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Rackspace S-1
- usaphp 6y agoThe fact that in 2020 you have to fill in a contact form to get a quote for a server price is ridiculous...I just browsed their site and could not find a single mention of pricing without providing them with my full contact information
- ralph84 6y agoSelling one-off servers without any engagement with the customer isn't their business model. Has nothing to do with the year on the calendar.
- staysaasy 6y agoThey're very enterprise focused, so you might not be the target customer? (I don't want to presume, however) For a lot of powerful but heavyweight enterprise products, giving people access to pricing isn't worth it because it can cause some buyers to opt out of the process earlier than they would if their hands were held. Especially if the integration process will require some element of digital/IT transformation and hence internal political wrangling. There's tech for smooth onboarding in 2020, but not necessarily tech for helping you to do stakeholder alignment in a sales context. The engineer in me finds this painful and wants to scream inside, but empirically this does work..
- DaiPlusPlus 6y ago> The engineer in me finds this painful and wants to scream inside, but empirically this does work.. If it doesn't make sense it's because it makes dollars...
- aspenmayer 6y agoThis one is going in my memo book!
- ricopags 6y agoAny attribution for that quote? Because I am going to steal it. Is it just a transposition of "If it doesn't make dollars it doesn't make sense" which I see as a headline a few places?
- niea_11 6y agoIt made me think of a rap song by DJ Quick : If it don't make dollars, it don't make sense https://genius.com/Dj-quik-dollaz-sense-lyrics https://genius.com/Dj-quik-dollaz-sense-lyrics
- DaiPlusPlus 6y agoI first heard it in an MC Plus+ song: https://lyrics.fandom.com/wiki/MC_Plus%2B:Plastic_Actuals https://lyrics.fandom.com/wiki/MC_Plus%2B:Plastic_Actuals It’s also a pun: “sense” / “cents”.
- Swizec 6y agoIt makes sense. Enterprise sales processes are very very long and hand-holdy. The final price is very dependent on the amount of value a product brings to this particular organization. It also involves lots of negotiation. None of those fit in a pricing page. Maybe as a very dynamic calculator it could work, but it's likely the person looking at the page doesn't even have enough context/info to fill out the calculator.
- DaiPlusPlus 6y agoAzure and AWS both have straightforward pricing calculators on their websites though.
- scarface74 6y agoBut if you are a large enterprise, you’re not going to just pay list price.
- sulam 6y agoI don't know about Azure, but AWS is also very transparent with their volume discounts. You know exactly what price you're going to get, without talking to sales. And they don't negotiate those discounts. (At least they don't up to the $50M / yr level, which is the highest I've directly observed.)
- Swizec 6y agoWhich is why a whole industry exists focused solely on helping you understand your AWS bill and how to optimize it. Right?
- youeseh 6y agoPremature optimization is the root of all evil. If you don't need to automate, then don't automate!
- bretpiatt 6y agoThe interesting bit on this is Rackspace was actually the first build-to-order "Configure a Server [with pricing]" on the Internet in 1998: https://web.archive.org/web/20000302000851/http://www.rackspace.com/goconfigure/pricing.php3 https://web.archive.org/web/20000302000851/http://www.racksp...
- QUFB 6y agoAmazon learned with AWS that you can generate extreme profit when the devops team expenses instances/lambdas/absolutelyEverything on their company card. Click/click/click, spend. What is the result? Customers then create Organizations and accounts, and pay orders of magnitude more.
- stingraycharles 6y agoI think the idea is that Rackspace wants to focus on a different target audience than AWS, and hence has a different sales process.
- sswaner 6y agoCorrect, my company uses both Rackspace and AWS. We host legacy platforms with low rates of change on Rackspace and use AWS for new work that has high change rates and requires flexibility.
- QUFB 6y agoBut Amazon gets the same audience, in addition to others! The initial spending on personal/corporate cards from engineers who need to get work done drives the adoption of AWS.
