The space has a moat though - it takes a huge investment and long time to become competitive in this low margin space. Rackspace has shown themselves to be a market leader within this moat.
You're being unfairly downvoted, because it's a good question, but I understand why people are so abhorrent to private equity.
Private equity has a reputation of splitting up companies, firing tons of people, and then selling the parts to the highest bidder, often while taking advantage of a reputation which is based on social capital the brand built before being acquired.
Some will say this is a good thing since the company was often failing in the first place, but there are plenty of counter examples where the only motivating factor in the move to PE is greed.
Greed isn't always good, even in the context of the boardroom.
If you believe in private ownership of property, then it should extend from an apple to a $100 billion corporation. Someone owns it, they own it. I’ve yet to hear a cogent argument that logically explains the line below which private property is fine, and above which owning something is immoral, other than some fuzzy “it feels like $50mil is too much”. I want to know logically the exact metric where some amount of wealth crosses into evil world.
So if you agree private ownership is not the devil, then nothing stops a private group from acquiring a majority stake in a company and running it the way they see fit. And if what they want to do is to fire everyone skilled and run it into the ground - so what? If the need is still there, a new company will arise. If they were too bloated, then cost cutting is good. And if they just middle along doing poorly, then they can’t spin it back out to the public markets and earn a huge pay day (unless the public markets are irrationally exuberant from free money printed by the government, but this is a 2020 phenomena).
This is an over simplification and no one here is saying private ownership is bad. It would be mind boggling if someone were allowed to buy your home with a mortgage in your name, kick you out of it and then sell the home for pure profit. Yet that is exactly what LBO's do. They buy companies using debt which they then transfer to that company, sell off anything of value, fire most of the workers, show some level of profit and sell the company to someone else.
But the house is privately owned by me. The company is public, anyone can buy, and if they have enough of it (or enough of the elected board representation), then they can do that.
If I was a shareholder in a company that underperformed the market, and a professional turnaround firm decided to take drastic action to improve the value of my ownership stake, I would approve.
My preference is to work for and invest in companies that try to make me the most money possible. I donate to non-profits that try hardest to improve the world. For-profit companies and non-profit organizations have different goals.
Unless there is a robust social safety net, it doesn't take much to go from "fire everyone skilled" to serious effects on the most vulnerable: children, elderly dependents, etc. often reaching far beyond the employee.
Maybe the previous owner should've known better, but they made a conscious decision after evaluating the situation. Maybe the new owner should've acted more responsibly, but they made a conscious decision after evaluating the situation.
Can you say the same for the people who are told they're fired? They made no conscious decision but are the ones who will have to pick up the slack (until such time that a new company arises, if ever). And, funnily enough, the people who are all for private ownership tend not to be the same people advocating for better social safety nets.
If the company was in decline before the purchase, then the end effect could end up being the same. But willfully creating the situation is hardly fuzzy morally.
There is almost no way to affect another person's life by what you choose to do with an apple.
Society is made stronger when businesses fail and workers get reallocated to more productive companies. Short term pain is necessary for long term benefits.
This logic is anathema to some people, who wish that the same stodgy old conglomerates exist in perpetuity like a government agency. But this would be suicidal.
Yes, but ending lemon socialism should only happen when a society is able to handle the effects of businesses failing gracefully.
Going back to your apple - the requirements for society to gracefully handle an apple's owner allowing it to rot are nothing. For handling a large company failing gracefully, they are very significant.
A society that is happy to let this happen should recognise this difference and set aside resources to prepare for it - on a scale that recognises the relative difference.
Basically what the last thread said: the typical pattern is to buy a company, load it up with debt and cut expenditure to make all of the revenue graphs trend up for a few years then sell it to unwary public investors and walk away with a huge profit.
A lot of them end up collapsing under the debt a few years later, plus the heavy cutting of capital expenditure (“capex”) leads to a long term declining revenue as they are no longer investing in new products.
