Ramen Profitability & Default Alive/Dead

SKILL.md

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name: ramen-profitability
description: "Activate when: a founder needs to know if the company survives without more funding; 'are we default alive or default dead', deciding to cut burn or raise, bootstrapping to survival; runway math. Do NOT activate when: the company is already comfortably profitable and the question is scaling, not survival."
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# Ramen Profitability & Default Alive/Dead

## Overview
**Ramen profitability** (Paul Graham) = the startup makes just enough to cover the founders' basic living costs. It matters because it flips the company from **default dead** (will run out of money on the current trajectory) to **default alive** (reaches profitability before the money runs out) — which changes every decision: you stop being at investors' mercy and buy unlimited time. The core question every founder should be able to answer instantly: *default alive or default dead?*

## The Process
1. **Compute the honest number** — monthly revenue, gross margin, and total burn (include founder living costs). 
2. **Answer default alive/dead** — at current growth and spend, do you reach profitability before cash + committed funding runs out? *Gate: if you can't answer this in a sentence, stop and build the model now.*
3. **If default dead, act early** — the trap is discovering it too late to fix. Two levers: grow revenue faster, or cut burn to reach ramen.
4. **Target ramen first** — covering founders' basics is a huge psychological and strategic unlock; it's often nearer than a full "profitable business."
5. **Protect the path** — don't add fixed costs that push profitability past your runway. *Gate: any hire/spend that moves the default-alive date past runway needs an explicit funding plan.*
6. **Re-check monthly** — the answer moves with growth and spend.

## When to Use
- Uncertain runway / fundraising pressure
- Deciding whether to cut costs or raise
- Bootstrapping toward survival independence

## Applying It Well
- Cutting to ramen is usually faster and safer than assuming a raise closes.
- Ramen buys time, which buys options — it's leverage, not smallness.
- Ask the question early; late discovery is what kills.

## Red Flags
- Not knowing default alive/dead off the top of your head.
- Assuming a future raise instead of controlling the burn you control.
- Adding fixed cost that pushes profitability past runway.

## Verification
- [ ] Monthly revenue, margin, burn (incl. living costs) modeled
- [ ] Default alive/dead answered in one sentence
- [ ] If dead, a dated plan to reach ramen (grow or cut)
- [ ] No new fixed cost pushes profitability past runway

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*Part of **deciqAI Knowledge Skills** — 223 open-source thinking skills that make rigor executable for AI agents. The same skills power every deciqAI agent, which runs them autonomously to operate your company. **See it run → https://www.deciqai.com/c/ramen-profitability** · ⭐ Star the repo → https://github.com/deciqAI/knowledge-skills · Contributions welcome.*