- JMTQp8lwXL 6y agoWhy do enterprises even initiate conversations with third parties if they won't immediately give you a price? Just move on to someone who will. If your options are $10,000 or <price unknown> its obvious option #2 will be more. If businesses categorically rejected working with companies that can't provide up-front estimates, they wouldn't be a thing.
- evrydayhustling 6y agoFor enterprise deals, the price is often a small part of the overall cost of ownership. The defining element of enterprise deals is complication: large companies don't tend to buy the product as advertised. They need the vendor to make lots of adjustments and carry out extra processes to deploy (or else those costs fall back on the buyer). So, until the buyer's requirements have been explored, there's not a useful estimate to be had.
- tjalfi 6y agoThis. There are no easy purchases in an enterprise. Working with any third party requires an NDA, contract review, and negotiations by our Purchasing department.
- frenchy 6y agoProbably a simliar reason as why I won't normally give an up-front price when doing contracting work. For better, or for worse, "enterprise" folk are trying to sell "solutions" and not services. This usually works out well for them, because the people who they're selling to don't usually understand the technical minutae, and will often get the details wrong or incomplete.
- dman 6y agoBecause from an enterprise point of view they want to negotiate and arm twist vendors. Large players can and do use their weight to get pretty hefty discounts.
- bityard 6y ago
- brightball 6y agoAs I’ve gotten to better understand the enterprise sales space, face to face is the goal on both sides most of the time. There will be questions to answer, special circumstances to account for, term and support expectations and often a billing structure to fit with their budgeting process better. Pricing laid out up front is more of a consideration for smaller shops which isn’t their target market at all.
- jblow 6y agoWe went through all this BS, then signed up with them on a year contract. Then we were shocked to find that it would take them two weeks to set up our first machine. I noped out of it at that point and just paid the penalty to get the hell out of there. A competing service, that we already used, sets up machines in 1-2 days. When stuff hits the fan and you really need things to happen, two weeks is just a crazy response time. That's like infinity in internet time.
- deleted 6y ago[deleted]
- genidoi 6y agoWas that in 2010?
- slyall 6y agoSomeone told me something similar. Took 2 weeks to provision servers (and we mean VMs no just physical kit) and there was usually something wrong with them that took more time to fix. This was about 3 years ago. His company moved everything to AWS.
- codegeek 6y agoThey probably don't sell the smaller plans. One of our clients has been trying to move away from rackspace and we looked into what she was paying for. Holy smokes. She is paying almost $1200/Month for a server that I can get from DigitalOcean, AWS or even a dedicated server provider for about $200/Month. Not kidding. Seriously overpriced and they lock in clients with multi year contracts. Beauty is that the so called "managed services" doesn't even patch the servers or update the libraries. Client could not even install letsencrypt SSL since the "server is not up to date" while she pays $1200/Month. Good for them but I am not buying that stock :)
- paulgb 6y agoOn the opposite end of the spectrum, their cloud CDN scales down quite nicely, to the point that I get occasional bills for 1 cent for monthly usage. (I experimented with hosting some static things there years ago and left it up because it was costing too little to justify moving elsewhere)
- james412 6y agoI know it's a crazy and inconvenient idea, but you may be surprised by what happens when you talk to sales folk like this. I've knocked list price rates down by 80% by simply explaining to another human what I need
- fluffernutter 6y agoMaybe browsing sites manually isn't a sustainable strategy? g'rackspace pricing' yields: https://www.rackspace.com/calculator https://www.rackspace.com/calculator
- walrus01 6y ago> The fact that in 2020 you have to fill in a contact form to get a quote for a server price is ridiculous...I just browsed their site and could not find a single mention of pricing without providing them with my full contact information ISP perspective here: This absolutely has to be intentional. There has been a race to the bottom in pricing for dedicated bare metal x86 servers for close to 20 years now, in the hosting company industry. Very likely they're not going after the market of people who want to pay $165/mo for a server, but some considerably higher amount. A lot of the lower end dedicated server hosters who put prices (anywhere from $39/mo to $200/mo) directly on their website with a shopping cart are not their competition.
