Why is Rackspace targeting Startups?
I have often spoken about how cloud computing can help level the playing field between established enterprises who can afford to spend millions on information technology (IT) infrastructure to support their operations, and smaller entities that cannot. (See: Fighting Above Your Weight Class Through Cloud Computing).
Cloud computing, with its on-demand model that lets users pay for only that what they use, and the fact that it eliminates heavy setup costs, is a boon for smaller companies. At the same time, with its scalability, a small firm can grow and expand with the assurance that proportional increases in IT infrastructure needs will be met.
zzNow, it is obvious that startups are prime examples for small but growing companies who are looking to keep their IT costs down. Consequently, they constitute a major target market for cloud computing services. (See: How Small Firms Can Benefit Big From Cloud Computing And Why They Are Not).
Also, consider the fact that getting a small company that can grow into the Coca Cola of tomorrow hooked onto its service is a huge incentive for any cloud computing service provider. Although lock-in is a major concern for any company looking to go on the cloud, it is less important vis-à-vis immediate cost benefits for a startup. (See: Cloud Computing Risks And How to Deal With Them). Consequently, it is easier to sell the benefits of cloud computing to startups.
All the above points make it clear that startups are prime candidates for selling cloud computing services. Now, Rackspace has recognized this market and taken the initiative to capture it through a targeted program.
Last week, the company announced the launch of the Rackspace Startup Program, where Rackspace will provide cloud computing resources to startups participating in programs with premiere startup accelerators and incubators 500 Startups, TechStars, Y Combinator and General Assembly.
“A lot of folks don’t understand that Rackspace is actually a startup success story – they grew from a 10 person start-up to a leading cloud player, so they understand what it takes to succeed. Fortunately for the tech community, Rackspace continues to invest in entrepreneurs by providing compute power,” said Dave McClure, Founder of 500 Startups.
“Unlike years ago, these startups will likely never touch a server because the cloud provides a cheaper, easier way to operate – which is key for any startup that is boot-strapped and short on time. We’re using Rackspace at 500 Startups, and we’ve been consistently pleased with both the service and the support,” McClure added.
Some recent entrepreneurs are quite upbeat about the news, including David Stein, founder of Dubset, a General Assembly startup. “Dubset is DJ-defined internet radio, where we source and syndicate music mixes from some of the top DJs around the world. The Rackspace cloud allows us to stream music while accurately tracking what gets played – which we believe is the future of music consumption. The cloud is key to the success of our company: our costs are low and we never have to worry about our servers,” he said.
San Antonio-based Rackspace specializes in products for the hosting and cloud computing industry. It is also a co-founder of OpenStack, an open source cloud platform. With its focus on startups, it may have just tapped into the market for the future.
By Sourya Biswas