CSPs, Mergers and Acquisitions

RapidScale Managed Cloud Services: Beyond Vonage Hosting Acquisition

RapidScale CEO Randy Jeter

A thank you goes a long way. Especially in an industry where change is the norm, it’s easy to forget the little things. It’s a lesson that managed cloud service provider, RapidScale, has taken to heart.

“We appreciate our clients and we appreciate our partners,” says Randy Jeter, RapidScale’s CEO and co-founder. “Without our partners, we wouldn't have a business, so we say thank you. For every quote we get, they get a thank you. For every deal we get, they get a thank you and they get a call. We're very specific in the channel that we want to be the company that's most appreciative of the deals being brought to them."

For a company that is known for conducting business exclusively through the channel, it makes sense. RapidScale is fresh off the news that it acquired Vonage’s hosted infrastructure services, a deal that will allow the company to expand into the Eastern U.S. and gain new clients.

Opportunities and Challenges

Jeter tells ChannelE2E the response to the news has been great. The company will be able to offer new clients a range of capabilities that weren’t previously available. RapidScale plans to build strong relationships with IT teams running its services as it migrates Vonage’s clients to its own platform.

But the celebration doesn’t come without some obstacles. “There's always roadblocks because you have risk,” says Jeter. But he adds that a big part of his company’s outlook is being confident, not cocky. "The reason why we did the deal is that we're confident in what we provide our clients and we've been doing it now for close to nine years and our service gets better every year."

The company faced hard times in 2014 when they had to turn down additional capital and slow growth in order to concentrate on their core business, Jeter concedes. Luckily, the company was able to hold on to most of its clients by doubling down on customer satisfaction.

The plan worked. As of this year, RapidScale was on track for 75 percent organic growth year over year, according to Jeter – not including the Vonage acquisition. With that, the company is looking at 150 percent growth, says Jeter. "A lot of that has to do with the heartache and headaches that goes on early on, and tightening everything up and really providing a great service to our clients," he says.

Jeter’s looking forward to the opportunity to interact with new clients and provide services they may not have had access to previously. "It really is about the client experience. It's what we focus on,” he says. “A lot of these clients are stuck out on an island and we're going to be able to put them on an island together with us and work with them to collaborate and provide a lot of other services they wouldn't otherwise have access to."

Building An Idea

Jeter co-founded the company with William Hiatt, a wunderkind of sorts who was 22 when they met. Hiatt has been nominated as a finalist for CIO Magazine’s Ones to Watch and for Computerworld’s Honors Program, according to the company’s website. At the time, Jeter was working at PAETEC. The two hit it off and began collaborating on projects.

Eventually, the pair struck on the idea of providing the same cloud-based infrastructure to small and medium-sized businesses (SMBs) that enterprise-level companies were enjoying. "I had this young, brilliant co-founder and we were working aggressively to build and design an enterprise model for SMB-based clients. And that's what we have today," says Jeter.

From there, they grew RapidScale to the point where a large service provider began poking around in 2013. But the following year the company hit hard times and had to scale back. Still, the company managed to hold on to the majority of its customers and became reinvigorated. Jeter says it’s one of the things he’s most proud of – RapidScale’s retention rate. The company boasts less than 1 percent business churn, which aided them in this most recent acquisition.

Vonage is best known as a VOIP service provider, and hosted infrastructure was a low priority for the company. But Vonage knew it wanted a company that would maintain its clients, Jeter asserts. "They wanted somebody who would retain their clients because they were still going to be voice clients for Vonage and they didn't want to lose those clients," he says.

From here, Jeter says RapidScale plans to keep acquiring companies. But it’s a combination of financial intelligence, core applications, and automated systems that will win the day, Jeter says. RapidScale is in this to provide every client with a great experience,” he says. “That's really why we've been able to grow so much.”

And a thank you goes a long way as well.