Thursday, January 25, 2024

Let’s rename the company!

Renaming a company is a surprisingly common occurrence in the technology space. Just the other day, I saw the news about Kofax renaming itself to Tungsten Automation – a bold move for a 40-year-old company. So, let’s discuss the reasons behind companies changing their names and review the best practices.

Rebranding vs Renaming 

First, let’s clarify the terminology. Rebranding and renaming a company are not one and the same. Company rebranding is a marketing project resulting in updates to the company's visual persona, including the color palette, typography, image style, logo, etc. While a rebrand might involve a name change, it does not always. Rebrands are frequent, often initiated by Chief Marketing Officers (CMOs) within a year of joining a company to put their own stamp on the company. While not without costs, rebrands usually pose limited risks, primarily tied to opportunity costs. 

In contrast, renaming a company is a significant decision fraught with substantial risks. This decision involves changing the company's name, leading to a temporary loss of brand equity and uncertainty about the outcome. The repercussions of this loss include reduced recognition of the new name by prospects and a notable decline in inbound traffic to the company's website. If your business relies on brand recognition and inbound traffic, the decision to rename the company becomes particularly risky.  

Reasons for Company Renaming  

The decision to rebrand is a challenging one, as there is no hard data that proves the old name is wrong, and the new name will fix whatever is broken. Even if you conduct a survey asking customers and prospects about their perception of the company name, their response will be biased by their perception of the company. There is pretty much no way to calculate that the rebrand will deliver the expected outcome. If the product or service was subpar before, it will remain the same even with a new name. The decision to rename the company is mostly an emotional one.  

There are many reasons why companies change their name, and here are some of the most common scenarios:   

1. Mergers and Acquisitions 

Mergers, acquisitions, and divestitures are obvious scenarios. When a company buys another company, the acquired company is no more, and it usually goes through a rebrand. Whether the acquired brand continues to be used as a product name or the name of a business unit requires thoughtful consideration. Usually, the bigger or more popular the acquired brand, the more likely it will be continued. Think of Instagram and WhatsApp, which many people don’t even realize are brands owned by Meta. 


2. Financial Engineering 

This scenario is like M&A but without another company involved. Financial engineering is exactly what Google and Facebook did when they renamed the companies Alphabet and Meta, respectively. In this scenario, the target audience for the renaming is the investors, and the existing brands and their customers are relatively unimpacted – both Google and Facebook products remained the same. The risk of such renaming is quite low. 

 

3. Politics 

This scenario is less common among technology companies, which tend to be quite politically savvy and correct to begin with. This is the type of rebrand that happened to companies (Squaw Valley to Palisades Tahoe, Uncle Ben’s to Ben’s Original), sports franchises (Washington Commanders, Cleveland Guardians), and even countries (Myanmar, Sri Lanka, Northern Macedonia). In business, such renaming is usually the result of external forces. 

 

4. Scandals and Legal Issues 

Some companies had to pay a very high price for their missteps, ultimately deciding to change their name to escape the negative brand perception. Examples include Accenture (formerly Andersen Consulting), Altria (formerly Philip Morris), and the Livestrong Foundation (formerly Lance Armstrong Foundation). In the tech space, the renaming of McAfee to Intel Security falls into this category, given the founder John McAfee’s legal escapades in the 2010s (note: the company was eventually renamed to McAfee again). 

 

5. Business reasons 

This is a scenario where the company voluntarily decides to change its name to pursue its business goals. The company’s leadership concludes that the old name is either limiting its growth, adding costs, or imposing some other burden on the business. It’s very common for small startups that are quickly evolving and often pivoting to a new business model (e.g., SaaSure to Okta, Burbn to Instagram, Tote to Pinterest, etc.). When the company is small, the risk and cost of renaming is relatively low. 

