When you’re a young company, you can come up with ideas on the fly. You can pivot relatively quickly. You can throw fringe rules to the wind, bend them a little, and deal with the consequences if they ever come down the pipe. (see: was that first employee REALLY an independent contractor? Did you pay royalties for every single image you ever used on that blog of yours, or did you grab them off Google images?) You can make a mistake and atone for it relatively quickly, and you can generally play the “whoops” card a little more than you can when you are a larger company, because you essentially have no assets that anyone trying to sue you would hone their sights on. Being a start-up DOES have these benefits. In the beginning, if Uber had tried to enter every single market legally by challenging the laws governing the taxi commissions, they’d still be drafting paperwork.
But what about when you’re bigger? The tables definitely turn, as you go from an unabashed growth (user or capital) mode to one of protectionism. Chad and I always used to ask ourselves, “What can ruin us?” and that was a very valuable thing to think about when we became a company worth something to the world. All of a sudden, you can’t just replace a new feature to all your users because they NOTICE and you can disrupt their flow. All of a sudden, you can’t just link to a webpage of calculators that you want your financial advisor customers to be able to use, because that webpage PAID for use of those calculators, and you’re infringing on their use laws. And all of a sudden, you can’t just have a footloose and fancy free vacation policy with your employees, because when EVERYONE takes off the Monday after Super Bowl, you’re sitting there with an office full of ringing phones, upset customers, and no one to answer their needs.
For us, it was the servers. That’s what could ruin us. We always had this mantra within our company to “never be caught with our pants down.” Now that doesn’t mean we didn’t receive threatening letters from lawyers, or letters from the state, or have internal employee issues, or missed deadlines, or botched rollouts. What it means is, through the eyes of our customers, nothing was ever wrong. Never let ‘em see you sweat. And the only thing that could ruin us was servers. So we backed them up, and backed them up and backed them up and backed them up. Facebook went down a few times. Facebook! If that site can go down, so could ours, no matter how many clouds were in the sky. We even built a local machine right there in the office, whirling all night, in case our cloud stack went haywire. We realized that the thing that could ruin us was the thing we could not control, but had to try to control. But our seemingly over-insurance assured Chad and I, because even if there was an employee coup, if our sales dropped to zero, or if we had to price gouge ourselves in order to stay competitive, no one on the outside would be able to tell. Because the servers were up.
For most of my clients, it’s something different. One of my clients manufactures sandals, and if they don’t arrive in the docks on time, he’s completely screwed from a delivery, client retention and fiscal standpoint. Note, it’s not the manufacture of the sandals that can ruin him, as he has that part down pat, and there is always an abundance of materials and labor to get the sandals made. It’s the shipping that he cannot control. Items come and go on the docks, they prioritize different stacks, the boats can be delayed due to labor or union disputes, it can be held in customs for weeks, and occasionally, cargo is lost. He quickly realized that one lost or severely delayed shipment would cripple his business, and it was in fact the uncontrollable factor that could lead to ruin. In order to combat this, we not only registered his business with a second, independent shipping company that we had no intent of using unless the primary one went awry, but we also calculated how many sandals he could air ship ahead of time, as an insurance policy, and still keep a large margin. The shipping was his “server.” What’s your server?