"A lot of times when you call technical support [of an IT company], you almost feel like that company is competing with itself," says Luke Owen, director of customer support at Rackspace Managed Hosting, which is based in San Antonio, TX. "[They say] 'It's not our fault. It's this department's or it's that department's fault.' You don't get that here at Rackspace."
Indeed you do not. What began in 1998 as CEO (now Chairman) Graham Weston's small foray into computer server renting after a successful career in real estate has blossomed into one of the leading managed hosting providers in the country in less than a decade.
The company's business is managed hosting, which differs from other types of website hosting such as colocation hosting, which gives webmasters complete control over their server but places hardware and operating system costs on customers, and shared hosting, a basic hosting level that lumps many customers' websites on one server. Managed hosting provides system-level support to relieve IT departments of such critical and costly responsibilities as security, data storage and content delivery.
And Rackspace has clearly succeeded at it. They count businesses as small as financial e-learning provider BankersEdge, with 32 employees, as customers, all the way up to brands quite at home on Wall Street, such as Motorola with almost 70,000 employees. In fact, to keep up with customer demand, Weston says the company is hiring 80 people and adding 800 servers each month.
But the company wasn't always great at managed hosting, as Weston readily admits. Coming from the real estate business, where he says the mentality is "buy a building, rent to the tenant and hope you don't have to do anything until the tenant renews their lease," Weston and his original employees ran their server rental business in much the same way.
However, a call from an angry customer six months into the venture and a series of sit-down lunches at a local Mexican restaurant with a friend whom Weston later hired, David Bryce – during which they would talk "academically" about customer service – convinced him that he needed to change course. "I realized that the big opportunity was to not just to rent the servers, but to make the servers into a service, make them usable," Weston says.
Bryce, who has since left the company to pursue an academic career, reinforced the company's shift in its approach to customer service at the time when he showed up for his first speech to employees with a banner that read, "Rackspace Gives Fanatical Support." The internal initiative worked: It fired up employees, and the phrase "Fanatical Support" began showing up in marketing materials a few years later, by which point the company had worked hard to distance itself from its competitors by defining and redefining the practice.
Fanatical Support is deceptively simple, yet the industry has not readily embraced the model. At many IT or web hosting firms, if you're lucky enough to graduate from the phase of filling out and communicating with a company's staff via electronic ticket to phone support, you may still get bogged down by the sheer number of people you need to speak with in order to move a project or task forward.
Rackspace assigns a team of people to each customer, including a leader, an account manager (who is the main point of contact with the customer), several technicians, and billing and accounts receivable specialists. "These work groups are treated as individual businesses," Owen says.
And these businesses are full of technical people that also want to interact with and serve the customer, a mentality that Weston says is becoming more common among IT types, but which he says Rackspace still needs to devote training resources toward in order to get it right. To this end, the company has joined the ranks of businesses that provide in-house, university-style educational opportunities – which in the IT world translates into the latest certifications for software platforms such as Linux and MySQL.
Employees on the support floor who, with the help of ongoing training and occasional, intensive "brown bag" sessions where pizza is plentiful, make great strides for customers are revered by coworkers. Some support staff are openly referred to as heroes. A smaller pool have reached legendary status.
Helping to keep the original, internal spirit of Fanatical Support alive is Director of Racker Relations, Karla Fulton, a seven-year employee of the firm. She says that managing growth, while "a nice problem to have," is one of Rackspace's biggest HR challenges right now. They deal with this issue by purposely keeping teams small and having leaders meet weekly as well as in daily huddles to review concerns and successes.
Speaking of employee successes, Rackspace has several unique, culturally significant rewards that it bestows upon workers who over-perform. On the low-cost end is the coveted Straightjacket Award. Chosen employees have their picture taken while strapped in a straightjacket that Bryce found. The picture with their name is then added to the "Straightjacket Wall of Fame," which is currently almost completely canvassed with the pictures of over 60 employees.
At the higher cost end of the spectrum is a practice that has turned heads, literally: Weston routinely rewards managers that over-perform with a week's use of a company-owned BMW convertible. What's the cost benefit of plunking down $70,000 on the car, and then spending even more to regularly replace clutches? "All week long while you're driving it, you have to explain the story of your recognition 50 times to your brother and your friends and people at the gas station. It's an experience end to end," Weston says.
He gave Owen the keys to the car soon after he joined Rackspace as an account manager. "I thought he was joking at first. I didn't even know that Graham knew my name," Owen says. "The first day I had the car, I showed it to my folks. I said it was mine, but they didn't believe me."
One of the lessons from this anecdote is that the amount of money the leadership spends on employee recognition is secondary to the focus used to build a foundation for their camaraderie and development. Rackers are using their model of Fanatical Support, which started as an internal initiative, to distance themselves from the competition and elevate the company far above a mere server rental business.
Company: Rackspace Managed Hosting
Website: www.rackspace.com
Industry: IT hosting
Location: San Antonio, TX and Stockley Park, UK
Number of employees: 1,800
Sales: $224 million
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