 

It’s a much bigger deal for a larger startup or a public company. And yet, it happens, and here are a few recent examples: 

    • Twitter was renamed to X to somehow grow its revenue and reduce cash burn. Or because Elon is obsessed with the letter X. 
    • FinancialForce was renamed to Certinia to distance itself from Salesforce, upon which it was built. Never mind the watch brand Certina, founded in 1888.
    • KeepTruckin was renamed to Motive to expand its addressable market beyond the trucking vertical.   

Other examples include DaPulse into Monday.com, ZenPayroll to Gusto, eShare to Carta, 10gen to MongoDB, and let’s not forget Research in Motion renaming into BlackBerry. These were major renaming projects at companies with sizable brand equity that have been implemented to pursue their business goals. 

 

The results of renaming 

Obviously, changing the company name at a later stage is very costly. There are direct costs related to months of work by naming agencies, design agencies, the entire marketing team, the product design team, the documentation team, and many others. Direct costs also include the expenses for content, printed materials, branded assets, office signage, etc. Additionally, there are many indirect costs, including the previously mentioned loss of brand equity, pipeline reduction (from the inbound traffic loss), the damage resulting from any inconsistencies, and the opportunity cost of all employees working on the rebrand instead of other tasks. 

Is it worth it? That’s a tough question to answer. The results are difficult to measure, and every rationally thinking management team is aware of the tradeoffs involved in this decision. They expect costs, brand equity loss, and a dip in the pipeline. The impact is often more severe than anticipated, and the recovery takes longer than planned. Once the company emerges on the other side of the dip, it is hard to attribute the positive results solely to the new name. 

Would Gusto grow as much if it were still called ZenPayroll? Would MongoDB be as popular if it were still called 10gen? It's hard to tell. The new names are certainly better, but the growth didn’t happen solely by renaming the companies. 

How to name a company  

Putting thought into a naming strategy from the early days will help avoid the costly exercise of renaming down the road. Here are some best practices to follow when thinking about your naming strategy:  

1. Separate the Company Name from the Product Name 

Trust me, it will pay off in the long term. It doesn’t matter if you have only one product today because eventually, you will want more than one product. Just look at DocuSign – a company with an amazing brand equity that really struggles to broaden its product portfolio because of the name. DocuSign became a verb, a brand marketer's dream. Yet, the name is holding the company back today. It’s tough to explain that a company that everyone knows as a tool for electronic signature also offers contract management. Everybody wants to become the Kleenex of their category, but Kleenex is a product name. The company that makes it is Kimberly-Clark. 

You may object that Google and Meta successfully created a separation between the company name and the product name much later in their life. Sure, but they didn’t rename the products that already had amazing brand equity. Google and Facebook remained untouched by the creation of the Alphabet and Meta brands. Besides, both companies are drowning in money, giving them a lot of marketing firepower. Unless that applies to your company as well, separate the product name from the company name early on.  

2. Don’t Limit Your Future Addressable Market 

One of the common pitfalls that tech companies often fall into is selecting a name that constrains their total addressable market (TAM) by associating it with a specific market segment, buying center, or technology. Here are recent examples to illustrate this point: 

  • ZenPayroll was limited to one buying center, payroll. As Gusto, the company can now offer products such as Benefits and HR (HRMS). 
  • KeepTruckin was limited to one market segment, trucking companies. As Motive, the company now sells to other verticals such as construction, food & beverage, and oil & gas. 
  • Kofax sales teams had to explain every day that they don’t just sell scanning and faxing products. As Tungsten Automation, the company is trying to broaden its perceived product applicability.  

These companies started with a name that worked great for a while but ultimately became an anchor that held them back. Most hyper-successful companies have names with a very broad applicability: Apple, Meta, Alphabet, Dell, Intel, etc. I bet that Salesforce has had many discussions about how to get stronger in departments such as R&D, Finance, and HR; departments that don't respond to the name "Salesforce". 

3. Company Name Should Not Be a Message 

This is follow-up advice on the previous two points. It’s extremely tempting to use your company name to explain what the company does. Resist! Leave that to the product name. That’s another reason for separating the company name from the product – it allows you to have multiple products that do different things. The company name should leave all options open because things will change, and you want your company to last for a long time. 

