Vultures have started circling over struggling cloud and hosting provider Rackspace.
The company has lost several key employees in recent months. Competitors like Amazon Web Services, Google, and Microsoft have left Rackspace behind in their race to the bottom on cloud prices. Meanwhile, Rackspace has reported smaller and smaller year-to-year revenue growth from its dedicated cloud and public cloud services in recent years, and in the past year and a half, Rackspace stock ($RAX) has generally followed a downward trajectory — although it’s been going up since early May.
So it’s no surprise that Rackspace has retained Morgan Stanley to consider partnerships with other companies and even acquisition offers.
The situation has gotten so bad that a top Rackspace executive requested a handshake agreement from a competitor, asking them not to poach Rackspace’s most effective employees, VentureBeat has learned.
Under the requested agreement, the competitor could generally make statements about its willingness to hire, but direct pursuit of individual Rackers is a no-no, said a source familiar with the matter.
Rackspace denied that such an agreement had been made.
“There is no truth to this rumor. We do not engage in ‘anti-poaching’ agreements,” a Rackspace spokesman wrote in an email to VentureBeat. “That would be inconsistent with our values and policies around openness and transparency. What attracts and retains employees at Rackspace is our culture and our bright prospects as the leading managed cloud specialist. We’re growing and hiring.”
Still, Rackspace seems to have a retention problem, as shown by a string of departures in recent months.
Cloud evangelists Scott Sanchez and Niki Acosta announced their move to OpenStack company Metacloud earlier this month. Miguel Millan, who led up Latin American sales for Rackspace, took a similar job at SoftLayer in May. Sales engineering director Eric Thiel went to VMware last August. And marketing executive Bryan Urioste joined Solarwinds in January after eight years at Rackspace. Suaad Sait, who was Rackspace’s chief marketing officer for more than two years, also moved to Solarwinds in recent months.
Now the migration could intensify, as the cloud industry speculates about the fate of the company.
But with challenges coming from top public-cloud providers and hosting providers, employees might not be as excited to be Rackers as they once were.
If a Rackspace executive did ask a competitor not to bite away at its best employees, the development would be a bit ironic. In better times, talented tech people wanted to ditch their companies and work for Rackspace.
But that doesn’t seem to be the case these days.