Founder Reference
Startup Glossary
54 terms, plain English, no fluff. The words you'll see in investor decks, product meetings, and startup Twitter — explained like you're already in the room.
← Back to ResourcesAssumption
A belief about your customer, problem, or market that you haven't proven yet. Every business idea is a stack of assumptions. Your job is to find the ones that could kill you and test them first.
Concierge MVP
Delivering your product's value manually, by hand, before building anything automated. If you can't do it manually, you probably don't understand the problem well enough to build software for it yet.
Customer Discovery
Talking to real people before you write a line of code. Not to pitch your idea — to understand their problem, their current workaround, and whether they'd pay to fix it.
Jobs to Be Done (JTBD)
The underlying goal a customer is trying to accomplish, not the feature they're asking for. People don't want a drill — they want a hole in the wall. Understanding the job helps you build what actually matters.
Minimum Viable Product (MVP)
The smallest version of your product that lets you test a core assumption with real users. It's not a prototype and it's not a demo — it's a working thing that delivers real value, even if it's rough.
Pivot
A deliberate change in strategy based on what you've learned from the market. Not giving up — more like adjusting your aim after getting new information. The best pivots are small and purposeful.
Problem-Solution Fit
Confirmation that the problem you're solving is real, painful, and frequent enough that people are actively looking for a better answer. You have this when someone says "I've been waiting for this."
Product-Market Fit (PMF)
When your product satisfies a real market need well enough that customers stick, refer others, and come back. You'll know it when growth stops feeling like pushing a boulder uphill.
Smoke Test
A quick experiment — usually a landing page or a fake button — to measure real demand before building anything. If people won't click "buy" on a description, they probably won't pay for the real thing either.
Validation Test
A structured experiment designed to confirm or disprove a specific assumption. Good validation tests have a clear hypothesis, a defined success threshold, and a time limit.
Beachhead Market
The narrow, specific segment you go after first. Win there before you expand. Trying to serve everyone from day one is a reliable way to serve no one well.
Ideal Customer Profile (ICP)
A precise description of the type of company or person most likely to buy from you, get value from your product, and stick around. Not "everyone who could use this" — the one customer who makes everything else easier.
Niche
A focused slice of a market with specific, shared characteristics. Counterintuitively, going niche usually leads to faster growth — a small group of people who really need your thing is worth more than a large group who kind of do.
Persona
A semi-fictional profile of your target customer built from real research. Useful for keeping your team aligned on who you're building for. Dangerous when based on guesses instead of real conversations.
TAM (Total Addressable Market)
The full revenue opportunity if you captured 100% of the market. Mostly useful for framing the size of a space — investors care about it, but you should focus on the SAM and SOM.
SAM (Serviceable Addressable Market)
The portion of TAM you can realistically reach with your current product and distribution. A more honest number than TAM and more useful for planning.
SOM (Serviceable Obtainable Market)
The slice of SAM you can realistically win in the near term. This is the number that should drive your goals. If your SOM doesn't support a real business, revisit your model.
Viral Coefficient
The average number of new users each existing user brings in. A coefficient above 1.0 means the product grows on its own. Below 1.0, you're always topping up the bucket manually.
Business Model Canvas
A one-page framework for mapping out how your business creates, delivers, and captures value. Useful for stress-testing your assumptions before you spend money building anything.
Freemium
Offering a free tier to drive adoption, with a paid tier that unlocks more value. Works when the free tier genuinely delivers value and the paid upgrade is an obvious next step. Fails when the free tier is too limited to demonstrate anything.
Go-to-Market Strategy (GTM)
The plan for how you'll reach your first customers and grow. Covers positioning, pricing, channels, and messaging. Having a great product with no GTM is how you build a ghost town.
Price Anchoring
Presenting a higher price first to make your actual price feel more reasonable. Common in pricing page design — the pro tier exists partly to make the starter tier look like a deal.
Revenue Model
How your business actually makes money — subscriptions, one-time purchases, usage-based billing, marketplace fees, etc. Different models suit different products and customer expectations.
Bootstrapping
Building a business using your own money and revenue, without external investment. Slower to scale but you keep full control. Many successful products are profitable bootstrapped businesses.
Activation Rate
The percentage of new users who reach the "aha moment" — the point where they first get real value from your product. Low activation usually means onboarding is broken, not the product.
ARR (Annual Recurring Revenue)
Your predictable, annualized revenue from subscriptions. ARR = MRR × 12. The number investors and acquirers use to value SaaS businesses.
