Just over five years ago, the web hosting service provider I was using, went out of business in a bad way. In such a bad way, that there was no notice. The sites were simply gone.

I had to track down the reseller that Binaryblocks had used and pay them to get all my data off the server. Not cheap and not easy. Many people lost everything. The owner of Binaryblocks was a guy named Jason Piercy. It was all his fault. He cost me time, money, and effort due to his failure.

I was upset over this and posted about here and here. I even made a site called binaryblockssucks.com for people to discuss the problem.

By posting on the internet, Googlebot took notice. Currently, my site has a pagerank of 6, meaning that search results on Google show my site fairly high.

Fast forward five years. Imagine that you are Jason Piercy, the villain of this story. When you Google your own name, you find my post about you as the first hit. Take a look at Jason Piercy or Binaryblocks. How much does that suck?

Well, in my book that's the effect of the long, long arm of Google. Google doesn't forget things like this. And because Google doesn't forget, people can find out what happened in the past.

So Jason Piercy sends me an email that explains what happened to Binaryblocks and asked me to post it.

I had to think about this for a while. He's still a jerk and that hasn't changed. He still screwed me over, and I really don't care why. Rather than telling his customers what was going on and finding a way for us not to get screwed, he simply disappeared. The coward's way out. He literally took my money and ran.

I decided that I would post his letter. I consider myself a fair person and I think it's fair to let him say his peace. You can read it in the extended entry.

But this should serve as a reminder of the long arm of Google and how what you do will end up online. Even years later, you won't be able to escape it.

This is Jason's email in it's entirety:

Michael,

Please read the following, I would appreciate a posting of this on your
cruftbox.com site alongside the other posting in regards to me/my former
company. If you have any questions please feel free to contact me.

POSTED: Sunday, September 30th, 2007 on www.jasonpiercy.com/binaryblocks

Official Statement from Jason D. Piercy on the closing of BinaryBlocks Inc.
in 2002.

Although it has been some time since the closing of BinaryBlocks Inc. (over
5 years), I felt it has been necessary to answer some of the questions /
rants / character assassinations that have been posted on the internet in
reference to myself and the company.

First off, I want to apologize for the inconvenience that the closing of
this company has cause the numerous customers of BinaryBlocks Inc. I know
that having to find your website data, domain information and transfer this
to another server in a panic is not a fun experience. The loss of internet
traffic justs adds to this experience.

I also know that an apology 5 years after the fact is not going to make
things right for the former customers of BinaryBlocks Inc., but I hope that
the following summary of the situation below will bring some understanding
to the challenges / mistakes I have made in running BinaryBlocks.

The BinaryBlocks Inc. Summary:

Started in 1998, at the start of the dot com boom, as a sideline to my
application development business. I started as a reseller and provided
hosting services to existing clients in the GTA (Greater Toronto Area).
Because of the economic environment around internet companies, it grew
overnight to over 1000 customers.

In 2000, when BinaryBlocks Inc. reached its first 5000 customers, I had made
the decision to go big, and service customers throughout the North America
market (Canadian / USA). I had also decided to quit my application
development / consulting and focus all my efforts in growing BinaryBlocks
Inc. This was my first personal mistake, I should of stayed with the
application development / consulting as well, to supplement my income and to
help easy some of the stresses outlined below for BinaryBlocks Inc.

Being a young (twenty something) business owner, I have decided to
aggressively price BinaryBlocks services at a gross profit margin of 5 to
7.5% in order to make BinaryBlocks the lowest priced provider on the
internet in order to become the biggest hosting provider (in terms of number
of customers). The economic environment at the time was such that this
thinking was correct - grow dot coms in numbers of customers versus hard
dollars and cents. In hind sight this was the first fatal mistake
I/BinaryBlocks made.

I had started hosting BinaryBlocks customer accounts through several
providers, DataPipe, Cobalt Racks and more. We did not reseller these
companies hosting plans, but instead leased / rented dedicated servers from
these companies, developed our own hosting packages / accounts and supported
them ourselves. We have also signed up with Open-SRS as a domain register to
provide domain and SSL certificate services to our clients.

