How to talk like an entrepreneur
SUBTITLE: Learning the language of startup culture.
By Olivia Geen, MD, MSc, FRCPC
| 8 min read |
I work with healthcare startups in pre-seed and seed stages to establish problem-solution fit. In later stages I help with product/market fit, comment on UX if physicians are the target market, and help access channels into the clinical space for validation and growth.
Want to know more, including what all these words mean?
This article will introduce you to essential terms used in the startup world, written for anyone working in healthcare.
Being able to speak the same language is essential to good communication. While I don’t agree with jargon for jargon’s sake, learning the language not only avoids miscommunication, but it shows respect and interest for the world you’re trying to enter.
Enjoy!
Essential Steps
Problem/Solution Fit
Fully understanding the problem and all its aspects, so that you can design a solution that gets to the root of the issue. This step is crucial, and technically never ending – even late-stage companies need to keep their finger on the pulse of the problem and refine their product to continuously meet the customer’s needs as the world changes.
MVP (Minimal Viable Product)
The most basic version of your product or service that includes core features for testing. You can show your MVP to customers to validate your idea – i.e. that it is needed and they will buy it - and continuously iterate the design based on their feedback
Pitch
A short presentation / verbal description of your company with key stats/figures and business model. This can range from a full pitch presentation to an “elevator pitch” where you describe what you do in 10 seconds.
Product/Market Fit
This is where you iteratively refine your MVP to match the product to the market – you might go after different market segments based on user feedback. E.g. you might start out with a product to manage medication adherence in older adults, but later realize your solution has higher traction in younger diabetic patients, so you pivot.
Business Model Strategy
A map of your plan for success, including what you do, how you do it, to whom are you selling, how, and how much you expect to make vs how much it will cost. The underlying question here is how do you plan to make money? Are you ad-based revenue? Subscription model? Licensing deals? Using freemium and premium services? Selling data to third-parties?
Go-to-Market Strategy
A step-by-step plan for how you will launch your product and obtain customers (i.e. your “market”).
Scale Up
Now that you’ve had initial success, it’s time to replicate success at a larger scale, by going after more of the market or new market segments.
Exit Strategy
How are you getting money out of the company back to investors? Options include going public, through an IPO, merger, acquisition, or liquidation.
IPO (Initial Public Offering)
Become a publicly traded company on the stock market with shares.
Innovation Hubs
Incubator
Helps pre-seed, seed, and early startups for a prolonged period of time, through mentorship and resources. Sometimes in exchange for equity or free if government funded.
Accelerator
Help growth/expansion-stage startups grow during a defined period of time - through advice, mentorship, and resources. Usually take equity, and there’s a time limit on involvement
Startup Stages
Pre-seed
This is the idea phase, where you’re validating that the problem is indeed real and that your idea would solve some important aspect of it (problem/solution fit). You’re also looking at how many people have the problem (market size) and understanding how much it would cost to address the problem (opportunity cost) and any competitors already in the space. You might start working with an incubator in this stage or the next. You develop a mission/vision/strategy statement.
Seed
This stage is all about testing and validating on the smallest, cheapest scale possible. You might need funds (from bootstrapping or angel investors) to build your product prototype or MVP and focus on accessing potential customers to get their feedback and confirm your assumptions.
Early (also known as Series A)
You’ve had success refining your product, have a working business model and a few paying customers. But there is still much to be done to validate and scale the business. You’ll need to test an upgraded MVP and likely need more funds for this – think venture capital investment. You’ll be doing lots of iterations and might even pivot to a new market entirely to find the right product market fit (see below). You might start working with an accelerator. Risk of failure is highest at this stage.
Growth (also known as Series B/C)
You’re finally hitting it off and have good product market fit. You’ve got real customers and they are growing in number. You’ll probably need to hire more people to help, and you’ll be looking at marketing strategies to keep the momentum going. This is also when the “chasm” hits (see below), where you run out of keen early adopters and will need to innovate to access the early and late majority of potential customers. Venture capitalists and accelerators definitely come in handy now.
Expansion (also known as Scale or Series D+)
You survived and are ready to expand on a grander scale – maybe internationally or to additional market segments, or even offering new, related products to your initial product offering. Risk of failure is lowest at this stage.
Exit
It’s time to get the money out of the startup and pay back investors through an “exit strategy” such as going public on the stock market (see below).
Product Design
UI (User Interface)
The design of the look, feel, and interactivity of the product.
