The Exchange

I Lived Out of My Car to Fund My Startup

Austen Allred, the co-founder of social news-sharing app Grasswire, was like any other budding entrepreneur when he set out earlier this year for the West Coast in hopes of funding his startup.

He was broke.

Trouble was, the 23-year-old Utah resident knew he needed to spend a few months in Silicon Valley pitching his idea to potential investors, but he didn’t have enough in his savings account to support a long residency in pricey northern California.

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A look inside Allred's Honda Civic, his Silicon Valley home for three months.

So he did the next best thing: He lived out of his car for three months while making the rounds of Silicon Valley’s venture capitalists.

“I look at it as, really, an apartment is a place to sleep, and a place to shower, and a place to eat,” he explains. “So I slept in my car, and then I would shower and get ready at the local YMCA ... After a while I’d tell people that I was living in my car and they’d go, ‘Oh, that’s crazy.’ And for me it was like, ‘Oh yeah, people don’t do that.’ [But, by then] it was just part of life.”

A set routine

Allred says his routine didn't vary too much from day to day. He slumbered in a sleeping bag spread across the front and rear seats of his 2002 Honda Civic EX Coupe, got up with the sun, went for a run, then used the bathroom and showers at the YMCA. He spent the rest of his time working at the Hacker Dojo, a nearby coworking space, and traveling to meetings all over town. The coworking facility had a small kitchen where Allred was able to prepare his meals, along with power and Wi-Fi for his laptop.

As for logistics, Allred says he preferred parking in empty church lots for privacy, though he didn't tint his windows, put up curtains or otherwise make any modifications to make the car more comfortable. Overall, the weather was pretty nice while he was in California, though he says it would get hot in the car during the day.

"I had to go to sleep when the sun went down and get up when the sun came up," he says. "That sort of disciplined me to make sure that I’m going to sleep at a good hour and getting up at a good hour, so it actually worked out great."

It also forced him into a more minimalist lifestyle.

"When everything you own is in a Honda Civic, you pay a lot of attention to what do I really need versus what’s just garbage that I want but don’t really use," he says. "I don’t really have many clothes, I don’t really have very much stuff, but I’m totally content and fine with that.”

And the savings were significant. According to the U.S. Census Bureau's American Community Survey, the median rental price in Mountain View, where Allred was parking, is nearly $1,250 per month, a far cry from the $250 per month he pays to rent his apartment in Provo, Utah. So, rather than spend roughly $3,750 simply to put a roof over his head during his time in the area, Allred's expenses boiled down to about $300 per month for gas, food, and memberships at the local YMCA ($16/month) and the Hacker Dojo coworking space ($100/month).

A worthy sacrifice

The gamble paid off, and Allred returned home from California in early August with several investment offers lined up and plans to launch Grasswire publicly by the end of the month.

Allred is quick to point out that homelessness isn’t going to become a habit, however. Now that he is known in Silicon Valley circles, he says he doesn’t expect to have to slum it the next time around. “It’s kind of one of those things where, if you meet the people once, you don’t ever have to meet them again,” he says. “They’re just in your network.”

Of course, Allred is far from the first aspiring entrepreneur to spend time living out of his car. Former hedge fund manager and now CNBC host Jim Cramer famously spent nearly six months in his car on the streets of Los Angeles in the late 1970s, after thieves broke into his apartment and left him nearly penniless. Cramer even credits the experience with helping shape his investing strategy, but is quick to admit, “that was a terrible six months.”

In Silicon Valley, “flexible living” is even something of a tradition. Apple (AAPL) co-founder Steve Jobs spent over a year couch surfing in friends’ dorm rooms after dropping out of Reed College in 1973, trading in glass soda bottles to raise money for food.

More recently, in 2012, entrepreneur Kurt Varner “moved” from Los Angeles to the Bay Area, where he lived in his own Honda Civic in the Palo Alto, Calif., area for four months in an effort to bootstrap his latest startup, Daily Toaster. For his business, he told Inc. magazine at the time, he really just needed to be in Silicon Valley, no matter what the personal cost.

What do you think? Is forgoing the apartment a viable way for entrepreneurs, and others, to cut costs in this economy? Or is it just a short-term, and uncomfortable, solution to a long-term problem?

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