Navigating The Entrepreneur’s Path

Editor’s note: Tim Chen is the CEO and co-founder of NerdWallet, which helps consumers make financial decisions.

The mystique around starting your own business is thick. The romanticized view of founders slaving away in garages ready to unleash their “great idea” upon an adoring public and fawning investors is the stuff of American dreams.

The reality is businesses are often born in desperation, fueled by loneliness and doubt. The distance between starting your own firm in your bedroom and hiring your first employees is a long stretch filled with empty Dominoes boxes, dwindling bank accounts and unreturned calls. But the myth is right when it comes to job satisfaction – once you earn your first dollar under your own steam, you can’t imagine working for anyone else again.

I doubt I would have started my own business had I not been let go as a hedge fund manager at the height of the financial crisis in December 2008. I will be forever grateful I was fired. But I sure didn’t feel that way at the time.

A confluence of three things germinated the idea that would become NerdWallet: My sister asked for help to find a credit card; my experience doing public market investing research for hedge funds; and the time on my hands while I was looking for another job. Dissatisfied with the online credit card comparison sites out there, I thought maybe I could do it better. A side project while looking for a job is now a profitable, bootstrapped startup with 100-plus employees.

But our success was far from assured the first few years. There are many rough patches on the long march toward profitability.

Fair-weather friends flee. Some of my finance friends started to become harder to reach as my career looked like it had permanently nose-dived. Whereas failure is celebrated in Silicon Valley, on Wall Street it makes you a pariah. Friends on the Street I used to dine and drink with stopped returning phone calls and emails, as if my career setback was contagious. Fire and brimstone was falling from the skies in those days, crashing through markets and sinking margins. I suppose connection with me carried too strong a whiff of sulfur for those still clinging to their jobs.

It sucked. And it’s telling that the first person to join me in my new venture was Jake Gibson, my best friend from my boyhood days in Atlanta, who came on board 18 months after I started the company. In short, you find out fast who your real friends are.

Money falls fast, too. My first year running my business, I earned $75. I was able to pick up some consulting work for hedge funds to help make ends meet. I ended up going on my girlfriend’s health insurance policy to save cash. For bootstrapped entrepreneurs, this period of austerity is like growing up during a World War, where rations are strict and you count every dollar. Even though I had quite a bit of savings, it’s very psychologically difficult watching your bank account go down every month with no prospects of a paycheck.

Your diet degrades. Spending so much time alone with laser-like focus on your company is hard on your stomach and waistline. I ate Subway or Domino’s extensively, or forgot to eat, as I optimized for cost and convenience. Eating became a distraction, a growling stomach an annoyance. I ate the same thing — a half-foot Black Forest Ham on Italian bread with provolone cheese – and became so automated I could order without losing my train of thought.

You lose verbal skills. Working 16 to 20 hours a day alone from home kills your ability to communicate – or relate – to another human being. When I forced myself to get out of my head and go to a party, I found I couldn’t hear – or often care about – what others were saying. If I opened my mouth, a stream of consciousness about what I was working on that day would burst out. You’re like a mountain hermit coming down from the hills. It’s hard to relate to city folk.

I’m glad I didn’t know then what I know now; the learning curve is so steep when starting a business. But being naïve can pay off; you explore opportunities others ignore because you don’t know any better. And I doubt I would have done this if I had a wife, kids and a mortgage to pay. It pays to be single and clueless. Work is so all-consuming, I would have had to have an extraordinarily understanding partner or a good divorce attorney. The financial responsibility of people who depend upon you would inevitably lead to seeking a quick payoff rather than digging in for long-term rewards.

Luck is as important as smarts. Hard work goes without saying, but luck is elemental – and something you can’t control. About two years after starting NerdWallet, I was given an opportunity to end my exile from the hedge fund world. I was offered a fund manager position with $75 million in seed capital. As luck would have it, the offer came at the same time that NerdWallet turned a financial corner — our profits quadrupled in a single month. Had that job offer come a month earlier, I might have taken it.

But after two years foraging through the entrepreneurial wilderness to finally find a clear path toward profitability, there was no looking back.