UX (User experience)
How the user navigates the product
Usability
How easy it is to use
Accessibility
How quick it is to access – removing barriers to use
Validate
Making sure that there is indeed a problem that people are willing to pay for a solution to, and that your solution is what they’d want.
Iterate
Refining your product/service based on customer feedback. Usually small, minor changes.
Pivot
A large change of direction – i.e. going after an entirely new market segment.
Scalability
Whatever you’re designing must be repeatable so that you can grow. If it’s not repeatable, you’ll never scale.
Cottage Industry
A company that can really only operate on a small scale and has little potential for large growth.
Healthcare Products
SaaS (Software as a Service)
The software is licensed on a subscription basis to customers - think electronic medical records (EMRs).
SaMD (Software as a Medical Device)
The software makes treatment or diagnosis recommendations that are followed by clinical staff or patients.
Medical Device Classifications
Class I - Low risk medical devices – common, low risk, low complexity i.e. no one really gets hurt whether or not your product performs. E.g. bandages, dental floss
Class II - Low risk but riskier than Class I – it would not be great if your product didn’t perform - contact lenses, pregnancy test kits, surgical gloves
Class III - Moderate risk – Someone could be seriously injured if your product doesn’t perform - surgical implants, glucose monitors, hemodialysis systems, diagnostic ultrasounds
Class IV - High risk – they are implanted or regulate body functions - someone could die if your product doesn’t perform - pacemakers, angioplasty catheters, heart valves
Business Model / Strategy
Target Market
Who are the people or other businesses that you are trying to sell too? What is their age, interests, likes/dislikes, sex/gender, etc
Market segment
What niche part of a market are you going to target? E.g. going after physicians within the entire market of “healthcare workers”. Or, you might segment based on need - going after the portion of physicians that hate using EMRs and would want to buy your EMR that streamlines charting. (This would be your “competitive advantage” (see below) and how you’d steal some of the market from a company that already exists in the space - by competing on an important feature).
Total Addressable Market (TAM)
What is the total size of the market, i.e. how many people have your problem? E.g. how many physicians in Canada hate using EMRs?
Serviceable Available Market (SAM)
What portion of the TAM do you realistically think you can capture with your current resources and channels? Tends to be geographically proximal to where you are. I might look at the total number of EMR-hating physicians within Ontario.
Serviceable Obtainable Market (SOM)
What portion of the SAM can you expect to capture, E.g. I won’t realistically be able to reach and sell to everyone physician that hates EMRs in Ontario - maybe just 30%?
Channels
The ways you can reach customers. This could be word-of-mouth; through traditional ads on TV, podcasts, instagram, TikTok; partnership deals with influencers; affiliate marketing; website and/or blog; events; search-engine marketing; PR, etc.
Freemium
A pricing strategy where some products are free, and customers pay for “premium” versions.
Value Proposition
What you bring to customers – i.e. the benefit they get from buying your product or service
Competitive Advantage
What makes your startup unique and able to compete in a crowded market. This could be on price, quality, usability, design, etc.
IP (Intellectual Property)
The legal rights to your innovation. Only some products have IP (for example, there is no IP for a clinical service model).
B2B
Selling business-to-business; i.e. your customer is another business
B2C
Selling business-to-customer; i.e. your customer is a person
The Chasm
The point between early adopters and the rest of the market – this is where a lot of startups stall. Early adopters are risk takers, like new things, and are willing to tolerate imperfection for the joy of the new. The rest of the market - early majority, late majority, etc - care more about what other people are doing, safety, usability, price, etc. They are harder to sell to.
Traction
How well you’re doing with customers, based on your KPI’s (see below).
Disruption
Changing the game of the market with your new product or tech. This usually means initial loss or low profit for the first few years. Think Amazon.
Analytics
KPI
Key performance indicators – these are the things you’ll track and measure to figure out how well you’re doing
Churn
How many customers cancel your service or stop buying
Retention
How many customers are you keeping; repeat buys.
LTV
Stands for “Life-time value” of a customer – how much over their lives do you anticipate you’ll make from your business with them? Think lifetime subscribers, or the use of chronic medications.
Financial terms
Capital
The money you need to build your company.
Non-dilutive funding
Free money – through pitch competitions, government funding, or other sources that do not take a cut of your equity (see below).
