LANSING – Liquid Web, a $90-million web hosting and cloud services provider, announced this week an agreement to purchase the Cloud Sites business unit from publicly traded Rackspace – what Liquid Web CEO Jim Geiger describes as the new strategy to better serve savvy, skilled professionals who are dependent on a highly available and reliable hosting provider.
Geiger is part of the Madison Dearborn Partners team that bought Liquid Web from Matthew Hill a year ago. Hill was a high school student when he created Liquid Web in 1998.
“With the addition of Cloud Sites, we further our mission to empower web professionals all over the world to create content and commerce without worry, free of problems and devoid of even one bit of hesitation by providing absolutely flawless web hosting,” said Geiger. “Unfortunately, our industry is trending toward unsupported services, which leaves fast-growing developers, digital agencies and designers alone, without a real person to turn to when they really need help.”
Today, the hosting world has morphed into three very distinct segments, said COO Joe Oesterling.
At the low end of the market are what he describes as hobbyists. A lot of different providers offer this group shared hosting. Those include Go Daddy and Square Space. People using these services spend less than $100 a year on hosting.
At the larger end, major players dominate including AWS, Microsoft, and Google. Oesterling said in this spectrum major international businesses have very complicated hosting needs. They typically spend $25,000 or more each year for hosting services.
But the middle is the space Liquid Web has carved out, he said. Liquid Web’s focus is on serving smaller businesses that are dependent on the web – in other words, the web is their business. These players need a partner to help them navigate the technology. They need a partner to provide 24/7 customer support, he said.
Cloud Sites supports Liquid Web’s mission to empower these web professionals worldwide. With the acquisition, Liquid Web plans to invest in Cloud Sites’ platform, employees and overall business. Given the clear shift in how customers want to consume web services, for example the mass adoption of easy-to-use, open-source content management systems like WordPress or commerce platforms like Magento, Liquid Web aims to continually improve the usability and reliability of the systems behind those services.
“Matt created that middle space and we’re extending it,” Oesterling said. “We’re developing common shared storage to have the power and elasticity of a group of servers.”
With the acquisition of Cloud Sites, Liquid Web will grow to approximately 550 employees and 30,000 customers globally. Some 50 employees in Cloud Sites’ San Antonio, Texas, office have joined Liquid Web. Liquid Web now has three data centers in Lansing, one in Arizona, and one in Amsterdam, Netherlands. About 30 percent of its customers are outside the United States.
The acquisition of Cloud Sites has been part of an evaluation process in which Liquid Web did its due diligence on about a dozen companies over the past year, said CEO Geiger.
“Our investment idea is to accelerate organic growth and acquisitions,” he said. “We started early in the process of looking for opportunities to growth. The only one we pulled the trigger was Cloud Sites, a unit of Rackspace. Cloud Sites is well ahead of its time developing that platform. We’ll be busy over the next year focusing on innovation and organic growth to complement this acquisition.”
To learn more about Liquid Web, click on www.liquidweb.com
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