- The concept of "default to live default dead" forces founders to be honest about the possibility of their startup going out of business.
- It was invented by Paul Graham, co-founder of YC.
- There are only two options: default alive or default dead.
- Default alive means the startup may be burning money currently, but its revenue growth rate is high enough to become profitable before running out of funds.

As founders, we like to ignore the truth a lot of the time.

And 1 of those truths are, is my startup going to go out of business?

That's kind of an awkward thing to talk about.

You know, you don't want to bring that up in polite company.

And so the point of default to live default dead is it forces you to be honest with yourself.

If I don't raise any more money, am I gonna die?

This was a concept that was actually invented by 1 of the co-founders of YC, Paul Graham.

Either you are default alive or you are not default alive, thus default dead.

And default alive is different than profitable.

Profitable means today I make enough money that I am profitable.

Default alive means I may be burning money today, but my growth rate is high enough on revenue that I will become profitable before my bank account goes to 0.


Speaker 0: As founders, we like to ignore the truth a lot of the time. And 1 of those truths are, is my startup going to go out of business? That's kind of an awkward thing to talk about. You know, you don't want to bring that up in polite company. And so the point of default to live default dead is it forces you to be honest with yourself.

If I don't raise any more money, am I gonna die? Am I out of business? Or am I gonna make it? This was a concept that was actually invented by 1 of the co-founders of YC, Paul Graham. And his point is this is a binary.

Either you are default alive or you are not default alive, thus default dead. There's no third option here, friends. And default alive is different than profitable. Profitable means today I make enough money that I am profitable. My bank account grows every month.

Default alive means I may be burning money today, but my growth rate is high enough on revenue that I will become profitable before my bank account goes to 0.

See all Y Combinator transcripts on Youtube

Is your startup default alive, or default dead?