There's a special kind of person that thrives in Silicon Valley. Since the 1940s and '50s, the area has been a hub for entrepreneurs and techies. For over six decades, passionate engineers and entrepreneurs have settled in the valley with the hopes of bringing their biggest ideas to life.
Over time, this tech bubble filled with like-minded people working in the same industry, creating a language and vocabulary of its own. A combination of scientific shorthand and mathematical concepts are incorporated in the Silicon Valley lingo, which continues to evolve as quickly as the arrival of the next start-up.
From burn rates to limbic resonance, sound like a Silicon Valley veteran by incorporating some in-the-know industry jargon into your next startup pitch.
An N of 1 trial is a case study done on a single patient. Often used in healthcare, the goal is to uncover subtle results that would get lost in a large-scale study. Many measurements from one person over a period of time rather than fewer measurements from a large pool of people lead to specialized optimization.
The concept is simple: personalized features prescribed precisely for the individual. An N of 1 trial helps to improve AI performance by having data based on specific user personas.
If there is a singular belief in Silicon Valley, it would be first principle thinking. Elon Musk and the CEO of Nextflix both use this method to develop a decision making strategy for their growing billion-dollar businesses.
Aristotle actually coined the term over two thousand years ago. The idea is that to make something new, you have to apply first principles thinking—the first assumption you make must be the root and not based on any other propositions or assumptions.
Putting the company first and always looking for other viable solutions are key components of first principles thinking. The ideology is a belief that instead of following directions or continuing to work on something in the same way, it's better to consider and suggest alternatives. First-principles thinking also allows you to break down problems into smaller parts and see where things could be improved.
It's the key to adaptability, focusing on bottom-up thinking.
Think of antifragile as a step up from resilient. If something is resilient, it can withstand the tests of time. If something is antifragile, it won’t only come out on the other side unscathed; it will also end up being stronger. In fact, maybe that same thing needed to be tested and tried to become better.
If you’ve ever worked at an early stage startup, you’ve likely been through these ups and downs. Many startups get tested and fail. Some end up coasting along, but never really exploding. And others…. Well, those are the names we remember. Uber. AirBnb. Amazon. Tesla. Slack. The list goes on.
Not trivial; Significant. Nontrivial is a great word to use when wanting to do a humblebrag, particularly about a large investment.
For instance, our support this funding round was non-trivial, so we are ready to go into beta.
A burn rate refers to how much money a company loses each month/in a given period. High burn rates are not uncommon amongst startups—actually, they're quite common. It's less likely to encounter a startup that is cashflow positive (aka NOT burning money). The strategy for many is to get big investments and backing, then work to scale FAST (which leads to lots of money being spent).
The key is to understand your burn rate and the reason for your net burn.
Bayesian statistics is based on a theory of probability in the field of statistics. Bayesian Statistics originated in the 1700s, and Silicon Valley loves it because the theory provides a mathematical way to rationalize a change of beliefs as a result of new information or data.
Tech companies are always updating some variables to increase the number of actions performed by a user or make an algorithm more democratic. Bayesian Statistics allows algorithms to update with each new piece of information they receive, a method used in machine learning. But be careful with discussing Bayesian Statistics, unless you really understand the complexity of how this works and differentiates from other theories such as frequentist inference.
This is a problem-solving principle that many startups likely use but may not know the name of. Occam’s Razor is an age old principle that, if there are two varying explanations for something that take into account all of the same facts, the more simple explanation is likely the correct one.
It’s not totally a scientific rule, but more so a philosophical one. The law was created by 14th century logician, William of Ockham.
Limbic resonance refers to the exchange of energy between two people inside a loving and safe relationship. When these two people interact, their brains release specific neurochemicals located in the brain's limbic region. Humans are social creatures by nature, and without the activation of limbic resonance, we can feel less mentally stable.
In tech, there is an ongoing discussion about how our online social behavior has shifted, and how this affects how we achieve limbic resonance. Some are concerned that tech makes us less dependent on other people because it can re-create some of the same stimuli and limbic resonance without human interaction. We recommend checking out The Social Dilemma on Nexflix for more information on how social media is affecting our lives.
Sounds scary, right? Well, it kind of is for tech companies! An attack vector is a path/means by which a hacker exploits the cyber security vulnerabilities, gaining access to a network server or computer. With this access, they may be able to expose sensitive data (ahem, the 2011 PlayStation Network outage) or even start screwing around with your code.
This actually happens quite frequently, which is why some companies will have whole teams dedicated to cyber security.
Programming languages where variables need to be defined before they can be used are considered dynamic typing languages. Python and PHP are considered dynamic typed languages.
For example: "We loved your energy but are only looking for dynamic typing developers at the moment."
This is a really well known term in the valley, and it's actually quite simple (in comparison to some of the others on this list). Second-order effect refers to this idea that every action has a consequence, and each consequence has another consequence.
So, when one decision is made, it can initiate a series of consequences, also known as "cause-and-effects". Basically, when you're making a change to something, think about what it could possibly effect—and be careful before making any big changes, as they may end up having the opposite effect that you were hoping for.
Counterfactual thinking is a concept in psychology that looks at how the world would need to be different to achieve a different outcome—something that is contrary to what actually happened. Flash to someone regretting their responses in an interview, thinking of alternatives to how that scenario could have gone (therefore affecting the outcome). "Maybe if I had said X in the interview and not Y, I could have got the job."
