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Startup Terminology 101
A List of frequently used startup expressions, to get you familiarized.
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Email: [email protected]: @CodeCloudmeWebsite: www.codecloud.me
Created by: Luke J. Fitzpatrick @iamwormify
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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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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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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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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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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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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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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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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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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