How to Name your Startup (hint, keep it short)

Choosing the name of your startup or small business is arguably one of the most exciting and frustrating of task items to complete! Maybe you’ve always dreamt about a specific name, and you’re sure it rolls right off the tongue and into the pathway of angel investors. However, Science recently published a study, “Where is Silicon Valley?” which reveals that successful startups tend to have shorter names. This is crucial information considering the failure rate of startups hover around 90 percent. However, it’s not just keeping the names short that suggest founders can optimize their odds of success.

It’s also a good idea not to name your company after any founders. If you’re going to geo-target, make sure that the region you choose is connected with other “high quality” businesses (Silicon Valley, Manhattan, and LA are all great choices.) Think of businesses like LA Fitness, which is one of the most popular big box gyms around the country—and is far from being linked to “just” Los Angeles.

Failure. It’s always an option with a startup. But can a name by any other name smell as sweet (and steer you towards success?)


The Name Game

These Science studies come with no guarantees, and there are certainly exceptions. Just take a look at Powell’s, the largest independent bookstore in the world based in Oregon, which has an eponymous name after founder Michael Powell. However, do know that eponymous businesses are less likely to succeed, to the tune of 70 percent, compared to businesses not named after founders. However, an eponymous short name is 50 percent more likely to succeed than an eponymous long name.

According to the study, Palo Alto, Menlo Park, and Mountain View are the current top ranked cities for quality if you’re going to geo-target, but that of course can shift over time and may not be a good permanent strategy. “Success” is defined in the study by businesses that scored an IPO or were acquired within six years of the founding date. But how did this study take place, what were the parameters, and what does it mean for your venture?


A Case for Success

The study authors mined data for all California for-profit businesses registered from 2001 through 2011, and also tapped data via the US Patent and Trademark Office. Thomson Reuters was an additional source. First, the entrepreneurial quality was rated by city and ZIP code. One of the authors, Scott Stern, who is also an MIT professor of management, says, “What we’ve been able to do here is move one step back and sort of get the raw material at inception rather than the impact of venture capital. We’re trying to measure things that companies do naturally when they have the ambition and potential to grow.”

Discovering that startups with shorter names are more successful has been supported by other studies. For example, TheLadders (a career website) found in 2013 that shorter company names are linked with higher salaries. Plus, especially companies in the tech industry, if there are intentional misspellings in the name such as “Flickr,” they’re more successful.


When Oh So Wrong Goes Oh So Right

In the Science study, there was no digging into the pros and cons of misspelled names. However, Stern notes that dropping letters will automatically make a name shorter. “Firms are looking for names that are easy to remember, that will come up in a search. If you have a smaller number of letters and you’re missing a vowel, you will have that distinctive search pattern.”


A name alone isn’t going to make a dud of a venture successful—but it is interesting to see the trends behind successful companies. Stern says, “Our indicators are the digital trail of ambitious, high potential entrepreneurs. Simply having those digital trail markers is not enough. What needs to be true is the founders need to have ambition and potential so that those choices make sense in their overall business plan.” Of course, a little bit of direction with something as important as a name couldn’t hurt.