Startup Lingo – Defined
As many of you know, I work at a startup.
I wouldn’t trade my time in the startup environment for the world! It’s been absolutely amazing and I’m not sure I could thrive in any other work atmosphere. I love the fast-paced, agile, work space. It offers a lot of opportunity for creativity, and rewards people for their efforts a lot more easily than corporate jobs. I personally recommend that all young people (especially) give working at a startup a try in the beginning of their career.
However (apparently), the startup world has it’s own set of phrases and lingo that may not make sense if you’re not immersed in it.
So with that said, here are a few different terms to help you familiarize yourself with the startup environment 🙂
(note – not all of these terms apply exclusively to startups, but I have heard them a lot in the startup culture).
Startup
First off, what is a startup? Essentially, a startup business is considered a small company that’s only a few years (or months) old. However, some startups can be several years old and just entering their first round of funding. If a company is raising capital and is just getting off the ground, it’s probably a startup.
Seed Round, Series A, B, C, etc…
When a startup is raising money, it often goes through many rounds of fundraising from either a few or many investors. The first round is called a “Seed Phrase” (think about planting a seed). It’s used to get the company off the ground and gives them the ability to produce an MVP (see below). As a general rule of thumb, after a company has raised its Series A (which is the first major round of funding), it is more likely to succeed. If you’re interviewing with a startup, a good question to ask is “What round of funding are you on, and have you raised your Series A yet?” But in the end, it all really depends on how much risk you’re willing to take with a particular company.
Runway
This is another excellent question for interviews: “how much runway do you have?” Think of a plane on a jetway or runway. When you ask how long the runway is in that scenario, you’re basically wondering “how much time do we have to accelerate this plane before we reach the end of the runway and crash?” It’s the same way with a startup. Runway refers to the amount of time (usually measured in months) that the startup has at its current burn rate (see below) before it goes under. Runway tells you how much time you have to “make it” as a business in terms of funding.
Burn Rate
How much money is the startup “burning” every month? How much are they spending on business expenses every month? Add everything up, and that’s the burn rate. Anything a business can do to reduce the burn rate without compromising the success of the project is generally preferable.
Bootstrapping
This leads into bootstrapping. This verb came from the term “to pull yourself up by your boot straps” – referring to a nearly impossible task. In the startup world, bootstrapping simply means the company is trying to cut costs as much as possible and be as cost efficient as possible (lots of DIY). This might entail sharing account logins for certain things (to save on user count), taking advantage of free trials, founders and leadership taking lesser pay, shooting videos for your company in your backyard with your phone, etc. Basically, anywhere money can be saved, it is saved.
Wearing Many Hats
This term simply means one person is performing job duties that are normally assigned to multiple people. It goes back to bootstrapping (saving money) as well. Additionally, when the company is small, wearing multiple hats is much easier. The term eventually ceases to exist as the company grows.
VCs
VC stands for Venture Capitalist. AKA – investors. Some startups opt to raise via crowdfunding, which allows many people to contribute small to larger amounts, but others choose to go the VC route. Usually, that means whomever invested gets some kind of say in how the company is run since they are providing a good chunk of change to help the business succeed. The only other option is to self fund the company, which, oftentimes, the founder(s) don’t have the money for.
MVP (Minimum Viable Product)
Basically, an MVP is the first publishable version of whatever product or service you’re marketing. Normally, the MVP is good enough for speeding up an initial launch but needs to be continually worked on in order to survive the test of time. They are meant to be temporary.
Value Proposition
A value prop is a short project or proposal showcasing value that could be provided. Oftentimes, interviewees will construct value props for potential employers to prove their worth, but they can also be created within a company to propose a new idea or make the employee more valuable for a promotion.
Roadmap
When you take a road trip, you often will map out a route to take in order to be most efficient. In the same way, startups will work really hard to produce a roadmap for future features, fixes, and enhancements for the company to ensure they are scaling as efficiently, safely, and profitably as possible.
As I mentioned before, the world of a startup is intense. It’s crazy at times, but it’s crazy fun! There’s always a lot going on and always something to do 🙂
And I wouldn’t have it any other way 🙂
Until next time,
Hope Szymanski
