Kubernettes Install on Azure Hangs

I am trying Rancher in Azure. I grabbed the latest images of server and agent.
I created a new virtual network in Azure
I provisioned Rancher Server. It was an internal only server with no public end points. It has an IP address 10.8.24.9
It was healthy.
I provisioned 4 Ubuntu 14.04 VM of size A2 ( 2 cores 3.5 GB RAM). I installed the agent on them.
These VM’s were also on the same subnet as the Rancher server. They did not have any public end points.
These new nodes joined the Rancher cluster.
I tried to change the type of default enviornment to Kubernetes.
This started provisioning of Kubernetes.
All 4 instances of Proxy and all 4 instances to Kublet are not starting.
I can start them and they stop as soon as they start.
View logs on the 4 proxy and 4 kublet does not reveal anything.

Let me know if anybody has a suggestion.
How can I debug this?
Should I have provisioned larger VM’s than 2 core 3.5 GB A2 VM’s.

Thanks

Can you confirm that your cross host networking is working? Are UDP ports 500 and 4500 open on the hosts?

http://docs.rancher.com/rancher/v1.2/en/faqs/troubleshooting/#cross-host-communication