Why change the company name?
January 24, 2008 9:18 AM Subscribe
What are the advantages of a start-up company changing it's name?
I work for a start-up company that will be seeking it's third round of funding this year. Our new CEO wants to change the company name and no one can really figure out why. Our company has some major corporate customers, so why would we give up our previous marketing efforts and the name recognition. Are there some fund raising advantages or legal advantages that come with a name change?
I work for a start-up company that will be seeking it's third round of funding this year. Our new CEO wants to change the company name and no one can really figure out why. Our company has some major corporate customers, so why would we give up our previous marketing efforts and the name recognition. Are there some fund raising advantages or legal advantages that come with a name change?
Best answer: I work in naming, but I am not your brand consultant. (hee.)
When we look at naming engagements we weigh brand equity (as measured in awareness studies, etc.), infrastructure (business cards, signage), against opportunities missed (you're called Amalgamated Meats and you sell wifi controller cards for example) and liabilities (the first thing everyone thinks when they hear your name is a stock scandal).
Most times that we rename a company, it's because they are being legally forced to. Most times when we're asked to assess a company's name, it's because someone just doesn't like it. And we disappoint them by talking about the reality of it – the difficulty of finding a good name that's legally clear, the cost of researching the names legally, the hassle of communicating the change to your customers, employees and investors, having to explain that, "no, we didn't go bankrupt, we just changed our name" without a story, etc.
Names are expensive. They are high commitment and they are investments. If he's got a different vision for the company, better to change it now when you're a start-up than after years of building up the brand equity of it.
There have been a few times when the name is so bad – so generic sounding – that it's difficult from a marketing standpoint to make it stand out. Is there something about your name that makes it difficult to support in a professional context (Are you "Naked Monkey 2.0"?)
Either he's got a big vision he's not sharing (which execs have a right to ask) or he doesn't know what he's getting into.
posted by Gucky at 9:36 AM on January 24, 2008 [5 favorites]
When we look at naming engagements we weigh brand equity (as measured in awareness studies, etc.), infrastructure (business cards, signage), against opportunities missed (you're called Amalgamated Meats and you sell wifi controller cards for example) and liabilities (the first thing everyone thinks when they hear your name is a stock scandal).
Most times that we rename a company, it's because they are being legally forced to. Most times when we're asked to assess a company's name, it's because someone just doesn't like it. And we disappoint them by talking about the reality of it – the difficulty of finding a good name that's legally clear, the cost of researching the names legally, the hassle of communicating the change to your customers, employees and investors, having to explain that, "no, we didn't go bankrupt, we just changed our name" without a story, etc.
Names are expensive. They are high commitment and they are investments. If he's got a different vision for the company, better to change it now when you're a start-up than after years of building up the brand equity of it.
There have been a few times when the name is so bad – so generic sounding – that it's difficult from a marketing standpoint to make it stand out. Is there something about your name that makes it difficult to support in a professional context (Are you "Naked Monkey 2.0"?)
Either he's got a big vision he's not sharing (which execs have a right to ask) or he doesn't know what he's getting into.
posted by Gucky at 9:36 AM on January 24, 2008 [5 favorites]
Best answer: Renaming companies in the start-up stage is a risky move unless the CEO has a legitimate reason and plan related to the rename. That's because of the cost of the move across your company (though probably small) and the large cost of advertising the change to the market and your clients. I was just in a similar situation, though I left the company before they had made a decision on the naming issue. I agree with Gucky that your CEO should have a very good plan for the development. There have been some interesting renaming plans recently. This is a very good article on common naming mistakes, which might be helpful too.
posted by parmanparman at 9:53 AM on January 24, 2008 [1 favorite]
posted by parmanparman at 9:53 AM on January 24, 2008 [1 favorite]
Is it just a name change, or some legal shenanigans? A friend worked for a company which changed its name -- from Foo Corp to Foo Corp II, more or less -- because they somehow closed one business and started another to avoid some legal obligation. (Basically, "we broke up the band and reformed without you.")
posted by The corpse in the library at 12:59 PM on January 24, 2008
posted by The corpse in the library at 12:59 PM on January 24, 2008
Response by poster: Thanks for all the answers and the useful links. We did ask the CEO, but his answer was just something like a new name will give us a new start. Our company name is somewhat confusing, but we're usually known by our initials anyway, so a lot of people were just wondering if there were some other motives - like a new company making it easier to raise funds or something.
posted by gt2 at 7:20 PM on January 24, 2008
posted by gt2 at 7:20 PM on January 24, 2008
My current company, which is not a startup but is quite small, changed it's name recently. We changed it because everybody in the business knew the name of the product we make and sell, but nobody knows the name of the company, and nobody connected the company name with the product name. So, we changed the name of the company to be the same as the name of the product.
I think this is an unusual situation, though.
posted by vilcxjo_BLANKA at 5:36 AM on January 25, 2008
I think this is an unusual situation, though.
posted by vilcxjo_BLANKA at 5:36 AM on January 25, 2008
we changed the name of the company to be the same as the name of the product.I think this is an unusual situation, though.
Incredibly common, particularly in the case of public companies that want to boost their stock price. Target Corporation vs. Dayton Hudston. I'm continually amazed that Research in Motion is still RIM, rather than "The Blackberry Company" or something.
posted by Gucky at 7:03 PM on January 27, 2008
Incredibly common, particularly in the case of public companies that want to boost their stock price. Target Corporation vs. Dayton Hudston. I'm continually amazed that Research in Motion is still RIM, rather than "The Blackberry Company" or something.
posted by Gucky at 7:03 PM on January 27, 2008
This thread is closed to new comments.
There could be a whole host of reasons to change the name from hubris of the new CEO, the old name being too similar to something else to the new name better describing the current or future focus of the business to some consultant/investor/offspring of CEO suggested the new name.
posted by mmascolino at 9:25 AM on January 24, 2008