10/18/2016
AEM Jovenes had an Executive Fieldtrip at Rackspace Hosting. Rackspace is a private IT Cloud Hosting and innovative multi-national company with over $2 billion usd in revenue every year. Its infrastructure is established in what used to be an abandoned shopping mall in San Antonio, TX.
"What we all want is to be valued members of a winning team on an inspiring mission" - Graham Weston, Chairman of the Board, Rackspace Hosting.
The tour of the infrastrcture was given from a "Racker" (employee) perspective and completed from an executive perspective by a company executive.
We have to consider two important factors when evaluating Rackspace: One, Culture, Philosophy and Values. Two, it has been a profitable company nearly from the beginning with a robust cash flow. These helps understand the impressive and fast paced continous growth from 0 to 2,000 employees in 3 years and continuing to over 7,000 Rackers worldwide. It has offices present in Asia, Europe, United States and Latin America. It manages support for over 300,000 clients around the world including Amazon and Microsoft.
Although profitable, Rackspace did acquire funds for expansion from well known venture capitals Norwest Venture Partners and Sequoia Capital. In 2008 it decided to open for trading under the NYSE: RAX with an IPO of 15,000 shares of common stock at $12.50 per share. Since 2008, Rackspace initiated a series of company acquisitions to expand and solidify its standing, as well as to increase its services. In 2016 Rackspace decided to go private again when it sold to Apollo Global Management for $4.3 Billion USD. When we asked the Vice.president of communications as to why the decision to go private again his answer was clear and perfectly understandable. "As a public company Rackspace had to make decisions based on quarterly benchmarks to increase the profits to its share and stock holders. As a private company they could make decisions and take actions for the long term future of the company". Under this premise the company executives looked not to banking investors in order to sell the company but to venture capitals or investors who understood the value of long term returns.
Rackspace went into a transformation process from its early beginnings. From a Product Company in application development and the technology end of hosting To a Service and Support Company under the idolized "Fanatical Support" Philosophy by VP of Customer Care, David Bryce that is lived by Rackers every single day and time they interact with clients. This shift of mentality from a "Denial of Service" common to product companies into the realization that "the thing the customer wants from you is always hard" as said so by company Co-founder Graham Weston came the profitable business model of "Fanatical Support" (managed cloud service). Rackspace became so good at service and support that companies like Amazon and Microsoft decided to outsource Rackspace to run service and support for its cloud servers.
This shift in mentality from not wanting to deal with helping the customer learn how to interact with the technology to becoming experts at it, meant a shift in the hiring and training of Rackspace´s human capital. As Co-Founder Graham Weston mentioned "You can´t command great customer service, it has to be volunteered" and so Rackspace started to look for Rackers with an ideal personality and skills in order to train them in the art and passion of service and support philosophy which they called "Fanatical Support".
As you may perceive from the pictures each Racker work station seems to be personalized or taylored to their own personality. Vice-president of Communications, Dan Goodgame mentioned that it is a company culture "to allow everyone at Rackspace to feel comfortable being themselves". The entire infrastructure includes areas for most aspects of Rackers daily lives. From Gym, and areas for recreation and leisure, to social, and food court areas so that rackers save time of their day instead of traveling around the city to go to the gym, eat, fix your computer, hang out with co-workers, or even nap for a while. It is not uncommon to get hit by a Nerf dart coming out of nowhere as we experienced during our tour. Which only allowed us to understand the magnifficent work environment that is lived daily at Rackspace. The company founders also hold special funds for Racker emergencies, and community development. As stories of how the company helped rackers in their hour of need are common too. In a sense, employee life is the company´s life too.
We were astonished to find a high contrast between "People don´t know what they want until we go out there and show them" culture instilled in Apple by revered innovator Steve Jobs to a "Let your customers pull you into the future" culture at Rackspace. When asked to comment on the contrast, Vice-president of Communications Dan Goodgame mentioned "we are an expertise based customer and support service company; we go where the customer needs our guidance and support...If a new technology comes out or a new version of it, we innovate and become experts for our clients on how to interact with it so we can offer more options and better solutions. Apple is a product company; they rely on constant innovation of their products as a business model" This contrast allowed us to perceive two different schools of thought for two different types of companies and came as a welcomed insight into how both companies are managed.
We could strongly perceive Rackspace as a people/employee oriented company with a support/service based culture. This translates to specific qualifications and personality traits that the company looks for and expects from its Rackers. In practice, each racker undergoes starting and continous training throughout his career at Rackspace. Trainings are given ar Rackspace University where some if not most of the human capital at Rackspace is developed and expanded to fit perfectly into the company created "Fanatical support" culture.
From a customer perspective: once you contracted Rackspace´s services you are assigned to an account manager who will go above and beyond to ensure that your experience with the cloud goes smoothly, it is efficient and easy to understand and connect to. This account manager gets to know and understand your specific needs and learns how to work with you or your IT specialist. Not only that but he is also empowered with functions by the company to make on the spot decisions as to how best serve your needs. He is an expert and is surrounded by all necessary departments at arms length to provide answers and solutions with speed in order to avoid having the customer waste time being transfered to multiple departments. One call=One person=Quick solutions=Excellent Service. He is not trained on how to answer the phone or respond an e-mail but on how to be the most efficient and effective problem solver and is surrounded by a team who can provide quick on the spot support.
AWARDS: Rackspace developed the Fanati Award for outstanding customer service and excellence. It was awarded America´s Most Trustworthy Company in 2015 by Forbes. Top 100 Best Companies to Work For by the Sunday Times almost every year since 2005. Named Fortune 100 Best Companies to Work For and Employee´s Choice on glassdoor. Microsoft Partner of the Year. Microsoft Gold Certified. Amongst many other awards whom are repeted on a yearly basis as full devotion to its core values, culture and philosophy is maintained and lived by constantly.
As of 2015: Revenue $2+ billion, Net Income $120+ million, Operating income $180+ million, Total Assets $1.8+ billion, Total Equity $1.2 billion (U.S. Dollars)
Special thanks to: Chairman of the Board, Graham Weston, VP of Communications Dan Goodgame and Michelle Richardson.
"Patefacio Est Melior" -Rackspace Open Cloud Academy (Exposure Is Better)
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