By Joe Mancuso

Originally written 1985 - Updated in 2004

One of the most important tasks when starting a small business occurs right at the outset: giving the enterprise a name. The name chosen will come to symbolize the entire business and can be an early sign of a company's character.

My fascination with naming companies stems from the almost endless variety, cleverness and useful information found in the name people give their businesses. In fact, one of my favorite pastimes when traveling to other cities is to pick up the Yellow Pages and start reading, just to see the inventive (or uninventive) names that people have given their companies. In fact, a fresh set of Yellow Pages can often hold my attention longer than a good novel.

I've even been known to show up late for appointments because I lingered in a building's lobby reading the floor directory. And in the Hancock Building in Boston, or the Empire State Building, that can be more than a few minutes of interesting reading.

I classify the way people traditionally name businesses into four broad groups. They are, in reverse order of effectiveness, Ego Trippers, Latent Ego Trippers, Nonsense Names and Names That Work.

Ego Trippers are the people who name a business after themselves because they want fame; they want their businesses to be the primary vehicle toward achieving that fame. This is almost always disastrous, and not just because the person's priorities are mixed up.

Remember, a large percentage of entrepreneurial ventures fail, and when your business contains your name, your name fails too. Look at Osborne Computer Corp. Although Adam Osborne single-handedly invented the portable computer, his name will always be associated with failure. Of course, poor Martha Stewart never realized that she would be going to jail when she called it Martha Stewart Living. She didn't realize “where she might be living”, back in the beginning.

Another example is a product and not a business, but it illustrates the danger of ego tripping better than any I can think of. It's the Edsel. Even if you don't remember the car, you automatically associate the name with failure because the Edsel -- named for Henry Ford's son -- was one of the biggest marketing failures in the history of American business. When I met Edsel Ford II in the mid­1970s, before I'd finished shaking his hand, the whole story flashed through my mind. That's a pretty tough history to have to carry around.

On the other hand, do you know who founded General Motors? He owned control of it twice before he died. In Flint Michigan, in the basement of the General Motors building is a Museum dedicated to a man who died broke, William Durant.

So it's a good idea to isolate your name from your business -- in much the same way you protect personal assets by incorporating your business. Also, on the chance that your business goes bust, when your name is on it, it's that much easier for the creditors to look you up in the local telephone directory and pester you at home.

The possibility of failure isn't the only caveat against naming a business after yourself. Success can be a problem too, especially if you sell the business. A friend of mine, Jim Pastoriza, started an electronics company and named it Pastoriza's Electronics. Simple enough. But when he sold the business to Analog Devices, it became Analog's Pastoriza Electronic Division.

When Jim started another company, which he named Memodyne, the problems began. Even though Memodyne was in another product area, it was still in electronics, and it shared a number of customers with Analog Devices. So Jim wound up spending several unproductive hours every week explaining to buyers that, even though his name was Pastoriza, he had nothing to do with Analog's Pastoriza Electronic Division, that his company was Memodyne, and that no, Memodyne was not a division of Analog Devices. You can imagine the difficulties. He didn't even have control of his own name.

Avis rent a car suffered the same fate. After the founder sold Avis, he sued the new owners to allow him use of his own name in a similar business. He lost.

The Founder of Ray's pizza in Manhattan had no idea that several dozen years later there would be 26 different Ray's Pizza's in the Manhattan yellow pages. The original Rays, the only Rays, the best Rays, etc now compete with a business that failed to protect it's name.

Latent Ego Trippers

The second category, the Latent Ego Trippers, know enough not to name the company after themselves, but they can't help but want to grab a little of the glory. So they name the company after the street that they live on, as Howard Freeman did with Jamesbury Corp., which manufactures valves in Worcester, Mass. Or they go with their wife's middle name, the way Freeman's son Jack did when he named his computer-oriented business Stewart Systems. Names like these don't really contribute anything to the business.

The all-purpose cleaner, Lestoil, was named after the founders three children, Lenore, Ester and Seymour. Then the Lexington Mass., optical company, ITEK, was named after “I will take over Eastman Kodak”. The founder of now defunct discount stores, Korvettes, was named after his high school buddies…Eleven Jewish Korean War Veterans. His name was Eugene Furkoff.