When it comes to business, this thinking is applied to looking at changes that can lead a model to a different outcome. "We set the product at X price point, and these were our sales results. Maybe if we set the price to Y, we will be able to double our sales." Counterfactual explanations are also often used to make algorithms more democratic.
When the barrier to industry and infrastructure costs are so high that it prevents competition, then there is a natural monopoly. This phenomena most commonly arises in industries that rely on technology or raw materials to operate.
These types of businesses tend to be stable, profitable and rare. Many companies in the tech industry, including Google and Facebook, have established a natural monopoly in a short amount of time. How? They stole that first mover advantage, creating a (nearly) entirely new product/service with low competition. Oh, and they did it really well.
Speaking of, this is also a very popular tech term being thrown around in the Valley (and beyond). It's similar to a natural monopoly, and may also go hand and in-hand. Where it differs, though, is that the first mover advantage refers to the competitive gains/advantage of being the first to market. Whether that's a product or service, the idea remains the same.
This advantage doesn't guarantee success, though. It also doesn't mean the first company to do something is going to be the company that lasts. First mover companies need to continue to innovate, grow, and even patent technology or processes in order to fend off competition (example: Uber). Once the public sees that a certain model can work (like the simple process of ordering a cab with an intuitive app), you can bet that more companies in a similar vein will start to emerge.
This theory can be applied to all aspects of life. Survivor bias refers to the human tendency to study (and put emphasis) on successful outcomes, ignoring the possible and accompanying failures. These successful outcomes can come in the form of people, businesses or strategies.
Here's a good example from Hubspot's article on survivor bias:
“Steve Jobs, Bill Gates, and Mark Zuckerberg dropped out of college and became millionaires, so will I.”"
Heck, so did Steven Spielberg, Oprah and Larry Ellison, but they're all special cases in the grand scheme. This "if they can do it, so can I" attitude ignores the stories of failure (which there are bound to be a lot of).
In mathematics, the idea is that two different objects have the same form and therefore perform the same function. For example, all chess boards are isomorphic.
Isomorphism refers to code that can be used to render pages for both the server and the client. Developers love the concept because it helps improve search engine optimization, performance, and maintenance.
Lossless compression is a type of data compression algorithm that allows original data to be reconstructed from the compressed data. From .zip files to an Instagram story, lossless compression is all over Silicon Valley. The smaller the file can be compressed, the faster it can be transferred or displayed at its destination point.
File storage for these businesses is also a big deal. The more they can compress the files and retain the quality, the less file space taken up on their servers.
Sometimes referred to as the Silicon Valley "Power Law," it is a way to examine the relationship between startups and profit. The power-law looks at the decay rate and failure rate to get a better outlook on your investment.
The network effect is actually a phenomena where a service or goods become more valuable as more people use it. So, your product will increase in value as it picks up in popularity.
Some examples? The internet, for starters. Also businesses like AirBnb, Etsy, Amazon and Apple Apps, where the more people use it, the more vendors/sellers end up on the platform, and the more money the business makes.
Illusory Superiority is at the core of the Dunning-Kruger effect. It is defined as a cognitive bias in which unskilled individuals suffer from the illusion of superiority, ranking their ability and skills much higher than is actually accurate.
We encourage you to watch the show Silicon Valley to watch this theory in action.
Heuristics are a way to make quick decisions when working with complex data. They exist as a problem-solving method but are not necessarily optimized solutions. Self-discovery can also be heuristic, mental shortcuts when there is no optimal solution available.
Heuristics are part of our daily lives, from trial and error to the rule of the thumb.
Wondering how to build marketing directly into your product? The concept of growth loops is that growth doesn't have to be linear, and the actions of one user can create an output that creates a new user.
Brian Balfour of the famous Reforge academy says it best:
"The fastest growing products are better represented as a system of loops, not funnels. Loops are closed systems where the inputs through some process generates more of an output that can be reinvested in the input. There are growth loops that serve different value creation including new users, returning users, defensibility, or efficiency.""
Essentially, convect returns are an effective risk-managed investment strategy where you repeatedly choose greater and greater levels of market risk in areas that have a history of high risk/returns.
The higher the convexity, the more drastic change in price. You may hear this term being thrown around in investment banking firms in the valley while discussing what startup to fund next!
Silicon Valley's beginning as a hardware and chip manufacturer for NASA has always kept the conversation in Northern California focused on the future, the unknown, and what comes next. As the tech ecosystem in the valley continues to spread to other cities (including Silicon Hills in Austin, Texas, and Silicon Valley North in Waterloo, Canada), the vocabulary that has been baked into the tech world also travels with it.
The list above scratches the surface when it comes to language and concepts common in Silicon Valley.
The famous tech hub has even set up its own system of growth loops. If, you have a new tech idea that you're ready to bring to the world, with the right vocabulary and understanding of businesses principles, you could be on your way to some nontrivial investments from an angel investor or two.
Though simple language is (almost) always better, it's important to familiarize yourself with these terms if you're in the tech industry. Because, we guarantee you'll hear many of them being thrown around in business meetings or coffee chats. We even catch some of this Silicon Valley slang in our own company (though we try to avoid it).
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