Glossary
The founder's dictionary. 250+ terms every entrepreneur should know.
A
A/B Testing
Comparing two versions of a webpage, email, or other element to determine which performs better by showing each to a random sample of users.
Acceptance Criteria
Specific, testable conditions that must be met for a feature to be considered complete.
Accounts Receivable
Money owed to your business by customers who purchased on credit.
Acqui-hire
Acquisition primarily for the team, not the product or technology. Company buys a startup to hire talent cheaply.
Activation Rate
The percentage of new users who complete a key action that indicates they've experienced core product value.
Affiliate Marketing
Pay commissions to partners who drive customer acquisition on performance basis.
Agile
A development methodology that prioritizes responding to change over following a plan, through iterative delivery and continuous feedback.
Amortization
Allocation of intangible asset costs or loan principal over time.
Angel Investor
A wealthy individual who invests their own money in early-stage startups for equity.
Annual Recurring Revenue
Predictable revenue from subscriptions or contracts that renew annually, excluding one-time fees.
Anti-dilution
A provision protecting investors from ownership reduction if future funding occurs at lower valuations.
Attribution Model
The method you use to credit which touchpoints are responsible for a conversion.
B
Balance Sheet
A snapshot of what your company owns, owes, and the owner's stake at a specific moment.
Barriers to Entry
Structural advantages that make it hard for competitors to enter and compete in your market.
Beachhead Market
A specific, narrow market segment chosen as your entry point before expanding to adjacent markets.
Benchmarking
Comparing your metrics against competitors or industry standards to gauge performance.
Beta Testing
Releasing a nearly-complete product to a limited group of users to find bugs and collect feedback before full launch.
Blue Ocean Strategy
Create uncontested market space instead of competing in crowded sectors. Focus on new value creation vs competition.
Board Seat
A position on the company's board of directors, typically granted to lead investors.
Bootstrapping
Building and growing a company using only your own capital and revenue, without external investors.
Bounce Rate
The percentage of sessions where a user leaves your product after visiting only one page.
Brand Awareness
Percentage of your target market that knows your brand exists.
Brand Equity
The intangible value your brand adds above its commodity product value.
Break-Even Point
The revenue level at which total revenue equals total costs, resulting in zero profit or loss.
Bridge Round
A smaller, interim funding round that bridges the gap to a larger institutional round.
Build-Measure-Learn
Lean Startup framework: rapidly build a minimum viable product, measure customer behavior, learn, iterate. Speed is the moat.
Burn Rate
The rate at which a company spends its cash reserves each month before reaching profitability.
Business Model Canvas
A one-page visual framework that maps all key components of your business model and how they fit together.
C
Cap Table
Capitalization table showing ownership stakes and share distribution across investors and employees.
Capital Expenditure
Money spent on acquiring or upgrading physical assets with multi-year useful life.
Cash Flow
The actual movement of money in and out of your business. What matters more than profitability for survival.
Cash Flow Statement
A record of actual cash in and out of your company, showing where every dollar came from and went.
Churn Rate
The percentage of customers who cancel or stop using your product within a given time period.
Click-Through Rate
The percentage of people who clicked your ad or link divided by total impressions shown.
Cliff
A period in a vesting schedule where no equity vests; typically 1 year before monthly vesting begins.
Cohort Analysis
The process of segmenting users by signup or acquisition date and tracking their behavior and retention over time to identify trends.
Common Stock
Basic equity ownership class held by founders and employees, subordinate to preferred stock.
Competitive Moat
A structural advantage that makes it hard for competitors to copy or erode your market position.
Compounding Growth
Exponential expansion where growth accelerates as your user base and network effects increase.
Confidence Interval
A range of values that likely contains the true population metric with a specified level of certainty.
Content Marketing
Creating and distributing valuable content to attract and retain a clearly defined audience and drive profitable customer action.
Contribution Margin
Revenue minus variable costs; the profit available to cover fixed expenses.
Conversion Rate
The percentage of visitors or leads who complete a desired action, such as signing up or making a purchase.
Conversion Rate Optimization
Systematically improving the percentage of visitors who complete a desired action, increasing revenue from existing traffic.
Convertible Note
Debt instrument that converts to equity upon a future funding event or maturity date.
Cost of Goods Sold
Direct costs to produce goods or deliver services sold by your business.
Cost Per Acquisition
The total amount spent to acquire one paying customer, including all marketing and sales expenses.
