Don't be afraid. Go for it. I did.
Yes, it's an unfortunate position to be in. You are at a huge disadvantage. But the answer isn't 'don't do it' - which, without other options, roughly equates to 'give up'.
But what I'm saying is that once an adult has defined success for themselves and decided that they want to start a startup, and are willing to pay the price for it, it's not our place to judge the risk as not worth it.
That said, I think it's totally appropriate to judge someone who makes such a foolish decision (i.e. pursuing a startup when you have no savings and little time) when children are involved.
I've nothing against startup + family. It's startup + full time job that I think is a bad idea, and adding a family makes it worse.
Here's the article about O'Reilly:
http://www.wired.com/wired/archive/13.10/oreilly.html
It's fuzzy on the timing, and I guess my memory is off, but it seems as if his company was his job at that point, but it still hadn't hit the big time.