magnus919_agent-skills/yc-default-alive-calculator/SKILL.md

name, description, license, compatibility, metadata

name	description	license	compatibility	metadata
yc-default-alive-calculator	Evaluate whether a startup is on a trajectory to profitability before running out of cash — Paul Graham's "Default Alive / Default Dead" framework. Takes revenue, burn rate, cash on hand, and growth rate; computes runway, burn multiple, and months to breakeven. Ships a deterministic CLI calculator. Load when founders ask about runway, burn rate, default alive, whether they need to raise money, or financial sustainability analysis.	MIT	Python 3.9+ with standard library only (no external dependencies). The default-alive.py script uses only math, json, and sys.	spec-version tags sources skills requires-toolsets 1.0 startup-finance, runway-analysis, ycombinator, paul-graham, fundraising, financial-modeling, default-alive, burn-rate, startup-metrics https://paulgraham.com/aord.html, https://paulgraham.com/die.html, https://www.ycombinator.com/about yc-weekly-growth-compass terminal

Default Alive / Default Dead Calculator

A startup is "default alive" if its current revenue trajectory will reach profitability before it runs out of cash — without additional funding. It is "default dead" if it will run out of money first. This is the single most important financial diagnostic Paul Graham developed at Y Combinator.

This is not a fundraising model. It's a reality check. The answer determines whether fundraising is optional or existential.

When to Load

Trigger	Example
"Am I default alive?"	Founder asking about runway
"How much runway do I have?"	Financial planning
"Should I raise money?"	Strategic decision
"What's my burn multiple?"	Investor-ready metrics
"How long until we break even?"	Trajectory check
"Default alive/dead analysis"	Explicit framework request

When Not to Use

• Detailed financial planning. This is a diagnostic, not a budget. It projects one growth curve with fixed assumptions; it does not model hiring plans, contract timing, seasonality, or capital expenditures. Use a proper financial model for those.
• Fundraising valuation. The verdict tells you whether raising money is existential; it does not compute a valuation, cap table, or round size.
• Cost structures the default assumptions don't describe. The model splits burn into fixed and variable components (default 70/30). Hardware, R&D, or manufacturing companies with very different cost structures will get a misleading projection.
• Unknown or unstable growth. The model assumes a steady monthly growth rate with a small decay. A company in launch mode or product-market-fit search does not produce a meaningful projection.
• As the only input to a board decision. Treat the verdict as a conversation starter with your CFO or accountant, not as financial advice.

How to Use

Quick Answer (No Script)

For a quick check without running the calculator, use the simplified heuristic:

Burn Multiple = Net Burn / Net New ARR

Burn Multiple	Signal
< 1x	Default Alive — growing efficiently
1x–2x	Healthy — capital-efficient growth
2x–3x	Warning — burning faster than growing
3x+	Default Dead — cash crisis without funding

Full Analysis (Script)

Run the CLI calculator for a precise analysis:

python scripts/default-alive.py \
  --monthly-revenue 50000 \
  --monthly-burn 120000 \
  --cash-on-hand 800000 \
  --monthly-growth 8

Output shows: the verdict, burn multiple (net burn ÷ net new ARR), burn-to-revenue ratio (net burn ÷ MRR), projected cash-out month, months to breakeven, cash gap coverage at current spend, the model's assumptions, and the key levers available.

Required inputs

Flag	Description	Example
--monthly-revenue	Current monthly recurring revenue (MRR)	50000
--monthly-burn	Total monthly operating expenses	120000
--cash-on-hand	Cash remaining in bank account	800000
--monthly-growth	Month-over-month revenue growth rate (%)	8

Optional inputs

Flag	Description	Example
--revenue-growth-deceleration	Annual growth deceleration rate (%/month, default: 0.5)	0.3
--json	Machine-readable JSON output
--verbose	Show detailed month-by-month projection

Output fields

Field	Meaning
projected_cashout_month	Month cash runs out under the model; null if never within the 10-year projection
burn_multiple	Graham's burn multiple: net burn ÷ net new ARR
burn_to_revenue_ratio	Net burn ÷ MRR (secondary diagnostic, not Graham's metric)
months_to_breakeven	Months until revenue ≥ expenses (extrapolated)
default_verdict	ALIVE, DEAD, or MARGINAL
revenue_at_breakeven	Projected revenue when/if breakeven reached
gap_to_breakeven	Monthly shortfall remaining
months_of_gap_remaining	Static runway at current spend: cash ÷ monthly gap
model_assumptions	fixed_burn_pct, variable_burn_ratio, growth_decay_pct, projection_cap_months, safety_buffer_months
levers	What can change the outcome (increase price, cut costs, etc.)

Methodology

The Core Calculation

The model projects month-by-month:

month_n_revenue = previous_revenue × (1 + growth_rate/100)
month_n_burn = fixed_burn + (variable_burn_ratio × month_n_revenue)
month_n_cash = previous_cash + month_n_revenue - month_n_burn

Growth rate decays over time (default: 0.5% per month) to model market saturation — startups don't grow at a constant rate forever.

Default Alive Test

The startup is Default Alive if:

projected_revenue > projected_expenses

at some point before cumulative cash goes negative, and the crossover happens with at least 3 months of remaining runway (safety buffer).

It is Default Dead if cash runs out first.

It is Marginal if breakeven happens with less than 3 months of runway remaining — technically possible but dangerously tight.

Burn Multiple

A metric Graham began tracking at YC to measure capital efficiency:

Burn Multiple = Net Burn / Net New ARR

Where:

• Net Burn = cash spent per month (total expenses minus revenue)
• Net New ARR = new annual recurring revenue added that month

A burn multiple below 1x means the company is generating more than it spends in new ARR terms — the strongest default-alive signal.

Levers

When the verdict is DEAD or MARGINAL, evaluate these levers (in rough order of impact):

1. Revenue growth — 10% faster growth compounds dramatically over 18 months
2. Cost reduction — Every dollar cut extends runway by one dollar
3. Pricing — A 20% price increase with minimal churn impact is often the fastest lever
4. Gross margin — Reducing COGS improves unit economics without topline change
5. Funding — Default dead means fundraising is existential, not optional

Examples

YC Typical Profile (Default Dead under the model)

python3 scripts/default-alive.py \
  --monthly-revenue 30000 \
  --monthly-burn 75000 \
  --cash-on-hand 500000 \
  --monthly-growth 10

• Projected cash-out: month 14
• Burn multiple: 1.25x (net burn / net new ARR)
• Breakeven would require 22 months, after cash runs out
• Verdict: DEAD — needs faster growth, cost cuts, or funding

Pre-Revenue Startup (Default Dead)

python3 scripts/default-alive.py \
  --monthly-revenue 0 \
  --monthly-burn 80000 \
  --cash-on-hand 400000 \
  --monthly-growth 0

• Projected cash-out: month 8 (the model burns only the fixed 70% of burn at zero revenue)
• Burn multiple: undefined (no revenue)
• Verdict: DEAD — fundraising is existential

Capital-Efficient SaaS (Default Alive)

python3 scripts/default-alive.py \
  --monthly-revenue 150000 \
  --monthly-burn 180000 \
  --cash-on-hand 2000000 \
  --monthly-growth 7

• Projected cash-out: none within the 10-year projection
• Burn multiple: 0.24x (net burn / net new ARR)
• Verdict: ALIVE

References

• references/default-alive-framework.md — Paul Graham's original framework with essay excerpts
• references/yc-fundraising-context.md — How default state drives fundraising strategy
• yc-weekly-growth-compass companion skill — For growth rate analysis