One requirement was we had to find a place where we could have a dog, since a founder already had a dog and we couldn't get rid of the dog! :)

So the best place we could find was a house for the three of us in San Jose. We definitely ate cheap food and used cheap hosting and had cheap everything. We even used 3 imacs that were donated to us by someone from Apple.

But rent in California is a tough one, but something we needed to get through for our participation in Y Combinator. Which was totally worth the experience.

We think of the money we invest as more like financial aid in college: it's so people who do need the money can pay their living expenses while Y Combinator is happening.