Default Alive or Default Dead? - Paul Graham essay

October 2015

When I talk to a startup that's been operating for more than 8 or 9 months, the first thing I want to know is almost always the same. 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? Or to put it more dramatically, by default do they live or die?

The startling thing is how often the founders themselves don't know. Half the founders I talk to don't know whether they're default alive or default dead.

If you're among that number, Trevor Blackwell has made a handy calculator you can use to find out.

The reason I want to know first whether a startup is default alive or default dead is that the rest of the conversation depends on the answer....

October 2015

When I talk to a startup that's been operating for more than 8 or 9 months, the first thing I want to know is almost always the same. 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? Or to put it more dramatically, by default do they live or die?

The startling thing is how often the founders themselves don't know. Half the founders I talk to don't know whether they're default alive or default dead.

If you're among that number, Trevor Blackwell has made a handy calculator you can use to find out.

The reason I want to know first whether a startup is default alive or default dead is that the rest of the conversation depends on the answer. If the company is default alive, we can talk about ambitious new things they could do. If it's default dead, we probably need to talk about how to save it. We know the current trajectory ends badly. How can they get off that trajectory?

Why do so few founders know whether they're default alive or default dead? Mainly, I think, because...