CO-INNOVATION GLOSSARY

Startup Lingo for Managers

Accelerator: An accelerator is a hub where startups are given mentorship, space to work on their ideas and sometimes seed capital.

Source: Wilson S. (2021). Resilient: How to Overcome Anything and Build a Million Dollar Business With or Without Capital

Angel Investor: It is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company.

Angel investors are individuals who seek to invest at the early stages of startups. These types of investments are risky and usually do not represent more than 10% of the angel investor’s portfolio. Most angel investors have excess funds available and are looking for a higher rate of return than those provided by traditional investment opportunities.

Source: Ganti A. (2020). Investopedia.

Bootstrapping: A form of financing businesses without external money.

In startup speech, this stands for building a business out of very little or virtually nothing, without external investments. Bootstrappers rely usually on personal income and savings, sweat equity, lowest possible operating costs, fast inventory turnaround, and a cash-only approach to selling. Many of today’s largest corporations (such as Apple, Coca-Cola, Dell Computer, Hewlett-Packard, or Microsoft) began as boot-strapped ventures. Most of the world’s startups still follow this road; either because there is no alternative, or because of the unmatched control and independence it offers. The term itself is derived from the fictitious story of Baron Munchausen which pulls himself out of a swamp by his own hair.

Source: BusinessDictionary. (2019). Bootstrapping.

Bubble: A bubble describes a moment in an economic cycle where an industry or company does not realize that it might be overvalued and over-inflated.

When a “tech bubble” bursts, it means that a lot of startups go bust and investors lose their money.

Source: MyCFOng (May, 2020).

Burn rate: The rate at which a company depletes its cash pool in a loss-generating scenario.

It is a common metric of performance and valuation for companies, including start-ups. A start-up is often unable to generate a positive net income in its early stages as it is focused on growing its customer base and improving its product. As such, seed stage investors or venture capitalists often provide funding based on a company’s burn rate.

Source: Corporate Finance Institution (2019).

Cliff: A cliff usually applies to vesting schedules (shares given to employees over time).

Cliffs can be a device for the CEO to fire employees or let them leave without giving them stock within a limited period of time (usually 1 year). There are horror stories from Silicon Valley about early employees being cut just before they get to receive their equity stake. Cliffs are also used on CEOs by investors to make sure the CEO sticks around after getting the cash.

Source: Lowe D. (2018). Medium.

Convertible note: A note is worth a percentage of equity ownership in a company.

Some business owners use convertible notes if they want to attract angel investors without having to put a valuation on the company. The note turns into equity as soon as another investor comes in.

Source: WeWork Ideas (2014).

Cottage Business / Cottage Industry: A cottage business is one that is never going to make millions or scale but can be a nice lifestyle business.

Source: Lowe D. (2018). Medium.

Crowdsourcing: Crowdsourcing involves obtaining work, information, or opinions from a large group of people who submit their data via the Internet, social media, and smartphone apps.

Crowdsourcing allows companies to farm out work to people anywhere in the country or around the world; as a result, crowdsourcing lets businesses tap into a vast array of skills and expertise without incurring the normal overhead costs of in-house employees.

Source: Hargrave M. (May, 2021). Investopedia.

Early Adopters / Early Evangelists: The first users of your product.

They will typically be key influencers and active on social media. They will give you your most honest and sometimes overly direct feedback. If you can identify these people effectively and have them interacting with your startup from an early stage, you can get lots of free exposure. Already coined in 1962 by Roger, nowadays the term “early evangelist” is frequently used for those kinds of users in the startup world.

Source: Roger, E. M. (1962). Diffusion of Innovations

FMA (First Mover Advantage): First-mover advantage (FMA) is the competitive advantage gained by the initial (“first-moving”) significant occupant of a market segment.

First-mover advantage enables a company or firm to establish strong brand recognition, customer loyalty, and early purchase of resources before other competitors enter the market segment.

Source: Wikipedia (2021).

Going public: A private company’s initial public offering (IPO), thus becoming a publicly-traded and owned entity. 

Businesses usually go public to raise capital in hopes of expanding. Additionally, venture capitalists may use IPOs as an exit strategy (a way of getting out of their investment in a company).

Source: Hall M. (September, 2020). Investopedia.

Growth hacking: A process of rapid experimenting across marketing funnel, product development, sales segments, and other areas of the business to identify the most efficient ways to grow a business.

Growth Hacking is a marketing technique to quickly scale growth through non-traditional and inexpensive ways such as with the use of social media, viral marketing, or targeted advertising. Famous companies that have successfully applied this technique are for example Airbnb, Dropbox, and Foundr. Not only early-stage startups but also many corporates apply this technique nowadays.

Source: O’Kelley, L. (2016). B2B Marketing Buzzwords: Growth Hacking Vs. Inbound Marketing.

