Getting a startup off the ground takes time, talent, and money.  Time can be stolen from various parts of your life with some determination and prioritization. Talent can be eventually learned or acquired with cofounders.  Money's different.  You can do a lot of things to reduce the need for money, but it usually takes some capital to get your idea off the ground initially.

I still remember the night I met with my 2 cofounders of my first company to talk money.  We had been working on Openvote for about 6 months while in business school together.  It was our first startup,  and so far, it had been super fun.  We had a vision for changing the world, and we weren't afraid of the hard work or the low likelihood of success.  I remember this particular evening in part because the weather was horrid.  We were sitting in our bud's living room in New Hampshire with a wind howling outside.  Though warm inside, we were all very tense.  With no technical cofounders onboard (I was so silly in those days!!), we needed money to hire coders.  With a few other items budgeted, we had determined that our startup needed a bare minimum of $20k to get off the ground.

One of our co-founders came to the conclusion that he couldn't put any money into the company.  With a wife and a kid on the way, he couldn't justify any financial risk.  He also couldn't go without a salary.  It was a really painful moment, but we had to cut him loose as a cofounder.  I hold no judgment.  Startup drag coefficients are very real.

My other cofounder was able to come up with $4k, but couldn't risk anything more.  We agreed that I would be responsible for the last $16k.

For some personal background, I do come from a financially stable family.  My parents could have covered the $16k to help me follow my dreams.   But I didn't ask them (and neither did they offer).  The financial pressure and responsibility of my startup was to be fully on my shoulders. 

But I didn't have the $16k or anything close.  I had spent the first part of my twenties working at summer camps, pulling in a whopping $31k a year.  Then, I went to business school where all my friends had expensive tastes in restaurants and vacations.  At this point in my life, I had access to about $5k in cash and was substantially in debt with loans.  That $5k was already not enough to fund my personal expenses for the rest of business school.  I budgeted that I needed $22k to cover the startup and my personal costs.

I could have gotten a normal MBA-type internship and earned a bunch of money.  But I was also impatient.  I knew that our startup had momentum and delaying for any reason was off the table for me.  

And, so I raised my money through credit card arbitrage: $22k across 14 different cards. 

Financing problem solved.  Now we could continue with building our startup.  Of course, I knew that debt never solves money problems, it just delays them.  But for a startup at embryo stage, delaying problems can be nearly as good as solving them.  I'm going to tell you how I did it, but first, my quick disclaimer.  I don't ever recommend this strategy to anybody. Fucking around with credit card debt can do bad, bad things to you.  But if you insist...

How to Play Credit Card Arbitrage

Research the fuck out of credit cards
If you're going to do this strategy, you need to make yourself the world's expert on credit card terms and conditions.  You're playing with fire with credit card companies.   A big part of their business model is built on deceiving customers with hidden terms.  This, this, and this should get you started.  Pay close attention to the risks.  Be careful in your reading.  Most sites that talk about this stuff are monetizing through credit card affiliate fees.  (FYI—I have zero affiliate or monetized links in this post).

Check your credit score
Go ahead and get all your credit reports.  You get them free once a year.  Fix any mistakes and make sure that your credit score is as good as it can be for the time being.  While you're at it, research the fuck out of credit scores.  This, this, and this should get you started.

Find introductory APR credit cards
The game of credit card arbitrage is played because many banks offer introductory 0% APRs for the first year.  They also often offer a few courtesy checks with low cash advance fees of somewhere around 3%.  This means you can write yourself a check for a 3% transaction fee and pay it back within a year with no further interest.

Apply for all the cards all at once
Once you start increasing your credit, your credit score will drop.  But there's a lag in processing the change.  If you apply for a whole bunch of cards at once, your credit decisions will all be based on your original score.  You can stagger them a bit to increase the time you get for credit card arbitrage and to take advantage of account balance transfers which are often initially 0%; however, you risk getting denied for cards or receiving very low credit limits.

