For the last several years I've been running a business whose primary purpose, really, is charity: providing high quality technical services to people and businesses who couldn't otherwise afford them.
It sounds like a noble cause, but it sucks balls.
You're not serving your customers' needs if you end up in the hospital for any of a hundred different reasons that can happen to anyone at any time, and there's nobody that can manage the service for you while you're out. (Look: you obviously think that having a backup plan for data is important; why do you not think that having a business backup plan is also important?)
You're not serving your customers' needs if you can't afford to ensure the integrity of your own infrastructure. No business lasts forever; what happens if Amazon, two years from now, starts making policy decisions that cripple your business? Steve Jobs died just over two years ago and most people agree by now that Apple has become a different company. Bezos is not immortal, and there's a board of directors that would very much like to be making a lot more money from Amazon.
You're not serving your customers' needs by maintaining an unnecessarily high barrier to doing business with you. I do web and mail hosting for a number of customers. Having backups is really important to me. But I'm also busy and underpaid and my hair's always on fire and my bank account never has quite enough money in it, so tarsnap for me has never looked better than my current backup system (BackupPC on a machine I have physical access to in a secure location). Excel modeling to attempt to estimate my monthly costs for a service is obnoxious.
You're not serving your customers' needs by being unable to fix problems that they are actively complaining about because you're the only engineer in your business capable of addressing them.
Colin's current way of doing business is actively interfering with his goals -- assuming those goals are anything more than, "provide a cool backup service as a hobby".
You don't have to become a disciple of SV startup culture. There's a fantastically large middle-ground that allows for changing the business just a little bit without sacrificing its soul.
The amazing thing here is that both Colin and Patrick are amazing engineers: Colin as a software engineer, but Patrick as a business engineer. A business is an abstraction that can -- and should -- be engineered. That means understanding the scope and requirements of the problem being solved and then coming up with a system that meets them. Colin, for godssake, take Patrick's advice just as seriously as somebody should take your advice on cryptography.