Exactly, and grandparent post was a great question. Another nasty dimension (in the LBO model referenced) is that by playing crazy financial games the PE firms can often wager very little of their own money AND take money off the table fast by issuing dividends. So it's basically a low-risk / risk-free way to suck the blood out of a company.
In my experience whether you think that PE is lawful neutral or flat-out lawful evil tends to come down to your opinion on the most brutal forms of capitalism...
We have increased the percentage of our revenue from segments which we believe benefit from attractive growth dynamics. In 2019, over 85% of our revenues came from our Multicloud Services and Apps & Cross Platform segments, which we refer to as our “Core Segments”. In contrast, in the twelve months ended September 30, 2016, less than 10% of our revenue came from our Cloud Office and Managed Cloud Services service offerings.
Basically Rackspace went from being a hosting company with "fanatical support" to someone who manages your AWS account and your cloud apps. They still offer their traditional bare metal servers, and they have their cloud, but that's not where the growth is.
Looks like gross profit margins decreased in aggregate by almost 4% in both "growth" categories of their Core Revenue (page 79). Doesn't look good for future margin expansion opportunities.
Not that anyone will see this but regarding this comment's siblings:
It seems like you don't understand the metaphor unless you each mean to imply that The Economy goes through frequent regular cycles of significant expansion and contraction where every expansion reaches a consistent, predictable high point before contraction brings it back down to a consistent predictable low point.
But it can still accurately represent the people who are "left behind" in the economy. You cannot just say "Ah yes, the tide is going up. Therefor everyone is safe and dry in their boats as they rise with the tide" as an excuse to ignore people who need help.
The tide might lose steam if Biden wins the election. Though I doubt there will be any carnage similar to the dot com bust. For one, interest rates are super low and I don't see them rising anytime soon, even if the Fed raises rates, the ceiling will be around 3-4%.
The Covid induced tech euphoria might die down but I am willing to wager that won't be the case. People's habits once changed are very hard to fall back, especially when the new habits have a net positive economic impact. Time saved in commuting, air travel etc. The events industry might totally die down though. So there will be some negative impact as well. Other than these specific verticals such as events and tourism, I bet the market will favour tech innovations now more than ever.
So yeah, this is probably the right time for any tech company to go public, not just those with mediocre metrics.
Yep, in addition to increasing corporate taxes to 28%, Biden's plan is to ensure that corporations will pay at least a minimum tax, regardless of all the deductions they can avail.
Doom is not a word, I would use. Helpless is more appropriate word, that was the state of Obama White House during the wave of Corporate Inversions and Corporations stashing foreign earnings. They will make a comeback.
So are you suggesting we should just keep lowering corporate taxes so that corporations don't stash it overseas. Isn't that being held for ransom by the same corporations?
The American political left/right scale is very silly on the international level. Republicans attack standard Party-Line Democrats as Socialists when in reality the vast majority of Democrats would be considered right wing in the EU and the Republican Party are more like Far Right extremists a la AfD, UKIP, etc.. Sanders himself would hardly be center-left in most EU parliaments.
It doesn’t matter what his policies are. The greatest power a President has that affects policy long after he is gone is his ability to nominate judges with lifetime appointments.
I hear this all the time but I have to say I have not seen actual data that supports it.
To take perhaps the highest-profile issue when it comes to judges: access to abortion remains federally protected today despite the last 5 Republicans promising to nominate judges to reverse that.
And that’s only because there have consistently been a majority of liberal judges.
Just this term they made decisions both forcing states to fund religious schools if they find secular private schools and in a separate decision, said that religious institutions have the right to discriminate.
Now we have a condition where my taxes must pay for people who could conceivably discriminate against me.
If RBG had retired or passed away before the recent abortion case, Roe v Wade would almost certainly have been overturned fully or partially a few days ago. The court voted 5-4 to uphold and whatever hyperconservative federalist society nutjob Trump would have nominated to replace her would virtually have guaranteed the opposite result.