- deleted 6y ago[deleted]
- tomxor 6y agoThey are also absurdly expensive and their sales team are aggressive. While setting up infrastructure for my current employer I was required to get a quote from them as an existing customer. I expected them to be more expensive than everything else but it was a shock, at the time their IaaS was roughly 4 times the price of any competitor with some extreme limitations such as bandwidth with an expensive per GB rate if you go over. They also recommended dedicated hosting offering to set up an antiquated DB fail over system and claimed to offer 24 hour phone support for a total price I could have hired someone to work as a dedicated sysadmin. I went with Linode, over provisioning everything for a fraction of the price, I don't expect 24 hour support but stuff gets sorted out quickly when things go wrong on the other side of the hypervisor, Linode are also more transparent in my experience when pushed about issues. With Rackspace they make me feel the way that sleazy salesman that scares you into the extra insurance you get sold with hire cars and then feel like a fool for for afterwards - I can only assume their market is for people who would rather comfort themselves with expensive support than invest in the time to set up a reliable system with a DRP. ... that ended up way more negative than I expected, but, it's just my anecdote.
- snowwrestler 6y agoIf you don’t want to talk to a person about a server, you probably don’t want to rent one from Rackspace anyway, because they charge extra for service on everything they sell.
- deleted 6y ago[deleted]
- Hongwei 6y agoFor those who don't remember, here's what happened last time: https://www.thestreet.com/technology/rackspace-ipo-starts-out-reeling-10432556 https://www.thestreet.com/technology/rackspace-ipo-starts-ou... Wish them luck this time!
- newguy1234 6y agoI wouldn't buy into this IPO. The problem is rackspace doesn't really have much of a moat and the space is highly competitive.
- deleted 6y ago[deleted]
- psds2 6y agoThe space has a moat though - it takes a huge investment and long time to become competitive in this low margin space. Rackspace has shown themselves to be a market leader within this moat.
- discodave 6y agoTheir capex looks to be ~$2-300MM. That's approximately 1% of what AWS spends. https://www.platformonomics.com/2020/02/follow-the-capex-cloud-table-stakes-2019-edition/ https://www.platformonomics.com/2020/02/follow-the-capex-clo...
- jgalt212 6y agoTrue, containers are all the rage, but it is quite arduous to move a database from one cloud provider to another.
- ffsgdyfhfjvds 6y agoWow. I thought they learned their lesson with the last mid-recession IPO. I was on that ride, and it fucking hurt.
- czbond 6y agoI was thinking before I saw your comment "seems an odd time to IPO" when people mainly talk about the AWS and Digital Ocean of the world. (Supposedly D.O. is IPO'ing next few years)
- raiyu 6y agoNo comment =]
- oillio 6y agoJudging by the stock market performance, this is a perfect time to IPO. It may end in tears like a 2000 IPO, but tech is so hot right now. For example, look at recent public offerings like DKNG and NKLA
- newguy1234 6y agoIt isn't like 2000 though. These tech IPOs are real companies, with real products, real customers and real businesses. The 2000s had companies going public that were just based on an IDEA. Literally...."we're raising funds in this IPO to build xyz website/service." Most tech IPOs these days have at the very least already been vetted through venture capital funding rounds. The weak simply don't get funded at an early stage.
- ffsgdyfhfjvds 6y agoThe market is a speculative cokehead right now.
- leetrout 6y agoI’m conflicted. On one hand Rackspace used to have some great offerings and tech chops and then (wisely?) became a cloud intermediary. Is AWS professional services for a company that has went through the transition Rackspace has worth a $100m IPO? (Assuming I read the S-1 correctly).
- czbond 6y agoI am only familiar with Rackspace of about 10 years ago. Beyond the marketing speak, what is their competitive advantage? Are they doing AWS prof serv?
- rorykoehler 6y agoThey do AWS professional services since last year (I think) but we mainly use them for support as AWS doesn't cater for companies our size with their pricing.
