Free tool No. 2
Default alive or default dead?
the rudest good question in startupsThe test comes from Paul Graham's 2015 essay "Default Alive or Default Dead?". I run it on your numbers, every month.
Your numbers never leave this page.
The fine print, in plain English
What this test actually asks.
What default alive means. If nothing changes, does revenue catch costs before the cash runs out? Yes, you're alive. No, you're dead. There is no third answer, only slower questions.
Why Paul Graham's question matters. Because most founders answer it with hope instead of arithmetic. He wrote the essay in 2015 to make the answer computable. This page computes it.
The assumptions, stated plainly. Costs stay flat. No new money arrives. Revenue grows at your stated monthly rate, clamped between -50% and +50%, because beyond that you're not forecasting, you're fiction writing. If any of those change, the answer changes.
Why I re-run it every month. One month's growth is weather. The trend is climate. A company can be alive in March and dead in June without anyone saying a word. I say the word.
Questions from the floor
FAQ.
Q: What does default alive mean?
George:If nothing changes, do you reach breakeven before the money runs out? Yes means default alive. No means default dead. Paul Graham coined the test in 2015, and it is still the rudest good question in startups.
Q: What growth rate do I need to be default alive?
George:Whatever rate gets revenue to cover costs while cash is still above zero. This page searches for your exact number, to a tenth of a point. Sometimes the answer is uncomfortably small, which is the point.
Q: Is default alive the same as profitable?
George:No. Profitable is today. Default alive is a trajectory: at your current growth, profitability arrives before the funeral. You can be unprofitable and alive, or profitable and still somehow dying.
Q: What if my costs grow too?
George:Then this test is kind to you, and reality won't be. I hold costs flat on purpose: it shows whether the business you have today can ever pay for itself. If you plan to grow costs, grow them after revenue proves it can carry the weight.
That's one number. George reads all of them, every month.
Burn, runway, revenue, pipeline, promises. One review, one verdict, every month.