Abortion isn't the only relevant case that the court could overturn, we have decisions like Citizens United that have essentially gutted the political process for a generation and in the past few days the courts have handed massive wins to Churches and conservatives that allow them to discriminate freely. To pretend the courts don't have massive power to dictate daily life in the US seems to be denying obvious truths.
Biden is a Democrat the same way DPRK is democratic. That is in name only. He is very much on the right side of the spectrum, the reason he's considered left is because the Republicans have moved so far to the right over the past several decades that you can call yourself a Democrat for being what would be considered a moderate Republican in the 80s.
The policies he's for are what the Conservative Party is for in the UK.
> The policies he's for are what the Conservative Party is for in the UK.
This may have been true the mid 2000s through 2015, but the Conservative Party in the UK is now dominated by the extreme right "European Research Group" (your DPRK comment is apt with regards to them), who are far more aligned with the right of the Republican party of today.
Point taken, but even if you look at the Tory party under DC, it was clearly a right-wing party. Not extreme right, but very firmly right.
That is the philosophy that Biden represents. My problem is with the American definition of left/right where somebody like Biden/Obama gets called a socialist. That's insane since by international standards they're not even left-wing.
Funny, if you just re-write your post with the opposite points, it reads exactly the same and has the same apparent merit.:
The tide won't lose steam if Biden wins the election. Though there will be carnage similar to the dot com bust. For one, interest rates are super low but will rise sometime soon, when the Fed raises rates at least 3-4%.
The Covid induced tech euphoria might die down and I am willing to wager that will be the case. People's habits once changed may change again, especially when the new habits have a net positive economic impact. Time saved in commuting, air travel etc. The events industry might totally boom though. So there will be some positive impact as well. Other than these specific verticals such as events and tourism, I bet the market will sour on tech innovations now more than ever.
So yeah, this is probably the right time for any tech company to go public, not just those with mediocre metrics.
We didn't manage to raise rates to 2.5% in the longest economic expansion of modern history and you are thinking that they will be hitting 3-4% "soon"?
It isn't like 2000 though. These tech IPOs are real companies, with real products, real customers and real businesses. The 2000s had companies going public that were just based on an IDEA. Literally...."we're raising funds in this IPO to build xyz website/service."
Most tech IPOs these days have at the very least already been vetted through venture capital funding rounds. The weak simply don't get funded at an early stage.
I was thinking before I saw your comment "seems an odd time to IPO" when people mainly talk about the AWS and Digital Ocean of the world. (Supposedly D.O. is IPO'ing next few years)
The fact that in 2020 you have to fill in a contact form to get a quote for a server price is ridiculous...I just browsed their site and could not find a single mention of pricing without providing them with my full contact information
They're very enterprise focused, so you might not be the target customer? (I don't want to presume, however)
For a lot of powerful but heavyweight enterprise products, giving people access to pricing isn't worth it because it can cause some buyers to opt out of the process earlier than they would if their hands were held. Especially if the integration process will require some element of digital/IT transformation and hence internal political wrangling. There's tech for smooth onboarding in 2020, but not necessarily tech for helping you to do stakeholder alignment in a sales context.
The engineer in me finds this painful and wants to scream inside, but empirically this does work..
It makes sense. Enterprise sales processes are very very long and hand-holdy. The final price is very dependent on the amount of value a product brings to this particular organization. It also involves lots of negotiation.
None of those fit in a pricing page. Maybe as a very dynamic calculator it could work, but it's likely the person looking at the page doesn't even have enough context/info to fill out the calculator.
I don't know about Azure, but AWS is also very transparent with their volume discounts. You know exactly what price you're going to get, without talking to sales. And they don't negotiate those discounts. (At least they don't up to the $50M / yr level, which is the highest I've directly observed.)
Any attribution for that quote? Because I am going to steal it. Is it just a transposition of "If it doesn't make dollars it doesn't make sense" which I see as a headline a few places?