- sjm-lbm 6y agoYeah, they acquired Onica which was/is a decently sized AWS prof services company. Not sure how much they were doing before then.
- ericcholis 6y agoGCP, AWS and Azure now as well. They still have a bunch of on-metal, physical, and cloud customers as well.
- leetrout 6y agoAh I didn’t realize that.
- bluedino 6y agoYou pay them so your ops team has someone to blame
- huac 6y ago
- itsdevlin 6y agoI really hope that part of their use of funds is to hire a design team.
- greghausheer 6y agoJust goes to show how a functional product even with bad design can do well. What are other software products / companies with horrible design but get the job done?
- quest88 6y agoI would say Craigslist because it's not pretty but I can't say that an ugly UI is the same as a horrible design. The design has worked well so far for many types of people.
- bhurlow 6y agowould put Scalyr in that category
- alteria 6y agoAmazon. It may be true that they A/B test the shit out of things, but it feels super clunky every time.
- tmpz22 6y agoIMO it feels like AWS just makes slow gradual changes without trying to match the material design updates etc of other clouds - all while knowing the ideal usecase of their platform is automated through the API with tools like terraform.
- cheeze 6y agoMost teams look at the data, and see that a vast majority of their customers use the CLI. I'm sure AWS loses out on sales from non-technical folks who only see the console side of things, but I personally would way rather DynamoDB focus on performance rather than a pretty console. That isn't true for all though, many AWS services seem like they are 'console first' and do wonky shit in the console that is hard to do using APIs. Those services are incredibly frustrating. Most AWS teams own their own console from what I've read here. And the smaller orgs often don't have any designers - backend engineers build the first iterations of the console.
- bluedino 6y agoAre they just hoping to grow as AWS grows? Not sure why anyone would choose Rackspace these days.
- deleted 6y ago[deleted]
- EE84M3i 6y agoRackspace isn't exclusively tied to AWS. They have other operations too.
- m3kw9 6y agoIs it right to say they are basically IT consultants
- neom 6y agoA rising tide lifts all boats. Maybe a decent time for a capex heavy business with mediocre metrics to go public?
- poorman 6y agoMediocre metrics is generous from my experience working with them.
- deepGem 6y agoThe tide might lose steam if Biden wins the election. Though I doubt there will be any carnage similar to the dot com bust. For one, interest rates are super low and I don't see them rising anytime soon, even if the Fed raises rates, the ceiling will be around 3-4%. The Covid induced tech euphoria might die down but I am willing to wager that won't be the case. People's habits once changed are very hard to fall back, especially when the new habits have a net positive economic impact. Time saved in commuting, air travel etc. The events industry might totally die down though. So there will be some negative impact as well. Other than these specific verticals such as events and tourism, I bet the market will favour tech innovations now more than ever. So yeah, this is probably the right time for any tech company to go public, not just those with mediocre metrics.
- shuntress 6y agoFunny, if you just re-write your post with the opposite points, it reads exactly the same and has the same apparent merit.: The tide won't lose steam if Biden wins the election. Though there will be carnage similar to the dot com bust. For one, interest rates are super low but will rise sometime soon, when the Fed raises rates at least 3-4%. The Covid induced tech euphoria might die down and I am willing to wager that will be the case. People's habits once changed may change again, especially when the new habits have a net positive economic impact. Time saved in commuting, air travel etc. The events industry might totally boom though. So there will be some positive impact as well. Other than these specific verticals such as events and tourism, I bet the market will sour on tech innovations now more than ever. So yeah, this is probably the right time for any tech company to go public, not just those with mediocre metrics.
- linuxftw 6y agoHow much of Rackspace is even left? Is this just a cash grab by the company that took them private? > As of March 31, 2020, we had $3,987.5 million face value of outstanding indebtedness It's always a mystery to me how some firm can buy a company, and then push the debt from acquiring the company onto the company itself. This is just vampire capitalism. Unfortunately, it makes no difference if individual investors here choose to invest, "index funds" will use everyone's retirement savings to funnel more cash to these parasites.
