The Rigged-Up Net

Keeping Small Business Off the Street

Rackspace, a profitable, San Antonio-based web-hosting company, wanted to raise $50 million in the capital market. But Sarbanes-Oxley simply made it too expensive. So Rackspace’s executives decided to hold off going public for at least two years, when they hope to be so big that absorbing the extra costs won’t be too painful. Sarbanes-Oxley “makes the efficiency of the capital market lower for a smaller company,” says Rackspace president Lanham Napier. “And when you don’t get money as quickly, your growth is impacted.”