30 Startup Buzzwords You Should Know


There is a specific language that is used in the startup world. Yes, it contains many buzzwords and there are also humorous infographics on them, while many people -who are many years in the space- make fun of new teams over(ab)using them (read posts at quora). However, you should still invest some time in learning and understanding them, in order to communicate more effectively. Here are the basic terms and their explanation:

1. Lean Startup: It is a method for developing businesses and products first proposed in 2011 by Eric Ries. Wikipedia. It explains how to startup with minimum resources and with focusing on the important staff.

2. Business Model: This is how you are going to make money, or the “money-making” engine. Is it a subscription model? A freemium model? Pay as you go? Some other way?

3. Business Model Canvas: This is a tool and methodology to describe, design, challenge, invent and pivot your business model. Search for Steve Blank, the Stanford professor who invented it for more. There is also a nice course on udacity. And the http://www.leanlaunchlab.com to help you with your first business model canvas.

4. MVP: The Minimum Viable Product. It is the product with the highest return on investment versus risk. Meaning, a stripped down version of the mobile app or SAAS solution you are thinking, with only the basic functionality that is required by your target audiences, in order to examine whether your idea works in the real world.

5. LTV: Life Time Value of Customer. For example, if I am Dropbox and I acquire a new paid user, who gives me 5 USD/month and will be using my service for 20 months, the LTV=100USD

6. CAC: Customer Acquisition Cost. How much you need to pay for marketing/sales etc in order to acquire one user. For example, if I am Dropbox and I need to have a facebook ad, which costs 30 USD in order to get 10 new customers, the CAC=3USD. Obviously, all startups try to build a business engine where CAC<LTV.

7. Churn Rate: How many customers I am losing in a time period. E.g., if I am Dropbox and 20 out of my 100 paid customers quit my service after 12 months, my churn rate is 20%.

8. Conversion Rate: How many visitors I turn into users or customers. Or how many free users I turn into paid users. If I am Dropbox and I have 100 customers in the free plan and 15 of them become paid users, then my conversion rate is 15%. If I have 100 visitors in my site and 30 of them subscribe to my free service, then the conversion rate is 30%.

9. Angel Investor: An Angel investor makes use of his personal disposable finance and makes his own decision about making the investment. The investor would normally take shares in your business in return for providing equity finance.

10. VC: Venture Capital. Venture capital (VC) is financial capital provided to early-stage, high-potential, growth startup companies. The venture capital fund earns money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology and IT.

11. Seed Capital: Small amount of money (e.g. 30k to 200k) you get in the beginning of your project, in order to prove that it works and can scale.

12. Incubator: A place that provides you the basic infrastructure to work and usually hosts many startups. They don’t tend to get equity from your startup.

13. Accelerator: Seed accelerators are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day.[1] While traditional business incubators are often government-funded, generally take no equity, and focus on biotech, medical technology, clean tech [2] or product-centric companies, accelerators can be either privately or publicly funded and focus on a wide range of industries.(wikipedia source).

14. Advisory Board: A team of experts that support your startup and mentor you.

15. IPO: Initial Public Offering, or the day you are entering the Stock Market (yes,yes I know..it is a dream for many..)

16. NDA: Non-disclosure agreement. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets.

17. PoC: Proof-of-concept. A complete cycle of your project, that proves that your idea works for at least one customer or some users.

18. ROI: Return on investment. It is also used for “Marketing ROI”, meaning, if I put 1USD in marketing how many USDs of sales I will make back.

19. Valuation: An estimation of the worth of your startup. E.g., if at the beginning you get offered 30k seed capital for 10% of your startup, the valuation of your company is 300k.

20. Traction: ‘Quantitative evidence of market demand.’ For more information read this quora post.

21. Viral Mechanics: A mechanism into your application or SAAS, to get more users through referrals. E.g., Dropbox asks you to invite 10 more friends to get extra space.

22. Stealth Mode: You run your startup without exposing information publicly. Like the airplane that flies under the radar..

23. UX/UI: User experience and User interface. What your user sees and experiences in your app.

24. Freemium: a business model, especially on the Internet, whereby basic services are provided free of charge while more advanced features must be paid for. Read this book by Chris Anderson.

25. A/B Tests:  In marketing and business intelligence, A/B testing is jargon for a randomized experiment with two variants, A and B, which are the control and treatment in the controlled experiment. E.g., I have two different versions of my website and I test the conversion rates in both of them.

26. Landing Page: In online marketing a landing page, sometimes known as a “lead capture page” or a “lander”, is a single web page that appears in response to clicking on a search engine optimized search result or an online advertisement. (wikipedia)

27. Longtail: A phrase coined by Chris Anderson, in 2004. Anderson argued that products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, but only if the store or distribution channel is large enough. (source:investopedia).

28. Pivot: You start with an idea and in the way you change it to something else.

29. Gamification: Elements of game playing in your app.

30. Growth-hacking: Getting many users with smart ways and minimum resources. Read some of the best growth hacks, here.

That’s it for a start! Learn them, love them or love to hate them (after the XYZ time you hear them in the future)…