IP Democracy: Web 2.0 Startups and Scaleability Investments

A post by David on the 37signals’ “Signal vs. Noise” blog responds to recent posts by Jeremy Wright and Om Malik. While Jeremy and Om argue that scaleability issues are important for and too often ignored by Web 2.0 companies, David sees the costs and benefits of upfront investments in scaleability and reliability differently:

Wright correctly states that those final last percent are incredibly expensive. To go from 98% to 99% can cost thousands of dollars. To go from 99% to 99.9% tens of thousands more. Now contrast that with the value. What kind of service are you providing? Does the world end if you’re down for 30 minutes?

If you’re Wal-Mart and your credit card processing pipeline stops for 30 minutes during prime time, yes, the world does end…Now what if Delicious, Feedster, or Technorati goes down for 30 minutes? How big is the inconvenience of not being able to get to your tagged bookmarks or do yet another ego-search with Feedster or Technorati for 30 minutes? Not that high…The criticality of your average “Web 2.0” application is one with loss of comfort as the result of something going wrong.

The real lesson to keep in mind, David says, is that “Before you have users, it’s a waste of time ensuring that they can always get to the service.”

A project that spends a lot of time upfront on scalability is the one that can’t afford to fail…You can’t carry around the label of Zero Risk (TM) and expect to be the next big thing. It will focus your energy on all the wrong things.

What you need is to embrace the goal of getting someone to care enough about your product that they’ll actually complain when its down. Once the first complains starts to trickle in, you know you’re riding something right, and then you start caring about adding another percentage point or two.

Om Malik thinks that the running-with-scissors approach of most start-ups is a sign of a bubble. Awahh? The bubble was when people thought they needed to spend $3 million dollars buying Sun servers and Oracle databases to build a site for wedding invitations.

The business smarts is when you don’t blow the farm before the crap shot has turned sure bet. Fail cheap. Because odds are you’re going to. And you need to have your shirt for the second round.

So. Don’t scale. Don’t worry about five 9’s or even two. Worry about getting something to a point where there’s reason to worry about it.

Update: A post at The Stalwart argues that David has it backwards, that downtime may be more of a problem for a Web 2.0 startup than it is for Wal-Mart:

If Wal-Mart is down for half an hour I’ll come back later, because there’s really no competition at those prices. If Technorati is down I’ll immediately start looking elsewhere, maybe Google blogsearch, Yahoo blogsearch, Sphere, PubSub, Feedster, etc. There’s not shortage of alternative to try out with absolutely $0.00 switching costs. To make matters worse, I might even like one of those other search engines, and remain a loyal user forever. Even if I went to a Wal-Mart competitor for a day, it’s unlikely I’d be a permanently lost competitor.

Posted by Mitch Shapiro on December 7, 2005 1:40 PM to IP Democracy