Founder Perspective
What does 'default alive' mean?
Default alive means a startup's current revenue growth will cover its expenses before it runs out of cash — it can survive without raising another round. Default dead means it will run out of cash before breaking even unless it raises more money.
Paul Graham coined "default alive" in a 2015 essay. The question is simple: if nothing changes about your revenue growth trajectory and expense base, will you become profitable before you run out of money?
Default alive: yes, you'll reach profitability before cash runs out at current trends. Default dead: no, you'll hit zero before breaking even.
Most early-stage startups are default dead by design — they're intentionally burning cash to grow faster than organic revenue would allow. That's fine when capital is cheap and fundraising is easy. It becomes dangerous when markets tighten.
Graham's key insight: founders often don't realize they're default dead because they assume they'll raise more money before it becomes a problem. But the company's trajectory should make it default alive before needing to raise — otherwise you're raising from a position of necessity rather than strength, which weakens your negotiating leverage.
The math is simple: (Cash in bank) ÷ (Monthly net burn) = months of runway. Then compare to how long it would take to reach profitability at current growth rates.
Being default alive doesn't mean you shouldn't raise. It means you can raise on your terms, when you want to, rather than because you have to.