Business

Do startup names matter?

Feb 3, 2015 /
TED-NamingStartups-credit Kelly Rakowski-2

Startup names may be a dime a dozen, but most founders still agonize over what to call their dream. Are they right to invest so much energy and time — or would any random string of letters be fine?

If anyone knows the answer, it’s Jonathan Nelson, who created the well-known startup incubator Hackers/Founders (aka H/F). A mainstay in the tech community, H/F spans 75 cities in 32 countries and throws events where entrepreneurs can network, hone pitches and gather advice. We asked Nelson for his thoughts.

Is naming a startup a big deal?

Founders spend a lot of time on it. It’s kind of like that question, “What do you name your band?” What if you name your band Mudhoney or Nickelback? It’s hard to change that name once you get a bit more popular, because the brand is so tightly tied to your name. You don’t hear of startups changing their name after they’re bigger so it tends to be something that people obsess about.

I think that there is a corollary between the names of hedge funds, startups and bands. I’ve been reading about hedge fund history and they tend to have aggressive funding names like Tiger Global, Alpha Heavy, Aggressive Growth. You could put whatever turd of an investment in a fund named Aggressive Growth, but you’d think “oh yeah I want to put my money in,” just because the name tells you what you want it to tell you. Hedge funds obsess about their entity names because that’s on the check that you write to them.

How much involvement do VCs have in choosing a name?

I’ve asked a lot of investors how they make their decisions. It’s all about pattern match. They tend to invest a lot in gut and emotion. Generally many investors will make up their minds in 2.5 minutes whether they’ll write a check or not. The company name and one line pitch is about all you can fit into that time, so I think it’s actually fairly important. It’s part of the first impression people get. If you have a really bad name, chances are you’re not going to get funded. Or the lead investor will change the name real quick before they tell all their friends about it, because they don’t want to tell their friends that they invested in something with a lame name.

What sort of factors go into choosing a name?

Naming companies is an interesting problem, primarily because so many companies are web-based, which limits you to current available domain names or a domain name extension. For a while there the .ly extension was really popular, which is Libya’s, but then the civil war happened in Libya and a lot of entrepreneurs thought ‘maybe it isn’t such a good idea to be giving Gaddafi $75 a year for my domain name.’ That’s changed people’s perceptions.

Do you try to keep names to a certain length?

Y Combinator tries to keep startup names down to 2 syllables: Think of names like Ebay, Yahoo, Google, Reddit, and so on. They really try to have short memorable names, even if you have to turn that name into something else and build a brand around it.

But another startup I know about is Can I Stay With You While I Rent My Place on Airbnb. They got a ton of press coverage just because of the name. It’s just a sign up page, but they got 1,500 sign ups as a social network to find a place while you rent out your place on Airbnb. The name stuck and was memorable.

When I think about names, I know memories are formed from data + emotion. Emotion makes the data sticky. We really try to think about that when we think about names. You want it to be memorable. When you come up with a one line pitch for your company you try to make it more memorable. Ours is “making life suck 34% less for founders.” It causes some cognitive dissonance but because of that it’s more memorable.

What if your company was Fuck You We Do Data.com? I’m waiting for a company to take that name because it’s self explanatory, and memorable because it’s shocking. Sure, it’s not businessy, but the definition of business is changing.

Why are domain names so important in a world where people don’t type them into their browsers anymore and search instead? Is there any move to abandoning the obsession with a name that works as a great domain name?

Startups getting off the ground obsess about domain names for a while. I horde cool domain names just because I may use them someday. But they still matter outside of just being cool names.

I’m working with a company right now founded by a divorce lawyer who wants to transform the divorce process because divorce lawyers get paid by the hour and no one should get paid by the hour to settle a divorce. That’s evil. The founder, Sandro, wants to charge a flat fee for divorce. He started with the name Legal Passage but when we looked at his logs he got zero hits to that page in six months with zero promotion.