In late 2001, when moving some of our client sites around between our
servers/data-centers/providers, we ended up creating an outage and deleted
some 3500 customer sites. While this was a human mistake on our part, we
made it right to our customers via our SLA.

We introduced the first 5 nine (99.999%) guarantied uptime SLA (service
level agreement) in the hosting industry that was backed by a full year
credit on account for any downtime incident. (i.e. 15mins downtime = 1 year
credit for hosting) This has not been done before by any hosting provider at
that time or by hosting provider since. (For a good reason)

My thinking was that BinaryBlocks Inc. would not only have the best prices,
but also the best SLA agreement, turning a bad incident into a positive for
both BinaryBlocks Inc. and the affected customers.

We automatically credited all customers that were affected by the outage
above without question.

This aggressive SLA, while being great for the customers was BinaryBlocks
Inc. second fatal mistake. In doing the math today, it takes approximate 35
new hosting accounts to cover the costs of each hosting account that was
compensated under this incident.

Business went on and we continued to grow at the rate of ~ 225 new accounts
per month.

BinaryBlocks also stated developing our own server platform including
writing our own control / management panel. This new platform was going to
put us finally on the map as a true hosting company versus the current
leasing/renting servers from competitors.

With the new platform in place it was also estimated/budgeted that there was
going to be an additional cost savings equal to an additional 10% of gross
margin.

We had made arrangements to co-locate our servers within several
data-centers. The new platform would pair servers together at different
locations to provide redundant fail-safe hosting. Providing a platform that
allow us continue with our aggressive SLA without worry.

Now with the new platform, BinaryBlocks Inc. would have not only the best
prices, the best SLA, but now the best hosting platform on the internet.
Like many development projects the control / management panel project took
longer / costed more than estimated to complete and took most of operation
revenue from the company.

About 6 months into the SLA compensation period, mentioned above -
BinaryBlocks Inc. started to feel the pressures of these compensation
credits. While still growing at a steady rate, it was not enough to cover
the costs of operating, and developing out the new hosting platform.

On top of this the Canadian Dollar was starting to climb against the US
Dollar. This slight climb wiped out the majority of the gross margin the
company was operating on.

After review of this current situation, we decide to add some new services -
like dedicated server hosting, and got more aggressive in our marketing
efforts to turn things, including expanding into the UK and AU markets. This
think was against a traditional business approach of changing our SLA to a
more industry standard one, and adjusting prices to reflect the current
economic situation. Again this was inline with the thinking of the time as
far as dot com business was concerned. This was BinaryBlocks Inc. third
fatal mistake.

We continued to grow at a good rate and had ~ 15 dedicated server customers
by the end of year.

Up to this point, I have invested all of my time and savings into this
company. I was still driving an old 1990 ford F-150 (bought for $700 CDN).
The office was a home office. My personal life was not existent and in fact
suffered greatly as I spent every waking minute / dollar into the company to
get through the year of compensation credits. To this day I am surprised
that my wife and kids are still with me.

Anyway, I still enjoyed servicing the customers and I could see the end to
the economic pressures once the 1 year credits for compensation came to an
end. (October 2002) So I happily continued on.

In early 2002, in reviewing both my personal situation, and BinaryBlock's
economic situation, I made the decision to move ourselves and BinaryBlocks
Inc. back to my hometown in Fredericton, New Brunswick. In doing this I
could eliminate my personal cost of living, take advantage of lower wages
and finally get setup in a proper office. We moved in May.

During the move there were several servers that went offline for various
reasons and again we compensated the ~ 1500 affected clients under our SLA.

I leased 2400 sq ft office in downtown Fredericton, furnished it, outfitted
it with computers, setup phone lines and internet access and got operations
up and running in a proper environment.

All was moving along as planned and all we had to do was make it to the end
of September 2002, when the last of the first round of compensation came to
an end. In September the new platform would be implemented and we could
really staff up as we would realize the full revenue from our client base.