Put your cash into interest bearing accounts
I recommend uber risk-free accounts.  I usually just stick with ING's money market savings account.  The point is not to create wealth with this investment, but to help cover the transaction costs.  Your high-beta gamble  is on yourself and your startup. 

Sign up for automatic minimum payments
You'll need to cover the minimum payment every month. Set up to have each of them paid automatically out of your bank account.  It's really easy to fuck everything up if you're not super organized. 

Set the clock for repaying your credit cards
You have 12 months to pay everything back.  Get cranking on something that makes money and get yourself out of this trouble you've created for yourself...

So, yeah.  That's about it.  For me, it worked out both terribly and perfectly.  The terribly part is that our startup failed, and I never paid myself enough to pay the cards back.  At the end of Openvote, I was saddled with all this credit card debt, plus opportunity cost loss from no salary, plus no job.  It was a tough time.  Even though I was exhausted from the startup's failure, I had earned myself 6 months of working days, nights, and weekends on boring consulting jobs just to get back to even.  It sucked.

But I don't regret it for a second.  It many ways, it worked out perfectly.  It was during that really tough time that we founded FlightCaster.  I had learned just how much I love startups, and it was no longer based on some romanticized view of entrepreneurship.  My friends that deferred their startup dreams for high-paying consulting jobs got no closer to learning how to build a startup and, worse, became accustomed  to the life that a high salary affords. 

I, on the other hand, learned that the risk and hardship of startups and debt were worth it because I was happy.  And, as a Mastercard customer 12 times over, I can say confidently that that shit is priceless.

A Caveat:  Don't do this.  Don't do any of it.  Learn how to code so you don't need to hire programmers.  Get yourself into one of the bagillion incubators out there.  Find a part-time job that you can do to make money on the side.  Do something.  But whatever you do, don't fool yourself into believing that lacking $15k is what is preventing you from doing a startup.

Find discussion of this post on Hacker News.

For those of you that know me well, you know that I have terrible, horrible insomnia.  In high school, I would go to sleep around 3am and then struggle to get up at 6:30 am.  I would drink a dozen Mountain Dews everyday just to stay awake.  In college, my schedule shifted further so that I was falling asleep around 6am and sleeping until 2pm.

It massively affected my life.  I once slept through the finals of a doubles tennis tournament.  My 4 alarm clocks and the repeated calls from my partner didn't wake me up.  I remember once, in college, having an important meeting scheduled for 8am.  I had to stay up all night to ensure that I would be there.  Because I was so nocturnal, I couldn't take any morning classes.  In 4 years of college, I took 1 class before noon.  I probably missed 75% of the class sessions and barely passed.  There were all sorts of fascinating classes that I would have loved to take but couldn't because they weren't afternoon classes.  

And I really tried to fix it.  I tried everything.  I saw sleep doctors and spent the night in sleep labs. I tried melatonin, ambien, lunesta, cutting caffeine, exercising everyday, meditation, sleep rituals, etc.  It was so tough.

And I've now, finally, 100% fixed it.  

I have delayed sleep phase syndrome.  I still have it, but I've totally managed it.  I don't let it run my life.

Last year, I wrote a blog post explaining exactly how I did it, entitled Become a morning person.  How to end insomnia for $520.99.   The post explained that delayed sleep phase syndrome is solved by regulating light.   Light at night (specifically from the blue spectrum) pushes our circadian rhythm later, causing us to go to bed later.  Bright light in the morning (bright enough to be over 5000 lux) pushes your circadian rhythm back, helping you wake up earlier and go to bed earlier.

This light manipulation is just mimicking our more natural state when the sun was our primary source of light.  Now, with interior lighting, back-lit computers, and 52 inch TVs, we get far more light at night than we should.  With shades blocking our windows in the morning and with spending all day inside, we get far less light during the day than we should.

My blog is about startups and all this sleep stuff doesn't have anything to do with startups or MBAs sucking.  But, as of now, that blog post has gotten over 130,000 views.  On Hacker News, it has generated 110+ comments.  A year later, hackers still mention that post to me quite frequently.  At the time I wrote it, I knew intuitively that hackers faced insomnia at a high rate.  A bunch of my friends in the startup world are night owls just like me.  And it seems to be delayed sleep phase syndrome that specifically hits entrepreneurs the hardest.  

