A Breakdown of Commonly Used Tech Terms Part II
We realize that not everyone is like us at here at Fueled. When people hear about the companies we work with, their services, and how…
We realize that not everyone is like us at here at Fueled. When people hear about the companies we work with, their services, and how people are using them, there are many unfamiliar phrases and terms thrown around. Even the term “startup” is vague, as it could imply a brand new ecommerce site or a profitable tech platform that’s 5 years old.
If you’re interested in applying to jobs at any tech company or startup, or just want to know more about the services that you’re using on a daily basis, it’s important to know the tech jargon.
The first article in this two-part series explored technical and engineering related terminology. This time, let’s go through some commonly used business terminology.
Scrum refers to an agile development framework in which company members take a holistic approach at their product development strategy and work together as one, unified team. As opposed to the traditional development approach, the scrum approach involves all members of the company knowing everything about the company and its workings, and all of the members play an equal part in the development. Scrum development also focuses on maximizing efficiency and the team’s ability to deliver changes frequently in order to match the customers’ needs, as opposed to creating one, final product that would suit all of the customers’ potential needs (since those are extremely hard to figure out and constantly changing).
Vested shares are shares of a company that you are given as an employee that you still own whether you leave the company or not. Generally, vested shares are offered to employees as a type of compensation on top of or along with a monetary salary.
An IPO, or Initial Public Offering, is basically a stock market launch for a company. Through an IPO, a private company becomes a public, and the general public can purchase shares of stock of that company. Many private companies IPO in order to expand monetization and attract attention as well as better potential management. In the U.S. this is often referred to as "Going Public" while in the UK it's "Floating on the Public Market." Facebook and Twitter are two popular tech companies who have gone through IPO’s and are now publicly traded, meaning you can buy stock in them!
When customers “churn,” that means that they are no longer customers. These customers are originally considered those who would continue to generate future revenue. For example, customers churn when they cancel subscriptions to services.
B2B stands for business-to-business. Companies that follow B2B commerce transactions sell their products or services to companies as opposed to consumers. An example of a B2B company is Salesforce.
B2C stands for business-to-consumer. Companies that follow B2C commerce transactions sell their products or services to consumers as opposed to companies. An example of a B2C company is Netflix.
C-Suite is a term used to refer to the “c-level executives” in a company, like the Chief Operating Officer or Chief Executive Officer. The C-Suite is generally comprised of the most senior level employees in a company.
Created by Eric Ries, Lean Startup is a philosophy and methodology for business and product development. The process involves harvesting a lot of consumer feedback, and iterating the business or product around that feedback. It ultimately aims to reduce all unnecessary or wasteful practices and to center its main point of interest around consumers’ needs.
CRM stands for Customer Relationship Management, and it consists of having an organized structure of the various aspects involved in improving customer service, such as sales processes, direct contact protocols, trend forecasting, and more. Businesses need have a strong CRM model in order to ensure overall customer satisfaction.
Marketing automation is a subset of CRM, and it refers to software platforms that are built to perform or automate, repetitive and continual tasks for marketing departments in companies. Monotonous marketing services and practices, such as having to send mass bi-weekly e-mail blasts or compiling web analytics, can be handled by marketing automation softwares like Silverpop, Hubspot and Marketo.
Revenue run rate
The revenue run rate is the speculated annual revenue of a company, determined by the amount of revenue generated on a monthly basis for a short period of time. Generally companies that are new or companies that have had a short period of revenue generation use the revenue run rate to forecast how much money the company will potentially make by the end of the year. For example, if a company made $2 million in its first month of operation, then its revenue run rate would be $24 million.
KPIs, or a Key Performance Indicators, are established in order to understand what the key goals and factors for success will be for a company. Key performance indicators allow businesses to measure progress, and thus help them make sure that their goals are being met. A KPI for the government might be unemployment rates, and for schools, might be graduation rates.
An incubator is a very important resource for a startup, often confused with an accelerator. What makes a startup incubator different from an accelerator is that incubators are more geared towards offering resources and management for growing companies. There’s generally no set time frame that a startup can be involved with an incubator, as they usually just have to pay a monthly fee to stay a part of the team. Incubators tend to provide office space and guidance for the small companies involved. As opposed to directly investing, incubators make sure the odds for the startup’s advancement much better.
An accelerator is a very important resource for a startup as well. What makes a startup accelerator different from an incubator is that most, if not all, accelerators provide some amount of funding for the startup to get off of its feet. Accelerators are usually involved in the earlier stages of the startups growth, and serve as investors for the businesses. Startups are usually offered accelerator investment money for equity stakeholdership in return.
Seed funding is a small round of funding that is raised during the early stages of a company or startup. It generally occurs prior to Series A funding, and is commonly raised by angel investors, family and friends funding, and crowdfunding.
CLV stands for Customer Lifetime Value, and it refers to the total value of a customer to a business. The CLV is generally calculated by predictive analytics that forecast future insights on company spending. It’s important to know the CLV, as it might cost more to acquire a customer than the CLV might be. For example, if a yearly CLV for Netflix yields $10 per customer and they are spending far more than $10 (on average) per customer for acquisition, then they need to re-think their business strategy.
Some additional resources to learn more about tech companies and tech vernacular are Wikipedia, Investopedia, TechTerms, and StartupDefinition.
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