Looking at the largest US unicorns, here are the names that have the potential to last forever: Stripe, Chime, Plaid, Revolut, Discord, Ripple, Airtable, Motive, Gusto, etc. Some of these names are better than others but they all have a broad applicability. A company called Stripe can offer (and already does) products like Payments, Billing, Invoicing, Tax, Identity, Climate, etc. Grammarly, in contrast, is stuck with one product forever. 

Now, here are the unicorns whose names are limiting by trying to say what the company does: 

  • Grammarly – This name clearly says that the company does only one thing and always will. It will be hard to grow into a billion-dollar company with that name. 
  • ServiceTitan – Its name limits the addressable market to just one target function: service. The market opportunity is large for field service and the name has not prevented the company from offering many different products. However, it will be difficult to sell to other company types/functions outside the service department. 
  • Databricks – Better, but while the name works well for data management solutions it won’t work for other adjacent categories. 
  • Canva – The name suggests a creative tool and the name will be a stretch for other types of applications. Companies called Figma and Miro have a similar problem. In these names, the message is relatively subtle, but still restricting for future expansion. BTW, I hope that Miro cleared the name with the Successió Miró which manages the rights to the work of the artist Joan Miró. 
  • OpenAI – I know that AI is hot right now, but the hype will fade, and new ones will emerge. Most of the new companies with “AI” in their name will be renamed if they live long enough. The same thing happened to all companies with “.com” in their name. Remember Amazon.com and Salesforce.com? 

4. Decide on a Brand Strategy 

The old school of marketing says that there are two brand strategies: Branded House and House of Brands. The car makers serve as a great example. BMW is a Branded House. There is only one brand, BMW, and a long lineup of descriptive product names (assuming you learn the code): iX, i4, i5, X1, X7, Z4, 3-series, 5-series, etc. There is no brand equity in any of the product names; all the equity goes into the company name.  

Ford, on the other hand, is a typical House of Brands with products called Mustang, Escape, Explorer, Edge, Expedition, etc. These products have strong brand equity on their own. In fact, Mustang and Bronco can stand on their own without even mentioning Ford.

In tech, an example of the branded house model is Salesforce with brands like Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud, and Data Cloud. Not much equity in any of these brands. This strategy is hard to sustain as the company grows. Even Salesforce is now keeping the large, acquired brands such as Tableau, MuleSoft, and Slack. Einstein is not fitting the branded house mold either. It’s becoming a bit of a mess. 

An example of a House of Brands is Microsoft with a hierarchy across hundreds of brands. Take Microsoft 365 which includes Word, Excel, PowerPoint, Outlook, SharePoint, OneDrive, etc. Teams is for some reason called out separately on the same level of the hierarchy as Microsoft 365, even though it is included in my 365 license. Is Azure part of Microsoft 365? Nobody knows. Is Office 365 still a brand? Unclear. Microsoft’s product branding is a mess. 

So, what's the best solution that will scale?

For years, I was a fan of the Branded House strategy, especially for B2B tech companies that are notoriously low on a branding budget. Today, I came to realize that the best approach is a hybrid approach. It's a Brand Architecture with a company name and a very finite number of product brands at the top level of the product hierarchy. The top-tier brands should be able to build brand equity and thus they shouldn't be descriptive names. All the add-ons and modules below should have descriptive names to avoid competing with their parent brand. When deciding about which products deserve such a brand, think company's divisions or business units. That’s about the right level of granularity that enables building brand equity for multiple products.

A great example of such brand architecture is Atlassian with top-tier brands like Jira, Confluence, and Trello. Under each of these brands is a bunch of products, add-ons, and modules that are descriptive because they have no reason to accumulate any brand equity. Atlassian has a strong brand and so do the products. This is the perfect brand strategy outcome! 

