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Two techniques I've used in the past:

1) Figure out the "regular" job that is most directly related to what your startup does and say you do that. For example, I have largely been involved with ad supported startups, so most of my relatives think I work at an ad agency.

2) If you have big clients, partners or vendors that you think your relatives have heard of you can say something like, "I work with company X". The fact that you have some relationship with a company they have heard of is typically good enough for them to think you are doing something right.

That being said, your non-technical family members are also a great audience on which to practice refining your pitch. If you can figure out how to explain what your startup does to your family, then you can surely explain it to users, clients, investors, etc.



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