I'm onto my second startup. My first one is (just) profitable and my second is showing very promising signs.
I put all the profits back into my businesses, so I work three days a week to pay my personal bills (and temporary business expenses). Fortunately, my job lets me go in whenever I want, which helps me juggle my time.
I think it works pretty well. It's meant I've never had to take any outside investment and yes, working my day job gives me time to reflect and come up with new ideas. It undoubtedly makes me more productive.
I've worked in an office environment where people could easily get away with surfing the web 80% of the time, no big deal.
I've worked from home where Subversion checkins are monitored daily.
No checkin? Well what the heck are you doing from home then? =)
"...Most founders of failed startups don't quit their day jobs, and most founders of successful ones do. If startup failure were a disease, the CDC would be issuing bulletins warning people to avoid day jobs." -- The 18 Mistakes That Kill Startups