The $500,000 Reason Every Startup Office Needs a Backup Connection
Boom! You’ve just closed that seed round for your startup, and you’re finally ready to move out of your co-working space. You find the perfect office. It’s a converted pencil factory with exposed brick, lofted ceilings and a totally open floor plan. You deck out the office with reclaimed wood, a ping pong table and vintage arcade games.
You’re not live-working out of your startup hostel anymore, so you choose the best “business class” internet connection - high roller! An IT manager isn't in the budget yet, so you call all the shots—what have you got to worry about? Your ISP tells you that business class has a guaranteed uptime of 99%. Everything is perfect!
...until it's not. Two days later, you walk in and see "Unable to Connect to the Internet" on every browser tab.
It Was the Worst of Times
When the internet goes down in any office, the work stops. Employees can’t access any of the cloud services that they rely on to do their jobs. It doesn’t matter how sweet your digs are—your office becomes totally useless the second that you lose your lifeline to the internet. You have database backups, you have server backups, you even have backup ping pong paddles and balls in case they get misplaced. You have a backup of all critical infrastructure for your company—then why don’t you have a backup internet connection?
Especially since it could turn out to be a massive, $500,000 mistake that you’re making.
Having a backup internet connection is essential to every startup office, and when you look at the economics, it’s a total no brainer.
How Much an Outage Can Cost Your Company
Outages add up easily when you look at the loss of productivity across all of your employees. Remember: every second of downtime doesn’t just hurt your own personal productivity—your entire company can’t do work while the internet is down.
Let’s say that your company has 10 employees costing an average of $12,000/mo fully loaded.
You can calculate your labor cost like this:
Labor Cost = P * R * H
P = number of people affected
R = average employee cost per hour
H = number of hours of outage
Labor Cost = 10 * $67 * (3.65*24) = $58,692
Assuming 99% uptime, you'll see 3.65 days of total downtime over the course of a year, resulting in $58,692 in lost labor. On the other hand, a backup connection will run you $3,000 to $12,000/year, a small fraction of the labor you’ll lose to an outage.
Why You Need a Backup No Matter What
You might have a Service Level Agreement (“SLA”) with a guaranteed uptime of 99%, or 99.9%, or even the magical 5 nines (99.999%). You still want a backup connection.
Even a 100% SLA like Pilot's will see unavoidable outages, because issues not usually covered in service level agreements (typically those beyond the ISPs control) will rear their heads.
1. There might be physical damage to the network caused by a power surge.
2. There could be power outages that hit your internal servers and routers.
3. Someone could just trip over the router and break it, as happened to an Assistant Professor at Marshall University. They were web-less for 36 hours.
Then, there’s God and his pesky Acts. Bad deity.
When this happens, having a connection that you can immediately fall back on can mean the difference between making money and losing money.
As a startup, your business is based on creating outsized, highly leveraged returns on capital. You need a backup connection, because every second that the internet is down, you’re losing the value created by labor.
On the low end, you’re getting 2x return on labor—on the high end, you get 10x return. That means that you’re losing between $117,384 and $586,920 in value created on a yearly basis for your 10 person company . . . all because you skimped on the internet connection, tried to save pennies and didn’t get a backup.
3 Tips for Getting the Most Out of Your Backup
One psychological barrier that’s tough to overcome is the idea that you’re paying good cash for something that’s just going to sit there, doing nothing.
You can think of insurance. People don’t want to pay insurance premiums, but they sure are happy they did when they get bit by a rabid squirrel.
Still, we as humans have a psychological aversion to buying insurance, even when it makes pure economic sense. That’s because we are terrible at planning for the future, and perceiving the correct amount of risk.
In one of his first studies in behavioral economics, Daniel Kahneman found that people consistently give too little weight to high probability events. Car accidents are one of the biggest killers in the US, but you think way more about how your GMO food is going to kill you. There is a high probability of your internet connection going down, but our brains always give this little weight, thinking it ain’t gonna happen to you.
Also, our Present Bias means that we are generally averse to planning for the far future. We postpone activities with immediate costs and tend to give too much weight to losses and gains in the present versus similar losses and gains in the future, a concept known as Hyperbolic Discounting.
One way around this is to not think of it as a backup connection at all, as a backup implies that it’s sitting there doing nothing. You should actually be using your other connection, and here are a few ways how.
1. Use It As a Guest Connection
If you’ve got a steady stream of visitors to the office, you can configure your backup connection as your guest connection, keeping any visitors well away from your regular network.
This improves the security and privacy of your network by keeping access to your machines, devices, and printers segregated. You’ll be able to keep the password to your main network secret and more complex (more like 25 characters than 5) while making it more convenient for visitors to login with a short and sweet password.
2. Use It for Streaming Services
If you’re trying to run a video meeting at the same time all your colleagues are playing World of Warcraft, you’ll know how annoying it is to a) video chat over a stuttering connection, and b) have co-workers who don’t wait for you to finish your meeting before starting a game.
If you run all VoIP and video conferencing over your secondary connection, it will remain stable no matter what everyone else is doing on the main connection. These services don’t necessarily need high bandwidth, and it’s much better to have a lower resolution and continual connection, than a great picture for only 5 seconds at a time.
This idea makes even more sense if you are using VoIP for all of your customer communication. Giving your sales team a dedicated VoIP connection that they’ll only need to share once in a while when you need it as a backup means they can always keep in touch with customers anywhere on the globe, with crystal clear clarity.
3. Use It for Downloading Data
We don’t mean torrenting the first season of Mr. Robot.
Sometimes you will have to download data from other services or from your own remote servers. If it’s not time-critical and can be done at a slower speed, you can use your backup connection to download the data leaving your main connection for essential work.
When your connection goes down, it’s a momentum-killer, because there’s so much uncertainty around it. Will it be back in 5, or will it take a few hours to come back online? You're on hold with Time Warner while the team hits refresh in their browsers over and over.
With old-school ISPs like Time Warner and Comcast, you don’t just lose 10 minutes or an hour, you lose the hours around the downtime and maybe even the whole day. It will take half a day for the technician to make it to your office, if you’re lucky. People grab coffee, mill about, and eventually head home to work there, wondering why you penny-pinched on the internet—the one thing everyone needs to do their job—while you splurged on the kegerator.
This is one of the aspects of ISPs we’re hell-bent on changing here at Pilot. Alongside our reliability guarantee we also aim to be super-responsive whenever God does have his way with your internet connection.
No matter who your ISP though, a backup means that whenever something bad happens to your connection, you can calmly switch over to your backup, and carry on.
If your interested in learning more about using Pilot as a backup (or primary) connection, just holler at firstname.lastname@example.org or 646-798-2521. We've got a team full of awesome sales folk who would love to chat.