Amazon learned with AWS that you can generate extreme profit when the devops team expenses instances/lambdas/absolutelyEverything on their company card. Click/click/click, spend. What is the result? Customers then create Organizations and accounts, and pay orders of magnitude more.
Correct, my company uses both Rackspace and AWS. We host legacy platforms with low rates of change on Rackspace and use AWS for new work that has high change rates and requires flexibility.
But Amazon gets the same audience, in addition to others! The initial spending on personal/corporate cards from engineers who need to get work done drives the adoption of AWS.
Why do enterprises even initiate conversations with third parties if they won't immediately give you a price? Just move on to someone who will. If your options are $10,000 or <price unknown> its obvious option #2 will be more.
If businesses categorically rejected working with companies that can't provide up-front estimates, they wouldn't be a thing.
For enterprise deals, the price is often a small part of the overall cost of ownership.
The defining element of enterprise deals is complication: large companies don't tend to buy the product as advertised. They need the vendor to make lots of adjustments and carry out extra processes to deploy (or else those costs fall back on the buyer). So, until the buyer's requirements have been explored, there's not a useful estimate to be had.
All I care about, on behalf of my employer, is the final price.
I’m not afraid to make a few phone calls, or exchange a few emails, to find out how much something costs. It’s not hard, and it’s my job to do it.
As for your guess that “call for price” businesses are always more expensive than those with pricing pages, from my experience you are wrong. All that matters is the company’s willingness to negotiate with me. In my experience there is essentially no correlation between that and whether they publish a pricing page.
Enterprise purchasing is more similar to a marriage than it is to buying a latté. Even down to having to get internal stakeholder buy-in (akin to "meeting the parents"). Price matters but it doesn't matter nearly as much as being able to navigate the evaluation and procurement process adeptly, so it's worth it for the vendor to filter out tourists, and the right buyers are looking for a longterm partner as well so they're down to do the dance (ie they're not just looking for a fling on Tinder).
This feels like a bunch of sales/marketing bullshit, but it's not - it's just a byproduct of the fact that change management at a big company is hard and people are people (ie are difficult).
I work in product/engineering, and we spend a lot of time thinking about how to tune our product to help enterprise buyers make purchases successfully. It's hard but rewarding. Tiny example, having a product that is flexible enough that you rarely have to say "no we can't do that" in a sales cycle is really powerful.
Probably a simliar reason as why I won't normally give an up-front price when doing contracting work.
For better, or for worse, "enterprise" folk are trying to sell "solutions" and not services. This usually works out well for them, because the people who they're selling to don't usually understand the technical minutae, and will often get the details wrong or incomplete.
Because from an enterprise point of view they want to negotiate and arm twist vendors. Large players can and do use their weight to get pretty hefty discounts.
I work for a company that buys a lot of enterprise gear. Here is what buying it looks like, if you've never done it before.
Let's say you have your eye on a storage array. You know it's going to cost a bundle but it's exactly what you need and want to know how much to budget for buying one. So you call the company who makes it and ask for a price. They tell you, "Sorry, but we don't sell directly to end users, you have to buy our gear through an authorized vendor." So you ask for a list of their vendors. "Sorry, but we don't give out that information. You could try googling our name for some?"
Once you locate a reseller, you call them up and ask them how much it costs to buy the storage array. "I'm sorry, I don't have the pricing in front of me but do you have time on Wednesday for a 1 hour phone call?" You ask, why can't you just give me a price over the phone? "Well, we want to get to know you and we need to make sure that this solution is the one that fits your needs. Plus we can tell you all about the product and answer any questions you might have." Fine, let's schedule a phone call.
Wednesday rolls around and the phone rings. On the line is your "Account Manager" (salescritter), an Integration Engineer (salescritter who can sometimes answer technical questions), the Account Manager's manager, and possibly a trainee for any of the above. Because whenever there's a scheduled phone meeting, it's never just one person on the other end, it's a whole team. "Why don't you start by telling us about the problem you're trying to solve and by the way, all other parts of your infrastructure that we could possibly sell you solutions for?" So you answer their questions, as diplomatically as you can. Once that's done, if you're _lucky_, you will sit through a 30-minute long sales pitch on the product you already fully intend to buy, if the price is right. If you are unlucky, they will try to schedule a follow-up phone call and webex for it.
