How I Went from Being Homeless in NYC to Running a Tech Startup

The Merits of Having No Backup Plan

Sometime in early August 2011, I sat on the bottom stair of a subway station in Manhattan. It was about 2 am, and the train wasn’t going to arrive for another 15 minutes. Once the train picked me up from Union Square, it was going to take another 30-40 minutes to get to Flatbush, and another 11 minutes for me to walk from the station to the “apartment” I was living in.

In reality, the bed I was headed towards was actually a floor, located in the top room of a building forgotten by Brooklyn’s gentrification efforts, and littered with cockroaches. The subway station had to have been over 100 degrees, and my fruit, sugar and sweat-covered shirt stuck to my stomach, chest and back. (at the time I was working for a store that sold healthy, fruit-based snacks). Even worse, the room I was headed towards was going to be hotter.

Most of those summer nights, I would take a really cold shower, and then run to my attic and lie down on a comforter, which was the only thing separating me from the floor, and try to go to sleep as quickly as possible. Sometimes, if I started sweating before I could fall asleep, my whole face would begin to burn up, and I’d need to take another cold shower. The attic-room was so hot. Sometimes I’d just lay there and cry for a few minutes—admittedly not very tough of me.

What Happened—and The Feeling of Scraping Bottom

My first startup had failed. When it did, I had a few hundred dollars in my bank account, and was too embarrassed to ask for help. It sounds funny—why didn’t I just stay with friends? I had just been at a university for a year, there were people I could have called. But living a life indebted to others via favors somehow seemed too evil to me. I had been “the kid starting a company.” Maintaining that identity had meant everything.

When I think of why people fall so far, I often think that maybe it’s because they were too afraid to ask for help. Asking for help—like real help—is harder than most people realize.

And so there I was, sitting on a subway stair waiting to go home. I’d just spent the day passing out promotional flyers for a new business on 17th Street. At the end of the night I helped clean up/lock up the store.

But I still remember that night well, because it was the night I realized I was okay. I was living, I had a job, I had a roof over my head and enough food the next day, and I liked the people I worked with—I called them my friends.

A weight that had existed, so heavily wrapped around my shoulders, was lifting, because I had scraped rock bottom. Looking back, there was probably quite a bit further I could have fallen… but it really did feel like bottom. And at that moment the bad stuff was over. The fall—the dive from being a startup founder, to not making rent, to asking a friend for money, to passing out flyers on 17th street… was over.

I’m convinced that emotion is driven by change—not by absolute position. People become happier as circumstance improves, and increasingly depressed as things get worse.

But when things stay the same, there is a lot less emotion. And so for the first time things weren’t getting worse—they were just what they were. I realized I was okay. That my startup had failed, I had let down a lot of people, I had lost my best friend’s money (ya, I let me best friend invest… idiot!), I had fruit juice all over me and felt like scum of the earth, having not shaved or showered in a bit, but I was fine. And I was going to start moving forward.

Having No Backup Plan

Why had I fallen so far? It was because I had no backup plan. I had not planned on failing. I was 100% sure my startup (which never really officially launched and spent most of its time deciding over and over again which technical direction it should go in) would succeed. I was 100% sure we would be able to raise more capital. I was so confident.

And when none of that happened—I had nowhere to go. There wasn’t an alternative job lined up… for a little bit I actually stayed with my suitcase in Union Square Park at night, while napping in a Starbucks during the day. It wasn’t until I borrowed $300 from my friend’s mom and convinced a landlady to let me stay in that room for $250/month that I even had my floor.

I remember one time she was convinced I wouldn’t be able to pay her the $500 I would owe for the next month, and called my boss at work to ask if he planned on firing me. Thanks, Daniel, for taking that call. (He said I was a good employee and he didn’t plan on firing me—so the landlady let me stay). Another time—she became angry at me for some reason I don’t remember, and took all my stuff and put it on the sidewalk outside.

