Rackspace, Owned by Private Equity, Loses CEO to Cloud Tech Company

San Antonio—Rackspace’s CEO, Taylor Rhodes, is leaving his post for an unnamed, smaller tech company this month, the newest dramatic change for the cloud computing giant, which was sold to private equity investors for $4.3 billion in August.

Rhodes had been at the helm of Rackspace since 2014 and led the company through rapid changes in the way businesses manage and store data. As companies such as Amazon, Microsoft, and Google began investing more in public cloud technology—directly competing with Rackspace’s own data storage and computing services—Rackspace began selling its support and cloud management service to businesses that bought from its competitors.

Rackspace made deals to sell its “Fanatical Support” and other tools to customers of Amazon Web Services and Microsoft Azure in 2015, as well as certain Google products in 2014. The company plans to offer them on the Google Cloud Platform in the “near future,” Rhodes said in a farewell blog post.

Rhodes wrote that the company he’s joining is privately held, based in a different city, and does not compete with Rackspace. He said it is “using cloud technologies to disrupt what has been a very low-tech industry.” The move is effective May 16.

Jeff Cotten, Rackspace’s president, is taking over as interim CEO, and the company’s board has started a search for a permanent replacement, said Rhodes, who joined the company in 2007. In a separate blog post, Cotten wrote that Rackspace’s revenue grew across the board in 2016, as did its earnings before interest, taxes, and other factors.

Rackspace, long known as a launching pad for many San Antonio startups, was acquired by funds affiliated with Apollo Global Management last year. The company laid off 6 percent of its 4,500-person workforce in February.

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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