Security Breaches Destroyed These 4 Businesses

dropbox-cloud-storageStartups start and fail. It happens every day, and yet when a startup fails because a hacker maliciously attacked the business and extorted it or deleted data, well that’s a reason to be extremely disappointed. It’s sad really, and more devastating to entrepreneurs than losing a business to financial losses or a faulty business model. Challenge-based losses can be understood and quantified, and there’s a degree of responsibility on the business itself.

A security breach is no one’s fault, except for the hacker’s and yet these criminals are rarely caught. Startups are urged to protect their data. Backup your accounts two times (on a cloud-based server and an internal backup). Make sure all your data is protected, including your backup data. This means securing it with complete small business protection that includes cloud security, virus protection, mobile security and more.

Without further ado, here’s some businesses that lost it all after hackers infiltrated their systems.


It’s unlikely you remember Nirvanix, the cloud storage company that was attacked by hackers. The company received more than $70 million in venture capital funds, got hacked, and then disappeared overnight. “One lesson from the situation is clear,” writes cloud expert Brandon Butler. “If you have a lot of data in the cloud, have a plan for how to get it out quickly if need be.”


Distribute.IT was founded in 2002. Resellers would market the service, which offered customers cloud-based web server hosting, SSL certificates, and SMS services. The company swiftly grew, and in eight years have secured 10 percent of Australia’s domain names. With more than 30,000 hosting clients and 3,000 active resellers, Distribute.IT was a huge ecommerce success.

Unfortunately, a hacker was able to infiltrate the company’s security. The hacker gained access to all the company’s data, including information that was previous sequestered to a master account. It wasn’t long before Distribute.IT had to distribute itself out of business.

Code Spaces

Code Spaces is yet another example of a cloud based company susceptible to hackers. If you take anything away from this blog post, make sure to secure your cloud and backup your data. The innovative startup was charged with offering developers a source code repository and project management services. Unfortunately, their business was hosted on Amazon’s cloud, and that got hacked.

The hackers attempted to extort Code Spaces. They suggested the business could pay a fee and receive all their data. In a move that proves you don’t negotiate with terrorists, the hackers deleted all of the startup’s data – every bit of it, which completely destroyed the startup.


MyBizHomepage was an innovation that instantly received media attention. The idea was to create a system capable of crunching business data. “The idea was that by checking in on their key numbers every day, a business owner could see where he was headed,” said the company’s founder, Peter Justin. It seemed MyBizHomepage was next in line to be a huge, household name startup. Unfortunately, the instant popularity wasn’t enough to settle disputes between the company’s founder and senior officers.

Justin fired three senior officers, including his chief executive and chief technology officer. The three senior officers wanted to sell the company, but Justin disagreed. They parted ways, but the three fired employees decided to get revenge. They caused a massive security breach, sabotaged the site, and the company went down in flames.

Hacking is a real threat for startups. Attacks can come from someone internal who knows your private information, or hackers may target your business and take you down. You need to protect your business, so keep your information secure and your data protected by protection software.

Published by Kidal Delonix (1066 Posts)

Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.

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