The Business of Being Nice

Do nice guys finish last in business? What does it mean to be “nice”? When you’re running a business is it better to be a mean guy or a nice guy? Does being the nice guy sometimes mean you’re the mean guy in the end and vice versa? I’m fairly convinced that being a nice guy pays off in the long run, but I’m still trying to figure out what being a nice guy means.

About a year or two ago I had an experience that has made me question what it means to be “nice”.

One of the services my web design firm provides is web hosting. Web hosting is an interesting business. When everything is working correctly, it seems like free money. When you have a problem, it’s a nightmare and you wonder how much money you’ve lost. One experience with one client ended up costing me so much I’m not sure web hosting will ever be profitable for us. To understand how it happened, you need to know something about our hosting arrangement.

Our hosting situation is pretty sweet. Without sharing more than my provider would want me to, let me just say that we have a bunch of space for servers, and we don’t have to pay for bandwidth as long it stays “within reason.” For those of you in the know, bandwidth (or data transfer) is where you can get hit pretty hard. But for us, we never had to worry about it. We just pay a flat monthly fee and that’s it. My provider has essentially said “I won’t make you worry about bandwidth as long as I don’t have to worry about it.” I had tested our bandwidth for months and was confident no client of ours would ever provide a problem.

Then we took on a client that sold mp3 files online. These were basically books on tape, except on mp3. Some of these files were multiple gigabytes in size. But because of my experiments, I was confident we could handle the bandwidth and it wouldn’t be an issue. When I sent our client a hosting agreement I didn’t put anything in it about bandwidth limits. I told them verbally that they wouldn’t have to pay for bandwidth as long as their bandwidth stayed “within reason.”

For the first few months, everything was ok. But then they started a promotion where anybody could download a certain book on mp3 for free. All of a sudden, the bandwidth usage shot up to unprecedented levels. Unfortunately, my hosting provider wasn’t tracking things. The first month the bandwidth exceeded it’s limits he was charged about $1,500. The next month it was around $1,800. He didn’t know where it was coming from exactly, and didn’t track it down too quickly because those numbers weren’t outrageous for him. The next month it jumped up to $6,000. At this point it became a serious issue, and my provider tracked down the problem. It pointed straight to this client of mine.

My hosting provider informed me that one of my clients had already cost him around $9-10K in overage charges, and I needed to take care of the situation, as well as pay the bill. I was stunned. I jumped into action and called the client and let them know what was going on. Obviously they weren’t too happy, but they understood the situation.

This is the point where I’m not sure I whether I was nice or mean.

I had two choices. I could turn off my client’s servers immediately and stop the bandwidth charges. This would hurt them, but it would stop the problem. Or I could be “nice” and let them keep the servers running, as long as they promised to take care of the situation.

Well, I’m a nice guy, so I decided to be nice.

To make a long story short, by the time they solved the problem, they had incurred $3,600 more in bandwidth overage charges. At this point my hosting provider was telling me I owed him $14,000.

I didn’t feel it was fair for my client to pay $14,000. After all, I told them bandwidth wasn’t an issue. However, I did feel they owed something for the time it took them to fix the problem after they were aware of it. I was hoping they would have pity on my situation and say “Hey, we’re sorry we cost you $14,000, how about if we pay for the $3,600 that was incurred after you told us about the problem since you were nice enough to let us keep our servers running during that time?”

Unfortunately, that’s not how it went. First, the client said he thought the bandwidth charges were at a high rate. Perhaps true, but they had been non-existent for the previous few months when he got tons of bandwidth for free. He said he would pay “a fair amount”.

It’s been over a year now, and I’m assuming that by “a fair amount” he meant “nothing” because I haven’t seen a dime and have had to work on paying off the $14,000 by myself.

But the consequences don’t stop there. Having to pay off this $14K has had other repercussions. I was late on paychecks to employees, paid bills late, and of course had to beg mercy from my hosting provider and try to establish a payment plan.

So was I nice, or was I mean? I was nice to my client, but by being nice to him I hurt other people. I thought I was being nice by not having anything about bandwidth in the hosting agreement. I thought I was being nice by letting the server stay up and running after I knew about the problem. But nobody is happy now.

Worst of all, I feel like the client is a dishonest person because he said he would pay something and never did despite repeated voice mails and emails sent to him regarding the matter, and I don’t like feeling that way about people.

What does it mean to be nice, and what does it mean to be mean? I believe sometimes what other people might perceive as being “mean” or strict is the nicest thing you can do. I believe it all has to do with short-term vs. long-term.

My advice? Be careful, think about the details and the long-term consequences of your actions. Then do the right thing and be nice but firm. Don’t provide opportunities for people to take advantage of you or be dishonest to you. Remove the possibility at a systemic level. I’m convinced if you do this, and are sometimes mean about it, more people will actually think you’re nice than if you do what seems to be the nicest thing at the time.