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As of one week ago, I am officially funding Rocket Lease with retirement fund money. This was not a decision made in haste. You may think I’m an idiot, and you may be right.

This is a statement of fact documenting an action I took, not a “How To” document or a recommendation for anyone to do the same.

Retirement Money Isn’t Sacred

I am aware that many people consider 401k money off-limits. I consider it just another pool of capital with different access restrictions. I believe myself to be (mostly) rational in matters of risk/reward analysis especially pertaining to financial decisions. Despite the obvious uncertainty in the future and the risk, I stand by this decision. Will it work out for me? Maybe not.

I am not interested in debating the merits of retirement savings and safety funds. Different people have different needs, desires, risk tolerances. This fit the bill for me. (Also, don’t tell my mom. She falls on the side of safety, as mothers often do.)

I’ll also say there was a weirdly sick exhiliration in cutting into my safety money to finance Rocket Lease. It made me realize:

• Yes, I’m dead serious about this.
• Yes, I believe Rocket Lease will be a winner.
• Yes, there are challenges ahead.
• No, success is not certain.
• Yes, I could fail and that would suck.

The moment I got my check it suddenly became more real that I’m committed to the success of my current venture and that I will do whatever it takes to get to the finish line.

Investing in Me

This is, more than anything, an investment in myself.

I believe so strongly that dollars invested into Rocket Lease today can outperform any other investment that I have access to (admittedly not a lot of options… Weirdly, Jack Dorsey didn’t call me for a check the last time Square closed a round).

Founders play “backseat founder” all the time, telling other startups what they should do. Fundamentally, this is a statement that the company being discussed has some deficiency that the speaker is somehow able to correct – from the outside, with less information, via his/her brilliant insight.

This is a pervasive attribute of not only startup culture, but popular culture. What Romney could have done to win. What the CEO of ACME Widget Co should be doing. How other people can solve all their problems. Yelp would be better if. How Twitter could make a ton of money. This restaurant would be perfect if they just…

Everyone other than you is doing it wrong.

Yippee! I get to invest (even more) in me now. If this burns to the ground, it’ll be on me.

Betting on yourself is great, because you can guarantee that the founder in your investment isn’t spending his days on facebook or wasting time otherwise (well, sort of).

There is No Free Lunch

This is just the trader in me – every transaction you make in life has risk and reward attached to it. Sushi or steak for dinner? Hire that growth hacker tomorrow or next month? For equity or cash?

I could have tried to raise a seed round. I could have sold equity to friends and family. These avenues have all sorts of other hidden costs: loss of autonomy, investors to answer to, guilt at losing other people’s money, the time/effort required to raise, etc. The relative cost (penalties/fees) of the 401k path seemed more palatable to me in the long run.

Put it another way: Imagine you’ll have to pay a 10% early distribution penalty and you only need ~40k. How long does it take you to secure the financing and land the check from external investors, and how much equity do you give up. Would be willing to pay 4k (10% early distribution penalty) to make all that effort disappear and retain total company equity? The answer to that question was yes for me, so I took an early distribution.

There are cheaper and more expensive transactions. 401k was the cheapest way for me to get what I wanted, and a great bet. I might lose it, but I’ll be happy that I tried.