Then BinaryBlocks Inc. was hit with a three situations out of it control.

The first was the dot com bust. This economic down-turn in dot com /
technology market slowed down our sales, and instead of growing in numbers
of customers we actually start losing customers including the bulk of our
bigger customers (customers with accounts over $250 USD per month), the bulk
of our dedicated customers, the bulk of the customers which we had
development projects started/ongoing with. A majority of them closed their
accounts as they lost funding for their companies. The amount of
un-collectable receivables for these customers was in excess of $ 37,350.00
USD.

A secondary credit card processor supplier disappeared in June 2002 (not our
primary - WorldPay) with not only $ 7437.21 USD of BinaryBlocks money but an
additional $ 23,876.53 USD which we processed on behalf of clients through
our payment gateway services. We paid our clients these monies as per our
contract/agreements with these customers.

Then Revenue Canada (the Canadian Taxation Agency) in their infinite wisdom
decided to assess our company 7% GST (Good and Services Tax) on our revenue
from US Customers. Under the taxation law if goods and services are sold to
US customers they would be exempt from this tax, but they did not understand
the internet hosting business and assessed BinaryBlocks anyway, thinking
that the services was bought and used in Canada. An example of their
thinking on this assessment was that we were like a Canadian gas station and
we needed to charge GST to US customers buying and using gas while on
vacation in Canada. I started to fight this assessment but realized it was
going to take years to straighten out.

With the above loss of cash flow, I had to start robbing Peter to pay Paul.
In this case delaying payments to my suppliers in order to give the above
customers their credit card monies first, then paying the suppliers about
10% to 15% on the dollar for a couple of months.

My suppliers got unhappy with these payments and would not work with
me/BinaryBlocks Inc. over a period of 3-6 months until I got back on a level
footing. They shut down servers etc. I do not blame the suppliers for their
decisions; it was just a business decision on their part.

With all of this happening at once, I had no choice but close the doors and
walk away from the office, etc.

I spent the next 3 years of my life doing nothing other than fighting with
Revenue Canada to resolve the GST assessment issue and to finalize and close
the company.

This experience has taken a big toll on me. I basically crawled into myself,
spent 4 years doing nothing but feeling depressed and only recently (last 2
years) started to play with computers and the internet again.

Last week, I have decided to google myself and my former company
BinaryBlocks Inc. In doing so I see that there is a fair amount of
complaints about my conduct in running BinaryBlocks. While some of this
information is understandable some of the personal attacks and
misinformation are definitely not warranted.

I would like to clarify some of these points:

I really did enjoyed serving BinaryBlocks customers, at that point of my
life it was my passion. For the customers that I met in person (some
travelled up from the US) and the countless others than I talked to in the
middle of the night during a support calls - I miss serving you!

Businesses fail every day, and allot of internet companies did back on the
dot com bust. I am truly sorry that BinaryBlocks was one of them.

I did not take the money and ran. In fact, I sank all of my personal savings
(over $71,000.00) into this company and I did not draw a dollar for wages
period.

I did everything with the attention that the company would be around even
today, growing and serving its customers.

Yes, I made several mistakes as outlined above but did not know I was making
mistakes at the time the decisions was made.

I am not was affiliated with ARACTELNETWORKS. They were a reseller of
BinaryBlocks Inc. and decided to take advantage of the closing of
BinaryBlocks Inc. by stealing the BinaryBlocks website.

I certainly did not attend for BinaryBlocks to close and force any hardship
/ stress on its customers. If I had any monies available to me/BinaryBlocks
at the time of closing - I would have done everything in my power to make
the transition to new hosting providers allot easier for the customers.

I know that this statement/apology will not change the past and/or relieve
the hardship / resentment felt by our former customers, but would help bring
some understanding to the situations that I was faced with.

Sincerely,

Jason D. Piercy
jdp@jasonpiercy.com

Posted by michael at October 09, 2007 07:47 PM