Default Alive (Your Users, Less So)
March 2026
When I talk to a startup that's been operating for more than a few months, the first thing I want to know is almost always the same. Assuming expenses stay constant and revenue growth continues at its current rate, does the company make it to profitability on the money it has left? Or, more dramatically: by default, do you live or die?
The startling thing is how often founders don't know. Half of them look at me like I've asked something rude.
I've recently started asking a second question, and it produces the same look. By default, do your users live or die?
The two curves
Every company in our portfolio can be described by two curves: the company's runway and the customer's. For a normal startup the second curve is flat and nobody draws it. For a YC company it slopes. What I've learned is that the best founders know precisely where the two curves cross.
If the company runs out of money before the users run out of whatever it is the company is using up (health, savings, kidneys, a stable climate), that's a bad business. You've left value on the table. If the users run out first, that's a supply problem, and it can be fixed the way all supply problems are fixed, which is with top-of-funnel. The ideal is that they cross at the exit. 1
Why founders don't ask
Partly it's that the question feels morbid. But mostly I think it's that the answer is structurally someone else's problem, and founders are busy people who have been trained to ignore whatever isn't on fire. The entire definition of a moral hazard is that the fire is in someone else's house. You can see it from your window. It's actually sort of pretty.
I don't think this makes founders bad people. I think it makes them people with a window.
What to do
If you're default dead, you need to fix that now, while you still have options. If your users are default dead, you also have options, and it would be dishonest of me to pretend they aren't good ones: you can disclose it in a document no one reads, you can price it in, or you can sell to someone who'll do both. Most of our founders eventually do all three.
There's a fourth option, which is to change the product so the second curve is flat. In eleven batches I have seen this attempted once. The company is now a very nice consultancy in Portland.
Notes
[1] Lastly (W24) is the rare company for whom the users' curve is the business model, and I'd caution other founders against treating them as a template. They're a special case. They're also, I'm told, all in a pool together, which explains the atmosphere at their board meetings.
Thanks to Evander Szymanski-Cole for the curves, and to the Portland people, who seem happy.
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