Default Alive or Default Dead?
Address: Default Alive or Default Dead?
In this post, PG explained the most fundamental metric to evaluate the status of a startup by looking at expenses and revenue growth, and surprisingly, half of the founders are not aware of this metric.
Therefore, he suggested:
- Instead of starting to ask too late whether you’re default alive or default dead, start asking too early.
And he pointed out the fatal pitch of startups:
- The fatal pinch is default dead + slow growth + not enough time to fix it.
And he suggested to avoid the fundraising trap:
-
It would be safe to be default dead if you could count on investors saving you.
-
So no matter how good your growth is, you can never safely treat fundraising as more than a plan A.
-
You should always have a plan B as well: you should know (as in write down) precisely what you’ll need to do to survive if you can’t raise more money, and precisely when you’ll have to switch to plan B if plan A isn’t working.
One of the biggest mistakes that startups may have is that:
- Hiring too fast is by far the biggest killer of startups that raise money.