As the hour-long phone call is clearly starting to wind down, you grit your teeth and ask, hopefully, how much does this thing actually cost? "I can see your a down-to-brass-tacks kind of guy so I'll tell you what, I'll send you a detailed quote sometime early next week, okay? Great!"
_Two weeks_ later, you get the quote. At this point you are so tired of the resller people and their delays and empty platitudes, you just want to get the damn thing on order before your spending window closes. To your surprise, once they actually have the check in hand, they move a lot quicker and ship the unit more or less immediately.
The thing is, if you offer a product in the enterprise space and _don't_ go through this complicated dog-and-pony show for every customer, they won't buy from you because they won't see you as a serious vendor.
Sounds something like Gartner -- the folks that are supposed to help recommend solutions and vendors to you, without going directly do the vendors first.
I meant something like - if you have a hiring manager in a company who likes a product X, they can just go in and buy it from the store at pre-negotiated terms rather than getting lawyers and other purchasing teams involved.
We went through all this BS, then signed up with them on a year contract.
Then we were shocked to find that it would take them two weeks to set up our first machine.
I noped out of it at that point and just paid the penalty to get the hell out of there. A competing service, that we already used, sets up machines in 1-2 days.
When stuff hits the fan and you really need things to happen, two weeks is just a crazy response time. That's like infinity in internet time.
Someone told me something similar. Took 2 weeks to provision servers (and we mean VMs no just physical kit) and there was usually something wrong with them that took more time to fix.
This was about 3 years ago. His company moved everything to AWS.
As I’ve gotten to better understand the enterprise sales space, face to face is the goal on both sides most of the time. There will be questions to answer, special circumstances to account for, term and support expectations and often a billing structure to fit with their budgeting process better.
Pricing laid out up front is more of a consideration for smaller shops which isn’t their target market at all.
They probably don't sell the smaller plans. One of our clients has been trying to move away from rackspace and we looked into what she was paying for. Holy smokes. She is paying almost $1200/Month for a server that I can get from DigitalOcean, AWS or even a dedicated server provider for about $200/Month. Not kidding. Seriously overpriced and they lock in clients with multi year contracts. Beauty is that the so called "managed services" doesn't even patch the servers or update the libraries. Client could not even install letsencrypt SSL since the "server is not up to date" while she pays $1200/Month.
They are also absurdly expensive and their sales team are aggressive.
While setting up infrastructure for my current employer I was required to get a quote from them as an existing customer. I expected them to be more expensive than everything else but it was a shock, at the time their IaaS was roughly 4 times the price of any competitor with some extreme limitations such as bandwidth with an expensive per GB rate if you go over. They also recommended dedicated hosting offering to set up an antiquated DB fail over system and claimed to offer 24 hour phone support for a total price I could have hired someone to work as a dedicated sysadmin.
I went with Linode, over provisioning everything for a fraction of the price, I don't expect 24 hour support but stuff gets sorted out quickly when things go wrong on the other side of the hypervisor, Linode are also more transparent in my experience when pushed about issues. With Rackspace they make me feel the way that sleazy salesman that scares you into the extra insurance you get sold with hire cars and then feel like a fool for for afterwards - I can only assume their market is for people who would rather comfort themselves with expensive support than invest in the time to set up a reliable system with a DRP.
... that ended up way more negative than I expected, but, it's just my anecdote.
> The fact that in 2020 you have to fill in a contact form to get a quote for a server price is ridiculous...I just browsed their site and could not find a single mention of pricing without providing them with my full contact information
ISP perspective here: This absolutely has to be intentional. There has been a race to the bottom in pricing for dedicated bare metal x86 servers for close to 20 years now, in the hosting company industry. Very likely they're not going after the market of people who want to pay $165/mo for a server, but some considerably higher amount. A lot of the lower end dedicated server hosters who put prices (anywhere from $39/mo to $200/mo) directly on their website with a shopping cart are not their competition.
