But people did use it, enough that it caused them to be horrendously slow. This means they should put more money into making it bigger. If there are a few hundred "innovators" (in the Everett Rogers/Crossing the Chasm sense) who were so alienated by bad service during the beta that they will never ever use it again, even when it becomes a good service...well, that sucks but has no bearing on the ultimate success or failure of the service.
If you're going to beta test something, you have to expect it to have a few flaws. That's the point.
Maybe in disneyland, but that's mostly how things go down in the real world. It's a startup, first week, got hammerred by HN heavily, probably others, that's as much as they can handle. Things will go fine, they just need the time to adjust.
If Magic wants to be competitive, it needs to have services equal to or better than existing options. (The Postmates comparison mentioned in the article is valid). That's the way it is with all startups and "they're just figuring themselves out" is not a sympathy granted by the marketplace.