But Having No Backup Plan Turned Into the Best Thing on Earth

Starting the night that I sat on the stairway, realizing I was fine, I began to move forward. I was excellent at passing out flyers. There was not a single flyer-kid in NYC who drove more business. I was a hall of famer. And you know who noticed? The owner of the store I worked for while he was secret shopping. And that owner turned out to be a Cornell Alumn (I go to Cornell), a former Fortune 40 under 40, the CFO of a Private Equity Firm, and to this day, a close friend, my mentor, and an investor in CoVenture. We spoke briefly that first time, and since then, I’ve owed Michael more than I could ever hope to repay.

I went back to school that fall and kept in touch with him. I also ended up getting asked to speak at the UN in Kenya where I scored a couple of contracting jobs doing consulting for a government and a few international companies.

Those first clients asked me if I could help with various problems, and I said “yes” to everything because, well, I didn’t really have any other choice. I needed the business. What I ended up doing was finding people who didknow how to solve each of those problems, learned from them, and then worked really, really hard at doing an awesome job for my clients. And I kept doing good work, and kept getting referrals. And even without a backup plan, I was fine, because I kept working hard.

@ the U.N.

If I had secured a backup plan none of these serendipitous events would have happened. I would have been closed off to these opportunities, and maybe would have been too busy to go to the UN. It was at the UN that I met my co-founder for CoVenture.

And it was because I had reached such rock-bottom, that today, I still don’t have a backup plan. I’m liberated from the burden that maintaining a backup plan would have placed on me. Do I get scared sometimes that things won’t work? Of course. I have to find 15 awesome companies in 2014 that are as great as the ones we found in 2012 and 2013. That is really, really hard. But I still have no backup plan, because I know what the worst is, and I know I can survive it—even if I reach it again.

I know that the fall would hurt, that each blow would be a bit crushing, and that failure would mean depression, embarrassment and all of those other things. But I am optimizing for success, and am saying fuck you to failure, cause I don’t have time to think like that.

The Problems with Backup Plans

Backup plans are huge handicaps. They hold people back from doing all types of things:

(1) Asking potential employers to be investors instead.

(2) Asking friends for help in case you need to ask them for something else later

(3) Telling everyone on earth who needs to know about what you’re building, because you don’t want them to think of you as a failure if it doesn’t work

(4) They cause people to save money rather than continuing to plow it back into the business

(5) Backup plans cause founders to accept that it’s okay to fail—and to wind down respectfully, but maybe a bit too early

(6) They let founders come up with excuses and think it’s okay to have “fought hard”

(7) It keeps founders from working at 100%, because 10% of effort is being spent keeping that backup plan secure and in check

Backup plans give founders a sense of comfort. I’m not saying comfort isn’t good, or that founders should drive themselves insane. They should enjoy their lives and remember that they are founding companies because it makes their lives fulfilling—but sometimes it’s good to be so terrified of having no backup plan.

It’s good to think that running forward is the only possible way. That the option of falling back onto a cushion is not a possibility. I often feel like I’m sprinting down hill, and trying to stop would only cause me to fall—so I’ve got to just keep sprinting.

Going Forward

If CoVenture fails, I am screwed. I am saving none of my money. I am literally putting every dollar I have into the firm. So the only thing I can possibly do—literally my only option—is to find a way to make CoVenture work.

I am freed by having no reserves. I am willing to make asks of people that those with backup plans would not make. I’m lucky to have an amazing group of friends who have supported us. The work we’ve done thus far is work that I am proud of, and we’ve had the chance to help amazing people begin to reach their dreams. And I myself, am chasing a dream, and have no backup plan. And I’m fucking glad.

Having no backup plan is part of what will make sure we succeed—we don’t have a plan for failure—we only have a plan for success.

  • *quick note—I have no children or familial obligations in my life—to those who do, this mentality likely makes a lot less sense, especially in how extreme it is. I understand that.
  • **I also understand that having a job at all was a good thing, it’s easier to recognize now
This article also appears on Medium and is published here with the permission of the author

in your inbox everyday at 10am CST.

No fluff or "pie in the sky inspiration." Just real stories.

Written by Ali Hamed

[5'9", ~170 lbs, male, New York, NY] My blog posts are meant for early-stage entrepreneurs. They’re usually about things I’ve learned the hard way.