About the Default Alive Calculator
Paul Graham coined the terms “default alive” and “default dead”: assuming expenses remain constant and revenue keeps growing at the rate of the last several months, does the company reach profitability on the money it already has? This calculator answers that by projecting monthly revenue, expenses and cash until revenue covers expenses or the bank balance goes negative. Set expense growth to 0% for Graham’s strict test, or enter your planned expense growth for a more realistic view.
It is built for founders and early employees who want an honest answer without a full financial model, and for boards checking whether the plan depends on raising more money. Besides the verdict, it shows the month you break even or run out of cash, the lowest cash balance on the way, and the minimum monthly revenue growth that would make the company default alive.
The model compounds revenue and expenses at constant monthly rates and ignores fundraising, one-off costs and timing of collections. Use a growth rate from the last three to six months rather than your best month, and re-run it whenever the trend changes.
How to use the default alive calculator
- 1Enter cash in the bank today, excluding money not yet raised.
- 2Enter current monthly revenue and its recent average monthly growth.
- 3Enter monthly expenses and how fast they are growing.
- 4Read the verdict, break-even month and lowest cash balance.
- 5Check the growth needed to be default alive and compare with your trend.
Formula and method
Month 1 uses your current revenue and expenses. Each month the calculator first checks whether revenue covers expenses; if it does, the company is profitable and default alive. Otherwise the monthly loss is subtracted from cash, and if cash falls below zero the company is default dead. Revenue and expenses then grow at their monthly rates and the next month is tested, up to 120 months.
The growth needed to be default alive is found by bisection: the calculator searches for the smallest constant monthly revenue growth rate that reaches break-even before cash runs out, holding expenses and their growth fixed. The model excludes new funding, interest income and working-capital timing.
- g
- Monthly revenue growth rate
- e
- Monthly expense growth rate
- t
- Month number
Worked examples
Seed-stage SaaS growing 8% a month
Starting at $50k revenue and $150k expenses, 8% revenue growth against 2% expense growth closes the gap in month 21. Cash bottoms out around $643k, so the company is default alive. Growth of about 6.23% a month would be the minimum to survive on current cash.
Burning too fast for the growth rate
With $120k monthly burn and expenses growing 3% a month, 5% revenue growth is not enough: cash goes negative in month 12. Revenue would need to grow about 8.6% a month to reach profitability first.
Fast growth with a big cushion
Growing revenue 10% a month while expenses rise 1% reaches break-even in month 12 with nearly $2M left, so the company has room to spend more on growth. Even 4.1% monthly growth would keep it default alive.
Frequently asked questions
What does default alive mean?+
A startup is default alive if, assuming current expense levels and revenue growth continue, it reaches profitability with the money it already has. Default dead means it needs to raise more money or change course before cash runs out.
Where does the term come from?+
Paul Graham of Y Combinator introduced it in his 2015 essay “Default Alive or Default Dead?”, arguing that founders should know the answer at all times because fundraising may not be available when they need it.
What growth rate should I enter?+
Use the average monthly revenue growth over the last three to six months. Using your best month overstates the outlook; if growth is slowing, enter a lower rate or re-run the projection with a few scenarios.
What can a default-dead startup do?+
The levers are cutting expenses, slowing expense growth, raising prices or growing revenue faster, or raising money. Use the required-growth output to see how much faster revenue must grow, or lower expenses until the verdict flips.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.