Default Alive
Paul Graham's question: if expenses stay constant and revenue growth continues at its pace of the last several months, does the company reach profitability on the money it has left? If it does, it is default alive; if not, default dead.
Real Growth and CashTerm 60 / 81
In practice
Runway counts the money in months; default alive asks whether that time is enough to reach profit. The answer rests on two assumptions: expenses stay flat and growth keeps its pace. Hiring raises expenses and growth can slow; either changes the answer (our reading). Graham argues against leaning on investors: he writes that they are so fickle that you can never do more than start to count on them. He also says you should know, as in write down, precisely what you would need to do to survive if you cannot raise more money. When you run the calculation, write down the assumptions too.