Rhodes said he is leaving to join a "smaller private company" that doesn't compete with Rackspace, but which is using cloud technology to "to disrupt what has been a very low-tech industry." Rhodes said: "This opportunity fits my strengths and skills, and I think it will provide a reinvigorating change."
Rackspace said Jeff Cotten, currently the company's president, will step in as interim CEO. "Our board has launched a search for a long-term CEO, and it considers Jeff a strong candidate for that position," said Rhodes.
Rackspace started out as web hosting company, but morphed into one of the early cloud infrastructure players. Facing tough competition from Amazon Web Services and others, the company went private last year in a $4.3bn deal with Apollo Global Management. It now focuses on providing managed services on top of the cloud infrastructure of its former rivals Amazon, Microsoft, and Google.
In a recent interview with ZDNet Rhodes said: "Just think about how disruptive Amazon has been to the technology landscape...it's phenomenal. How do you matter in a post-Amazon world? That's what I think everyone has to figure out, and that's what we've done."
Cotten said that, as a private company, Rackspace does not publicly report many financial metrics, but noted that during 2016 the company grew in revenue across all of its product lines, grew EBITDA and expanded its EBITDA margins, adding that "we more than doubled our cash flow and cash flow margins." Rhodes also said that the company was exceeding "almost all of the financial targets" it had established with Apollo and its board.