Hockey Stick: A line chart in which a sharp increase occurs suddenly after a short period of quiescence.

Widely used by investors to describe their future growth expectations of startups (in terms of revenue, users, etc.). After a normal, linear pace, growth takes off at an exponential rate, also described as the “inflection point”. This type of growth is mostly seen within startups benefitting from network effects or a strong viral nature.

Source: Biery, M. (2016). Navigating The Make-Or-Break Years As You Create Hockey Stick Growth.

Incubator: Startup incubators are groups that support chosen entrepreneurs and/or their businesses with mentorship and funding.

In exchange, the incubator takes an equity stake in the company. Increasingly popular and competitive in the tech world, incubators have been touted as the new business schools.

Source: WeWork Ideas (2014).

Lean Startup: Lean startup is a methodology for developing businesses and products that aim to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning.

Lean startup emphasizes customer feedback over intuition and flexibility over planning. This methodology enables recovery from failures more often than traditional ways of product development. 

Source: Wikipedia (2021).

Loss leader pricing: Loss leader pricing is using deliberately low pricing to gain market share.

The key here is to tempt your users with the low price or free offer and once you have acquired them, focus on how you can get repeat business from them.

Source: Lowe D. (2018). Medium.

Low hanging fruits: Low hanging fruits are things that can be identified to quickly bring cash in the door.

Your first customers will keep you afloat and help you get to your cash cows (reliable and consistent revenue generators) and whales (your accounts that make you big bucks).

Source: Lowe D. (2018). Medium.

MVP: Abbreviation for minimum viable product.

As Lean-Startup co-developer Eric Ries (2011) puts it, the minimum viable product (MVP) is that version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort. Instead of building the whole product or service, an MVP is a prototype that provides the minimum set of (relevant) features to test product-market fit. This ranges from low fidelity MVPs (customer interviews, landing page, explanation video, ad campaign, micro-surveys, or paper prototypes) up to high fidelity MVPs (digital prototypes, wizard of Oz, concierge, piecemeal, crowdfunding, etc.). Startups, as well as corporates around the world, use MVPs nowadays to validate their assumption as soon, fast and efficient as possible.

Literature: Ries, E. (2011). The Lean Startup. 

Nondisclosure agreement (NDA): A legal document that protects a startup’s secrets by holding employees responsible to pay damages for leaking them.

NDAs can be used to protect things like proprietary code, formulas, or customer information. You can have a “one-party” NDA where one side is receiving confidential information from the other or a mutual NDA for both parties.

Source: WeWork Ideas (2014).

OPM (Other People’s Money): Other people’s money refers to borrowed capital that is used to increase the potential returns as well as the risks of an investment.

Using other people’s money is considered a double-edged sword – it cuts both ways. If an investment that is levered with other people’s money turns out to be profitable, then the profits are magnified by the effects of the leverage. However, if the levered investment goes sour, then the investor that utilized other people’s money can incur steeper losses.

Source: The Strategic SFO (2018).

Pitch deck: A short presentation used to pitch your business plan to potential investors.

A pitch deck answers key questions about your startup and business plan in a short and simple way. It is flexible and adaptable to the respective target group and usually includes vision/mission, problem, solution, team, business/revenue model, market/customer potential, competition, milestones, capital requirements/use (when pitching to investors), and contact information. Storytelling and creative user stories are often used to catch the attention of the audience and improve the understanding of the business concept.

Sources: Kawasaki, G. (2015). The Only 10 Slides You Need in Your Pitch. 

Pivot: A radical strategic change in the business model in the startup scene.

Eric Ries coined the term pivot defining a radical strategic change in the business model, without changing the company’s vision. He provides examples of Youtube (originally a video dating site) and Twitter (former audio podcasting), which pivoted and radically changed course before achieving success with their new strategic direction. The main question to answer for both Startups and Corporate is whether when to pivot or persevere?

Source: Ries, E. (2011). The Lean Startup. 

Scale-up: A development-stage business, that is looking to grow in terms of market access, revenues, and a number of employees.

A development-stage business, specific to high-technology markets, that is looking to grow in terms of market access, revenues, and a number of employees, adding value by identifying and realizing win-win opportunities for collaboration with established companies. As with any capital-intensive company, the financing goal for a scale-up is to reward its investors, either by being acquired via an M&A (Mergers & Acquisitions) or via an IPO (initial public offering which is a process of offering shares of a private corporation to the public in a new stock issuance).

Sources: Startup Europe Partnership. (2014). Scaleups. When does a Startup turn into a Scaleup. 

Seed round / Seed stage: The first round of venture capital funding for a business venture.

This is for the development stage, just past the angel round, and can be up to $1 million of capital. Subsequent rounds are referred to in terms of Series (Series A, B, C, D, E) or stages (startup stage, formative stage, mezzanine stage).