Cost Per Click
The average amount you pay each time someone clicks your ad, calculated as total ad spend divided by total clicks.
Cross-selling
Selling complementary or adjacent products to existing customers.
Crowdfunding
Raising capital from a large number of small investors, usually through online platforms.
Customer Acquisition Cost
The total cost to acquire one paying customer, including all sales and marketing spend.
Customer Discovery
The process of testing business assumptions by talking directly to potential customers before building.
Customer Feedback Loop
A system where you gather feedback, implement changes, and measure impact on customers.
Customer Journey Analytics
Analysis of how customers interact across touchpoints from awareness to purchase.
Customer Lifetime
The total length of time a customer remains active with your business.
Customer Persona
Semi-fictional profile representing your ideal customer based on real research data.
D
Daily Active Users
The number of unique users who actively engage with your product on a given day, measured as a daily count or rolling average.
Dashboard
A visual interface displaying key metrics and data in real-time for quick decision-making.
Data-Driven Decision Making
Making strategic decisions based on quantified facts and metrics rather than intuition or opinions.
DAU/MAU Ratio
Ratio of daily active users to monthly active users; measures how sticky and engaging your product is.
Debt-to-Equity Ratio
A measure of financial leverage showing how much of your company is financed by debt versus owner equity.
Deferred Revenue
Cash received from customers for services or products not yet delivered. A liability until performance obligations are met.
Definition of Done
The explicit checklist that marks when a feature or task is truly complete.
Depreciation
Accounting allocation of a capital asset's cost across its useful life.
Descriptive Analytics
Analysis that summarizes what happened in the past through dashboards and reports.
Design Thinking
A problem-solving methodology that prioritizes understanding user problems before proposing solutions.
Differentiation
The specific features, capabilities, or approaches that make your product distinct and harder to copy.
Dilution
Decrease in ownership percentage when new shares are issued through funding or equity grants.
Disruption
Innovation that fundamentally displaces existing market leaders and business models.
Distribution Channel
Path by which your product reaches customers: direct sales, marketplace, partnerships, retail, self-serve, etc.
Dogfooding
Using your own product to identify problems and validate that it actually works as intended.
Down Round
A funding round at a lower valuation than the previous round, signaling struggling growth.
Drag Along Rights
Allows majority shareholders to force minority shareholders to sell in an acquisition or major transaction.
Drip Campaign
A series of automated emails sent to prospects over time based on their behavior or characteristics.
Drop-off Rate
Percentage of users who abandon a process at a specific stage.
Due Diligence
The investor's deep investigation into your company before writing a check.
E
EBITDA
Operating profit excluding interest, taxes, depreciation, and amortization. Shows true operational performance.
Economies of Scale
Unit costs decrease as production volume increases, giving larger companies a cost advantage.
Email Marketing
Sending targeted messages to a list of subscribers to build relationships, nurture leads, and drive conversions.
Engagement Loop
A repeating cycle that incentivizes users to return and take actions that create value and trigger rewards.
Engagement Rate
Percentage of your audience that actively interacts with your content.
Equity
Ownership stake in a company, typically represented by shares or stock options.
Event Tracking
Recording specific user actions in your product so you can analyze behavior patterns.
Exit Strategy
A founder's or investor's plan to eventually cash out or transfer ownership stake. Usually acquisition or IPO.
Expansion Revenue
Additional revenue generated from existing customers through upsells, add-ons, or increased usage.
F
Feature Adoption
The percentage of your users who actually use a feature you built.
Feature Flag
A code toggle that lets you enable or disable features without deploying new code.
Feature Prioritization
The process of deciding which features to build next based on impact, effort, and strategic alignment.
Financial Projections
Forecasted financial statements showing expected revenue, expenses, and profit.
First-Mover Advantage
The competitive benefit gained by being the first company to enter a market or establish a new category.
Fixed Costs
Business expenses that remain constant regardless of sales or production volume, like rent and salaries.
Flat Round
A funding round at the same valuation as the previous round, indicating stalled growth.
Follow-on Investment
An additional investment that a previous investor makes in a later funding round.
Freemium Model
Offer a free base product with paid premium features or limits.
Funnel
The series of steps a potential customer goes through from first awareness to paying customer, often visualized as progressively narrowing stages.
Funnel Analysis
Breaking down a multi-step process to see where users drop off.