On the opposite end of the spectrum, their cloud CDN scales down quite nicely, to the point that I get occasional bills for 1 cent for monthly usage. (I experimented with hosting some static things there years ago and left it up because it was costing too little to justify moving elsewhere)
I know it's a crazy and inconvenient idea, but you may be surprised by what happens when you talk to sales folk like this. I've knocked list price rates down by 80% by simply explaining to another human what I need
If you don’t want to talk to a person about a server, you probably don’t want to rent one from Rackspace anyway, because they charge extra for service on everything they sell.
So Rackspace(RAX) went public in August 2008 and then when they could no longer compete against AWS and Google in the cloud provider space they spent years seeking someone to acquire them, which Apollo Global Management did in 2016 for $32.00 a share and took them private[1]. They then laid off a substantial portion of their workforce and decided to become an IT shop to provide support for customers who are using the cloud providers that put them out of business. And now their re-listing for $12.00 a share?
Why would anybody buy this? What is the play here? Is Apollo somehow making out here?
fwiw 100M is a placeholder amount for how much the company plans to raise via a stock sale; usually no bearing to the actual value/market cap of the company or how much the company raises
I am only familiar with Rackspace of about 10 years ago. Beyond the marketing speak, what is their competitive advantage? Are they doing AWS prof serv?
They do AWS professional services since last year (I think) but we mainly use them for support as AWS doesn't cater for companies our size with their pricing.
Many enterprise products have bad design because they need to serve so many complex workflows, not because their design teams completely suck. It's just a hard problem (eg look at Salesforce and tell me how you'd design it well...)
Consumer products are like Chipotle: streamlined menu, built for efficiency and elegance. Enterprise products are like the Cheesecake Factory: you want a steak, pasta, pancakes, and a margarita? Go for it! Why is there a full f*ing bar in the back? Who knows!
It's hard to have great design when you have to do so much.
I would say Craigslist because it's not pretty but I can't say that an ugly UI is the same as a horrible design. The design has worked well so far for many types of people.
IMO it feels like AWS just makes slow gradual changes without trying to match the material design updates etc of other clouds - all while knowing the ideal usecase of their platform is automated through the API with tools like terraform.
Most teams look at the data, and see that a vast majority of their customers use the CLI. I'm sure AWS loses out on sales from non-technical folks who only see the console side of things, but I personally would way rather DynamoDB focus on performance rather than a pretty console.
That isn't true for all though, many AWS services seem like they are 'console first' and do wonky shit in the console that is hard to do using APIs. Those services are incredibly frustrating.
Most AWS teams own their own console from what I've read here. And the smaller orgs often don't have any designers - backend engineers build the first iterations of the console.
I just wish the read interfaces were better. They could not even build configuration/creation/update interfaces and I wouldn't even notice. In 2020 who is even manually spinning up resources. But looking at lists of resources and statuses is still something I do consistently.
All the cloud providers reached success with awful UIs (IMO), which was temporarily solved by abstracting away from their UIs with Infra as Code and other tooling. They're getting around to updating it in recent years, though.
I agree with your point - If a product solves a real problem, design/usability is a secondary concern. This is particularly dependent on the space, in my experience. In my fintech world, a bank will give you a massive amount of $$$ for a dead-simple form + button if it eliminates a workflow problem. They really could care less if it looks like it's from the 90s (most of their stuff looks that way, anyway).
They purchased Onico and Onico is one of the best vendors for Devops support.
When a company is being spun out by a private equity, I am always hesitant to invest in it. I prefer when a company goes to market with their original investment thesis because you never know if the private equity is harming one of their other companies to grow another one.