We were actively thinking about it. Legal Passage doesn’t communicate what you they do, so we Googled around and looked at terms like diydivorce. Sandro mentioned that a huge part of the U.S. population will soon be Hispanic, so why don’t we go for divorce.io which is divorcio or divorce in Spanish. Divorce.com is for sale for $100,000, and we’re thinking that if people are typing in divorce into their search bars they’ll go directly to divorce.com and we’d get lots of incidental traffic. So, SEO still makes domain names important. We actually spend quite a bit of time of time working on these names.

Here’s another example. We were working with a company called Flights With Friends that lets a group of people split travel bills. Like if you’re going to a bachelor party, usually one person bites the bullet and buys everything, then does all the work to bill everyone else. We liked the service. We all hated the name.

Flights With Friends got sued by Zynga because they said it impinged on Words With Friends and Flights With Friends’ founder said ‘that’s awesome, we’re getting sued by a big company, we’ll get tons of press!” Eventually the company became more of ‘if you’re going to do something with friends, do something really cool’ — like an event, not just a flight. So we got the mobile only exclusive rights to 200 high roller penthouse suites in Vegas. You can’t book them any other way. And we changed the name to Suiteness.io where you can get things like a five bedroom suite, a bowling alley, a butler — for $5000 a weekend. Now with no advertising for Suiteness, it’s just in the App Store, we’re getting $40,000 – $50,000/month just because people were looking for the word “Suite.”

Do you have any hard and fast rules about brainstorming for names? Do you follow any formal process?

We spitball. There’s really no formal process that we follow.

What about putting someone’s name into a company name?

Founders’ names are interesting. One of the things we do when we select companies for our incubator is that we have a blind application so that founder name, age, gender isn’t present. We don’t post it on our app. Why? There’s a documented study about how, historically, a hiring manager who was handed two resumes that were identical except for name was likely to make a callback decision based on the perceived race of the applicant. That’s a documented study, so we thought about that a lot, and the rest of the numbers. There are a huge number of women in Silicon Valley, but only 4% of female-led startups get funded. We have name blind applications because of this. I suspect founders names also have a definite effect on the 2.5 minute VC pattern match for an investment decision.

Are you seeing any naming trends?
Things are getting shorter. Our first domain name was hackersandfounders.com, but our meetings are in bars where I have to tell people what our name is over all the noise. Eventually, I had to get a short name. The Christmas Island domain suffix is ‘.cx’ so we went with ‘hf.cx’ and made my email address ‘j@hf.cx.’ Now when I give someone my email address at a bar, they say ‘omg that’s the shortest name ever’ and they just type it into their phone.

H/F is an international network. Since startups are truly globalized, do you see any patterns in naming that differ by language or nationality?

I was working with a company named Export Abroad and someone said, ‘Dude, that’s a mail-order bride company: Export-A-Broad.’ I thought about it and concluded that OK that’s weird, but he kind of has a point. The company does big data to provide global business intelligence. It’s from the Midwest, where Export Abroad has a different vibe. It’s not Silicon Valley where someone would probably want Export.io.

How did your name come about?

It’s weird that Hackers and Founders ended up being a really good name, because in so many different parts of the country Hacker is a scary word, but in Silicon Valley it’s colloquial for ‘good programmer.’ Across the country, or even here occasionally, we’ll have a meeting in a bar and the bartender will ask if we’re going to steal their personal information. The fact that it has the word hacker in the name has helped us in our tech heavy community. About two thirds of our membership is engineers, so that’s really important.

What are some bad startup names you’ve come across?

Our parent company is called NP-Hard, which is computer science speak for a group of hard computer problems. When I came up with that, my wife said “that’s a terrible name.” If you’re not a computer science geek it doesn’t make sense, but I’m perfectly fine telling you that name, even if it only ever shows up on our checks.

At H/F, what good advice is most frequently ignored when it comes to naming?

Ultimately it’s not my company, it’s their company. My job is to be their sherpa. So I’ll ask, ‘what problems do you have?’ and I’ll give my pointed, direct, advice. But ultimately the CEO and founders have to learn to make decisions themselves. Ultimately it’s their company; I only own a small part of it. They face the consequences. I love being proven wrong by the founders.

Featured image by Kelly Rakowski for TED.