Five Years Too Late

November 20, 2008

What’s in a Name?

Filed under: Uncategorized — Tags: , , , , , , , , , — fiveyearstoolate @ 7:59 pm
Eric Wiesen

Eric Wiesen

I’ve been on a few panels (and been in the audience for many more) that focus on starting up a company. A lot of the questions (unsurprisingly) are about starting up web companies and best practices around doing so. Inevitably, one question arises:

“How much does the name matter?”

What does surprise me is the answer I usually hear from VCs, successful entrepreneurs, and other luminaries:

“It doesn’t matter.”

They go on to say focus on your product, great customer experience, scalability and all the other important company-formation features. And I agree that those are all critical, first-order concerns. But I disagree that names don’t matter, at least where consumer-facing applications and services are concerned.

Businesses generally don’t care what things are called – they have the time and financial interest to due significant due diligence on various offerings (although truthfully it doesn’t always happen) and decisions are made around more metrics-oriented decision criteria. But consumers are a whole different ballgame. You need to grab a share of their increasingly overwhelmed and attention-deficit suffering consciousness. You need, to use a metaphor I like in many contexts, to be no or low-friction. And your name is the first thing they are going to see.

So I’d lay out three rules for naming a consumer-facing web product:

  1. Be easy to spell
  2. Be 8 characters or less
  3. Be in plain language

You don’t need all three. But you need the first and one of the last two to have a good web name. Looking at some of the top (US) consumer-facing websites, let’s see how they stack up:

Yahoo (Easy to spell, 5 characters, arguably plain language): 2.5/3 PASS
Google (Easy to spell, 6 characters): 2/3 PASS
YouTube (Easy to spell, 7 characters, plain language): 3/3 PASS
MySpace (Easy to spell, 7 characters, plain language): 3/3 PASS
Facebook (Easy to spell, 8 characters, plain language): 3/3 PASS
Blogger (Easy to spell, 7 characters): 2/3 PASS
Ebay (Easy to spell, 4 characters): 2/3 PASS
Amazon (Easy to spell, 6 characters, plain language): 3/3 PASS
Flickr (5 characters): 1/3 FAIL

This is a somewhat cherry picked list, but most of remaining top sites by traffic are either abbreviations (MSN, AOL) or similarly compliant sites (live.com, photobucket, etc…). We find only one site – flickr – that doesn’t meet these criteria for consumer-facing name success.

We can speculate about why this is, but I would suggest that the obvious answer is likely the right one, as Occam would say. If consumers can’t remember, recognize or spell your name, they are unlikely to get to your site via direct, type-in traffic. That leaves you with SEO, SEM and other indirect methods for drawing in users, all of which are important, but without that initial primary funnel you may struggle. To pick on Charles (because I know he can take it), iminlikewithyou is not a good consumer-facing name. It’s 15 characters, is plain language, but includes a word with an apostrophe, so it only partially passes the spell test. Really good product, bad name.

We can draw some conclusions from Flickr’s success, or we can just say it’s the exception that proves the rule. Flickr built its audience largely of “net natives” who quickly adopted the “missing e” as the next creative web naming convention (sort of like ____ster became earlier), and we’ve soon lots of similarly-spelled “Web 2.0” company names. In fairness, a lot of this is driven by domain squatters taking many of the plain language names. But in the absence of plain language, I would argue that your new company’s name should be short and easy to spell, even if it’s meaningless (worked pretty well for Google). Sure, the tech-saavy crowd may figure out del.icio.us but will your parents or your friends who aren’t “webheads”? If you are comfortable building a big, successful business out of just us (it can be done), by all means. But if you are going for mainstream…

Ultimately, if you are being thoughtful about your core site, service or application, you are carefully instrumenting your processes (registration, sign-on, setup, etc…) to minimize the waterfall of dropped users and are being diligent about removing friction to lower bounce rate and registration failure. Don’t start out on the wrong foot with a name that won’t stay with potential users. Path101? Good. Xoopit? Well…

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October 15, 2008

You Can Lead a Horse to Water…

Filed under: Startups, venture capital — Tags: , , , , , , , — fiveyearstoolate @ 11:24 am

Eric Wiesen

When talking to companies, frequently consumer-facing companies, I often have a version of the following short conversation below:

Me: So the product looks really great – how are you going to convince consumers to switch to you from [old, hidebound web 1.0 service or manual process]?

