A "cheap VPS that can scale" is not a contradiction in terms, since hosting providers like DigitalOcean, Linode, and Vultr do indeed offer cheap VPS hosting options with adequate performance for small sites, as well as more expensive options suitable for high-traffic sites.

The parent comment makes a valid point about performance-to-price value. DigitalOcean, Linode, and Vultr currently offer much more value for the newbie client (and for many other types of customers) than Rackspace does at the same price point.

The problem was that you have two parties - the agency and also Rackspace - somehow selling a customer wanting to get their business online something that was not the right product for the job. Imagine a small clothing boutique new to the market and reselling other branded stuff. You know from the get go that they are not going to be getting the same level of traffic as an established retailer, you also know from developing the site for them how the server needs to be to give the page speed needed. You also know that the performance bottlenecks are not going to be solved with the gold plated server when you hit a go slow situation. However, if you are a mere developer and think that it would be easier to maintain the site and scale it later then it might as well be like your own Ubuntu box with pretty much the same configuration and that nice easy firewall that you get with Ubuntu.

Yet despite having a good idea of the requirements the project manager who has never coded in his life always gets clients a Rackspace box with enterprise Redhat and some horrid cPanel on it with some extra firewall box. These things hamper the go-live as if you come from Ubuntu then Red Hat always feels like it is a generation out of date with things turned off by default when you need them on. Then there is a cPanel sea of icons when all you need is an ssh terminal and 'apt-get'.

Some friction goes on because, as a developer you wonder how it is that you are not being listened to. Then one day it all becomes clear. There is this matter of a kick back which is a few hundred which is not really worth it for the hassle caused. If you are on the side of the client and you know full too well that they don't need to be paying out a grand a month for the few dozen sales they are getting in a week then you can't help but feel negative about Rackspace. The sales person at Rackspace has time and money to wine and dine your clueless middle manager whipping boy, but can't advise on a more sensible solution for your clients.

Eventually the clients move on to another agency because your agency have only thought of the 'go live' and no support beyond that, so in turn, Rackspace lose another customer once the expensive project has been torn to pieces and rebuilt by a better agency who charge the client for support instead of useless hosting that they will never get to need.

I am sure this is a scenario that was quite common a few years ago. Nowadays not so. Apart from anything else small businesses can just setup a Shopify website and be online by teatime rather than be bamboozled by useless web agencies.

There's a pretty big difference between what Rackspace pays in referral fees:

"Average Monthly Recurring Revenue (MRR) of the first 3 full months' paid invoice"

And what someone like Linode pays:

"You then receive a $20.00 credit applied to your account"

The comment you're replying to is saying Rackspace gets some benefit from unethical agencies advising clients that don't need a dedicated server to get one anyway.

It wasn't a knock on Rackspace per se, more of a commentary on agencies.

I worked at RS in the fastest growing DC when they went public. Very, very little of what we brought online was colocation. It was almost entirely leased servers. They must have been keeping the colo facility a secret from us :)