Here’s A Strange Practice Among Japanese Startups That Needs To Stop

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One of the strange characteristics of the Japanese startup market is that founders often give their company and the product or service that the company provides different names. And it is not even done in the format “Tesla Model S” or “Adobe Photoshop,” where the company name precedes the product name. It is done in a way where the URL and all the branding is done completely separately, where it would be “Model S” or “Photoshop.” I am not aware of anywhere else where this is common.

I assume that this is done with the intent that the company will provide many different products. It could also be that they are not sure which product will gain traction, so they want to be able to launch many different products without the commitment of naming the company after any one. Many then end up changing their company name to the product that has legs. However, I think the primary reason is that everyone else does it that way. If the two-name approach is so ubiquitous, it must be the best way to do it.

But I assure you it is not. It is hard enough to get people to remember one brand. Why spread out your efforts across two brands at the same time? All that money you spend on marketing your product could also be marketing for your company. By naming them differently, you are diluting your brand recognition among customers, investors, and potential hires.

It is also confusing. The other day I was talking to Miyata-san of SmartHR about this topic. In the early days, they were called KUFU, Inc. At the time, they did outsourced development work to pay the bills while they figured out what product they wanted to do full-time. So, for them it made sense. But once they fully committed to SmartHR, he says he wishes he would have changed the company name to SmartHR sooner. When he introduced himself to people at conferences, he would have to give this long winded introduction explaining the company name, the product name, and what they did. It was unnecessary.

Having different names is brand dilutive and confusing. If the product doesn’t go well, you can change the name. It only costs few hundred bucks, which is a small price to pay compared to the branding value lost from the two-name approach. We should change this nonsensical practice.

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