I'm reminded also of a reverse situation. Al Battista named his company, which does laser welding and dril1ing, Laser Inc., a name I thought might have been just a little too simple. And since the company is located near Sturbridge Village, Mass. a lot of people pass by and see the sign out in front of the plant. One of these people happened to be a manager at Pratt & Whitney, a division of United Technologies, who was vacationing with his family. The name piqued his interest and when he was back at his office, he decided to find out what kind of work Laser Inc. did. The result was that Pratt & Whitney became Laser Inc.'s biggest account. This would have never happened if the company had been tagged with a Latent Ego Tripper name.

Nonsense Names

The third category of names are Nonsense Names, like the XYZ Corp. or Widget Inc. Opinions are mixed on the effectiveness of this kind of name. My opinion is that naming a company is akin to naming a child -- the name usually has to last forever, so do it right the first time. Remember, the name will probably be the first aspect of the business to make an impression on customers, suppliers, stockholders and employees, and if it's a nonsense name, it may have a negative effect. What is called in Texas, big-hat-small ranch”.

On the other hand, Ira Bachrach, founder of NameLab Inc., takes a different position. And his four-person firm, located in San Francisco, is in the business of naming products and businesses and is best known for coining the name Compaq for Compaq Computer Corp., previously known as Gateway Technologies.

NameLab creates names by putting together new words from morphemes, words or parts of words that cannot be broken down into smaller units. (There are 6,200 morphemes in the English language.) The Compaq computer was portable so it was important that they come up with an overall name that conveyed that. So they put "com" for computer together with "pack," and added the "q" suffix to establish a proprietary trademark. The name, obviously, was a success.

Another good choice was the name given to a merger of many of New York's banks, Citibank. It allowed the extension of the name to Citicard, Citiloan, Citisavings, etc. 

Another theory on naming is the adaptive metaphor, as in Apple. The way Apple Computer got its name is a typical entrepreneur-in-a-hurry story. Steve Jobs and Steve Wozniak were looking for a name for the computer they'd built, so Jobs decided one day that if no one came up with anything better by five o'clock, they'd call the company Apple. And with little more than intuition, Mr. Jobs revolutionized the computer industry. Not only did he bring the first real personal computer to the retail market, he brought it to market with a name people could understand and relate to. Before Apple, computer companies seemed to think that all that was required was a few numbers and initials and they had a name for a new product.

Steve Jobs learned his lesson well in the business he founded after Apple. He eventually sold this business to Apple as part of the deal, which returned him to Apple. That company was called “NEXT”.

But a case like Apple is the exception, not the rule. With most Names That Work, there's a well thought-out strategy behind them. Back in 1980, my brother John Mancusco started a little engineering company in Connecticut call Tremont Inc.-- not the most exciting name in the world. But fortunately, John's company was forced to change its name as a part of a legal action initiated by his previous employer, Transamerica. So he changed the business's name to Equal Inc., because so many of the engineering blueprints that required the custom-designed, electro-mechanical components specified "'Transamerica or equal."

Moreover, Adam Osborne learned his lesson on naming a business the second time around. His new company, which manufactures low-cost software, is called Paperback Software International. The name is wonderfully descriptive; "Paperback" connotes low cost and mass-market availability.

Some other business names that really work in the favor of their businesses include Ray Stata's Analog Devices, London Fog Raincoats and John Hancock Insurance Co. What better closing line can an insurance salesman have than "Put your John Hancock right here" when he hands a customer his policy?

CEO CLUB member, Jim Kimsey, was the real founder of America On Line (AOL). It was not the hero, Steve Case. Steve was also a member of our CEO CLUB and has often listed founder after his name. But the company was originally called Quantum Computer when Jim hired Steve to run it. Jim had the vision to rename it AOL, just as it prepared for the IPO.

Finally, the name you choose should say something about the business you are in, without being too generic. Let's say you're in the dress business. You don't want to give your company a name like "The Dress Company" for two important reasons. First, while a name like that tells people what business you're in, it doesn't distinguish you in any way from the rest of the industry. And more importantly, even if you succeed with a generic name, you'll have no legal way of protecting it. If someone else wants to trade on your name, you'll find that the courts won't let you stop them. Even though the specifics appear to be an infringement on your rights, a name like "The Dress Company" is simply too generic to be protected. You can't own it.

-- Mr. Mancuso is founder and president of the Chief Executive Officers' Club Inc., a New York-based not-for-profit educational association of CEOs and entrepreneurs.