This document defines and explains common startup terminology to familiarize the reader with frequently used terms. It provides definitions for over 30 terms including minimum viable product, product market fit, growth hacking, burn rate, churn rate, pitch deck, and valuation. The definitions cover topics related to developing, marketing, funding, and growing a startup business.

1. Startup Terminology 101
A List of frequently used startup expressions, to get you
familiarized.
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Created by: Luke J. Fitzpatrick @iamwormify

2. A List of Common Words
Used in Startups:
• MVP: Minimum Viable Product, the minimum requirements for you to
put your product online (aka ship it).
• Product Market Fit: This is the point whereby you have built a product
that "many" users love = growth. Often a lot of testing & altering things
slightly, until you get it right.
• Execution: Knowing how to get your first users. More importantly a
team that 'knows' how to do it.
• Growth Hacking: Creative ways of doing marketing. Coined by Sean
Ellis. Think of non-traditional marketing, focussed on user growth.
• Chicken & Egg Problem: Social networks need users in order to be
sustainable and grow. No users = a dead product.
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3. A List of Common Words
Used in Startups:
• Burn Rate: How much money your startup is spending before making a
profit.
• Churn Rate: The percentage of customers that keep coming back to you. It
shows how many customers you are keeping/losing, based on user
retention.
• Pitch Deck: A PPT presentation of your service. The best pitch deck:
http://www.slideshare.net/mobile/hnshah/mintcom-prelaunch-pitch-deck
• Value Proposition: The value you provide to users or customers. For
example: http://mjskok.com/resource/building-compelling-value-proposition
• Elevator Pitch: Less than one minute/ one sentence pitch of your startup.
Usually "we're X for Y" - is the most common phrase.
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4. A List of Common Words
Used in Startups
• Conversion Rate: This can be either, the % of users signing up/ the % of
payable users.
• A/B Testing: Testing different variants of a landing page (this is a sign up
page before launching). Can also be used for testing Adwords campaigns,
book covers, colors, pricing etc.
• Pivot: Can be either - changing your product slightly OR changing your
market segments.
• The Lean Startup: A book that created a startup movement based on
strong product testing, by Eric Ries.
• The TechCrunch Trough of Sorrow: Developed by Andrew Chen, link:
http://andrewchen.co/after-the-techcrunch-bump-life-in-the-trough-of-
sorrow/
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5. A List of Common Words
Used in Startups
• User Acquisition Strategy: Put simply, how do you plan to get your first
users? For example: word-of-mouth (organic growth), Adwords etc.
• User Acquisition Cost: The $ cost value to acquire your users. In
simplicity, advertising/ marketing cost.
• Business Model: How will you make money? Often enough, what startups
think, and what they do is totally different. Think freemium, SaSS (Software
as a service), subscription based etc.
• Freemium: Giving your service away for free and plan to profit in the future.
• Pricing Structure: How much do you plan to charge per user/ per
customer. Do you offer tiered payment structures with multiple plans - like
SaSS?
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6. A List of Common Words
Used in Startups:
• Pre-accelerator: An accelerator that focuses on the ideas validation stage.
Usually lasts for 4-8 weeks.
• Accelerator: A 3-4 month training program for startups. Startups receive an
investment, mentors and other benefits. Y Combinator (YC), is regarded as
the best.
• Incubator: Uses an external management team to give advice. Takes a
larger equity percentage than an accelerator and often the duration of the
program is much longer.
• VC: Venture Capitalist's are investors that invest a large amount over $500K
USD.
• Angel: Angel investors are investors that invest a small amount often
between $10-20K USD.
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7. A List of Common Words
Used in Startups:
• Market Segment: Dividing a market into small markets (cohorts).
• Cohort: This means, customer segments. For example, age cohorts
aged 21-25, female cohorts in New Jersey etc.
• LTV: Lifetime Value of a customer. Think, how long will they use, and
continue to use your service in years. The longer, the better. Put
simply, the amount of yearly revenue you get from one customer.
• Product Differentiation: How does your product differ from your
competitors?
• Product Defensibility: What will you do to protect your product? For
example, are you protected by a patent? How will you react to
competitors and future competitors?
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8. A List of Common Words
Used in Startups:
• Equity: Think of a startup like a big pizza. It starts off in slices, gets smaller
and smaller when someone takes a bite. Equity refers to the % ownership
someone holds in a company. Tip read Slicing Pie, by Mike Moyer & read-up
on Paul Graham's views on founders' equity.
• Vested Equity: You get equity over time in small percentages. This prevents
people leaving, (should) motivate people to work harder to attain company
goals. Standard in startup contracts.
• Cliff: Linked to vested equity. A cliff is a specific time period set as a trial. For
example, one year, three years etc. It protects the company to an extent.
• Company Structure: LLC, C Corp, S Corp. Tip: If you're in the U.S, register in
Delaware, all startups do.
• Stake: The percentage ownership someone has in your company.
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9. A List of Common Words
Used in Startups:
• Valuation: How much investors "believe" your startup is worth? David S. Rose
shares a lot of insightful content on Quora about investments & valuation.
• Exit Strategy: Do you plan to sell your company? Which company will buy it?
Will you get an IPO, and go public?
• Go-to-Market Strategy: How you plan get your users and grow your service?
For example: StartupLister -> BetaList -> Product Hunt -> TC
• Validation: Think "The Lean Startup", go out & survey potential users to find
out if they want your solution. Another way, can you verify that users will pay?
• Scalability: The ability to add on more services OR expand to other markets.
Tip: your first version should be minimalistic giving you room to grow.
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10. Don't worry, this may seem
confusing at first. Most first-time
tech founders don't know all of this.
They learn it on the way :)
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11. Recommended Readings
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