Source: WeWork Ideas (2014).

Sweat equity: Sweat equity is when you give shares of your company to early employees or contractors in place of cash.

This is very common in the startup world before funding arrives. If you take a chance with a startup, your shares might become lucrative when the company sells.

Source: Lowe D. (2018). Medium.

Technology Evangelists: A person who builds a critical mass of support for a given technology, and then establishes it as a technical standard in a market that is subject to network effects.

The technology evangelist inspires businesses and individuals through interaction, content creation, and communication about new technology. The end goal of the evangelist is to inspire and hopefully convert the audience. Steve Jobs is a perfect example of such a technology evangelist, famous for his keynotes on new Apple technology. You might as well come across the term “early evangelist” (or early adopters, see more above): this is an early user, having the problem you design for (might have tried to solve it him/herself too), is happy to embrace your MVP, forgive potential flaws, but provide valuable feedback. Those are the people you search for when validating your first assumptions of your business model.

Source: Wikipedia. (2019). Technology evangelist. 

Traction: Quantitative evidence of market demand.

Ash Maurya, the developer of the Lean Canvas, argues that traction is the rate at which a business model captures monetizable value from its users, serving as a measure of the output of a working business model. It is essentially the moment when the rubber meets the road when your business is taking off. Identifying the right metric as an indicator of traction is crucial here.

Sources: Maurya, A. (2012). Running Lean; Maurya, A. (2016). Traction Is What Investors Are Looking for When You Present Your Plan.

Unicorn: Startups that have been valued at more than $1 billion USD.

Unicorns are startups that have been valued at more than $1 billion. As of December 2019, there are more than 400 unicorns around the world. Next, decacorns are companies valued at over $10 Billion USD (examples are Uber, Didi, WeWork, Lu.com, Airbnb, SpaceX, Palantir Technologies). Hectacorn means over $100 billion, and so on 😉 (even though there exists no hectacorn yet).

Source: CB Insights. (December 2019). The Global Unicorn Club.

Venture capitalist (VC): A professional individual who invests money in businesses in exchange for an equity share of the company.

VCs and venture capital firms invest institutional dollars (for investors, funds, and pension plans, etc.), they usually focus on proven or later-stage startups and invest greater amounts of money (typically at least $2 million per round).

Source: WeWork Ideas (2014).

Corporate Lingo for Entrepreneurs

Acquisition: An acquisition is when one company purchases most or all of another company’s shares to gain control of that company.

Purchasing more than 50% of a target firm’s stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company’s other shareholders. Acquisitions, which are very common in business, may occur with the target company’s approval, or in spite of its disapproval. With approval, there is often a no-shop clause during the process.

Source: Kenton W. (June, 2020). Investopedia.

Ballpark figures: Rough numerical estimate of the value of something that is otherwise unknown.

In the business context, ballpark figures are often used for negotiation, dealmaking, and brainstorming purposes (e.g. how many sales it might require to justify a large purchase). Hence, ballpark figures serve as a placeholder when a more precise number is not (yet) available.

Source: Investopedia. (2019). Ballpark Figure.

Blue-sky thinking: A technique used for idea generation.

Also referred to as “big-sky thinking” or “brainstorming without limits”, built on thinking sessions that are open to all creative ideas regardless of practical constraints.  

Source: QuickBooks. (2019). What Is Blue Sky Thinking?

Boil the ocean: “Boil the ocean” is an idiomatic phrase that means to undertake an impossible task or project or to make a job or project unnecessarily difficult.

The phrase “boil the ocean” has the additional connotation of going overboard or delving into such minute detail that a project becomes impossible. To avoid boiling the ocean, tasks and projects should have clear guidelines within the resources provided, frequent discussions on progress, and provisions against any unnecessary expansion.

Source: Majaski C. (2021). Investopedia. 

Continual Improvement Process (CIP): An ongoing effort to improve products, services, or processes.

These efforts can seek “incremental” improvement over time or “breakthrough” improvement all at once. Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness, and flexibility. Put simply, it means “getting better all the time”.

Source: Wikipedia. (2019). Continual improvement process.

CSR – Corporate Social Responsibility:
A type of international private business self-regulation that aims to contribute to the societal goals of a philanthropic, activist, or charitable nature or by engaging in or support volunteering or ethically-oriented practices. While once it was possible to describe CSR as an internal organisational policy or a corporate ethic strategy, that time has passed as various international laws have been developed and various organisations have used their authority to push it beyond individual or even industry-wide initiatives. While it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organisations, to mandatory schemes at regional, national, and international levels.

Source: Wikipedia (2020), https://en.wikipedia.org/wiki/Corporate_social_responsibility 

Fishbone diagram: Visual model to identify causal factors of an event.

