The importance of a name in business

A business’s name is the number 1 piece of information people know about that establishment. And yet, I see time and again start-ups that purposely use weird names.

Luckily, there is finally some science to this that shows who is doing what, correctly.

Studies have shown that companies in the S&P500 with name’s and ticker symbols that appear to have some meaning and are not random, will on average (and controlling for other factors), increase their stock prices in a disproportionate manner.

It’s the same concept as when you walk around a tradeshow. The booths at which I am more likely to stop are the one’s whose name tells me what they do and for whose products I’m a potential buyer. The businesses whose name tell me nothing will have to entice me via some other method such that I become interested enough to stroll by and find out what they do.

Also, I imagine that you can recall a few times when you were trying to remember a business’s name, but due to its randomness, couldn’t quite bring it to mind as easily as you would have liked. Well this has far reaching effects for your early customers and apparently even your investors. It’s comical how irrational we are.

So there you go – when it comes to naming your startup – stand out, but not so much that what you offer can’t be easily and cogently drawn from your name.

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