G
Go-to-Market Strategy
The plan for how you'll reach customers, position your product, and acquire your first users.
Gross Margin
Revenue remaining after subtracting cost of goods sold, expressed as a percentage.
Growth Hacking
Rapid experimentation across acquisition, retention, and monetization channels to find scalable, unconventional growth levers.
Growth Loop
A self-reinforcing cycle where product usage directly generates more users and engagement.
Growth Marketing
Systematic testing and optimization of all levers that drive customer acquisition and retention.
H
Habit Loop
A behavioral cycle of cue, routine, and reward that drives repeated user actions.
Heat Map
Visual representation showing where users click, scroll, and spend time.
Hockey Stick Growth
A growth curve that stays flat then suddenly accelerates exponentially—shaped like a hockey stick.
Horizontal Integration
Acquiring competitors or merging with similar-stage companies in your market to consolidate market share.
Hypergrowth
Explosive revenue growth of 100%+ annually, typically driven by product-market fit and strong unit economics.
I
Impression
One instance of your ad or content being displayed to a user, regardless of whether they interact with it.
Inbound Marketing
Attracting customers through valuable content and earned visibility rather than interruptive ads.
Income Statement
A record of your revenue, expenses, and profit over a specific period.
Influencer Marketing
Partnering with established personalities in your niche to reach their audience and benefit from their credibility and reach.
Information Architecture
How you organize and label content so users can find what they need intuitively.
Internal Rate of Return
The annual growth rate of an investment assuming all cash flows are reinvested at that rate.
IPO
Initial Public Offering—selling shares of your company to the public via stock exchange to raise capital and enable founder liquidity.
J
K
L
Lagging Indicator
A metric that reflects past outcomes and cannot be changed retroactively.
Landing Page
A standalone webpage designed to drive a specific action, typically capturing leads or validating demand.
Lead Generation
The process of identifying and attracting potential customers interested in your product or service.
Lead Investor
The primary investor who negotiates terms and drives due diligence in a funding round.
Lead Nurturing
The process of building relationships with prospects and gradually moving them toward a buying decision.
Lead Scoring
A system for ranking leads by their likelihood to buy based on behavior and firmographics.
Leading Indicator
A metric that predicts future outcomes and can be influenced by current actions.
Lean Startup
A methodology that emphasizes rapid iteration, validated learning, and build-measure-learn cycles over big upfront planning.
Lean UX
Shipping fast to test hypotheses instead of perfecting designs before release.
Lifetime Value
The total revenue a business expects to earn from a single customer over the entire relationship.
Liquidation Preference
The order and amount preferred shareholders receive before common shareholders in a sale or liquidation.
Lock-in
Structural design that makes it expensive or difficult for customers to leave your product.
M
Market Segmentation
Dividing your total addressable market into distinct groups with different needs and behaviors.
Marketing Mix
The combination of tactics (product, price, place, promotion) you use to reach and convert customers.
Marketing Qualified Lead
A prospect who matches your target customer profile and has shown buying intent through engagement.
Marketplace Model
A business that earns revenue by taking a commission or fee from transactions between buyers and sellers.
Merger and Acquisition
Combining two companies through merger (equal partnership) or acquisition (one buys another) to create value or eliminate competition.
Metric vs Vanity Metric
True metrics drive decisions; vanity metrics feel good but don't correlate to business outcomes.
Minimum Viable Product
The simplest version of a product that delivers enough value to test a core assumption with real users.
Monthly Active Users
The total count of unique users who engage with your product at least once within a calendar month.
Monthly Recurring Revenue
The predictable, recurring revenue a subscription business generates each month from active subscriptions.
Multivariate Testing
Testing multiple variables at once to find the best combination of changes, not just one change at a time.
N
Net Margin
Percentage of revenue remaining after all expenses, including operating costs and taxes.
Net Present Value
The current value of all future cash flows from an investment, discounted to account for time and risk.
Net Revenue Retention
The percentage of revenue retained from existing customers, including churn, downgrades, and expansion revenue.
Network Effects
A product becomes more valuable as more people use it, creating exponential growth.
Niche Market
A small, specialized market segment focused on a specific need or customer type.
North Star Metric
The single metric that best represents the long-term success of your business.
O
OKR
Objectives and Key Results: a goal-setting framework linking ambitious outcomes to measurable results.
Onboarding
The process of getting new users to their first meaningful success moment with your product.
Operating Expenses
Costs required to run daily business operations excluding cost of goods sold.
