Most Common used Jargons in Startup-world ?
Ten years ago, many of these words did not exist or were not used in the same way. Only with the increase in the number of startups around the world has an entirely new vocabulary emerged.
I was completely new to these jargons, I self-learned most of them while I was founding a company called Goodsdeck. My journey in understanding this jargon went while I worked the way up. I have often seen most of the new employees do not get accustomed to this jargon and did not know the real deal of it.
Mostly Angel investors and VCs speak in a particular dialect where most entrepreneur fails to understand aswell.
As the founder of a startup, it is important to know about these terms, I was privileged enough to self-learn most of these.
You often find yourself in situations where entrepreneurs (who might have an MBA) use acronyms or jargon to try to confuse you or make you think they know what they are talking about.
Due to these endless shortcuts and expressions, I decided that I had to make a list of the things I see the most.
If there are any shortcuts that I missed please add them in the comments so I can update the post. Enjoy!
User interface: At its most basic level, a user interface (UI) is a series of screens, pages, and visual elements, such as buttons and icons, that allow a person to interact with a product or service.
User experience (UX) design is the design process that design teams use to create products that provide useful and relevant experiences for users. This includes designing the entire product acquisition and integration process, including branding, design, usability, and functionality.
MVP-A Minimum Viable Product (MVP) is a Lean Startup concept that emphasizes the impact of learning in the development of a new product. Eric Rees has defined MVP as this version of a new product that enables the team to gain maximum customer-certified learning with minimal effort.
Customer Acquisition Cost: CAC is the cost of acquiring a customer to purchase a product/service. As a major economic unit, customer acquisition costs are often associated with a customer’s lifetime value.
arr-ARR is an acronym for Annual Recurring Revenue and is a key metric used by SaaS or underwriting companies with fixed-term underwriting agreements, which means there is a fixed term to the contract. It is defined as the value of the recurring revenue components contracted for your subscriptions that have been settled for one year.
CLTV- The loan-to-combined value ratio (CLTV) is the ratio of all secured loans on a property to the property’s value. Lenders use the CLTV index to determine the risk of default for potential home buyers when more than one loan is used.
Burn Rate: The burn rate is the rate at which the business loses money. It is usually expressed in monthly terms. For example, “the company’s burn rate is currently $ 65,000 per month.” In this sense, the word “burning” is a term synonymous with negative cash flow. This does not mean the business is loss-making, It simply means that the business is burning cash to acquire customers. Let’s say they are spending 2 USD to earn 1 USD by giving Cashbacks.
Valuation — Valuation is about tracking the effectiveness of strategic decision-making and providing the ability to track performance in terms of an estimated change in value, not just revenue.
Daily Active Users (DAU) is the total number of users who interact in some way with a web or mobile product on a given day. In most cases, to be considered “active”, users simply have to view or open the product. DAUs are the users who open your App every day and as active on your platform.
Maus-MAU stands for Monthly Active User, which is the number of users who have done something significant with your product in the last 30 calendar days/month. MAUs can also be defined as users who are active in the month but not necessary every day
Fluctuation rate: Fluctuation rate, in its broadest sense, is a measure of the number of individuals or items that move out of a collective group during a specific period. It is one of the two main factors that determine the steady-state level of customers that the company will support.
Bootstrapping: This term defines building a product without investing taking any money from outside sources like investors, but sourcing money internally through the Founder’s pocket.
Freemium Model: Offering a feature for free to get the users hooked to the Product App or website and then slowly penetrating them to paid features by charging monthly or quarterly subscription fees. It is usually in SaaS business models.
Pitch-deck: PPT or PDF or any other format which represents the core Business Idea and projections usually used to raise Investment rounds is called a Pitch deck.
Sweat Equity: Equity given to a person for his hard work and services rendered to the company is called Sweat equity. It resembles a document stating Equity shares to x percentage in a company.
Term Sheet: A document given by Investors that mentions their terms of investment in the company, ownership structure, and Voting Rights in the company.
ROI (Return on Investment): Returns generated over a period of time on investment, They are calculated on percentage over equity shares as valuation increases after.
Pivot: It means changing the direction of the company and doing something else than the actual thing and moving towards a new business Idea. Mostly it's using the existing technology for a new business Idea.
Cash Flow Positive: When a company breaks even and starts making some additional cash, it’s called Cash flow positive. This is an indication that it is moving towards profit.
Cliff: It also means the Vesting period. It usually resembles a time that has to be invested by employees or a co-founder so as to earn some percentage of sweat equity at the end of the period.
Crowdfunding: Sourcing Money from Pool of People as early beta users and offering them some freebies in return. This enables the company to raise money to build the product and also garner attention from the world.
Evangelist: Someone who is the company’s number one Fan and understands the depth of the company's core vision and mission. Their work is to convert other people into evangelists and influence them.
Exit Strategy: Investors look for exit after investing in the company, Exit strategy is when the founder plans either to sell the company to another company or to list the company in the stock market.
Growth hacking: It is a marketing technique to focus on quickly finding scalable growth using nontraditional approaches and less expensive methods usually through social media. It involves understanding algorithms of social media and doing viral posts.
Iterate: Reffing something or changing something which is earlier worked upon.
Moat: Sustainable competitive advantage over your competitors, This acts as a defense built around you before your competitor jumps in your area.
Lean Startup: Startup which has started with a little capital and in frugal way so as to manage costs for a longer run. This is a cultural revolution built to do more in less time.
Ramen Profitable: Making only enough money to pay for the basic necessities. It is called ramen profitable.
Traction: It is the early numbers that show that your startup is showing some early signups. Could be 10 orders or 100 USD in revenue.
Product Market Fit: It is when the product scales and users love using it, This shows users repetitive purchase of the same product.
These are some of the most common jargons used in startups, This may sound a little different than usual to a layman person, but the startup as an industry has evolved over a period of time and has seen many companies following a similar trend in this direction. The learning curve for one who works in a startup is massive compared to one who works incorporate. And it is seen that the learning curve enables us to do much more in a limited period of time. Race to do better thrives in each individual. The failed entrepreneur becomes a much more mature entrepreneur or a better employee, nothing shall be more uncomfortable for an entrepreneur to start new or all over again.