Often used in manufacturing and product development, especially in the context of quality control. Developed by Kaoru Ishikawa (therefore also often called “Ishikawa diagram”), the diagram helps managers to determine which issues have to be addressed in order to gain or avoid a particular event (e.g. sudden production stop).

Source: Investopedia, https://www.investopedia.com/terms/i/ishikawa-diagram.asp

Governance:
From a theoretical perspective, governance refers to the actions and processes in formal and informal organizations of any size, in which practices and organizations arise and persist. These actions and processes may function for any purpose, good or evil, for-profit or not. Conceiving of governance in this way, one can apply the concept to states, to corporations, to nonprofits, to NGOs, to partnerships and other associations, to business relationships (especially complex outsourcing relationships), to project teams, and to any number of humans engaged in some purposeful activity.

Source: Wikipedia (2020), https://en.wikipedia.org/wiki/Governance 

Innovation thesis: A company’s view of the future and strategic objectives of innovation.

Serving as a roadmap on how to use innovation to respond to future developments and trends. An in-depth analysis of the company’s portfolio (internal) and business environment (external) are used to develop this innovation thesis. Every company should actually have such a thesis (but many haven´t), integrated, and openly communicated within the strategy, vision, and mission. This thesis sets clear boundaries, sharpens the innovation portfolio, and can also serve as “internal life insurance”.

Source: Viki, T. (2018). Every Company Needs An Innovation Thesis.

ISO, TQM & GDPR: Abbreviations for “International Organization for Standardization”, “Total Quality Management” and “General Data Protection Regulation”.

Three omnipresent terms in the corporate field. Sometimes also inhibiting innovation and open collaboration with external innovation partners, such as startups. Especially the tightening of GDPR rules is affecting almost every business and causing major efforts. 

Leverage Synergies: Leveraging a synergy means that when you have two highly complementary aspects of business humming along parallel to each other you take a series of deliberate steps to intersect those things and amplify their relationship within your organization.

Source: Barnes J. (September, 2014). ”How to Leverage Your Synergies”

Move the needle: If something doesn’t move the needle, meaning that it doesn’t generate a reaction (like, positive cash flow), they don’t like it much. 

When pitching VCs, make clear that you intend to move the needle. Or you could just say, specifically, how your plan and product are superior to your competitors’.

Source: Forbes (2012). ”Most Annoying Business Jargon ”

Open Kimono: Open share of important information to an outside party.

Similar to “open the books” or “open door policy”, “open kimono” refers to the reveal of the inner workings of a project or company to an outside party. The phrase became most popular within the entire world of IT, especially in North America.

Source: Investopedia. (2019). Open Kimono.

Phase-Gate process: A project management technique for product- and innovation development.

Also known as the “waterfall process” or “stage-gate process”. Projects are divided into distinct phases (or stages) separated by decision points (known as gates). At each gate, continuation is decided by (typically) a manager, steering committee, or governance board, based on forecasts and information available at the time.

Source: Wikipedia. (2019). Phase-gate process.

Proof of concept (PoC): Evidence for the practical feasibility of a theoretical concept.

Proof of concept (PoC) is a realization of a certain method or idea in order to demonstrate its feasibility or a demonstration in principle with the aim of verifying that some concept or theory has practical potential. While a PoC shows that a product or feature can be developed, a prototype shows how it will be developed.

Sources: Wikipedia. (2019). Proof of concept; Singaram, M., & Jain, P. (2019). What is the Difference between Proof of Concept and Prototype? 

Punch the puppy: Punching the puppy means doing something unpleasant that will nonetheless be good for business.

Source: Fulham R. (2018). ”15 of the most baffling business buzzwords”

Silo mentality: Mindset of avoiding sharing information among different divisions.

Resulting in lower efficiency and productivity, bad morale, and damaged cultures within organizations. Often arising from competition between senior managers and protective attitudes, passing down to individual employees (top-down).

Source: Investopedia. (2019). Silo Mentality.

Singing from the same hymn sheet/ singing from the same song sheet: If you say that people, especially people in the same organization, are singing from the same hymn sheet or are singing from the same song sheet, you mean that they are saying the same things in public about something and appear to agree about it.

For example: ” We should bring together the departments so that we’re all singing from the same hymn sheet”.

Source: Collins Dictionary (2020).

Sweet Spot: A special target market of the company, for which you’re now expected to live for.

Source: Lyne T. (2016). ”75 Corporate Buzzwords and Phrases That Drive Us Crazy”

Tiger Team: Group of experts formed to work on specific problems.

For instance, the NASA Engineering and Safety Center (NESC) puts together “tiger teams” of engineers and scientists from multiple NASA centers to assist in solving complex problems when requested by a project or program.

Source: Wikipedia. (2019). Tiger team.