You certainly appear to have an abundance of education that should assist you tremendously... A born financial conservative, I say go with Option 1 - but note

You certainly appear to have an abundance of education that should assist you tremendously... A born financial conservative, I say go with Option 1 - but note that I have completely no experience in these types of ventures. What I can offer is that in this time of economic turmoil, if you happen to be doing alright - you don't need Warren Buffet to tell you that now is a nice time to buy as things are on sale, even if we haven't completely hit bottom yet. Now that only relates to the market and stocks specifically, but apply that to your idea - startup costs specifically, mustn't they be low too? Supplies, equipment, all marked and coming down due to businesses going belly-up. You fancy open source, so that's a cost saver too... heck, you've got an MBA and you're asking us about plunging, mortgages and finances? I say keep at your goal in the moonlight, pay off deficits as much as possible, that way you'll have less to worry about when you do take the plunge. I'm not really impressed with the numbers showing page views - your company could go bankrupt for some illegal exposure that you didn't foresee occurring. What I am concerned about is how much can you afford, and/or how much can you risk? If you don't have a backup plan, I say you have no plan - hence the cushion that the 35% would provide. Best of luck.