Glossary

The point a new user has experienced enough of the product's core value that they're likely to return — usually defined by a specific in-product behavior.

The specific point in a new user's experience when they first understand why the product matters to them — when intent converts to belief. Identifying and accelerating users to the Aha Moment is the core of activation-stage product work.

Annual Recurring Revenue is the normalized yearly value of all active subscriptions; MRR is the same figure expressed monthly. Together they are the headline revenue metrics for any subscription business.

A market space where competition is irrelevant because the offering is uncontested — created by either redefining an industry's value proposition or by entering an entirely new market segment.

The amount of cash a company spends per month in excess of what it earns. Gross burn is total monthly spend; net burn subtracts revenue collected. Burn rate is the rate at which runway depletes.

The total sales and marketing spend required to acquire one new paying customer, averaged across a period. Computed as sales + marketing spend / net new paying customers.

The number of months it takes for a customer's gross profit to repay the cost of acquiring them. The standard threshold of efficient SaaS growth is under 12 months for SMB, under 18 months for mid-market, under 24 months for enterprise.

The rate at which customers stop using or paying for a product over a given period. Customer churn measures lost logos; revenue churn measures lost recurring revenue. Usually expressed as a monthly or annual percentage.

A method of analyzing user behavior by grouping users into cohorts based on a shared event (usually signup date) and tracking how each cohort's behavior evolves over time, rather than averaging across all users at once.

A satisfaction metric measured by asking customers to rate a specific interaction or experience, typically on a 1–5 or 1–7 scale. CSAT is calculated as the percentage of customers who rate 4–5 (or 6–7), making it a transaction-level complement to NPS's relationship-level measurement.

Daily Active Users and Monthly Active Users — the two most-used engagement counts for consumer products. The DAU/MAU ratio (often called the 'stickiness ratio') measures how habitual usage is: 50% means the average user shows up half the days in a month.

A self-reinforcing business mechanic where each part of the system makes the next part stronger — producing compounding rather than linear growth.

A precise description of the customer type for whom a product delivers the highest value at the lowest cost to acquire and serve. ICP is the operational filter that prevents a sales team from chasing every lead.

A customer-research framework that models purchases as the customer 'hiring' a product to make progress on a job. Instead of asking who the customer is, JTBD asks what they are trying to accomplish.

A quantitative metric that summarizes ongoing operational health of a business function. KPIs answer 'is this part of the business running correctly?'; they are maintenance metrics, not ambition metrics.

The total gross profit a business expects from a single customer over the entire duration of their relationship. LTV is the upper bound on how much you can spend to acquire that customer (CAC) and remain profitable.

A sustainable competitive advantage that protects a business from competitors — analogous to a castle moat. Warren Buffett popularized the term in investing; the same concept applies to product strategy.

The smallest version of a product that can be shipped to real users to test a critical hypothesis — not a polished early version of the final product, but a learning instrument.

The single metric that best captures the core value a product delivers to its customers — the one number every team can rally around.

A single-question customer loyalty metric calculated as %Promoters (9–10) minus %Detractors (0–6). NPS ranges from −100 to +100. Above 30 is good, above 50 is excellent, above 70 is best-in-class.

The percentage of recurring revenue retained from existing customers over a period, including expansion and contraction but excluding new acquisitions. NRR above 100% means existing customers grew your revenue net of churn.

A goal-setting framework where each Objective is a qualitative, ambitious statement of intent and 3–5 Key Results are the quantitative measures of achievement. Developed by Andy Grove at Intel; brought to Google in 1999.

The deliberate choice of how a product is described, framed, and compared so a defined customer immediately understands why they should choose it over alternatives. Positioning is the bridge between segmentation and messaging.

The state where a product satisfies strong market demand — typically signaled by usage growing without forced acquisition and >40% of users saying they'd be 'very disappointed' if the product disappeared.

The share of customers (or users, or revenue) that continues to engage with a product over a defined time window. Retention is the closest single proxy for whether a product is delivering ongoing value.

A SaaS-investing heuristic: a healthy software company's growth rate plus its profit margin should sum to at least 40. The rule trades growth for profitability — either 40% growth with 0% margin or 0% growth with 40% margin clears the bar.

The number of months a company can continue operating at its current spend before exhausting its cash. Runway = current cash ÷ monthly net burn. It is the most important number on a startup CEO's dashboard.

The practice of dividing a market into groups that share buying behavior, needs, or willingness to pay. Useful segmentation produces groups large enough to matter and homogeneous enough to act on differently.

A 2×2 strategy framework that maps a position across four dimensions: internal Strengths and Weaknesses (what the team controls) and external Opportunities and Threats (what the market is doing around it). Developed by Albert Humphrey at Stanford in the 1960s.

Three nested market-sizing figures: Total Addressable Market (the whole opportunity), Serviceable Addressable Market (the slice your offering can reach), and Serviceable Obtainable Market (the slice you can realistically win in the near term).

The time between a customer signing up for a product and experiencing its first meaningful value. Short TTV correlates strongly with retention; long TTV correlates with churn before users ever see what the product can do.

The revenue and cost associated with a single 'unit' of a business — typically one customer or one transaction. The fundamental test of whether a business model can ever be profitable.

The average number of new users each existing user invites and converts. A K-factor above 1.0 produces exponential viral growth; under 1.0 means virality assists but does not sustain growth on its own.

A prioritization formula from the Scaled Agile Framework that ranks work by cost of delay divided by job size. WSJF favors small, time-sensitive items over large, value-but-not-urgent items.