What to prove first
One buyer segment with recurring pain and a clear trigger to pay now. If that is vague, validation can't fix it.
Skip or Ship — Glossary
Startup terms, defined properly
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.
Validation
Product-Market FitPMF
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.
Minimum Viable ProductMVP
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 Validationbusiness idea validation
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 Discoverycustomer interviews
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
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.
Pivot
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.
Market
Total Addressable MarketTAM
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 MarketSAM
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 MarketSOM
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.
Metrics
Customer Acquisition CostCAC
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 ValueLTV
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.
LTV:CAC RatioLTV to CAC
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 Ratecustomer churn
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
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 RevenueMRR
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 RevenueARR
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 Periodpayback period
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 RetentionNRR
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 Analysiscohort retention
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.
Finance
Burn Ratenet burn
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.
Runwaycash runway
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 Margingross profit margin
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.
Bootstrappingbootstrapped
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 Dilutiondilution
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.
Break-Even Pointbreak even
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.
Growth
Ideal Customer ProfileICP
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.
Value Propositionvalue prop
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.
Competitive Moatmoat
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.
Go-to-Market StrategyGTM
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.
North Star MetricNSM
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
The Skip or Ship Idea Lifecycle System evaluates ideas with five consistent signals: market demand, competition intensity, execution difficulty, revenue potential, and customer clarity. Same inputs, same verdict — every time.
What kills momentum
Generic ICPs, vague outcomes, and zero distribution plan. These collapse execution speed within weeks.
What to decide next
One channel, one wedge use case, one pricing hypothesis to test in the next 14 days.
Validate this idea before building
Move from idea generation into evidence-based validation with the core Skip or Ship Idea Lifecycle System. Free verdict, premium signal cards, no signup needed for the first run.
Frequently asked questions
Why do startup metrics definitions vary so much between sources?
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.
Which metrics matter most for an early-stage idea?
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.
Do I need to calculate all of these?
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.