Skip or Ship — Glossary
30 terms covering validation, market sizing, metrics and finance — each with what it actually means, how it is calculated, a worked example, and the mistakes people make with it. No filler definitions.
Product-market fit is the point where a product satisfies a real, urgent demand well enough that customers adopt it, keep using it, and tell others — so growth starts pulling rather than being pushed.
A minimum viable product (MVP) is the smallest version of a product that delivers real value to real users and produces reliable learning about whether the underlying idea works.
Idea validation is the process of gathering evidence that a business idea solves a real, urgent problem people will pay for — before committing significant time or money to building it.
Customer discovery is the practice of interviewing potential customers about their existing problems and workflows — rather than pitching a solution — to learn whether a problem worth solving genuinely exists.
Problem-solution fit is the stage at which you have confirmed a real, urgent problem exists and that your proposed solution genuinely addresses it — the milestone before product-market fit.
A pivot is a structural change in strategy — of customer segment, problem, business model or product — made in response to evidence, while retaining what has been validated so far.
Total addressable market (TAM) is the total annual revenue available if a product achieved 100% market share of everyone who could conceivably buy it — the theoretical ceiling, not a realistic target.
Serviceable addressable market (SAM) is the portion of total addressable market you could actually sell to given your business model, geography, language, regulation and target segment — TAM minus everyone you structurally cannot serve.
Serviceable obtainable market (SOM) is the share of your serviceable addressable market you could realistically capture within a defined period, given your budget, team, distribution and existing competition.
Customer acquisition cost (CAC) is the total sales and marketing spend required to win one new paying customer, calculated by dividing all acquisition costs in a period by the number of customers acquired in that period.
Customer lifetime value (LTV) is the total gross profit you expect to earn from a single customer across the whole of their relationship with you, before the cost of acquiring them.
The LTV:CAC ratio compares the lifetime gross profit of a customer to the cost of acquiring them, showing how many times over each customer repays their acquisition cost. Around 3:1 is the common health benchmark.
Churn rate is the percentage of customers (or revenue) lost over a given period. It determines how much new business you must win simply to stand still.
Unit economics are the direct revenues and costs associated with a single unit of your business — usually one customer — showing whether each one is profitable before overheads.
Monthly recurring revenue (MRR) is the predictable subscription revenue a business earns each month, normalised so annual and multi-year contracts are expressed as a monthly figure.
Annual recurring revenue (ARR) is the value of recurring subscription revenue normalised to a twelve-month period — typically monthly recurring revenue multiplied by twelve.
CAC payback period is the number of months it takes for the gross profit from a customer to repay the cost of acquiring them — the point at which that customer stops being a loss.
Net revenue retention (NRR) measures how revenue from an existing cohort of customers changes over a year, including upgrades, downgrades and cancellations but excluding new customers. Above 100% means the cohort grows on its own.
Cohort analysis groups customers by when they joined and tracks each group's behaviour over time, revealing retention and revenue patterns that aggregate metrics hide.
Burn rate is the speed at which a company spends its cash reserves, usually expressed per month. Net burn is spending minus revenue; gross burn is total spending regardless of income.
Runway is the number of months a company can continue operating before it runs out of cash, calculated by dividing cash reserves by net monthly burn.
Gross margin is the percentage of revenue left after the direct costs of delivering your product or service, before overheads like salaries, marketing and rent.
Bootstrapping is building a company using revenue and personal funds rather than external investment, retaining full ownership and control at the cost of slower growth.
Equity dilution is the reduction in existing shareholders' ownership percentage that occurs when a company issues new shares, typically during a funding round or when expanding an option pool.
The break-even point is the level of sales at which total revenue exactly covers total costs, producing neither profit nor loss — the threshold a business must clear to become self-sustaining.
An ideal customer profile (ICP) is a precise description of the type of customer who gets the most value from your product, is cheapest to acquire, and stays longest — used to focus sales, marketing and product decisions.
A value proposition is a clear statement of the specific outcome a product delivers, for whom, and why it is better than the alternatives — expressed in the customer's terms rather than the product's features.
A competitive moat is a structural advantage that makes a business hard to copy or displace — such as network effects, proprietary data, switching costs or regulatory position — and that strengthens rather than erodes over time.
A go-to-market strategy is the plan for reaching and selling to a specific customer segment — covering who you target, the channels you use, how you price, and the sales motion that converts interest into revenue.
A north star metric is the single measure that best captures the core value customers get from a product, used to align the whole team on one number that predicts sustainable growth.
Direct answer — Startup Glossary
30 startup and unit-economics terms defined with formulas and worked examples.
Describe your idea and the Skip or Ship engine returns a Ship, Fix, or Skip verdict with a full 10-category score breakdown — free, in 30 seconds, no signup.
Most of these terms have no governing standard, so companies define them to suit their own reporting. CAC that excludes salaries and LTV built on revenue rather than margin are both common and both flattering. Every definition here states explicitly what should be included.
Before you have users, market size and unit economics matter most — whether the market is big enough and whether each customer can be profitable. Retention metrics like churn and NRR only become measurable once you have paying customers with some history.
No. Pre-launch, the useful set is small: market size, break-even, and a rough sense of acquisition cost against expected lifetime value. The retention and expansion metrics matter after launch, when you have real data to put into them.
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