diff --git a/scripts/init-repo.sh b/scripts/init-repo.sh
index 6a707a0..45e257b 100644
--- a/scripts/init-repo.sh
+++ b/scripts/init-repo.sh
@@ -59,11 +59,13 @@ chown -R "$RUN_UID:$RUN_GID" "$WORKSPACE_DIR"
 mkdir -p "$HOME"
 chown "$RUN_UID:$RUN_GID" "$HOME"
 
-# Start Happy Coder daemon
+# Start Happy Coder daemon as the app user so it can access user credentials
+# (running as root means HOME=/root, Claude Code and Happy config would be missing)
 echo "Starting Happy Coder..."
-cd "$WORKSPACE_DIR"
 
-happy daemon start || echo "Happy Coder daemon failed to start, continuing anyway..."
+RUN_USER=$(id -nu "$RUN_UID" 2>/dev/null || echo "user")
+sudo -u "$RUN_USER" -E sh -c "cd '$WORKSPACE_DIR' && happy daemon start" \
+    || echo "Happy Coder daemon failed to start, continuing anyway..."
 
 echo "Happy Coder daemon started"