"They could have done the typical start up bullshit of pumping out a load of buzzwords as to why the service was down. No, they said "yeah our admin deleted something"
No, they couldn't. That's the thing most people totally ignore: they could not go that route because they weren't big enough. If they had gone that route and things would have leaked then the backlash would have been devastating. They had no other choice but being transparent.
"As with life when the shit hits the fan it's only then changes are made. In business, you don't make a change to fix something that could happen."
That's nonsense in my opinion. An outage can happen, but you don't change a backup strategy when you realize that it no longer works? You seem to forget where the money is coming from: it's from customers who rely on a company to handle those things for them which they don't (or can't!) think off.
And it's not as if others haven't gone here before. As a startup company there's plenty of material out there which can educate you in the "do's" and "donts" of business and IT in general.
And let's be honest here: not even bothering to actually look at a backup to see if it has done anything at all? Seriously? That is, in my opinion of course, way beyond a simple mistake which anyone would make. Sure, an amateur or newbie could do that. But not a company which gets paid by their customers to look out for them.
"But, while all this is going on, if you put your code on here to be kept safe then what does that say about you?"
Reverse logic much? Well, for starters: it shows that you have faith in a starting up company to at least respect their customers and ensure that they get what they pay you for. Following your logic I guess that's asking a bit too much?
"You can't put all your eggs in the someone elses basket then start crying when they drop it."
You can when you paid them a lot of money to do that for you and they ensured you time and time again that they would not drop it. Here's a real important question: did customers get some kind of a refund for this horrible messup? I don't think so...
Say, just curious: you wouldn't be happen to work for them? ;)