CAC (Customer Acquisition Cost)
What it costs you to acquire one new customer, including all sales and marketing spend. If CAC is higher than LTV, you're losing money on every customer you win.
Churn Rate
The percentage of customers who cancel or don't renew in a given period. Even a small monthly churn rate compounds into a serious problem over time. Fixing churn is almost always more valuable than adding new users.
Conversion Rate
The percentage of people who take a desired action — signing up, upgrading, buying. Track this at every step of your funnel. A small improvement at one stage can have a big impact on overall revenue.
LTV (Lifetime Value)
The total revenue you expect from a customer over the entire time they're with you. LTV ÷ CAC is one of the most important ratios in a subscription business. Aim for LTV:CAC of 3:1 or higher.
MRR (Monthly Recurring Revenue)
The predictable, repeating revenue your business generates each month from active subscriptions. The core health metric for SaaS. Track new MRR, expansion MRR, and churned MRR separately.
Net Promoter Score (NPS)
A measure of how likely customers are to recommend your product on a 0-10 scale. Subtract detractors (0-6) from promoters (9-10). Useful as a directional signal, not gospel.
North Star Metric
The single number that best captures the core value your product delivers to customers. Everything else is in service of this. Teams without a north star metric tend to optimize random things.
Retention Rate
The percentage of customers who stay with you over a given period. The inverse of churn. High retention is the foundation of sustainable growth — acquired users only create value if they stay.
Break-Even Point
The point at which your revenue covers all your costs. Before break-even, you're burning money. After it, you're building a business. Knowing your break-even gives you a clear target to aim for.
Burn Rate
How much cash you're spending each month beyond what revenue covers. If you're burning $5k/month with $30k in the bank, you have six months of runway. Know this number cold.
COGS (Cost of Goods Sold)
The direct costs to deliver your product or service — hosting, AI API calls, payment processing fees, etc. Subtract COGS from revenue to get gross profit. SaaS businesses should target 70-85% gross margins.
Gross Margin
Revenue minus COGS, expressed as a percentage. High gross margins mean most of your revenue flows through to profit after paying direct delivery costs. Low margins leave little room for mistakes.
Ramen Profitable
Generating just enough revenue to cover your basic living costs. Not a long-term goal, but a meaningful milestone — it means you can keep going without running out of time.
Runway
How many months your business can survive at its current burn rate before running out of cash. Your runway determines how much time you have to find product-market fit.
Unit Economics
The revenue and cost breakdown for a single customer or transaction. Positive unit economics mean you make money on each customer. Negative unit economics mean you can't grow your way to profitability — you have a structural problem.
Angel Investor
An individual who invests their own money in early-stage startups, often before institutional investors show up. Angels typically take more risk and move faster than VCs.
Cap Table
A record of who owns what percentage of your company. It shows founders, investors, option holders, and their respective stakes. Keep it clean and simple for as long as possible.
Dilution
The reduction in your ownership percentage when new shares are issued — typically when you raise investment. Dilution isn't inherently bad if the new money grows the total value of the pie.
Pre-Seed
The earliest stage of outside funding, often used to build an MVP or validate core assumptions before a seed round. Pre-seed investors are betting on founders and ideas, not traction.
SAFE Note
Simple Agreement for Future Equity. A simple contract that lets investors give you money now in exchange for equity later, usually at a discount, when you raise a priced round. Faster and cheaper than convertible notes.
Seed Round
An early funding round used to build product and acquire initial customers. Seed investors expect real signals — a working product, early users, and a clear thesis on the market.
Term Sheet
A non-binding document outlining the key terms of an investment deal before the final legal documents are drafted. Read every line. The details matter.
Valuation
The agreed-upon worth of your company at a point in time. Pre-money valuation is before investment; post-money is after. Valuation affects dilution and is ultimately a negotiation, not a calculation.
Feature Creep
The gradual accumulation of features beyond what your core users actually need. It slows development, bloats the product, and confuses new users. The hardest thing in product development is saying no.
Iteration
A single cycle of build, measure, and learn. Fast iteration is how you improve without betting everything on a single release. Small bets, frequent feedback, incremental progress.
Roadmap
A prioritized plan for what you're building and when. A good roadmap reflects real customer needs and strategic bets. A bad roadmap is a wishlist that never gets shorter.
Sprint
A short, time-boxed development cycle — typically one to two weeks — with a specific goal. Sprints create rhythm, force prioritization, and give you regular checkpoints to assess direction.
Technical Debt
The future cost of shortcuts taken today. Writing fast, messy code is sometimes the right call early on — but it always has to be paid back. Debt compounds just like financial debt.
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