Jason Seats, managing director of TechStars Cloud and cofounder of Slicehost
He’s not only the managing director of the TechStars Cloud program at Geekdom, a collaboration and coworking space downtown, but he’s been there done that and has plenty of T-shirts to prove it.
In 2006, Seats, cofounded Slicehost with his college friend Matt Tanase and two years later sold it to Rackspace for millions. The exact price of the acquisition was not disclosed.
But Rackspace did report paying $11.5 million in cash and stock for Slicehost and JungleDisk and up to $16.5 million more based on performance goals.
Here’s a video of Robert Scoble (at the time a reporter with Fast Company Magazine. He now covers startups for Rackspace) interviewing Seats and Tanase about the acquisition, which took place on Oct. 22, 2008. The acquisition allowed Rackspace to compete more effectively with Microsoft and Amazon in the cloud computing business.
The life of an entrepreneur is a risky one.
Some people prefer the security of a desk job with a corporation while others risk everything to create something from nothing.
Life is about making active and passive choices, according to Seats.
He graduated in 2001 from St. Louis University with two degrees in computer science and engineering. He got a job at a startup right out of college.
“It was a rough time to graduate,” Seats said. The Dot Com collapse had just occurred and the job with the startup didn’t work out. So he took a secure job with St. Luke’s Hospital in St. Louis and he stayed there for five years. He wrote software programs for the hospital.
“If I could stay there five years I could have done it for 15 years,” Seats said. “A lot of the people I worked with are still there sitting in the same chairs.”
But Seats was bored and restless. He took an MIT online course on open projects. One day, he read an article on “How to Love the Job You’re In” and he realized that he needed to make a change.
“I was rationalizing what I was doing there,” Seats said.
He started looking at his options and ended up taking a job with CPI Corp., the company that ran Sears Portrait Studios. He worked on creating a video software compression program for them.
“That broke me out of my rut,” Seats said.
Around that time, his buddy, Matt had started Slicehost, a web hosting company in 2006. He had already invested $10,000 in the business. Seats matched that and they became partners. But Seats didn’t quit his day job. He spent nights and weekends working at Slicehost and his days at his CPI job. They spent three months building the core product. The idea was to buy a server and virtually divide it into smaller pieces and sell “slices” to customers. They bought three initial servers. Then they put up a Website, explained the offering and opened up a chat room. They turned the system on and the first customer walked through the virtual door. Web hosting started at $40 and rose from there depending on the amount of server capacity required.
Seats planned to quit his day job at CPI within two years of starting up Slicehost. Instead, he quit two months later. By then, they had two dozen servers running, a waiting list of customers wanting to buy the service and they never advertised.
“It became clear that things were going to happen faster than we expected,” Seats said.
Seats and Tanase had one client on retainer for a development job that helped finance Slicehost. They bootstrapped the company and poured all the revenue back into buying more servers.
By the fall of 2007, Slicehost hired its first employees: one programmer and one community support person.
“We had a big open community,” Seats said. “If one of our members had a problem they could go out to the community. Our support costs were very, very low. People felt good about the support we gave. And our customers worked for us.”
To maintain that community, Seats and Tanase put up a blog post with job postings and hired the first two people who applied for the programmer and community support jobs.
“It was a totally organic move to bring them in.” Seats said.
Paul Tomes in the United Kingdom got the community support job. He’s still with Rackspace today, Seats said.
By the end of the second year, Slicehost had eight employees and 15,000 customers with 55 percent of them in the United States and the others coming from 170 countries.
“We never did any advertising,” Seats said.
Slicehost grew organically through word of mouth marketing by its customers.
“We spread in the circles that made sense,” Seats. “We never had an active sales force. We never talked about sales. We talked about support all the time.”
All of the Slicehost employees spent time in the chat rooms dealing with support, Seats said.
“We were always looking for ways to solve root problems,” he said.
In July of 2008, Lew Moorman, now president of Rackspace, opened up a support ticket with Slicehost and that started the courtship that would end up with Rackspace acquiring the company. From that first e-mail, it only took a week for the first acquisition offer, Seats said.
The guys at 37Signals did this great 30 minute four-part video interview with Tanase and Seats that recounts the full version of the Slicehost story from founding to acquisition.
As a condition of the acquisition, Seats moved to San Antonio to join Rackspace. He bought a house in December of 2008. He worked at Rackspace until June of 2010. He considered the idea of going back to school to get his Phd in Physics. But instead he started volunteering as a mentor with 3 Day Startup San Antonio. He liked working with entrepreneurs.
In the fall of 2011, Graham Weston, chairman of Rackspace, and Pat Condon, co-founder of Rackspace, approached him about heading up the new TechStar Cloud program in San Antonio. He met with Nicole Glaros and Dave Cohen with TechStars and they offered Seats the job.
“Working with Jason has been pure joy,” Glaros said. “He did a wonderful job. It’s going to be really cool watching him develop the program further.”
TechStars Cloud had its first class of 11 companies graduate last April. Seats still talks with the companies weekly. And they think very highly of him.
“Not only is Jason technically competent but he’s very insightful,” said Matt Gershoff with Conductrics, one of the TechStar Cloud companies.
Seats is tremendously loyal and speaks plainly and truthfully, Gershoff said.
“Everyone respects him,” he said. “He’s an amazing guy.”
Colin Loretz with Cloudsnap, another TechStars Cloud company, already knew who Seats was before joining the program.
“It was cool to meet him and realize he was the kind of guy who will go out of his way to help you out and help you succeed.”
Seats was the “best mentor I could ever hope for,” Loretz said.