- blamarvt 6y ago> Is this just a cash grab by the company that took them private? Absolutely. My uninformed ex-Rackspace-employee take is that Apollo Global Management just wants to raise more money to further run the company into the ground.
- linuxftw 6y agoRackspace's last quarterly statement (I believe) showed a Net Profit of $35.8M [1]. Compare this to their most recently quarterly numbers in the S-1: > For the three months ended March 31, 2020, we had revenue of $652.7 million, a net loss of $48.2 million Yeah, they grew revenue by around 20% over 5 years, but there was an $84M swing into the red! You'd have to have a hole in your head to trust these crooks. Unfortunately, most of us have no choice, the 401k market is rigged. 1: https://www.investing.com/equities/rackspace-hosting-income-statement https://www.investing.com/equities/rackspace-hosting-income-...
- bogomipz 6y ago>"Unfortunately, most of us have no choice, the 401k market is rigged." Can you elaborate on this? How is it rigged exactly?
- linuxftw 6y agoSure. Once a stock is listed on a major exchange, those stocks make their way into various index funds. 401ks most typically offer a very limited selection of funds there's no way for an individual to choose to own funds that exclude a particular company. It's rigged in the sense that the banks know the stock is worthless, but if you grease the right palms, you get to IPO, and the money you receive from the IPO is not investors that believe in your company, it's the fund managers that are managing other people's money, and they don't care about fundamentals or sound investing. It's the political class siphoning money from the working class. Do you think Warren Buffet is going to participate in this IPO?
- whatsmyusername 6y agoI will never do business with Rackspace again after they hell they put me through. When your entire security posture falls apart when one minimum wage call center employee gets bamboozled you should not be in business. Fuck that company.
- otoburb 6y agoNotice how Rackspace's 2019 revenue hit a hard ceiling in 2019 (pre-COVID). Also, capital expenditures in 2017, 2018 and 2019 were 9%, 14%, and 9% of yearly revenues, respectively. If they hadn't tamped down on their 2019 "capital intensity", and assuming a more normal capex spend of 11.5% (split the difference between 2018 and 2019 for incremental 3.5% capex spend or ~$70M+), their EOY2019 cash & cash equivalents would have been down to a mere $14M (instead of $84M) -- looks like a cash crunch, mainly due to the 2019 Onico acquisition for $316M.
- marketgod 6y agoThey purchased Onico and Onico is one of the best vendors for Devops support. When a company is being spun out by a private equity, I am always hesitant to invest in it. I prefer when a company goes to market with their original investment thesis because you never know if the private equity is harming one of their other companies to grow another one. I.e. Rackspace and Onico are owned by the same subsidiary, suppose Rackspace charges Onico an extra 20% compared to what they are already paying because Onico doesn't plan to go public, however, the extra 20% Rackspace gets looks better and causes a better return on their investment. At the same time, the subsidiary has an incentive to inflate their stock price and not be a bag holder.
- bogomipz 6y agoSo Rackspace(RAX) went public in August 2008 and then when they could no longer compete against AWS and Google in the cloud provider space they spent years seeking someone to acquire them, which Apollo Global Management did in 2016 for $32.00 a share and took them private[1]. They then laid off a substantial portion of their workforce and decided to become an IT shop to provide support for customers who are using the cloud providers that put them out of business. And now their re-listing for $12.00 a share? Why would anybody buy this? What is the play here? Is Apollo somehow making out here? [1] https://www.rackspace.com/newsroom/affiliates-of-funds-affiliated-with-apollo-global-management-private-company https://www.rackspace.com/newsroom/affiliates-of-funds-affil...
- Scoundreller 6y agoIt may not be the same number of shares.
