5.15.9: Key Terms

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burn rate: rate at which cash outflow exceeds cash inflow

buyback clause: legal agreement regarding an exit by a founding team member prior to the harvesting of the venture

code of conduct: formal statement that provides guidance on how ethical conduct is demonstrated

company culture: shared beliefs, values and assumptions held by people regarding how to behave or conduct themselves within the context of fitting into an organization

Delphi method: group decision-making process that includes a diverse group of people who are located at different locations and willing to respond to a series of questionnaires to assist in providing ideas, information or solutions to a defined question or problem

escalation of commitment: tendency to continue with a predetermined action based on the past efforts and contributions to the project rather than an analysis of the current realities that disclose a new solution or approach is necessary

fail-safe point: identified point that triggers the entrepreneur to consider what actions are needed to bring the venture back to a healthy position and whether this action is reasonable and feasible

founders’ agreement: written document that addresses contractual topics such as division of equity, compensation, contributions to the venture, and commitments to the venture with timelines included

Gannt chart: bar chart used to organize and plan sequential steps in a process

hindsight bias: belief that, in retrospect, the outcome was predictable when the outcome wasn’t predictable due to various uncontrollable factors

hubris: overinflated belief in oneself

lifestyle business: business that provides incomes similar to other forms of employment

Nominal Group technique: group decision-making process that requests multiple rounds of responses and discussions of response

noncompete agreement: formal agreement that the person signing the document will not work for another organization that is a direct competitor of their current employer during employment and usually for a specified length of time after employment ends

nondisclosure agreement: formal agreement that the person signing the document will not sharing proprietary information with outside sources

planning fallacy: creation of a plan that is too optimistic and not aligned with conservative assumptions

serial entrepreneur: entrepreneur who becomes involved in starting multiple entrepreneurial ventures

social capital: goodwill that is created through helping someone else

status quo bias: pattern of relying on previous actions and results as the accepted pattern and outcome with a bias against change or new information or new results