Agreed. How could a company with "millions in revenue" not backup critical databases? Not only were they exposed to the threat of human error, but hardware failures, hackers, etc. When he submitted his resignation, the company should have encouraged him to stay. Instead, anyone at the company that had anything to do with the failure to implement regular database backups and the use of redundant databases should have been fired.
I've had more than my fair share of failures in the start up world. It always drives me crazy to see internet companies that have absolutely no technical ability succeed, while competing services that are far superior technically never get any traction.
It's the difference between understanding the incident (programmer makes mistake) and the root cause (failing at data integrity 101). Not just no backups, but no audit log of what's happened in the game - I'd expect an MMO to have an append-only event history quite apart from their state information.
I've seen something like this. It could be a situation where they were transitioning from that backup service to their own server or another service, and the move was never completed due to some hiccup or priority change.
But if no one is watching to ensure the move was finished (or they got distracted), then something many people treat as set-it-and-forget-it could easily get into that state.
I don't think it is that far-fetched. I've had experience with a well known company that does millions in revenue per week (web based shopping cart) that just FTP's everything with no DVCS. Designers, developers, managers all have access to the server and db.