Enter cash, current revenue and expenses, a growth rate, and a planned hire ladder. You get snapshot runway (ignore hiring and growth), months to cash-out with the plan, and whether this model is default alive or default dead before cash hits zero. Not legal, tax, or investment advice.
What it models
Month zero is cash on hand, current monthly revenue, and current monthly expenses before planned hires. Each later month grows revenue by your growth %, adds fully loaded cost for each hire whose start month has arrived, holds other expenses flat, and updates cash by revenue minus expenses.
That matches Paul Graham’s “expenses remain constant” test, with the hiring plan as the one expense path you choose to change. PG points to Trevor Blackwell’s calculator; this is a separate browser tool that asks the same question with your hire dates typed in.
Snapshot runway vs trajectory
| Term | Definition | Source |
|---|---|---|
| Gross burn | Cash out for the period | Kruze Consulting, 22 Feb 2026 |
| Net burn | Cash out − cash in | Kruze Consulting, 22 Feb 2026 |
| Runway (months) | Cash ÷ monthly net burn | Kruze Consulting, 22 Feb 2026 |
| Default alive | On constant expenses and recent revenue growth, reach profitability before cash runs out | Paul Graham, Oct 2015 |
| Default dead | Same assumptions; you do not reach profitability on the cash left | Paul Graham, Oct 2015 |
Kruze’s worked example: $4.2M cash ÷ $350k net burn = 12 months; at $280k burn → 15 months. Snapshot runway in this tool is that ratio with hiring and growth turned off.
Paul Graham’s question is different. Assume expenses stay constant and revenue keeps growing as it has in recent months. Do you hit profitability on the cash you have? If yes, default alive. If no, default dead. The fatal pinch is default dead plus slow growth plus not enough time to fix it. He also notes Airbnb waited four months after raising at the end of YC before the first employee.
Carta’s State of Private Markets Q1 2024: median time between rounds lengthened (Seed→A 766 days; A→B 824 days in that quarter). Their piece frames a longer A→B wait versus an earlier cycle as needing more runway (on the order of three more months in their comparison). Longer fundraising clocks raise the bar on how much cash you need under either read.
Hiring plan as burn plan
Kruze: headcount often runs 60–80% of total burn. A rolling 18-month cash forecast that leaves out the hire plan will miss most of your burn. They cite a US SBA rule of thumb for fully loaded cost of about 1.25–1.4× base salary. Build that into the monthly cost per hire field. Assume future hires start a month or two later than the date on the slide.
Spacing matters. Three hires in month two is a different cash path than one hire every other month. PG’s warning that hiring too fast is the biggest killer of startups that raise money is the same problem in operator language.
Labeled hypothetical
Not a company. Scaled to Kruze’s $4.2M / ~$350k example.
Cash $4.2M. Revenue $80k. Expenses before planned hires $430k (so starting net burn $350k). Monthly revenue growth 8%. Three hires at $18k fully loaded per month each. First starts in month 2, then one per month. Horizon 18 months. Load those defaults. Read snapshot versus plan, then whether revenue covers expenses before cash hits zero. Replace each input with your numbers before you take anything to a board.
Board uses
Show snapshot runway so the board starts from one cash ÷ net burn figure. Show the hire ladder and the month cash would hit zero if the plan runs. Show whether this model crosses to revenue ≥ expenses before that month. If Carta-style round timing is stretching, say how many months of buffer you are buying. Tie efficiency reads (burn multiple, Rule of 40) to a sibling page. Do not present a single “runway” number when the hire plan is still open.
Mistakes
- Treating snapshot runway as the plan when three hires are already verbal-offered.
- Using P&L burn and ignoring cash timing (Kruze: use cash; average the last 3–6 months of net burn when you set the start).
- Booking hire starts on the recruiting slide date instead of a month or two later.
- Calling the company default alive because last month’s growth looked fine while the hire plan doubles expenses before revenue catches up.
- Inventing round-timing benchmarks. Cite Carta’s published medians or leave the cell empty.
Sources
- Paul Graham, Default Alive or Default Dead?. October 2015. Default alive vs default dead; hiring too fast; Airbnb’s four-month wait; fatal pinch; points to Trevor Blackwell’s calculator.
- Kruze Consulting, Build a Rolling Cash Forecast to Maximize Startup Runway. 22 February 2026. Gross vs net burn; runway = cash ÷ monthly net burn; $4.2M / $350k example; headcount 60–80% of burn; rolling 18-month forecast; SBA fully loaded 1.25–1.4×; recruiting slips; cash over P&L.
- Carta, State of Private Markets Q1 2024. Median Seed→A 766 days; A→B 824 days; longer waits imply more runway required.
Your board will ask about runway and default alive. Founders who have had that conversation will pressure-test your hiring plan against the cash left in a FounderNexus session.