Taking a brief break from innovation to talk about startup issues (another favorite topic).
Yesterday, I was presenting to a group of entrepreneurs at the Johnson & Wales Entrepreneur Center. I gave an updated version of a talk I originally did at a BarCamp a few years back with the brilliant Jim Meyer. We were both coming off very bumpy startup rides, so the presentation was a tongue in cheek look at common causes of failure in startups.
During the Q&A, Suzanne Buchanan of the brilliantly named Gentle Adventures asked if the name of the company had much to do with its success or failure. She also asked if the company name should clearly imply what the company does.
Now there are a lot of opinions on naming, but my initial answer was that there were usually other bigger issues that caused failure. While a good name certainly helped, there was usually a lot of space between a great name and a name that actually damages the company’s prospects.
After the talk, Suzanne and I chatted further on the subject of names, and she helped remind me of two things:
- Product names play a different role to company names
- Sometimes the company is the product.
In my opinion, good product names are critical to success. Unless the company is the product, a company name is much less important.
Let’s look at some key points.
Product Names versus Company Names
Product names serve a different purpose to company names. It sounds trite, but a product name should help sell the product. A company name should represent the company.
A good product name conveys what the product does. A good company name should convey what the company is. The only exception is when the company and the product are one and the same, which I’ll address a bit later on in this post.
So what do I mean by that? Well a product name needs to describe, or evoke a relevant feeling or emotional response tied to what the product does. Some examples:
- Twitter – You can stick with the dictionary definition: “to talk lightly and rapidly, especially of trivial matters; chatter.”
- Magic: The Gathering – tells you it’s about magic and groups of people, evokes a sense of mystery.
- Cheerios – Evokes a happy, perky, start-your-morning-with-a-smile image (exactly not how I start the day).
- Twister – you get the point
Your product is what people buy. Initially, customers could care less about the company. They only care about the company after they’ve started to care about the product.
A company name should address what a company is. It should evoke a sense of what the company stands for. It’s job is to build a sense of trust for customers interested in your product.
- International Business Machines (IBM) – Sounds like a serious, business-like worldwide organization.
- Thrifty Car Rentals – Tells you this company is about price, not frills.
- Whole Foods – It’s food and it’s good for you.
A product name is tied to a particular product. If you create a new product, you create a new name. If the product dies, the name goes away. In either case, the company name survives, so keep in mind that the company name is much more permanent than a product name.
When the Product is the Company
It’s not uncommon in tech to see a company with the same name as its product, but for tech startups, that’s particularly shortsighted. As a startup, your product plans are extremely likely to change, so putting everything under one name can end up being confusing and confining. What if that product fails, but the business continues? What if you add new product lines in the future, or radically expand the product features?
In tech, I think it is almost always wise to separate the product name from the company name.
In Suzanne’s case, the business is clearly defined and “Gentle Adventures” is a great umbrella for everything she’s trying to do. It’s very unlikely that her entire business will take a sharp right or left turn that will take her to a place where the name becomes a liability.
How can a name be a liability? Let me give you an example. Southwest Airlines began as a regional airline based in the southwest. It’s a great name, in that it tells you what they do (fly) and where they do it (the southwest). But guess what: their business has expanded dramatically. Fast forward to today, and they have a problem… You may know that Southwest covers all of the USA, but did you know that Southwest flies to the Bahamas and Cancun?
Now they are between the proverbial rock and a hard place. There’s a ton of value and name recognition in their existing brand. Re-branding the entire company would be absurdly expensive. However, they have to invest more money in marketing to make people think of Southwest as an option when they are booking international travel. And that will get expensive.
Let me give you another example. In one of my innovation posts, I talked about the humble beginnings of Toyota (manual and machine powered looms). If Toyota had been called Manual Loom Inc., the company would have had to fully rebrand and whatever brand equity they had built would have been lost.
As a side note, sometimes losing brand equity is a good thing. When I was a kid, the crummiest electronics you could buy (cheap but very poor quality) was from Lucky Goldstar. As I got older, I swore never to buy Lucky Goldstar again. Guess what? Lucky Goldstar rebranded as LG. Yeah, those guys. And I never even knew…
- Unless you are a relatively rare exception, your company name should be different to your product name
- Understand the different purposes for the two – to sell a product or to represent a company
If you want more advice on the naming process, try here.