Racking Up The Wins
This article originally appeared in Outsource Magazine Issue #25 Autumn 2011
In the finest tradition of tech giants, Rackspace started life in a garage in San Antonio. It now serves over 130,000 customers globally and is one of the biggest names in hosting. We caught up with its CEO, Lanham Napier, to find out what’s next – and discovered a man with a mission…
Outsource: Lanham, you’ve said previously that this is an especially interesting time because of the emergence of new technologies conflicting with old business models. How can potential customers know what’s the right model for them in this environment?
Lanham Napier: There are a couple of things for people to consider. The way all of us have experienced technology historically is, we buy advice, we buy a piece of software, we hire someone to run it for us. I think going forward, we’re able to specialise a whole lot more in that different layers of that value chain I just described you don’t have to do anymore. So the notion of, for example, a start-up going to buy a bunch of servers to run themselves is waste: that’s capital they ought not to spend. If you’re an established company and you hit an upgrade cycle, or an IT refresh, it’s a natural decision now to ask “do we actually have to do this anymore? Do we have to put our capital in this?” – because the reality is, buying the stuff as a service, they want to save the customer money, and increase their speed and increase their performance, all the while increasing their flexibility. OK: so the notion used to be that we all bought a machine, ran it to about 25 per cent of its capability and 75 per cent sat there idle. Going forward, speed and flexibility and cost savings ought to free up investment dollars for companies. So we’re in this magic time where people can dramatically change how they consume IT, to make their business move a lot faster.
O: This shift has obviously been core to Rackspace’s success, and you’ve come a long way in a short time: how are you ensuring that you stay at the crest of that wave?
LN: It’s about being good at one thing. The whole world gets confused, and wants to be good at everything. My perspective: focus is a wonderful thing. It provides the right guidance; when a market’s going through change the focus player’s often more agile – and man, the tech market’s going through a change. So for us as a company our focus is fanatical support: we see ourselves as one of the world’s greatest companies inside of tech. We take this mission very seriously; we measure our promise based on how our customers feel about us, and we want to be their trusted advisor as they make this shift to the cloud. And that’s all we’re ever going to be. You’re not going to see us manufacture devices or boxes or any of the other stuff. This is all we do, it’s all we’re ever going to do!
We’re focussed on growing organically. Companies often get confused and screw the pooch when they do big deals; most acquisitions never pan out. You know, we’re focussed on our culture – we’ve been recognised here in The Sunday Times in the UK as the best place to work for seven years in a row. That stuff really matters. I think in many ways, it’s about being deliberate and committed to the fundamentals – and it’s a cliché but I think customers decide who wins. It’s not our strategy, it’s not Amazon’s strategy; it’s how customers feel about that company. That’s the company that wins and gets to keep going. We’re a service business: if we don’t serve people well, I’m out of work tomorrow. I’m on call 24/7 and every customer has my mobile phone and can call me and that’s just how it goes. From my perspective, I don’t want the success we’ve had to confuse us. Let’s keep it simple, let’s stay focussed, let’s maintain fanatical support, and let’s be agile as the technology market shifts. That’s our play.
O: But there are challenges, aren’t there, in growing significantly while keeping it simple. You’ve just had your first board meeting here in the UK: that’s indicative of a greater global footprint and greater complexity, surely?
LN: And an expression of our dreams as well.
O: In what sense?
LN: We want to build a global player. Today we serve a lot of countries but really we’re in the US, the UK and Hong Kong, we’ve got an office in Amsterdam – so you’re talking four or five countries. I don’t know how many are on the planet, but it’s a lot more than five! So having a meeting here this week is an expression of our dreams to build something great on a global basis.
O: You’ve spoken previously about how, on a personal level, it’s very important for you to be a job creator. How does that manifest itself in terms of the way the company behaves – and how much of your drive personally goes into that ambition?
LN: That’s a good question – so you want to get into my head a little, eh? My basic belief here is: we’re all put on this planet for a purpose, and I think mine is to create jobs. So when we think about how this impacts the operations of the company, that’s pretty clear. We are an organic growth company – now we don’t acquire for growth, we’ve done acquisitions for a specific capability, with people we believe that share our values and our heart: our ‘Rackers’. If you look at our last public numbers, we were up 27 per cent year-over-year, and as we grow the business with that kind of top line that creates opportunities for jobs.
Some of those jobs, they’re created and filled internally as Rackers get promotions. Other jobs, we have to go outside the company to fill, and so we’ve hired hundreds of people this year. For me on a personal basis, it’s very fulfilling to believe we’re doing it the right way and that we’ve created an environment where people want to show up and volunteer their best. I’m a humanist. I have a bit of technology business but I think humans are the best technology we’ll ever see; I haven’t met a computer that can heal itself yet. So for me it’s about, if we create the right environment, and hire the right people, they’ll do incredible work. Whether that work is building Rackspace or curing Aids, whatever it is, they will do incredible work. For me it starts there with the environment of the people we hire – and then once we get those people right they do incredible work for customers, and so we get this reinforcing mechanism.
My job is to take care of Rackers. A Racker’s job is to take care of the customers. If we take care of customers, customers will take care of stockholders – and then you get this nice little cycle. Now that is the antithesis of how the rest of the world thinks about it. I really think most businesses think about that in the exact opposite order: their stockholders, then customers, and then their employee base. I think about it the other way. I actually think Rackers are extraordinary people and they’ll do incredible work; that at the end of the day, customers decide which company wins, not our strategy, or Amazon’s strategy or Microsoft’s strategy: the market decides, and they decide, based on all the work we give them.
We’ve probably looked at every company for sale in our industry but they’re not our kind of people – they’re good people, they just chose to go to work there for a reason and people don’t like to be bought and sold in these deals. People want to pick their boss, people want to pick the people they work with, people want to pick their role. I feel it’s not as glamorous to build it organically, it takes a lot longer – and I think it’s a lot more sustainable and I want to build something that lasts. When I go by our headquarters building in San Antonio, Texas, thirty years from now, with my grandkids I still want people to be in that building and I want it to say Rackspace, and I want to look at my grandkids and say “I was part of that”.
O: How do you make sure you get the right people?
LN: We make our share of mistakes… What we try to do is bring a lot of discipline and as much science to that artistic process as possible – because really I think hiring is an artistic process, but we try to bring real data in structure to it to increase the probability of success. We hire for attitude and aptitude, we hire based on our core values, we have a team-based hiring decision – because, let’s face it, it’s easy to trick the boss. I see you once a month in the office. But you can’t trick the people you work with – they see you up close and personal: so what we end up doing is, we get the team involved in the decision – and then the team enforces the decision as well. It’s a natural policing mechanism, so if the team makes a mistake and hires somebody that doesn’t fit, they will all raise their hand and say “man we made a mistake”.
The other thing we try to do is onboard people well; we’re actually going through an investment process now trying to increase our recruiting capabilities, as well as our onboarding capability. Now there’s a metric around from the day you start to the day you’re a star performer. How do we collapse that time, help make a bigger investment in people and give them a better chance of success? The nice thing about this is that when we take this approach it really does align everybody, everybody wins: if they show up in our company, they don’t want to do a bad job. They don’t say “I’m gonna show up today and screw myself tomorrow!” Nobody wants that – you want to do a good job – but sometimes they don’t know how to do it, so we’ve got to help them do it.