What does it mean to be "default alive"?
In some ways, starting a company can make you feel most alive: you’re in the eye of the storm, at the behest of the market; you’re in the arena. But in other ways, being a founder requires such relentless focus on the company that in most other aspects of your life, you can tend to go through the motions in somewhat zombie-like fashion, not feeling particularly alive.
Of course, being default alive means something slightly different. (Although it has always struck me as bizarre startup-lingo, and you can expect some weird looks if you ask someone not “in the know” whether or not they’re alive.)
Being default alive is a financial description of a company, which is to say that:
The business’ current growth rate implies they will reach profitability before using up their runway.
(There’s no points for guessing what default dead means!)
This question is pretty important because it dictates a lot of what you should be spending time on: if the company is default dead, then you need to start doing something fundamentally different to what you’ve been doing already in order to survive. In the original PG essay on the subject, he puts it that “We know the current trajectory ends badly. How can they get off that trajectory?”.
The other side of the coin is also true, if the company is default alive, you’re maximising what you already have. It’s an explore-exploit problem: if you’re default dead, you need to explore the product space more, if you’re default alive, you need to exploit the current product space you’re operating in.
To answer this question: “Are you default alive?” we’ve put together a simple model, where you can play around with the assumptions to see whether your current numbers will get you to profitability.
Check it out!