The passions and privations of the start-up entrepreneur

In May, Gupta and Nemeth competed in an annual business plan competition sponsored by the Yale Entrepreneurial Society. Much to their own surprise, Gupta and Nemeth won the $50,000 grand prize. I talked to Gupta not long afterward, and he told me his parents were thrilled. “They were ecstatic. They went crazy. They were like, ‘Oh, my god—$50,000.’ They saw that someone else believed in us!”

But there was a catch. The $50,000 is provided by Launch Capital, a venture capital firm that wanted a significant stake in WakeMate. Gupta and Nemeth did a careful reading of the terms, consulted with their lawyers, and ultimately came to the conclusion that, painful as it was, they couldn’t take the money. They felt they would be giving up too much equity and too much control. It took Gupta days before he could bring himself to tell his parents. Then WakeMate’s fortunes started to pick up. That summer, the pair were out in California, participating in a selective summer program for entrepreneurs known as Y-Combinator. The program provided a $20,000 stipend, which Gupta and Nemeth used to finance production of their design prototype. Then they got more funding, including a $7,500 grant from Connecticut Innovations, Moret’s firm. By late November, they had officially launched and had started taking pre-orders on their website for January delivery ($5 off from the total price of $49.99). And TechCrunch, a blog that reviews new Internet products, gave them a favorable write-up.

The last time I talked with Gupta and Nemeth was in December. I called Nemeth’s cell phone, and when I reached him it sounded as if I had woken him up. It was 9:30 in the morning in New Haven, but it turned out that Nemeth and Gupta were still in California. (They’re now based in Silicon Valley, sharing a studio apartment to save money.) “It’s early here,” Nemeth said with a yawn. His WakeMate had been set to go off imminently—between 6:40 and 7:00. “If you’d called just a few minutes from now,” he told me, “I’d be far more alert.”