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Good startup branding can be worth paying for
When AI companion startup Friendrevealedit had drop $ 1.8 million on buying the www.friend.com domain name last week , it set off a argument around what exactly branding is deserving , and how startups should be spending cash . laminitis of other companies likeLoomandPubliccame forrard to portion out stories of their own quest to shut away down a domain , but the questions continued wheel in : Did Friend overspend for its domain ? Will it really make a difference ?
Avi Schiffmann , the founder and CEO of Friend , told TechCrunch over email that the leverage has already pay for itself . And there may be a method to the madness , give that purchasing domain names for meg of dollar is n’t particularly a fresh affair — Tesla pay an estimated$10 millionover the span of a decade for “ tesla.com , ” and mortgage startup Better.com paid$1.8 millionfor its field in 2015 , the yr it was establish . And according tosome reports , OpenAI obviously pay $ 11 million for “ ai.com . ”
Alex Harris , a co - founder of inauguration merchandising firm Fiat Growth and plant GP at early - stage VC firm Fiat Ventures , told TechCrunch that getting the name , arena and stigmatization mightily can have a big impact on how a fellowship farm .
The right name or domain can help startup be not only easy to find but also easy to think of , Harris say . He contribute that “ .com ” domains are king ( sorry “ .ai ” companies ) — and shorter is always honest when it come to names or domains .
“ In many cases , the name is critical when there is any variety of Logos - of - mouth [ promotion ] , ” Harris said . “ The name is easy to spell , easy to say . These are some of the things we let the cat out of the bag about that are really quite simple , but a destiny of citizenry ignore [ them ] . ”
Olivier Toubia , a marketing professor at Columbia Business School , said one nuance to count when call back of a name is how often you require client to interact with your business . If it ’s a consumer product that users will become to often , or package that businesses will use every day , coming up with something unique and memorable like Google or Twitter could be a overbold play .
And if a company ’s product is something that users rick to less often , or only when they need to , it ’s good to opt a name that is generic enough to easily come up on search engine .
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“ If you [ are ] a product or service that [ mass ] wo n’t needfully use very frequently or maybe when they need you , they will Google or search for you , ” Toubia suppose , pointing out how someone may search for a locksmith if they were locked out of their apartment .
And in the case of startup that customer do n’t interact with on a daily basis — think healthcare companies — most of the big ones like Spring Health and Cityblock Health all have “ wellness ” in their name to make it unclouded what they do , as well as for SEO purposes .
Harris feels scram the name and domain right total a touch of legitimacy to businesses . A professional - sound name and domain help people trust a company if they have n’t hear of it before , be they customers , potential hire or even investors .
“ We all get electronic mail from [ company ] with a top-notch recollective domain or eldritch domain of a function file name extension , and it Delaware - legitimizes it , ” Harris suppose . “ If you have a domain that is worthy , [ multitude ] pay attention . ”
Harris also feels spend $ 1.8 million on a domain , as Friend did , is n’t as crazy as it may seem at first . He say that if buying that area helps the company ’s business organization , which he predicts it will , that leverage will devote for itself over clip . And a good domain like that can double as solid IP that can be sold if require .
Caution.com
enceinte companies can probably afford to spend millions on stigmatization , but does it make sentience for startups that are still building a production and going to market ?
Harris and Toubia both admonish that there are thing to keep in mind here , of course . In Friend ’s case , both said the amount of money spent on buying the domain name is only going to be worth it if it is n’t preventing the startup from in reality building a product .
“ The name is important , but you have to sell and develop a product , ” Toubia said . “ If you already burned 70 % of the cash and do n’t have a product , investors may not be very well-chosen with that . That may hurt your ability to raise [ more money ] in the future . ”
There are clear advantages to lock in your branding too soon on , but companies must also make certain they do n’t paint themselves into a corner with a name or branding that could make it hard to swivel later , Toubia pronounce . If a companionship all changes its business enterprise down the pedigree , or chooses a name that is subject to effectual action , that early stigmatisation could show costly .
It could also be speculative to pick out a name that is too similar to another party ’s . If the companies are in wildly dissimilar sector and would n’t confuse a potential client , it plausibly wo n’t matter . But the stakes change dramatically if a company with a similar name commits humbug or another enactment that would lead in a less - than - idealistic tie-up .
Even in less drastic terms , if a name is too similar , it could just cause oecumenical muddiness , Harris said , like in the type of former New York City mayor Rudy Giuliani ’s press group discussion at the Four Seasons Total Landscaping a few years ago .
Regardless of how Friend ’s determination to purchase their dear domain work out , both Harris and Toubia both said the fact that we are sing about their determination to do so shows their strategy might already be run .
“ It ’s kind of like naming a kid , ” Harris articulate . “ You get to the point where you say , I almost do n’t like anymore ; these five names are fine , just piece one and be done with it . In that moment of frustration , be patient and push through . It is very important . Do n’t settle on something because it ’s sluttish , because it ’s cheap . Think about the assets available and who you are competing against . ”
