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Good Reminiscing Friday

Those were the days!

Well, it was a little over two months ago that we had what I think is pretty safe to call the worst disaster in DreamHost history.

In retrospect to me, it’s kind of funny that the worst disaster didn’t turn out to be due to a security breach, a power outage, a loss of data, or actually anything related to our actual hosting service. I guess it shouldn’t be a surprise that people care a lot more about their bank accounts than they do their websites.

I have realized that billing is the one issue where how important we feel it is is completely at odds with how important you guys feel it is.

What I’m trying to say is, we’ve always been ultra-flexible and lax about how people pay, when people pay, or even about giving credits, discounts, or refunds. We figure, whatever, pay us when you’re ready, we’re not sending anybody to collections or ruining anybody’s credit over some measly bandwidth bill.

If everybody had just been paying by check!

What we’ve always tried to focus on more (even though it might not seem like it at times!) is our hosting system’s stability, performance, and features.

I guess I’ve always figured that any billing-related error can be easily undone (worst case scenario, it costs us a little money); there is no lasting harm done to the customer. Whereas having a website or email problem could potentially cause permanent damage to somebody’s business or personal life or something?

Well then, let’s go back and see just how little money a worst case scenario actually costs, shall we?

Credits and refunds to cover people’s bank fees: $52,000.

Sigh, if only everybody kept a big cushion of cash in their account! The main damage that can be caused by a billing snafu is for people who get their account overdrawn, and because of that aren’t able to make a critical purchase, or have a check bounce, causing hassles and incurring bank fees. We offered to pay people any amount their bank charged them for going negative, and in the end that total looks like it came to about $52,000.

Discover how much money I lost DreamHost!

Accidental refunds: $170,000.

The worst part of this whole process (for us) turned out to be just after the accidental billing, ironically when we were trying to make things right!

If you recall, our system was not actually charging about 75% of the time we thought it did.. and so we refunded thousands of people who were never charged (but, 75% of the refunds didn’t work either). Well, out of all that, and after two months, there are still about 600 accounts who were credited a total of $170,000 in excess of what we charged them that we haven’t been able to get back from them or their bank.

It is slightly annoying when the same guy who complains to the high heavens when he thought he’d been over-charged $9,000 by accident conveniently disappears when we realize that actually, he’s been over-refunded $9,000 by accident.

Extra credit card fees: $82,000.

Another slightly annoying thing is that credit card processors don’t credit you back any fees when you refund a transaction. Overall, the extra credit card processing we did resulted in extra fees of about $350,000! Fortunately, after a whole lot of groveling and explaining the situation (and waiting two months), we finally got all but $82,000 of that back from First Data, American Express, and Discover Card.

Apparently our snafu didn't screw up Visa's IPO too badly.

Extra support messages: 20,000.

As you may have surmised, people wrote to us about this thing. About 20,000 times… and it would have been tens of thousands more if we hadn’t put up an “emergency block” against new messages for a little while in there.

How much this extra support actually cost (in terms of your wased time, tech support overtime pay, and other questions taking longer to answer to) is hard to say, but normally we only get about 45,000 messages in a whole month!

Accounts canceled: 1000.

It’s also kind of hard to say how many people actually closed their account because of the incident, but in January we did have about 1,000 more accounts closed than average. Assuming each of those accounts would have stayed for maybe another year, that’s another $120,000 down the Intertubes. It’s crazy… from all our power problems back in 2006, we hardly lost any accounts at all.


Goodwill lost: Priceless.

Yeah, it turns out this whole blog post is nothing more than another clichéd MasterCard commercial parody.

P.S. I guess it’s nice to know, less than two hours away from our biggest data center move ever, that we’ll cause a tiny fraction of the disruption to our customers that one unexpected fat finger did!

P.P.S. Thanks RIM, for scheduling a blackberry outage exactly at the same time. It makes us look better. And, maybe some of our Happy Customers will blame their lack of email tonight on you!

About the author

Josh Jones