I.e. Rackspace and Onico are owned by the same subsidiary, suppose Rackspace charges Onico an extra 20% compared to what they are already paying because Onico doesn't plan to go public, however, the extra 20% Rackspace gets looks better and causes a better return on their investment. At the same time, the subsidiary has an incentive to inflate their stock price and not be a bag holder.
Notice how Rackspace's 2019 revenue hit a hard ceiling in 2019 (pre-COVID).
Also, capital expenditures in 2017, 2018 and 2019 were 9%, 14%, and 9% of yearly revenues, respectively. If they hadn't tamped down on their 2019 "capital intensity", and assuming a more normal capex spend of 11.5% (split the difference between 2018 and 2019 for incremental 3.5% capex spend or ~$70M+), their EOY2019 cash & cash equivalents would have been down to a mere $14M (instead of $84M) -- looks like a cash crunch, mainly due to the 2019 Onico acquisition for $316M.
How much of Rackspace is even left? Is this just a cash grab by the company that took them private?
> As of March 31, 2020, we had $3,987.5 million face value of outstanding indebtedness
It's always a mystery to me how some firm can buy a company, and then push the debt from acquiring the company onto the company itself.
This is just vampire capitalism. Unfortunately, it makes no difference if individual investors here choose to invest, "index funds" will use everyone's retirement savings to funnel more cash to these parasites.
> Is this just a cash grab by the company that took them private?
Absolutely. My uninformed ex-Rackspace-employee take is that Apollo Global Management just wants to raise more money to further run the company into the ground.
Sure. Once a stock is listed on a major exchange, those stocks make their way into various index funds. 401ks most typically offer a very limited selection of funds there's no way for an individual to choose to own funds that exclude a particular company.
It's rigged in the sense that the banks know the stock is worthless, but if you grease the right palms, you get to IPO, and the money you receive from the IPO is not investors that believe in your company, it's the fund managers that are managing other people's money, and they don't care about fundamentals or sound investing. It's the political class siphoning money from the working class. Do you think Warren Buffet is going to participate in this IPO?
They have $2.4B Revenue in 2019! Seems to be doing great in the HyperScaler Era. They have managed to increase their revenue despite market competition.
So they are still growing. And much bigger than I thought. I was expecting Rackspace to be running downhill.
I felt sad about their acquisitions and strategies. They had SliceHost - a big player in very beginning of Cloud, they had a solid background in Hosting Provider, but they just give them all and knees AWS.
I know the founder of Slicehost quite well, Jason Seats. Smart guy. Here's an old interview from these days, by none other than DHH [0].
I was at AWS in these years - I thought that Rackspace had a good chance of becoming a serious competitor in the cloud space, and Slicehost was a smart acquisition.
AWS then executed flawlessly. Rackspace, well, picked one of the worst possible strategies to chase the cloud opportunity.
Furthermore, Openstack was a giant mistake, IMHO. Execs thought that people wanted multi-cloud and private clouds. I met with literally 1,000 customers per year, and almost none of them wanted these things.
Perceptually, I think Rackspace was the first modern cloud provider that I'd ever heard of. Is that accurate? Were they early on the trend? Or did their name just advertise the concept really well?
EDIT: Nevermind, they seem to habe stopped caring about hosting and now provide support for AWS. Sounds a lot like consulting.
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At some point, innovation of the software slack on top of bare metal will slow down and the tooling will become commoditized.
IF, and that’s a big if, the best-in-class bare metal remains available for indiscriminate purchase, competitors may start to commoditize the cloud - AWS will need to start to fight a price war.
But those are two big question marks and even then, if any company can fight a price war then it’s Amazon.
So I wouldn’t bet on rackspace here.
For the time being, they may be able to serve those enterprises competitively that just want some bare metal - but once AWS and GCP roll our proprietary ARM chips, they may not be able to keep up any more.
I will never do business with Rackspace again after they hell they put me through.
When your entire security posture falls apart when one minimum wage call center employee gets bamboozled you should not be in business. Fuck that company.
Wish them luck this time!