5. Consider Evocative Names 

As mentioned earlier, a company name should be devoid of messaging. The name should not try to suggest what the company does because that is sure to change over time. Ideally, the company name should be an abstract name like the unicorns I mentioned in section 3. However, an abstract name doesn’t necessarily mean a meaningless word; a made-up word that doesn’t mean anything. In fact, names such as Oracle, Stripe, Chime, Plaid, and Gusto are real words with a meaning in the English language. 

This is where the right choice of name can help evoke the right association. Take the name Atlassian again, which seems to be derived from “atlas” or “Atlas” and thus evokes associations with words like “global”, “world”, “travel”, or with a Greek god who supported the sky on his shoulders. These are all very positive associations evoked by the name Atlassian. And yet, the name doesn’t try to explain what the company does. BTW, the company says that it is named after the Greek god. Although, they don’t control what the name evokes for you and me. 

A name created by combining two words (or three words) can feel abstract and yet evocative. Just consider names like Microsoft, Salesforce, ServiceNow, Workday, etc. However, the challenge is that many of these names are already taken. This naming approach worked well for companies that were founded 20+ years ago, but it’s hard to find such names today that are compelling and available. 

Creating good, evocative names is an art and science at the same time, and that is a job for agencies that specialize in such things.  

6. Avoid Conflicts, Even Outside Your Industry 

Using the same name as another company is obviously a bad idea, yet it happens all the time. The common wisdom is that it may be OK as long as the other company is in a totally different space. That’s also the advice the legal team would give me when they were assessing the risk of getting sued. In reality, the legal risk is just one of the concerns. It’s also about brand equity, which manifests itself in your day-to-day business in online search ambiguity and search engine marketing.

I recently did some research for a client in the tax automation space where one of the leaders is Vertex, Inc. However, there is also Vertex Pharmaceuticals – a company in a completely different space. No problem, right? Well, while the pharma company was founded a decade after the tax company, it is now much larger in terms of revenue and market cap. By the way, neither of those two companies owns the vertex.com domain. It’s owned by Vertex Software. Vertex, the tax company, happens to be really hard to find on the web. Bummer! 

This is also an issue for abstract names that have a real meaning. For example, Chime is a relatively good, message-devoid company name, if you don’t sell doorbells. Dozens of products named Chime are competing for the same keyword.  

Conclusion 

Naming a company is challenging. You've just started, and you have a million other tasks demanding your attention. You need a name but there's not much time or money to spend on it. Yet, a good name can make all the difference. In fact, how the name is created can become part of the company lore. You've likely heard the stories behind names like Google, Nike, and Starbucks. Starting with a good name is important. When you realize that your name might limit your success, consider renaming the company early. The cost of renaming grows exponentially with the company's valuation.

Of course, if your company experiences exponential growth for over a decade and builds amazing brand equity, you can probably get away with a mediocre name. Just look at Salesforce.  


3 comments:

  1. I enjoyed the blog Lubor. I scratched my head when I read about Kofax renaming to Tungsten Automation. Having known Kofax for over 30 years, I can argue both sides of their decision to rename, one that I'm certain was the topic of much internal debate. I would love to hear 1) how they came to a consensus on the decision to rename, 2) what consensus looked and felt like, and 3) how they landed on the new name. Now, they have the chore of turning the name into a brand, which seems to me like a more difficult journey.

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  2. Thanks, Tracy. Kofax acquired a company called Tungsten Corporation last year. This is how they got to own the name and so the big decision was to use it to rename the mothership.

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  3. Nice article, Lubor! I suspect Kofax has driven their brand recognition in the ditch with this renaming. I have never heard of, "Tungsten Automation", and I have been in the industry for 30 years. Everyone knew, "Kofax". They will need to spend millions to get the new name embedded in people's memories. I was part of IBM when they did the spinoff, "Kyndryl". The new company had zero name recognition. I saw customers struggle to pronounce the name, spell the name, and remember the name. Yikes.

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