Liquid Web Eyes San Antonio for Tech Talent After Cloud Sites Deal

San Antonio—A Lansing, MI-based Web hosting and server management company has plans to make more hires in the Alamo City after an acquisition, in part because its CEO thinks he’ll have better luck finding employees here.

Liquid Web, which was founded in 1997, bought a Web server business from Rackspace called Cloud Sites in August, shortly before Rackspace (NYSE: RAX) announced its sale to private equity for $4.3 billion. Liquid Web said it was keeping the company in San Antonio, and now plans to make new hires in the city for both itself and Cloud Sites, partly driven by potential incentives from local governments.

The San Antonio City Council is voting Thursday on whether to give Liquid Web $225,000, money that would be contingent on creating or moving 100 jobs to the city over the next four years. And Bexar County, which includes San Antonio, is going to consider giving the company $150,000 next week, with similar job requirements.

While financial incentives are appealing to any company, Liquid Web’s CEO Jim Geiger says that he was attracted to expanding the business in San Antonio because of the access to tech workers. From Rackspace to cyber-focused military workers like the 24th Air Force division, the city has historically produced tech talent. Local government officials and business executives have been working to expand those numbers through coding schools, such as Codeup, and other training programs at businesses and universities.

Geiger says he has a tough time finding new tech workers in Lansing, a town of about 115,000 that’s home to Michigan State University.

“It isn’t necessarily steeped in technology companies that I can trade talent with. A lot of the talent here is homegrown,” Geiger says about expanding in San Antonio. “We are growing the company faster, and I need more access to talent.”

Liquid Web’s growth in San Antonio is interesting because it operates a strikingly similar business to Rackspace, albeit targeting a slightly different customer base. Both businesses sell Web hosting and manage both physical and cloud-based servers for businesses, but Rackspace focuses on large enterprise businesses and Liquid Web works with small- and mid-market companies.

And both companies place significance on the customer aspect of their businesses. Rackspace markets its customer service as “fanatical support,” while Liquid Web brands its work as “heroic support.”

In Cloud Sites, Liquid Web is adding a business that manages Web hosting for its customers, but it’s a targeted group that primarily consists of people such as designers or developers, who might use something like WordPress to build a website. While some companies employ IT staff or other people who work with companies like Liquid Web and Rackspace to manage servers, Cloud Sites is targeting clients who don’t have that to manage their server usage—or don’t want to, Geiger says.

“I call it looking under the hood versus not,” Geiger says. “It’s a level of abstraction of the technology that allows for less involvement by the user.”

The business was a better fit for Liquid Web than Rackspace, Geiger says, because the price it charges more closely aligns with the Michigan company. Many of Rackspace’s large customers pay tens of thousands of dollars each month for their server services, Geiger says. Given that Liquid Web’s typical customer is much smaller, it charges somewhere between a few hundred dollars a month to a few thousand, he says. (Cloud Sites’ fees start at $150 per month.)

Private equity firm Madison Dearborn Partners made a large investment in Liquid Web in 2015 (terms weren’t disclosed). At the time, Geiger, who also invested, took over as CEO for founder Matthew Hill.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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