When first venturing on a new startup, it’s natural to divide responsibilities between founders and early employees. There is so much to be done that there is no time to stop and think about redundancy and replication.
But what is effective in the early stages of a company can cause serious problems later if information is not properly distributed. Just as we wouldn’t engineer our cloud platform with a single point of failure, entrepreneurs should make sure critical information is available to other members of a company in case a founder or employee becomes unavailable.
The more people who know about critical information and processes, the better. There’s a name for this effect: the bus factor. Rather callously, the bus factor refers to the number of people who would have to be hit by a bus for information to be lost.
The lower the bus factor, the higher the risk of important information being lost. It doesn’t have to be a literal bus, of course. A falling out between founders or the firing of an employee, a personal emergency, or a simply loss of interest can put an information bearer at odds with the interests of the company.
When founding a company, it’s often the job of one of the founders — or even an employee — to register a domain name. It’s quite common for that person to register the domain name in their own name. There’s an obvious risk here, but judging by the number of occasions on which I’ve seen this become a serious problem, too few realize the risk. This is one area in which having a high bus factor is crucial.
Another critical area in which information should be shared is infrastructure hosting. For modern startups, cloud infrastructure is key. In two-founder startups, it’s usual for one of the founders to take care of technical details like infrastructure and the other to lead on business acquisition and marketing.
The non-technical founder can be left in a sticky position if knowledge vital to controlling infrastructure leaves the company with the technical founder or an employee
Cloud infrastructure and services offer a solution to the problem of low bus factors, empowering companies to share and collaborate on information safely and securely.
SaaS password managers can be used to safely store and share business-critical authentication details. Cloud storage offers the same capabilities for documents, including code and documentation for business critical processes.
Avoiding bus-factor problems may be the furthest thing from the mind of an entrepreneur who is fully engaged in creating a new business, but neglecting to share information can result in substantial opportunity costs and lost business later in the company’s life.