Founder: Well, that old [site/product/service] is terrible! Ours has better functionality, is more reliable and look how pretty the rounded corners are (ok, I made that last one up). People will see how much better our product is and users will flock to us. Word of mouth will be inherently viral.

This is a dangerous place to be with your business, and if you’re talking to me or most of my colleagues you’re going to get a lot of push back on this line of reasoning.

Let’s step back. When I was in business school I was fortunate enough to have taken a strategy class from Bruce Greenwald. Professor Greenwald has a powerfully descriptive and predictive framework for considering the competitive positioning of a given company (although I am still working through how to best apply his precepts to early-stage businesses). The framework essentially posits that while there are many different strategic forces acting on a company (including Porter’s five, for the MBAs and business geeks out there), the one that matters far more than anything else are barriers to entry. And if you break down Greenwald’s view of barriers to entry, he looks to one of several sources.
1. Proprietary Technology
2. Economies of Scale
3. Customer Captivity

The first two are pretty well-known in the technology world. Many of the first several generations of successful companies were built by developing technology that others couldn’t match and couldn’t legally copy. There are plenty of examples on the web and elsewhere of companies that have built scale advantage (Ebay, Amazon). And the best companies will have all three (Google).

But I want to talk here about an aspect customer captivity and a how it potentially impacts early stage companies. Professor Greenwald argues (and I agree) that customers (particularly consumers, although businesses as well in limited circumstances) can become captive through sheer habit. There are other, more obvious forms of customer captivity (technology lock-in, ongoing investment, loyalty programs, etc…) but these aren’t present in, say, a consumer-facing web service. And so it seems pretty easy to lure customers away with a better product. And to some extent this logic is rationale, in that if you have chosen to compete against companies without these more obvious forms of customer captivity, you’ve done your business a favor.

But it’s a mistake to think you’re out of the woods just because switching costs are low. In fact, the unseen switching costs of customer habit can be dauntingly high. By way of example I’ll use (as I often do) my mother. My mother uses AOL. My dad got the whole family AOL accounts in 1995. I never used mine because I already had a university account and my younger brothers eventually ditched theirs as well. Even Dad ultimately switched. But Mom is still chugging away on AOL. My brother (who spent almost four years at Google) tried endlessly to convince her to switch to the more elegant, functional and reliable gmail. No dice. She’s used to AOL. And so she stays.

I bring this up because it demonstrates some powerful captive behavior. Email is an impure example because the archives and persistence of a long-standing email address provide additional sources of captivity besides habit. Think about someone you might know who still uses the travel site they started using in 1997. Or the mapping site they started using in 2000. Better alternatives have arisen since then, yet people frequently “just stay with what they know”.

This has powerful implications both offensively and defensively for your web business. Offensively it means that you can’t simply rely on “if you build it, he will come” product superiority. Customer habit is such that EVEN IF users can be convinced with marketing to check out your terrific new product, your war is far from won, because some large percentage of them will say some variant of, “Yeah that’s cool. But I’m fine with what I have”. Your marketing battle with this customer has just begun. On the defensive side, it is useful to think about instrumenting your product or service to encourage customer captivity. And while that sounds nefarious, it doesn’t have to be – building habit and addictive experience is powerful medicine, and by building customer habit you are generating captivity explicitly by delivering value to your customers.

Build something that users want to use every day and by the time someone comes out with something a little shinier, you will have the benefit of customer habit. Today, though, you need to work on how to overcome it.

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