How important is naming and rebranding for startups?
What’s in a name? Finding the right name for a product, or even for the small business that makes it, is notoriously tricky.
However, settling on something memorable and descriptive (i.e., does the name give any indication of what the company does?) can make a world of difference in the hyper-competitive startup space.
- The startup Pocket, for example, once called both its company and its app Read It Later, which was a literal, if wordy and obvious, explanation of what its main service did: saved Web content for offline, formatted reading. It eventually rebranded as Pocket, a moniker that was more concise while still hinting at the functionality (i.e., you can put a story in your “pocket”/queue for later).
- Hightail started life as YouSendIt before undergoing a similar transition from literal to abstract branding. The service allows for the exchange of large files as well as document collaboration. The Hightail brand was meant to differentiate it from the many other startups in the field that had “box” or “cloud” in their names” and to highlight its strategy shift from file sharing to collaboration.
- Facebook was originally called “The Facebook,” with the domain name to match. The dropping of “the” not long after its launch made it a lot easier to talk about the social network and, eventually, to make its name into a handy verb during its pivotal early years (“Facebook me” = “add me on Facebook”).
- Apple’s 2007 rebranding, done on the day that the first iPhone was unveiled, was similarly subtle and powerful. It swapped “Apple Computer” for “Apple Inc.,” revealing how it was looking beyond the Mac at products that would eventually remake the phone, tablet and watch industries.
- Groupon has its roots in a campaign website that was called ThePoint.com. What was “the point” in question, though? Its makeover as Groupon was clever, with a name that better encapsulated both its ideal activity (group buying) and what was being bought (a coupon).
Should startups use shorter names to make bigger impressions?
There really is no way around the truth: Most startups are not successful, even if their key ideas and personnel end up being reorganized into something else or absorbed by a larger company.
Up to 90 percent of startups may fail, a rate that holds even for teams that are accepted into elite incubators such as Y Combinator. It is not apparent, though, what really makes or breaks a startup’s fortune early on, although there have been indications that startups led by previously successful individuals may have better prospects.
Maybe names hold a clue. A smart, concise name may be a symptom of a startup that has solid fundamentals. A recent study, titled “Where is Silicon Valley?,” found much higher rates of success among startups that had short (i.e., three words or fewer) names and were not eponymous (in this case, named for the founders):
- Short-named startups were 50 percent more likely to succeed than their long-named counterparts.
- Eponymous startups were 70 percent less likely to succeed than non-eponymous ones.
These findings make some sense. Consumers want names that are easy to remember (and to Google, which, while we are at it, is another good example of a snappy name that can be used as verb) and that tell a story rather than simply recite who’s in the company.Firms are looking for names that are easy to remember, that will come up in a search,” Scott Stern, a professor at the Massachusetts Institute of Technology and one of the authors of the report, told Slate. “If you have a smaller number of letters and you’re missing a vowel, you will have that distinctive search pattern.”
So, searching for “Spotify” is much more straightforward and rewarding than it would have been if the company had been named “Daniel Ek,” after its creator. Moreover, the use of catchy name patterns, such as missing Rs (Tumblr, Flickr), “-fy” (Spotify, Shopify) and “-ly” (Bitly, Feedly), has become a reliable convention for attracting and holding customer attention.
Beyond the name: Location and infrastructure
A name may say a lot, but, as we said earlier, it is just one piece of the bigger puzzle, serving as either a good jumping-off point or a signal to the world that the company is on to something. Location and infrastructure also make a big difference in how startups fare.
The same report, published in “Science,” found that some California communities, such as the towns of Menlo Park and Palo Alto in the Bay Area, were more amenable to startups than others, including big cities such as Los Angeles and San Jose. Many factors go into making a city ideal for entrepreneurs, including the VC community, what other companies are in town (e.g., Facebook is headquartered in highly rated Menlo Park) and the quality of available networking infrastructure.
As startups embark on their journeys, these fundamentals – such as where to set up shop and what connectivity services to get – deserve as much attention as figuring out what to name the company. A clever, memorable name may be the sign of an up-and-coming company, but success with any name will still at the end of the day depend on hard work, creativity, and technical infrastructure.