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Framework

Default Alive Calculator

Simple monthly model: revenue × (1+growth)^n vs burn × n. The crossover date is your default-alive deadline.

Origin: Paul Graham, 2015 essay. Built into every YC office hour fundraising conversation.

Inputs: current MRR, monthly growth rate, monthly burn, current cash. Output: do you reach profitability before zero cash?

If you're default dead, you have three options: cut burn, grow faster, raise. Anything else is hope, not a plan.

Re-run the model every month. The variables change. Founders who don't re-run get surprised.

Steps

  1. Cash on hand

    Bank balance today, in dollars.

  2. Monthly net burn

    Total spend minus current revenue. Be honest about contractor costs.

  3. Monthly growth rate

    Trailing 3-month average of MoM revenue growth.

  4. Project 24 months

    If revenue ever exceeds burn before cash hits zero, default alive. Otherwise default dead.