The Rigged-Up Net

They cut spending and laid off 17 people from a staff of around 100, and were soon in the black. The result: the firm remains privately owned, and has no debt. The second setback dates to late 1999. Concerned that its increasingly extensive levels of customer service were leading it away from its roots in the do-it-yourself market, Rackspace decided that a bare-bones offering might make sense, recalls Richard Yoo, one of the three original founders. So a subsidiary was set up that sold just web servers.