Burn Multiple, Runway and Default Alive Calculator
Enter your cash, revenue and expenses. See how long the money lasts, when you break even, and whether you are default alive. The numbers below are example inputs. Replace them with yours.
1. Where you are today
2. How fast things grow
Set expense growth to 0 for Paul Graham's original test, where expenses stay flat.
3. What if you cut costs
Shown as a grey line on the chart. The cut starts in month 1 and expenses then grow at the same rate as above.
4. Burn multiple, optional overrides
Leave both blank to estimate. Net new ARR is the change in MRR over the last 3 months, times 12, using your growth rate. Net burn is 3 times this month's net burn.
Current plan vs expense cut
| Current plan | With cut |
|---|
Your burn multiple against David Sacks's rule of thumb
Sacks and Ruby give these two cut-offs for fast-growing SaaS companies. Stage, market and growth rate all change what is normal for you.
This figure divides cash by one month's burn and ignores growth. The chart above is the fuller picture. Use the buttons to compare burn now with burn after the cut.
How the numbers are worked out
- Month 1 is the current month. Revenue is your MRR. Expenses are your monthly expenses.
- Each later month, revenue grows by your revenue growth rate and expenses grow by your expense growth rate.
- Net burn is expenses minus revenue. Cash falls by net burn each month. Cash is shown after each month ends.
- Break-even is the first month revenue is at least as large as expenses. Cash hits zero in the first month the balance is zero or below. We look up to 10 years ahead.
- Default alive means break-even comes before cash runs out. Otherwise it is default dead.
- Burn multiple is net burn divided by net new ARR over the same period.
- This is a simple model. It does not include fundraising, taxes, seasonality or one-off costs.
Questions founders ask
What is burn rate?
Net burn is the cash you spend each month minus the cash you collect each month. If you spend $210,000 and collect $60,000, your net burn is $150,000 a month. Gross burn is spending alone.
What is the burn multiple?
The burn multiple is net burn divided by net new ARR over the same period. David Sacks introduced it at Craft Ventures. In The SaaS Metrics That Matter, Sacks and Ethan Ruby write that for fast-growing SaaS companies a burn multiple under 1 is amazing and under 2 is still quite good.
What does default alive mean?
Paul Graham's test, from his October 2015 essay Default Alive or Default Dead, asks one question: if the company changes nothing, does it reach profitability on the cash it has left? If yes, it is default alive. If not, it is default dead. This calculator uses your revenue growth and your expense growth inputs to run that test.
How is runway calculated here?
The calculator projects revenue and expenses month by month using your growth rates, subtracts net burn from cash each month, and finds the first month cash reaches zero. This is more realistic than dividing cash by this month's burn, which it also shows for comparison.
Is my data sent anywhere?
No. The math runs in your browser. Your inputs are not sent to a server. They may be saved in your own browser storage so they are still there when you come back, and you can clear them by clearing site data.
Sources
- Paul Graham, "Default Alive or Default Dead?", October 2015. https://www.paulgraham.com/aord.html. Accessed 2026-10-18.
- David Sacks, "The Burn Multiple", Craft Ventures, April 23, 2020. Defines burn multiple as net burn divided by net new ARR. https://www.craftventures.com/articles/the-burn-multiple. Accessed 2026-10-18.
- David Sacks and Ethan Ruby, "The SaaS Metrics That Matter", October 18, 2021. Source for the under 1 and under 2 cut-offs. https://sacks.substack.com/p/the-saas-metrics-that-matter. Accessed 2026-10-18.
This tool is for planning, not financial advice. Example inputs are not real company data.