EconomicoLearn
Default alive, or default dead?
One question decides more than any pitch deck: if you keep spending what you spend and growing how you're growing, do you make it to profitability on the money in the bank? Move the four numbers below and watch which side of the line you're on.
By Pelle Brændgaard
In 2015, Paul Graham gave founders a single question to replace all the hand-wringing about whether a startup was doing well: default alive or default dead? "Assuming their expenses remain constant and their revenue growth is what it has been over the last several months, do they make it to profitability on the money they have left?" If yes, you're default alive. If you run out first, you're default dead.
It runs on four numbers: cash in the bank, your monthly revenue, how fast that revenue is growing, and what you spend each month. That's it. The trouble, as Graham noted, is that most founders can't answer it — not because the math is hard, but because they don't actually know their four numbers. So here they are as sliders. Drag them.
Cash on hand projected month by month
Monthly revenue vs expenses does revenue cross the line in time?
Why this is the only question that matters
Graham’s point was that “how’s it going?” is unanswerable and “are you default alive?” is not. A founder who is default alive controls their own fate — they can raise money because they want to, not because they’ll die without it. A founder who is default dead is on a countdown, whether or not they’ve admitted it.
The dangerous part is how quietly you cross from one to the other. You don’t get an alert. You hire two people, sign an office lease, and the flat expense line in the calculator above jumps — and suddenly the revenue curve that used to cross it in month nine crosses it in month twenty, long after the cash runs out. Same growth, same ambition, opposite outcome.
“Hiring too fast is by far the biggest killer of startups that raise money.” — Paul Graham
That’s why the calculator has an expenses slider, not just a growth slider. Founders instinctively reach for growth to fix being default dead. But growth is slow and uncertain, and — Graham’s warning — the hiring you do to chase it often makes the product worse, not better. Cutting is fast and certain. When you drag yourself back to default alive above, notice which slider does it with less movement.
The catch: you have to know your four numbers
The math here is a toy. The real difficulty is that “cash,” “monthly revenue,” “growth,” and “expenses” are each a small lie when you pull them from a bank balance and a Stripe export. Cloud credits hide your true burn. An annual plan collected upfront inflates cash with money you haven’t earned. Overdue invoices count revenue that hasn’t arrived. Put those in and your default-alive verdict flips — the wrong way.
That’s the whole reason burn rate is so hard to answer on the spot: the four numbers don’t live anywhere you can trust. They get assembled by hand, and a version assembled from vibes will tell you you’re alive when you’re dead.
The fix isn’t a better calculator. It’s having one set of real, accrual-basis books underneath — so cash means cash, revenue means earned revenue, and the answer to “am I default alive?” is something you can read, not guess.
Try it
Once your books are connected, just ask.
Am I default alive or default dead?
How much would I have to cut to be default alive?
If we grow 12% a month instead of 8%, do we make it?