4 startup terms explained with analogies a 10 year old would understand

by Ana Lopez

Have a good understanding of the common language of the boot field is crucial if you want to communicate easily with investors and other stakeholders. In addition, some startup terms are extremely useful because they serve as a mental model that helps you better understand the problems and opportunities for your project.

That said, if you don’t have a business background, it can be challenging to understand much of the commonly used startup jargon simply because the individual terms are often explained with references to other business terms and jargon.

So, here are some of the key startup terms explained with analogies a ten year old would understand.

1. Product-market fit

Product-market fit is when a company makes something that people want to buy. Think of it like a puzzle. The company makes one piece of the puzzle (the product or service) and the customers are the other pieces (their needs and wants). If the pieces fit together perfectly, that is product-market fit. It’s important because if the company’s puzzle piece doesn’t fit with the customer’s pieces, they won’t buy it and the company won’t make money from it. But if the pieces fit together just right, the business will be successful.

2. Minimum viable product

Imagine you want to build a tree house in your backyard, but you don’t have all the materials or tools to build the biggest and best tree house ever. So you start with the bare minimum, like a platform and a ladder to get on. This is your MVP, it is the base version of your treehouse.

Once you have the MVP, you can try it out and see if people like it. If so, you can add more things to it, such as a roof, windows, and a rope swing. This is called iterating on your MVP. It’s like adding more rooms and features to your treehouse.

MVP is important because it allows you to quickly test your idea and get feedback from people so you can make it even better before investing a lot of time and resources into building something that might not be what people want.

3. Validation

Validating a startup is like trying out a new recipe. Imagine you want to bake a cake, but you’re not sure if the recipe will turn out well or if other people will enjoy it. So you bake a small amount of the cake and serve it to your friends and family. They give you feedback on the aspects of the cake they liked and disliked. You adjust and retest the recipe in response to their comments.

Validation is the practice of testing and receiving feedback. It is critical because it allows the startup team to determine whether their concept will be useful to consumers and allows them to make the necessary changes before spending significant time and resources developing a full product.

4. Agile

Imagine you want to build a big Lego house, but you don’t have all the Lego you need. So you start building the first room and you get it as perfect as possible. Then you go to the next room and build it as perfect as possible. You keep building rooms and adding to the house, one by one, until the whole house is finished.

This is similar to how a startup uses agile methodology for their projects. In agile, a startup divides its large project into small chunks called “sprints”. They work on one sprint at a time and at the end of each sprint they get feedback from customers and adjust the project. This allows them to quickly bring their product or service to market and make adjustments in the meantime, instead of waiting until the end to make changes.

We hope this explanation has made it less daunting to enter the world of startups!

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