Service Provider Cloud

Rackspace CEO Rhodes Hits the Road

Rackspace CEO Taylor Rhodes is riding off into the sunset, leaving Jeff Cotten -- an eight-year Rackspace veteran who was promoted to president in January -- to take the reins as acting CEO.

Rhodes says he's moving on to take a position as CEO of a smaller private company in another city, outside Rackspace's San Antonio, Texas headquarters. He says the new company doesn't compete with Rackspace and is about the size Rackspace was when he started with that company about ten years ago, and growing about as fast. "The company is going through growing pains and needs a CEO who has been through those challenges before," Rhodes says in a blog post announcing the change on Wednesday. He said he'll provide details on his new gig in weeks.

The move was "Taylor's decision alone," according to a Rackspace spokesman. Rackspace's primary investors, Apollo Global Management, "absolutely did not initiate the change." Apollo acquired the company for $4.3 billion when it went private last year. (See Rackspace finalizes deal to go private.)

At the outset of Rhodes's time at Rackspace, the company was a managed services provider, because hardly anybody had heard of "cloud" back then. Rackspace was one of the companies that launched OpenStack, as Rackspace tried -- unsuccessfully -- to compete with Amazon Web Services as a cloud platform. Rackspace went public, and then private again late last year. Now, it's selling and marketing itself as a cloud services provider, helping enterprises migrate to and manage cloud installations on Amazon Web Services Inc. (AWS), Microsoft Azure, and Rackspace's own cloud infrastructure, as well as launching support for Google Cloud Platform. (See Rackspace CTO Talks Cloud, OpenStack & the Power of Small Groups and Rackspace Sees Big Bucks in Pro Services.)

Rhodes Warrior
Outgoing Rackspace CEO Taylor Rhodes
Outgoing Rackspace CEO Taylor Rhodes

Taylor "leaves Rackspace in solid condition," says Cotten in his own blog post. (See Rackspace Picks Cotten as New Prez.)

Rackspace grew in revenue across all product lines last year, also growing earnings before interest, tax, depreciation and amortization (EBITDA), Cotten says. However, the company no longer reports financial metrics now that it's private.

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Looking ahead to the rest of the year, Rackspace's sales pipeline is strong, Cotten says. Its managed public cloud services, running on AWS and Azure infrastructure, are growing at a rate of more than 1,400% year-over-year, after launching less than two years ago. Rackspace will soon add managed public cloud services for Google Cloud Platform.

The company cut 6% of its US workforce in February. Total headcount before and after the cuts was unclear, though the company said in government filings that it had about 6,199 employees before going private. (See Rackspace Cutting 6% of US Workforce.)

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Mitch Wagner 5/4/2017 | 1:09:00 PM
Re: Growth CEO danielcawrey - Seems that way to me as well, though Rackspace has a lot of opportunity for growth ahead of it. Cloud is just getting started. 
danielcawrey 5/3/2017 | 7:46:42 PM
Growth CEO There are a lot of CEOs out there who are more of the "growth" type of CEOs. At a certain point in the life of a company when it gets too big, it's time to step down. 

I think that's the case here. 
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