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Lance Crosby, CEO of SoftLayer, the cloud services company that IBM acquired in mid-2013 and which now forms the backbone of its cloud services business unit, has left Big Blue, sources familiar with the move tell Re/code.
Crosby, 44, who ran Dallas-based SoftLayer for eight years as a privately held company, stayed on for about 19 months after IBM agreed to pay about $2 billion for it. Crosby’s last day at IBM will be Thursday or Friday, sources said, and a replacement has not been named.
IBM confirmed the move in a statement: “We wish Lance Crosby the best as he takes a well deserved break before pursuing new endeavors. Lance has left his mark on IBM. SoftLayer has become an important part of IBM’s cloud portfolio, and has played a big role in our success.”
Crosby also issued a statement via IBM: “I am very proud of the business we built and the team who continue to evolve SoftLayer at IBM. Now that the business is successfully integrated into IBM, I am ready to take some time off before I pursue my next challenge.”
His departure follows the promotion of Robert LeBlanc, an IBM veteran with three decades at Big Blue under his belt, to run a newly formed cloud business unit.
IBM’s acquisition put the SoftLayer brand at the center of a strategy that CEO Ginni Rometty is leading to try and transform the company into a significant player both in cloud services and in software delivered via the cloud. Within weeks of closing the deal, Big Blue had retired its own fledgling Smart Cloud brand. And as Crosby told me in a 2013 interview, more than 1,000 new customers walked through SoftLayer’s door in the first 90 days after the deal closed.
IBM now refers to its cloud business as one of its “strategic objectives” and has been hitting one aggressive goal after another in building it up. One goal was to break $7 billion in annual cloud revenue by 2015, surpassed last week when it said it hit $7 billion in combined cloud services and software revenue, amounting to about 8 percent of IBM’s 2014 sales. Of that, much of the $3.5 billion in services comes from SoftLayer.
Another IBM goal was the worldwide expansion of its cloud business in a more physical sense. Last year, it said it would spend $1.2 billion to expand its global footprint of data centers from 13 to 27. After cutting a deal with Equinix, a data center company, the company upped the goal to 49.
It’s a far cry from the company that started in Crosby’s living room back in 2005. By 2013 it had 21,000 customers and a global footprint spanning the U.S., Asia and Europe. Even so, it was much smaller than Amazon Web Services; the industry’s big gorilla was easily outrunning it, and everyone else — including IBM.
When I first met Crosby in New York in 2012, he let slip that he was in town for a round of meetings with investment bankers and contemplating an initial public offering, though at the time he didn’t strike me as the CEO of an IPO-bound startup.
There was a reason for that: Small cloud players were getting gobbled up by larger companies. Verizon had spent $1.4 billion on Terremark; CenturyLink dropped $2.5 billion on Savvis. And there were constant M&A rumors about Rackspace, a Texas-based cloud outfit like SoftLayer.
Crosby and his investors at GI Partners, a private equity firm in Palo Alto, Calif., opted instead to shop SoftLayer around, and according to a Bloomberg report attracted interest from as many as 36 different suitors. They narrowed that list down to six and Rometty herself closed the deal in a one-on-one meeting with Crosby.
By “my next challenge,” Crosby probably means starting another company, people who know him say. “He’s a serial entrepreneur. He likes to build things,” one source said.
This article originally appeared on Recode.net.
