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Rackspace Managed Hosting

Winner

Company: Rackspace Managed Hosting, San Antonio, Texas
Company Description: Rackspace is a managed hosting provider for customers of all sizes. Founded in 1998, Rackspace built a world-class service organization based on its philosophy of Fanatical Support™. The company grew by over 60% in revenue in 2005, offering a wide range of managed services for enterprise hosting platforms. Rackspace hosts 15% of Fortune 100 Companies and over 9,000 customers.
Nomination Category: Organization Awards Categories
Nomination Sub Category: Best Customer Service Organization

Nomination Title: Rackspace Chooses Customers Over Profit

1. Tell the story about what this nominated organization/department achieved in the past year (up to 500 words). Focus on specific accomplishments, and relate these accomplishments to past performance or industry norms. Be sure to mention obstacles overcome, innovations or discoveries made, and outcomes:

Rackspace Managed Hosting, a 2005 Stevie award winner and 2006 finalist
for “Best Customer Service Organization”, continues to press on toward its
mission to becoming one of the world’s greatest service companies. Rackspace
closed 2006 with more than 1,200 employees, $224 million in revenue, and 3,000
new customers – an overall growth rate up more than 60% since 2005! And
believe it or not, Rackspace was on the brink of surpassing that growth when
the company decided to slow down its growth in an effort to protect the heart
of the company, Fanatical Support™. 

Rackspace was in fast-growth mode in the fall of 2006 when the company faced a
hiring crisis. Rackspace could not hire fast enough to keep up with the
influx of new business – support teams were slammed. Rackspace President and
CEO Lanham Napier made the tough decision to strategically slow down growth to
approximately 60% (which is phenomenal!) by the end of 2006 in order for
Rackspace to catch up on hiring, training new hires and ultimately raising the
bar of Fanatical Support with the growing business demand. It was a bold
decision that ultimately chose the long-term value of customer loyalty over
immediate results – a statement that our company’s commitment to Fanatical
Support was real, through-and-through.

Rackspace focused hard on hiring, bringing in approximately 100 new employees
per month, and Rackspace University, our internal training department, was in
full force ensuring the new employees were equipped with the knowledge and
skills to deliver Fanatical Support to our customers. “Rack U” entrenches
every new Racker in one week of Rookie Orientation where they learn about
Fanatical Support, the Rackspace business model, the company history from our
top executives including the CEO, Executive Chairman, CFO and two of the
Rackspace founders. 

In the brink of our hiring frenzy, Rack U even teamed up with Rackspace
Recruiting to introduce Technical Boot Camp. Rackspace Technical Boot Camp
paid 30 candidates, with minimal IT experience but a great customer service
manner, to undergo 10 weeks of intense technical training. At the end of the
ten weeks, Rackspace welcomed 23 new, valuable employees that were, as a
result, qualified to help customers with complex technical issues and that
understood the most important part of their new jobs – providing Fanatical
Support.

Rackspace executives ensure that their employees, both new and old alike, are
Fanatically Supported themselves. In fact, Executive Chairman Graham Weston
was featured as a “Best Boss” in Fortune Small Business this past fall. 
Employee perks include the Racker BMW, Edgewater Riverhaus, monthly bonuses
based around customer loyalty, massages on paydays, quarterly celebrations for
successful quarters and more. In a recent Gallup Q12 employee engagement
survey, Rackspace scored 86 percent, placing them in the top 14 percentile
among Gallup’s 100,000+ work groups across the globe. The Fanatical Support
fever helps us keep up with our fast growth – more than 60 percent of new
hires are referred by current Rackspace employees! 

Rackspace support teams are continually driving Fanatical Support on the
frontlines, which has resulted in a Net Promoter Score of 67% – a milestone in
the technology industry! We also recently had the opportunity to share our
service innovations and ideas with Harvard Business School and will be
featured in a HBS video case study highlighting customer service this coming
fall! And finally, Rackspace was listed in the Leader’s Quadrant of the
Gartner Research Magic Quadrant for North American Web Hosting with the
analysts commending Rackspace for its service focus.

2. List hyperlinks to any online news stories, press releases, or other documents that support the claims made in the section above. IMPORTANT: Begin each link with http://, and enclose each link in square brackets; for example, [http://www.youraddress.com]:

Gartner Research, “Rackspace Positioned in Leader's Quadrant in 2006 North
American Web Hosting Magic Quadrant”, September 1, 2006
-Gartner Report:
http://mediaproducts.gartner.com/reprints/rackspace/141390.html
-Rackspace press release:
http://www.rackspace.com/information/mediacenter/release.php?id=126

Fortune Small Business, “Best Bosses”, October 2006:
http://money.cnn.com/2006/09/25/magazines/fsb/betterbosses.fsb/index.htm
?postversion=2006092817

Video clips:
http://www.rackspace.com/support/supportvideos.php
http://rackspacecareers.com/video.php

Customer quotes: http://www.rackspace.com/support

HR Magazine, “50 Best Small and Medium Size Companies to Work for in America”,
July 2006
http://www.shrm.org/bestplaces/#medium

InformationWeek, “Web-Hosting Vendor Pays Students to Train at Boot Camp”,
August 31, 2006
http://www.informationweek.com/story/showArticle.jhtml?articleID=192500906

San Antonio Express-News, “Group Takes Shine to Rackspace Workplace”, June 2006
http://www.mysanantonio.com/news/columnists/etijerina/stories/MYSA062706.3B.
tijerina.16179c9.html

TechNewsWorld, “Rackspace: A Study in Fanatical Customer Support”, January 2007
http://www.ecommercetimes.com/story/54931.html

San Antonio Express-News, “Rackspace Managed Hosting Execs Work to Nurture
Employees”, November 2006
http://www.mysanantonio.com/business/stories/MYSA110306.01C.Rackspace.27b6cc5.html

Rackspace University was awarded Alamo WorkSource’s “Frontier Award”, 2006
http://www.alamoworksource.org/E_News/2005/_3q2006/businessreport.asp

Texas Monthly, #15 on the “Best Places to Work in Texas,” February 2007
http://www.texasmonthly.com/sections/bestcompanies/3

San Antonio Business Journal, #2 on the "Best Large Companies to Work for in
San Antonio,” 2006
Article available hard copy only; Finalist article available online:
http://www.bizjournals.com/sanantonio/stories/2006/04/17/daily5.html?f=e

3. Provide a brief (up to 100 words) biography about the leader(s) of the nominated organization/department:

Graham Weston became involved with Rackspace in late 1998, when he decided to
invest in the start-up company. He served as CEO for nearly 8 years until
becoming Executive Chairman in 2006, when he named President Lanham Napier as
CEO. As Executive Chairman, Graham takes charge of corporate strategy,
business development and M&A activity. Lanham joined Rackspace as CFO in
April, 2000, and became President in 2001. He is largely credited by
Rackspace's own management team in keeping the company steady and setting it on its current path to profitability and success.