Am I reading this right, they are going to rack their own servers for this business?

If I were them I would be looking at renting from bargin bin hosting providers like hetzner or ovh to run this on. The great thing is that hetzner also has a large pool of racked servers that you can tap into.

You are basically going to re-implement hetzner at a smaller (and probably worse) scale by creating your own multitenant mini cloud for running these ci jobs.

Free advice: set up a giant kubernetes cluster on hetzner/ovh, use gvisor runtime for isolation, submit ci workloads as k8s jobs, give the k8s jobs different priority classes based on job urgency and/or some sort of credit system, jobs will naturally be executed/preempted based upon priority.

There you go, that is the product using nearly 100% existing and open source software.