Enabling Ecological Data Centers: Rackable Systems CEO Mark Barrenchea (Part 5)

SM: Your retirement became more of a sabbatical.

MB: It sure did. I thought I was retired, but in Silicon Valley there is no such thing as retirement. I decided to sit on the board of a public company. I was looking for smaller public companies or for troubled companies that I could help. I joined the board of Overland Storage in San Diego and Rackable here in Freemont.

Rackable is an interesting company with an incredible opportunity. It is six years old and is bigger than Sun in North America for x86 computers.

SM: Tell me more about Rackable. What is the genesis of the company and your involvement?

MB: I joined the board in 2006 as an independent board member. Tom, the first CEO was a Stanford graduate and a canonical entrepreneur. He brought the company from $10 million to $350 million and brought the company public. I am not sure that is something I could do. I feel more comfortable from $500 million to $2 billion. The company had hit its growth peak and was flat lining between $300 and $350 million.

It had one product line, one industry which was the Internet, one geography which was the US, and one sales model which was a direct sales force. They had niched out when IBM, Sun, HP and Dell were all offering catalogue products. The founders had a vision that for large scale computer storage environments that was customization. Why should someone have to buy their data center out of a catalogue? Why can’t it be built to order? Also, why not focus on energy efficiency and density?

The thinking was instead of requiring 500 watts a computer why not do it with 130 watts a computer. Why does a rack have to take 9 floor tiles versus 4 floor tiles? That led us down the path of custom built to order with energy efficiency, or green, datacenters. For largescale datacenters that resonated. Yahoo, Amazon, Facebook, and Microsoft all are multi-million dollar Rackable customers.

Rackable hit a growth curve and could not scale up the business. When you are in hardware you are a discrete manufacturer. It takes a lot of process and supply chain management and hundreds of millions of dollars of working capital as well as variable production lines. There are a lot of operations associated with going to market. The board decided to make a CEO change and offered me the job. I accepted the position.

SM: You accepted that position when the company was at the $350 million range?

MB: Correct. We are hovering there right now. Our opportunity is to move beyond the Internet and what we provide.

SM: Is your $350 million customer base entirely Internet customers?

MB: Over 80% are. Microsoft was a $80 million customer last year. We supply the gear to them. That includes MSN, Live.com, and Messenger. Facebook and YouTube are powered by Rackable as well. Yahoo! search runs on Rackable as well. Our value proposition is to take our technology to US Federal.

This segment is part 5 in the series : Enabling Ecological Data Centers: Rackable Systems CEO Mark Barrenchea
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