Austin expansion continues for Rackspace
Nov 24, 2012 (Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) --
In the Austin area, some tech companies set up shop in scenic locations, such as the Hill Country or the Loop 360 Bridge. Others prefer the cultural coolness of downtown.
But Rackspace Hosting Inc. went a different way with its new Austin location -- next to a Chevrolet dealership on Interstate 35 in North Austin, with heavy traffic roaring past.
A glitzy address was not a top priority for the San Antonio-based company, which calls itself the second-largest provider of public cloud services after Amazon Inc. Rackspace has more than 400 workers in Austin -- up more than 100 from last year.
Practicality and cost-effectiveness are part of it's culture.
"One of our core values is substance over flash," said Bill Blackstone, the company's Austin community outreach leader. "We don't need to be in the flashiest neighborhoods. The spirit of the company is to build from the inside out. If you build something from the inside out, people will want to be a part of that."
Rackspace, which topped the $1 billion revenue mark for the first time last year, is expanding swiftly as more businesses make the move toward cloud computing services.
The company started life in 1998 as a managed Web hosting company, which means that it owned and managed the data centers and equipment that customers used for Internet-related computing.
Cloud computing is a natural progression from Web hosting, said analyst Patrick Moorhead, but it requires a deeper investment in skilled workers and software development expertise to pull it off.
Rackspace was up to the task, developing OpenStack, an open-source cloud management software platform in collaboration with NASA. OpenStack is so well regarded that computer heavyweight Hewlett-Packard Co. is using the software in its cloud computing program.
Most of Rackspace's business remains tied to managed hosting, which the company now calls "private cloud services." The company's new move is to public cloud services, in which many customers can share the same computing hardware. The cost advantage of public cloud service is so strong, Moorhead said, that service companies will be able to deliver it for "pennies on the dollar" compared with conventional computer services.
The company is already a global player with major operations in England and Asia. It's in a race to cement is status as one of the formidable players in an emerging market.
Its first operation in Austin was a small office with eight sales people that opened in 2006. Soon the company began to hire tech support and programmers, too. It started -- and continues to run -- a shuttle service that takes Austin tech talent down to the mother ship in San Antonio. Some operations managers ride the shuttle the other way to look in on workers in the Austin office.
The company's management last year designated Austin as an "innovation center" that will continue to concentrate on sales, technical support and software development for a growing away of product offerings. The company introduced seven new cloud-related software applications this summer and the Austin team contributed work to all of them.
In the new location on I-35, Rackspace has leased 87,000 square feet, which is enough space for 500 workers, but it has the opportunity to expand at the same site.
The workplace is busy, but informal. College banners hang from the ceiling. And employees have about a dozen Razor scooters at the office and stage races in the hallways when activity slows down.
Because cloud computing is expected to deliver a big leap in efficiency and flexibility for business computing, more companies are moving into the market. International Data Corp. estimates that global spending on "public cloud services" will expand from $40 billion this year to nearly $100 billion in 2016.
"By the end of the decade, IDC expects that at least 80 percent of the industry's growth... will be driven by cloud services" and a few other related technologies, said IDC Chief Analyst Frank Gens. Getting cloud services right will be a key to growth, the analyst added. "Quite simply, vendor failure in cloud services will mean stagnation."
The company is competing with some of the giants of technology -- Amazon, Microsoft Corp., Google Inc., Hewlett-Packard Co., Dell Inc. and IBM Corp., among others.
It looks for tech workers experienced in both Linux and Microsoft Windows operating systems and those who can program in such software languages as Python, Ruby and Java. But in addition to technical skills, the company is looking for the right cultural fit.
That translates to people who are "get-it-done, with a positive attitude, ownership and accountability," said Austin site manager Max Thoene. "Our culture is extremely important to us. If we have an engaged, fired-up group that comes here every day to give their best to our customers, it bleeds all the way through everything that we do."
The company says it differentiates itself from competitors by an intense focus on customers and delivering "fanatical support."
Employees who show an outstanding commitment to delivering top customer service can earn "Fanatical Racker" status, which includes getting their photo taken in a straight jacket.
Analyst Moorhead said the company's early focus on cloud computing, its customer-focused culture and its software innovations could keep at the front of the pack of companies going after the cloud services market.
Being an early innovator in a fast-growing company can give a company a huge boost, Moorhead said. And having a strong culture can help too.
"Culture can count," he said. "Companies that can get people motivated around things like being a 'Fanatical Racker' often end up being pretty successful."
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