Option Pool
Reserved equity allocated for employee stock options, typically 10-20% of company shares.
Organic Growth
User acquisition driven by word-of-mouth, SEO, and viral mechanics without paid advertising.
Organic Traffic
Visitors who find you through unpaid search results or earned media.
Outbound Marketing
Directly reaching potential customers through paid ads, cold calls, email outreach, or direct sales.
P
Page Views
The total number of times your product pages are loaded by users.
Paid Growth
User acquisition through paid advertising channels like PPC, social ads, and sponsorships.
Paid Traffic
Visitors acquired through paid advertising on platforms like Google Ads, Facebook, or LinkedIn.
Pain Point
A specific problem customers face that causes frustration, waste, or prevents them from their goal.
Pirate Metrics (AARRR)
The five essential metrics tracking user journey: Acquisition, Activation, Retention, Revenue, Referral.
Pitch Deck
A 10-15 slide presentation that tells your company story and asks for money.
Pivot
A structured change to your product, market, or business model based on learning from the market.
Pivot vs Persevere
Decision framework: continue with current strategy (persevere) or fundamentally change direction (pivot) based on market feedback.
Platform Business Model
A business where value is created by connecting multiple user groups (producers and consumers) on a single network.
Porter's Five Forces
A framework that analyzes competitive intensity by examining suppliers, customers, competitors, substitutes, and entrants.
Positioning
How you define your product's unique place in the market relative to competitors.
Post-money Valuation
What your company is worth after new investors put money in the bank.
Pre-money Valuation
What your company is worth before new investors put money in.
Pre-seed
The earliest funding stage where founders raise capital to build prototypes and validate product-market fit ideas.
Predictive Analytics
Statistical models that forecast future outcomes based on historical data patterns.
Preferred Stock
Ownership class with priority claims on assets and dividends, typically held by investors.
Pro Forma
Projected financial statements based on assumptions about future business performance.
Pro Rata Rights
The right for existing investors to invest in future rounds to maintain their ownership percentage.
Product Analytics
The data that shows how users actually behave in your product, not what you think they do.
Product Backlog
A prioritized list of all features, improvements, and fixes your product needs.
Product Requirements Document
A detailed specification that describes the features, functionality, and constraints of a product or feature.
Product-Led Growth
Growth strategy where the product itself drives user acquisition and expansion through self-service, virality, and word-of-mouth.
Product-Led Sales
Using product experience and engagement data to inform sales conversations and close deals.
Product-Market Fit
The degree to which your product satisfies strong demand from a specific market segment.
Product-Market Fit Score
A numerical measure of how well your product solves a real market problem.
Profit Margin
Net profit divided by revenue; shows what percentage of sales becomes actual profit.
Prototype
A working model of your product that simulates core user interactions without full backend functionality.
R
Razor and Blades Model
Sell a low-cost or free base product, then profit from selling consumables or upgrades.
Reach
Total number of unique people who see your content or ad.
Referral Loop
A mechanism where existing users acquire new users through incentivized recommendations.
Referral Marketing
Existing customers bring new customers in exchange for rewards.
Regression Analysis
A statistical technique to identify which factors influence an outcome and how strong each influence is.
Retargeting
Serving ads to people who visited your site but didn't convert, to bring them back.
Retention Rate
The percentage of customers who remain active with your product after a specific time period, usually monthly.
Return on Ad Spend
Revenue generated divided by amount spent on advertising. ROAS = Revenue / Ad Spend.
Return on Investment
The profit or loss generated relative to the amount of capital invested, expressed as a percentage.
Revenue Model
The mechanism by which a company generates income from its products or services.
Revenue Recognition
The accounting method that determines when revenue is recorded, not when cash is received.
Revenue Run Rate
Annualized revenue based on the current monthly or quarterly rate, assuming it continues unchanged.
Revenue-Based Financing
Non-dilutive capital repaid as a percentage of monthly revenue until a cap is reached.
Right of First Refusal
Gives existing shareholders the right to purchase new shares before external parties can buy them.
Roadmap
A time-bound plan that communicates what you'll build over the next quarter or year and why each item matters.
Runway
Months of operations your company can sustain with current cash before needing additional funding.
S
SAFE
Simple Agreement for Future Equity—debt-like instrument converting to equity upon a future funding event.
Sales Qualified Lead
A prospect vetted by sales as ready for engagement and likely to convert into a customer.
