How Not to Run a Business: The Leafyhost Story

I caught an item on Digg this morning that I immediately recognized:  How Not to Run a Business:  The Leafyhost Story.  Here’s a quick description:

A story of a web hosting company with lots of potential. A hard drive failure, lack of back-ups, and bad communication. How things went south and some advice for how to keep your business from making the same mistakes.

Leafyhost is a small hosting firm started up by a couple of ArsTechnica members.  I recognized it because I am also a member of ArsTechnica and have also seen the saga being played out. Here is a link to the original thread where it is all still playing out.

At first it was just a little downtime, no big deal.  Then there were some unanswered support tickets.  Later on it was a corrupted drive for which the expected backups did not exist.  Then a 2-month delay in sending the failed out for data recovery.

Needless to say, the Leafyhost disaster-management story is not pretty.  To their credit, it seemed as though Leafyhost was staying on top of things at first.  But as the situation worsened, they seemed to turtle up a bit, which of course fanned the flames of customer discontent even more.  It seems as if they’re trying to remedy the situation, but there’s little visible improvement.  It’s sad because the Leafyhost staff is clearly smart but can’t seem to pull it together.

A lot of good people are upset at Leafyhost and feel they have not received what they paid for.  Sadly, Leafyhost has poorly managed the situation and have angered many customers by not being prompt and communicative enough.  The Leafyhost story is the kind of thing that runs completely counter to the principles of transparency that everyone seems to be talking about these days.

Dreamhost and Freshbooks have both had well-publicized disasters recently and handled them reasonably well, with tons of transparency and candor.  Leafyhost, on the other hand, has not.  Anyone who is looking to start any kind of business would do well to read the story and then make certain to NOT handle customer relations the way Leafyhost has done in this situation.

It’s sad for everyone, really.  At this point it’s a lose-lose for both Leafyhost and the customers who have been affected.  I hope it can all be resolved somehow.