What's the connection?

Why do so many entrepreneurs have insomnia?

I've got a few theories I want to share.  These are all based on observation and personal experience.  I would love to hear your thoughts. For those of you still in school, I would love love love to see what actual research has been done.  Please leave any good research finds in the comments here or on Hacker News.

Theory 1:  It's Genetic.

The same set of genes that makes for an entrepreneurial predisposition also causes insomnia.  Just by using the word 'genetic' I can say confidently that we're beyond my pay grade.  Go to it grad students!  Who has research to support or refute this claim?!?!  I have some thoughts that it's related to hypomania, but that's for another post.

Theory 2:  Insomnia makes 'normal' careers too difficult

I wonder what my life would have been like if I could have gotten up at 6am.  I remember my one normal internship as a consultant in college.  We were due in the office at 7:30am and it was an hour commute.  I was a zombie that entire summer. There were many reasons that I didn't like that career direction, but I do wonder how many times smart, driven people have shied away from a career path because the mornings were just too painful.  Have any of you had this experience?  With the traditional 9-5 jobs so physically challenging, the ability to work later in the day as an entrepreneur become almost a necessity.

Theory 3:  Entrepreneurs create a self-perpetuating night owl culture

Normal 'office hours' in our startup are 11am to 3am'ish.  At my buddy's startup, they started offering really good lunches to encourage people to get out of bed and come into the office.  Want time with the founders?  Join them at 11pm when the office is in full gear.  

We have one guy on our team that has really bad delayed sleep phase syndrome.  When he's around, everyone else also shifts a few hours later in the day.

Theory 4:    Entrepreneurs need to focus.  Night is simply more productive.

When we were building FlightCaster, we were dealing with some gnarly shit.  As an engineering team, our guys couldn't really focus on tough stuff until everything settled down.  Even with 'wired-in' rules, quiet rooms, and no meetings, there's still lots of commotion during the day.  At night, no one bothers you and you can focus for 8 hour chunks.  

One of the reasons I didn't care about the morning start time was that our guys were being so damn productive at night.  And more productive than normal people.  In fact, for a period we tried a normal schedule and it destroyed our productivity.

So, those are my theories.  I usually try to offer stuff with this blog, but this time I'd love your collective help.  Insomnia affects a huge number of us.  Please do include any research you find in the comments and on Hacker News.  I know that for me, learning about delayed sleep phase syndrom and the effects of blue spectrum light has vastly improved my quality of life.  If you're struggling with getting up in the morning and going to bed earlier, check out my original post and give it a try.

Thank you to everyone who has been supportive of me with this blog since I started it last year.  Many of you have voiced your appreciation for posts that you've found helpful.  It's been a really fun experience and a nice way to pay it forward as so many people have mentored me on my own path.  The fact that FlightCaster got acquired halfway through my first year of blogging just made the whole thing easier.  The acquisition gave me a credibility bump and empowered me with confidence.  I generally find that my best posts (based on my feelings for them, not just reader counts) have a nice balance of me as a person and suggestions for other entrepreneurs.  I have tremendous pride in what I do and I love doing it.

But I feel like a sham.

I'd like for this blog to be more honest, so I have a few things to share with you.  I'm not nearly as proud of my actions at FlightCaster as I make myself out to be.  To be 100% clear, I'm incredibly proud of my team, my cofounders, and all the awesomeness that we created together.  Working with my best friend to create our dream was a pure honor and I'm fortunate to have been a part of it.

But I'm not proud of how I did it, and I feel like I get more credit for our outcome than I deserve.  Part of the reason for that credit is that I actively promote it myself.  But inside, I know that I mostly just got lucky.  And I got lucky in spite of myself. 

I'm sorry.  This isn't coming out very well.  Let me try to be more clear.

From day one, I feared failure and it affected every decision I made.

