San Antonio, TX
|Traded as||NYSE: RAX|
|Industry||Internet Hosting Service|
|Headquarters||1 Fanatical Place
City of Windcrest
San Antonio, TX 78218
|Key people||Richard Yoo, Dirk Elmendorf, Patrick Condon, Co-Founders
Morris Miller, Graham Weston, Executive Chairman
Lanham Napier, President, CEO
|Revenue||$1.309 billion (2012)|
|Operating income||$172.8 million (2012)|
|Net income||$105.42 million (2012)|
|Total assets||$1.296 billion (2012)|
|Total equity||$843.65 million (2012)|
Rackspace Inc. is an IT hosting company based in San Antonio, Texas, USA. The company also has offices in Australia, the United Kingdom, Switzerland, The Netherlands and Hong Kong, and data centers operating in Texas, Illinois, Virginia, the United Kingdom,Australia, and Hong Kong. The company’s email and apps division operates from Blacksburg, VA; other offices are located in Austin, TX and San Francisco, CA.
In 1996, Richard Yoo started a small Internet service provider called Cymitar Network Systems out of his garage apartment in San Antonio, Texas. The company began doing application development work in addition to offering basic Internet access and web hosting. In 1997, Yoo brought on Dirk Elmendorf. When the company began to develop Internet applications as its primary business, the company was re-formed as Cymitar Technology Group. As Cymitar Technology Group grew, Patrick Condon was recruited from California and joined the team in 1998. Coincidentally, all three of the company’s founders were students at one time at Trinity University in San Antonio.
Although the founders began as application developers for end-users, they found that most companies did not know how to host their applications, or did not want to be involved in the hosting. The founders wanted to keep their focus on the application development–not the hosting–but they were unable to find an opportunity to outsource the hosting work. Eventually, the founders realized that it would be better to create a product to serve the hosting need and launch it as a company. Rackspace was launched in October 1998 with Richard Yoo as its CEO. Although most hosting companies focused on the technology end of hosting, Rackspace created its “Fanatical Support” offering to focus on service and support. On March 28, 2000, Rackspace received funding through Norwest Venture Partners andSequoia Capital. George J. Still, Jr., Managing Partner at Norwest, subsequently joined the Board of Directors.
Rackspace has two main service-level segments: Managed and Intensive. Both service levels receive support via e-mail, telephone, live chat, and ticket systems, but they are designed to fit the needs of different businesses.
The Managed support level consists of “on-demand” support where proactive services are provided, but the customer can contact Rackspace when they need additional assistance.
The Intensive support level consists of “proactive” support where many proactive services are provided, and customers receive additional consultations about their server configuration. Highly customized implementations generally fall under this level of support.
Some services and products are only available for certain support levels.
Involvement with other companies
Rackspace launched ServerBeach in San Antonio in January 2003 as a lower-cost alternative for dedicated servers designed for technology hobbyists who want flexibility and reliability. Richard Yoo was a catalyst in the startup of ServerBeach. A bandwidth and colocation provider, Peer 1 Hosting, purchased ServerBeach in October 2004 for $7.5 Million. Peer 1 Hosting entered the UK managed hosting market in January 2009 and the ServerBeach brand now competes directly with the UK arm of Rackspace, run by Dominic Monkhouse, former managing director of Rackspace Limited.
On October 1, 2007, Rackspace acquired Webmail.us, a private e-mail hosting firm located in Blacksburg, VA. Originally branded as Mailtrust on May 20, 2009, it became part of the newly formed Email and Apps division of Rackspace.
Expansion into the Asia Pacific Region
The company is experiencing growth in the Asian marketplace. The Asian office is a natural step in Rackspace’s expansion outside the U.S. and London to cater for worldwide customers’ needs in Hong Kong / China. Rackspace selected Hong Kong as the Asia Pacific regional office in part because of its reputation within the global business economy, itsIT infrastructure, multiple telecommunication providers and rich talent pool. Rackspace also solicited feedback from its current customer base in the Asia Pacific region, and the majority of those respondents confirmed their preference for doing business in Hong Kong.
In the news
In 2008, Rackspace moved their headquarters from a building once occupied by Datapoint Corporation to the then-unoccupied Windsor Park Mall in Windcrest, Texas. Rackspace’s Chairman, Graham Weston, owned the Montgomery Ward building in the mall until 2006, when it was sold to a developer. The city of Windcrest purchased 111 acres (0.45 km2) south of the mall to create a residential and retail complex. The facility is located next to Roosevelt High School, and many Roosevelt students intern at Rackspace.
The Fortune magazine‘s “Top 100 Best Companies to Work For 2008” placed Rackspace as #32 the first year that Rackspace applied for consideration. The company was praised for its transparency. Regular “Open Book” meetings are held where the top level leaders share in-depth financial information with all employees. In 2011 and 2013, the company was named as one of the top 100 places to work by Fortune.
On August 8, 2008, Rackspace opened for trading on the New York Stock Exchange under the ticker symbol “RAX” after its initial public offering (IPO) in which it raised $187.5 million. The initial public offering included 15,000,000 shares of its common stock at a price of $12.50 per share. The IPO did not do well in the public market and lost about 20% of its initial price almost immediately.
At around 3:45PM CST December 18, 2009, Rackspace went down. Rackspace experienced an outage for customers using their Dallas-Fort Worth data center – including those of Rackspace Cloud, again. This time, many high profile sites decided to make alternate plans at other hosting companies to avoid future problems.
On September 8, 2010, Rackspace received national attention when they decided to discontinue providing web hosting service to one of their customers, Dove World Outreach Center. This was in reaction to Dove World’s pastor Terry Jones‘ plan to burn several copies of the Qur’an on the anniversary of the September 11th attacks. Rackspace claims that this violated their company policy. This move came under criticism, notably from Terry Jones himself, who described it as an “indirect attack on our freedom of speech.” Others questioned the appropriateness of Rackspace’s action, stating that there is “absolutely no reason for web hosts to have an editorial policy, and this only gives Jones more attention, and makes him look more persecuted.”
Rackspace is registered in the UK as Rackspace Ltd. and as of 2013 employed approximately 900 people, at an office (in Hayes, London Borough of Hillingdon) and a rented data center (in and around London). The company opened a fourth UK data centre in Slough, Berkshire in the second quarter of 2008. Rackspace Ltd. appeared in The Sunday Timesbest employers’ awards for each year between 2007 and 2013, and was listed in the top 50 UK workplaces by the Financial Times.
Rackspace Benelux in Amsterdam opened its offices in October 2007. It won several customers such as LogicaCMG, Exact Software and CapGemini.
Rackspace Australia in Sydney opened its offices in March 2009. It won several customers and partners such as Westfield Holdings, Wotif.com, Sage Australia, Xero, Netstarter and Market Boomer.
In April 2012, Rackspace announced it would implement OpenStack Compute as the underlying technology for their Cloud Servers product. With the change will come a new control panel as well as add-on cloud services offering databases, server monitoring, block storage, and virtual networking.