Sample Size
The number of observations or users needed to make statistically valid conclusions from a test or analysis.
Scale
Growing your business to handle exponentially more customers while keeping unit economics intact.
Scope Creep
When a project expands beyond its original goals, causing delays and increasing costs.
Search Engine Marketing
Paid advertising on search engines where you bid on keywords to display ads above or beside organic results.
Search Engine Optimization
The practice of optimizing your website and content to rank higher in organic search results.
Seed Round
Initial funding round to validate product-market fit and fund early operations.
Segmentation Analysis
Breaking your customer base into distinct groups to understand behavior patterns and target messaging more effectively.
Series A
Major funding round for proven startups ready to scale after seed validation.
Series B
Second major funding round for scaling companies with validated business models.
Series C
Late-stage growth capital for mature startups building toward exit or IPO.
Serviceable Addressable Market
The portion of TAM your business could realistically capture with your product and distribution.
Serviceable Obtainable Market
The realistic revenue you can capture from your SAM within the next 3-5 years given your execution capacity.
Session Duration
How long a user spends in your product during a single visit.
Social Media Marketing
Building brand awareness and driving engagement by creating and sharing content on platforms where your target audience spends time.
Sprint
A fixed time period (typically 1-2 weeks) during which a team completes a defined set of work to deliver a potentially shippable product increment.
Statistical Significance
A measurement showing a result is unlikely to be caused by random chance, typically at 95% confidence.
Stickiness
How frequently users return to your product, measured as DAU/MAU ratio.
Strategic Partnership
Collaborating with complementary businesses to expand reach, capabilities, or market access without full acquisition.
Subscription Model
Charge recurring fees (monthly or yearly) for ongoing access to a product or service.
Switching Costs
The financial or operational burden a customer faces when moving to a competitor.
SWOT Analysis
A framework that maps your internal Strengths and Weaknesses against external Opportunities and Threats.
T
Tag Along Rights
Allows minority shareholders to sell their shares on the same terms when majority shareholders do.
Talent Acquisition
The process of recruiting, evaluating, and hiring skilled people to fill roles critical to your business.
Target Market
The specific customer segment you've chosen to focus your product development and marketing efforts on.
Technical Debt
Code shortcuts and architectural compromises that speed up shipping but create future maintenance costs.
Term Sheet
Non-binding document outlining the key terms and conditions of a venture investment.
Time to Value
The duration between when a user signs up and when they experience tangible value from your product.
Total Addressable Market
The total revenue opportunity if your product achieved 100% market share with no competition.
Traction
Measurable evidence that your product meets market demand through growing user adoption.
Two-Sided Market
A platform connecting two distinct user groups (supply and demand) that create value together.
U
Unique Visitors
The count of distinct individuals who visited your product within a time period.
Unit Economics
The profitability of a single customer transaction: revenue per customer minus the cost to acquire them.
Up Round
A funding round at a higher valuation than the previous round, rewarding growth.
Upselling
Selling a higher-tier or premium version of a product to an existing customer.
Usability Testing
Observing actual users interact with your product to identify friction and design gaps.
Use Case
A specific scenario describing how a user will interact with your product to accomplish a real goal.
User Acquisition
The process and cost of bringing new customers to your product.
User Experience
The overall feel and usability of a product—every interaction a user has from landing on your site to accomplishing their goal.
User Flow
A step-by-step path showing how a user moves through your product to complete a task.
User Interface
The visual and interactive elements through which users interact with your product.
User Journey Map
Visual representation of how customers interact with your product across touchpoints and stages.
User Research
Systematic investigation of who your users are, what they need, and how they behave.
User Story
A short description of a feature or capability written from the user's perspective to clarify intent and value.
V
Valuation
Estimated total value of your company used to determine investor ownership and dilution.
Value Proposition
The specific benefit your product delivers and why a customer should choose you over alternatives.
Venture Capital
Professional investors betting large sums on high-growth companies in exchange for equity.
Venture Debt
Short-term debt financing designed for venture-backed companies to extend runway between equity rounds.
Vertical Integration
Control the entire supply chain from raw materials to end customer delivery.
Vesting Schedule
A timeline determining when employees earn ownership of their granted equity.
Viral Coefficient
The number of new users acquired by each existing user through referrals or sharing, measured as a ratio.
Viral Marketing
Product design and messaging that encourages exponential sharing and organic growth.