Dilutive funding
You have to give up some equity in exchange for capital
Equity
The value of stocks in a company - even if not publicly traded. This relates to ownership. As the founder, you start with 100% ownership. Over time, you’ll need to sell off portions of the company in exchange for tangible money that you can use to grow and access markets, with the eventual plan of an IPO or some other exit strategy (see below).
Sweat Equity
Equity in exchange for effort (i.e. a founder might be putting in “sweat equity” and making very little actual money at the start of the company)
Market Cap
The total value of all your shares.
ROI (return on investment)
Stands for return on investment – what can investors expect to make on the deal?
Burn rate
Total capital divided by monthly spend – i.e. how fast are you blowing through your money. Low is best.
Runway
How much time you have left until you’re out of money. High is best.
Seed-funding
The first round of funding to get you going, usually from angel investors in exchange for equity. You can have multiple stages to investment, such as series A, B,C, D, and E (see “startup stages” above).
Valuation
The process to determine how much your start-up will be worth one day. This is how you determine the value of shares before you’ve gone public, which investors will use to determine the equity they want in exchange for capital. This means you make up a number based on the best available evidence (market size, competitors, cost, etc) - your company is physically not worth anything yet. This is the mirage of startup investing.
Angel Investor
Provide funding to early stage startups for equity. The investment is typically much smaller than VC firms
VC (Venture Capital)
Provide large amounts of money to startups in exchange for equity. They are typically a firm or a very rich individual.
Bootstrapping
Self-fund through self, family, or friends.
Term Sheet
An understanding of the terms of investment.
Vesting
Early startups have limited capital, so they will pay you in a mix of salary and stock options. The vesting schedule is over what time frame you will receive your stock options. For example, you might be promised 0.3% of the company, with a 12 month vesting schedule, meaning that it will take you a year to get all of your equity and be “fully vested”.
Cliff
The point at which your shares will start to vest. This ensures you don’t stay for 1 month and get a cut of the company. Typically the cliff is set at 6 months or 1 year, with a monthly vesting thereafter. For example, if you have 0.3% of the company with a 12 month vesting and 6 month cliff, you’ll need to stay with the company for 6 months, at which point you’ll get 50% of the shares, and every month after you’ll get 1/12.
Tech Terms
Font-end
The part of your digital product that users interact with.
Back-end
The part of your digital product (i.e. app) where the coders code.
API
Stands for “Application programming interface” – the ability of a tech to “plug-in” to other programs. You can link two things together (e.g. the EMR and a new AI-Scribe) if they have API capability
Open source
When the code is publicly available – you won’t have IP on it, and this is how most tech companies function. They compete on UI/UX, cost, and often first-to-market advantage.
Startup Culture
Flat Hierarchy
Startups have few employees to start. Everyone knows everyone. Everyone wears multiple hats. No managers, minimal organizational structure. You can get things done without having to ask.
Lean
Startups keep costs low by making quick adaptations, rather than investing heavily before validating the solution.
Agile
Related to being lean, startups make small and iterative changes quickly to respond to market changes.
Unicorn
A company valued at at least 1 billion USD. Think Shopify or Uber.
Types of Licensing Deals
Standard License Agreement
Sell your IP to third party for some kind of revenue split (i.e. 50/50). No capital needed from innovator and you retain 100% ownership. E.g. a reseller of a microsoft software.
In-Licensing Agreement
During product development: A larger company gives you the capital and/or infrastructure needed to develop your product, in exchange for equity. Typical in pharmaceutical industry – a small biopharma company makes an in-license agreement with a larger company to use their manufacturing and financial resources rather than building from scratch on their own (which has insane start up costs).
Out-Licensing Agreement
During go-to-market: Innovator makes a deal with a marketing firm, consultancy, legal firm, or investors to create a go-to-market strategy in exchange for profit split. Think Dragon’s Den.
There you have it - a crash course in startup lingo. Pro tip - don’t overuse it. Don’t pepper your speech with terms just to make you sound knowledgable. Use the words when you need them.
For example: “We’re still trying to find the right product market fit. We’ve got a great MVP, and a few paying customers, but we don’t have great traction. Can I pick your brain on what you think we might be missing in our design or understanding of the problem?”
Now go forth and communicate!
Olivia
Dr. Geen is an internist and geriatrician in Canada, working in a tertiary hospital serving over one million people. She also holds a masters in Translational Health Sciences from the University of Oxford, is widely published in over 10 academic journals, and advises digital healthcare startups on problem-solution fit and go-to-market strategy as part of a University-affiliated incubator. For more info, see About.