- konschubert 6y agoEDIT: Nevermind, they seem to habe stopped caring about hosting and now provide support for AWS. Sounds a lot like consulting. ——————- At some point, innovation of the software slack on top of bare metal will slow down and the tooling will become commoditized. IF, and that’s a big if, the best-in-class bare metal remains available for indiscriminate purchase, competitors may start to commoditize the cloud - AWS will need to start to fight a price war. But those are two big question marks and even then, if any company can fight a price war then it’s Amazon. So I wouldn’t bet on rackspace here. For the time being, they may be able to serve those enterprises competitively that just want some bare metal - but once AWS and GCP roll our proprietary ARM chips, they may not be able to keep up any more.
- 8organicbits 6y agoWhen did the change to consulting happen?
- konschubert 6y agoLast year, according to the other comments in this thread.
- discreteevent 6y agoThey also do on premise cloud: https://www.rackspace.com/cloud/private https://www.rackspace.com/cloud/private
- ksec 6y agoThey have $2.4B Revenue in 2019! Seems to be doing great in the HyperScaler Era. They have managed to increase their revenue despite market competition. So they are still growing. And much bigger than I thought. I was expecting Rackspace to be running downhill.
- humaniania 6y ago"Rackspace became public in 2008, and in 2016 was purchased and taken private by Apollo Global Management LLC." https://en.wikipedia.org/wiki/Rackspace https://en.wikipedia.org/wiki/Rackspace Read up on some IT chat boards about people's opinions of how Apollo has managed Rackspace before you buy into this IPO IMO.
- devalgo 6y agoThe same as any LBO most likely. They gutted the company and now want to cash out on the public markets. Private Equity is disgusting.
- burrows 6y agoWhy is private equity bad?
- dhsysusbsjsi 6y agoBasically what the last thread said: the typical pattern is to buy a company, load it up with debt and cut expenditure to make all of the revenue graphs trend up for a few years then sell it to unwary public investors and walk away with a huge profit. A lot of them end up collapsing under the debt a few years later, plus the heavy cutting of capital expenditure (“capex”) leads to a long term declining revenue as they are no longer investing in new products.
- staysaasy 6y agoExactly, and grandparent post was a great question. Another nasty dimension (in the LBO model referenced) is that by playing crazy financial games the PE firms can often wager very little of their own money AND take money off the table fast by issuing dividends. So it's basically a low-risk / risk-free way to suck the blood out of a company. In my experience whether you think that PE is lawful neutral or flat-out lawful evil tends to come down to your opinion on the most brutal forms of capitalism...
- _bxg1 6y agoPerceptually, I think Rackspace was the first modern cloud provider that I'd ever heard of. Is that accurate? Were they early on the trend? Or did their name just advertise the concept really well?
- shiftoutbox 6y agoIt took 20 years but my Datapipe is going public . So hard work, Ketanketan and drinking at Louis and Jerry’s , and Texas Arizona everyday got me a 2007 Data pipe world domination Tour shirt and Viva la DataPope .
- mot2ba 6y agoI felt sad about their acquisitions and strategies. They had SliceHost - a big player in very beginning of Cloud, they had a solid background in Hosting Provider, but they just give them all and knees AWS.
- simonebrunozzi 6y agoI know the founder of Slicehost quite well, Jason Seats. Smart guy. Here's an old interview from these days, by none other than DHH [0]. I was at AWS in these years - I thought that Rackspace had a good chance of becoming a serious competitor in the cloud space, and Slicehost was a smart acquisition. AWS then executed flawlessly. Rackspace, well, picked one of the worst possible strategies to chase the cloud opportunity. Furthermore, Openstack was a giant mistake, IMHO. Execs thought that people wanted multi-cloud and private clouds. I met with literally 1,000 customers per year, and almost none of them wanted these things. [0]: https://signalvnoise.com/posts/2974-the-slicehost-story#:~:text=David%20Heinemeier%20Hansson%20chats%20with,.com%2Ffounderstories%2Fslicehost https://signalvnoise.com/posts/2974-the-slicehost-story#:~:t.... Edit: I found the second part of the interview, where Jason and Matt discuss the acquisition by Rackspace [1]. [1]: https://vimeo.com/groups/99803/videos/26333537 https://vimeo.com/groups/99803/videos/26333537