There, that's mostly what I wanted to say.  I was not really a courageous founder; I mostly wanted to not fail.  My first company failed and I ran out of money (both my company and me personally).  When we started FlightCaster, I felt that I was lucky to get another opportunity at startup life.  For the first few months, we worked our asses off and it was awesome.  But soon, I started feeling stressed about the possibility of failure.  With one failure under my belt, I felt that another failure would put an end to my startup dreams.  By this time, we'd gotten into Y Combinator, one of the greatest startup handicaps ever created. If I couldn't succeed with YC's help, than I was truly incapable.

My fear of failure caused me to make several stupid decisions.  First, I built our team up too big, too quickly.  Then, because I was so nervous about not having enough momentum, we built out our product faster than our customer development process dictated.  Before launch, we'd created our flight delay prediction back-end with a working website, iPhone app, and Blackberry app.  That's insane!  Three front-ends before launch!  Each with 1-2 people building it.  And I know why I did all that.  I was so fucking scared of failing to raise money post-Demo Day, that I felt like I needed to show we were further along than we really were.

I'm incredibly proud of the investor crew we put together.  But the truth is that, again, my fear drove my decision-making during the raise.  We took on too much money, too early.  Pretty much against everyone's advice, including that of our investors.  And it was my call.  If I'd had more confidence, we could have gone 6-12 months longer with a smaller team and on less money.  We could have validated our product and built our company before giving up too much equity.  But I equated 'not raising enough money' with 'failure.'  I look at some of our batch-mates who waited a year after YC to raise money and they now have the foundations of really sustainable businesses.  I'm so proud of them.

Even our acquisition was driven by fear.  We had another round of funding on the table, but I so wanted to call FlightCaster a win and didn't want to risk walking away with nothing.  Yeah, we were stoked about the company that was acquiring us, and it looked like a good opportunity for us, for our employees, and for our investors.  But I love working for myself. Was this what I really set out to do—to sell my company only two years after starting it?

The truth, again, is yes.  Everything I did with Flightcaster, I did consciously or unconsciously with an eye towards selling the company quickly, getting out, and getting my win. 

Am I glad we sold?  Absolutely.  At the time, it was the best possible conclusion to a series of decisions that had led us there. But it's time for me to be more honest with all of you and to tell you that I'm going to do a better job next time.  I'm not going to let my fear of failure drive my decisions next time around.  If we fail, we fail.  A startup failure won't affect how my family sees me, how my friends see me, or how my girlfriend sees me.  And I'm never again going to let the possibility of failure affect how I see myself.

***

So, with all of that now said, I want to tell you that I'm starting a new company.  It's called 42Floors.  We're going to fix commercial real estate.  For some reason, commercial real estate never adopted the internet.  That will soon change.  I'll have a lot more to say about the company in future posts but for now, just know that I'm giving it my all this time.  I want to build a company that I can someday tell my children about.  I have visited my grandfather's company, and I know what courage it took him to build it.  I have dreams that my grandchildren will someday walk the halls of a company I created, and they'll be proud of the impact I made on the world.

I also plan to hold on to the truly honest posts like this one so that my children and grandchildren can know that I got scared too. The fact is, I'm still scared that I'm going to fail.  I can't completely get rid of the feeling.  I am simply choosing to no longer be bound by that fear.  We may make it, we may not.  But I'm determined to be more open and more courageous in the process. 

I would love it if you'd help keep me honest.  While I appreciate your support, I most appreciate the skeptics out there who push me to do better. From here out, please consider your 'unsolicited' advice...very much solicited and appreciated.

I thank you in advance.

Please come check us out.

Sign-up to learn more at 42floors.com,

and like us on Facebook.

and follow us on Angel List,

and follow us on Twitter.

Sign-up now to among the first to participate when we launch.  It's cool shit.  Don't miss out.

I would also greatly appreciate introductions to potential advisors.  We're not fundraising until the spring, but I'm happy to 'get coffee' with people who are interested in getting to know us.

Find discussion of this post on Hacker News.

******************