When Pat Condon '97 realized he wasn't ready to go back to grad school, he reconnected with two old friends from Trinity University. They ran an IT consulting practice in San Antonio, Texas taking any work that came their way. After realizing that their generalist consulting practice wasn’t going to make it, they took a hard look at where most of their business came from.
Mostly they built web apps. Eventually their customers needed managed hosting. Up went Rackspace.com. Within 30 days they had 30 customers, half of whom were located outside the United States. The founders quickly realized there were a lot of businesses all over the world that needed a reliable managed hosting service.
In '99 and '00 the company raised more than $30M in venture financing from Sequoia Capital and Norwest Venture Partners. In July of '00, after a failed IPO of one of its competitors, it became clear that the Internet bubble was bursting. This dashed Rackspace’s hopes of an IPO. With dwindling resources and a large burn rate, Rackspace had to focus on what mattered: turning a profit and serving its customers with Fanatical Support. The company quickly closed a Hong Kong office and laid off about 10% of its workforce in an effort to survive.
By 2001 Rackspace was profitable. In Q3 '07 they acquired Webmail.us and posted quarterly revenue of $96.2M. Today, Rackspace has over 2000 employees and serves over 15,000 customers with 8 data centers located in Texas, Virginia and the UK.
Pat had these three lessons to share with aspiring Bronco entrepreneurs:
1. Serve your customers really, really well. Happy customers mean repeat and referral business. At Rackspace they call it 'Fanatical Support' which translates roughly into delivering a pleasurable experience for customers.
2. Stay focused. You can’t be all things to all customers. They learned this in their consulting practice. They didn’t specialize. Focus takes sacrifice which means saying “no” to some customers and some business. If you’re getting started, start with a niche and serve it really well with your product or service.
3. Be honest with yourself about what you're good at and not good at. Focus on your strengths. Spend time practicing the things you’re naturally talented at and you have a much higher chance of achieving world-class success in that area.
