Interview with Patrick Condon of Rackspace Managed Hosting
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The Hosting News recently sat down with Mr. Patrick Condon, co-founder of Rackspace
Managed Hosting to talk about the changing face of
the dedicated server market, the strategies and success that Rackspace has
experienced, and what the future may hold.
The Hosting News: What is the relative size of the company, and
where are you located?
Patrick Condon: Rackspace has been in business for about 5
years now, and a lot has happened in 5 years! We currently have 345 employees,
and we're a little north of 9,000 servers now. We have a sales and marketing
office in London, there is a data center there as well. There are 2 data centers
in Texas, and then 1 (data center) in Herndon, Virginia.
The Hosting News: How did you get the company going?
Patrick Condon: We realized early on that this business was
not about technology. You can fool yourself into thinking that it is ? the
Internet, and bandwidth, and servers, and data centers which are all
cutting-edge technology but at the end of the day anybody can build an awesome
data center with a couple million dollars, anybody can buy bandwidth from the
same providers that we buy bandwidth from, and anybody can buy Dell servers, or
Compaq, or build their own.
The part that really makes Rackspace special and has allowed us to flourish
at a time when most hosting companies have filed for bankruptcy is our continued
focus on service and support and our commitment to it.
The Hosting News: What about your data centers is there anything
that sets them apart from other data centers?
Patrick Condon: Yes. One of the things that I have just
realized about data centers is that, first of all, data centers are power
plants. Getting the proper amount of power to the equipment is important.
Because we control everything in the data center, we are able to maximize the
servers per cubic foot in the data center. That sets us, and maybe other
managed hosting providers apart we have a standard and we're able to stick to
it because it's all our own equipment.
The Hosting News: Since you're focused on servers per cubic foot does that mean
that you manufacture your own servers to enhance this metric?
Patrick Condon: We do, and that's part of our business.
Although an even bigger part of our business is a tight partnership with Dell ?
we deploy a lot of Dell PowerEdge servers.
The Hosting News: What is the core strategy of Rackspace?
Patrick Condon: It focuses on service and support. This is
something that we were founded upon the principle of serving customers
properly being a company that is easy to deal with and do business with.
Anytime that customers talk about experiences with service providers whether
it's the Internet, or telcos, or cable companies it's usually a bad
experience. We spent a lot of time thinking about all the things that we hate
when we call the phone company ? and told ourselves ?we're never going to do it
like that. That is one of our core values.
In terms of our strategy, I think that it's understanding our customer base -
and tailoring our service and support for different types of businesses that do
their business at Rackspace.
The Hosting News: You have several different brand offerings now -
Intensive Hosting, Rackspace and Server Beach ? tell us about those.
Patrick Condon: Intensive hosting is the division of
Rackspace that specializes in selling to the enterprise and in particular the
enterprise running complex Microsoft web applications. So the service and
support of the Intensive division is very focused on specific Microsoft
technologies such as: Active Directory, SMS, and even Microsoft applications
like PeopleServer. So it's a higher service level, and a higher level of
expertise in Microsoft technology.
Intensive Hosting is good when a customer wants to hand off even more of the
administrative tasks in managing a hosting environment such as: patching, or
security issues so that they can really focus on their applications and on
their customers and not on the day-to-day management of the
infrastructure.
The Rackspace brand has traditionally offered managed hosting and managed
services patching and managed security, load balancing, SSL accelerators, even
routers depending on the size of the cluster and many of these managed
services are on demand.
So as customers grow and need them, and need to scale we have expertise in
complex environments with multiple-servers working together to manage an
application. that's Rackspace?s expertise complex hosting environments.
Server Beach is an separate entity that one of my original partners, Richard
Yoo, started. He is technically very brilliant at coming up with ways to
automate things. He saw a great opportunity to build a hosting company that
could compete at that low price point, and still make money. That is very tough
to do, given the economics of the discount dedicated market. So Server Beach has
automated as much as possible, to make that low margin business profitable.
The Hosting News: How does a small to medium sized business know
when they are a candidate for dedicated hosting? Are there some Top
Reasons?
Patrick Condon: I think that the number one thing is
probably the amount of resources needed to run that particular web site so
resource usage is one of the Top Reasons. By resources here I mean: bandwidth,
disk space, processing time, RAM, and the amount of memory the site requires.
If you simply have a brochure-ware web site, then virtual hosting is for
you. When you have a site that is more than a brochure whether you are selling
something on the Internet, or you have a very popular site and you get more and
more traffic a shared site may not be able to keep up with that. If your site
has a number of visitors in the low-thousands per day, you probably want to
think about getting a dedicated server.
Another reason revolves around security. Whether you have data that you
really want to protect, or if you happen to have a high-profile site that is a
target of hackers, dedicated is preferable. Typically sites on a shared
environment are less secure for a variety of reasons. So as you start to get
more and more serious about security, the dedicated environment makes more sense
for you.
Additionally, when you're in a shared environment you are in many ways at the
mercy of all the other customers in that shared environment. So if there's
another customer on that box that's doing something bad - that may be using up
all the resources of that server your customers and your site is effected by
that.
The Hosting News: Hosting prices in general seem to be falling,
and there is increasing commoditization of both the shared and dedicated
products. How do you see this effecting Rackspace?
Patrick Condon: I don't anticipate that this will have much
of an effect upon Rackspace. Our customers are businesses with mission critical
needs. They are willing to pay for great service.
A good way to think about is: what are you going to do when it's your job on
the line? Our customers are typically the CYA buyers. These are IT managers,
or CTO's people who could lose their job if they made a bad hosting
decision.
This is in contrast to who I believe are the core buyers for the discount
dedicated products more of an owner/operator. That is, the person making the
decision is the owner of the company ? they probably won't get canned if the
web site goes down for a week.
The Hosting News: there's another web technology company out there
that had been private and is now apparently going public, Google what are the
current plans for Rackspace with regard to outside investment?
Patrick Condon: The whole Google thing is just amazing to
me. In turns of Rackspace, we did file to take Rackspace public back in March of
2000. This was just right on the cusp of when the bubble burst. It was also just
after Interland and Data Return got out there.
Looking back, it was probably the best thing for us that we did not go
public. It forced us to think about the things that really matter the first of
which is making money. We are now fully funded, and free cash flow positive.
Therefore, we don't have a great need to take it public until the time is right.
So when the time is right it is certainly an option.
The Hosting News: What trends or developments do you see as likely
to emerge in your industry?
Patrick Condon: I think that you're going to find more and
more people moving from virtual hosting to an entry level dedicated box. I think
that you're going to see tremendous demand for ease of use and ease of
management tools. On the managed services side, I think that many more companies
are going to continue to outsource IT infrastructure, and certainly the hosting
environment, to managed hosting providers like Rackspace. we're now seeing a
shift where more and more companies are feeling comfortable about outsourcing.
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