How Zappos found a name that fit the business

To entrepreneur Tony Hsieh, Shoesite.com sounded like the poster child for every bad Internet idea.

Why would people want buy shoes online before they could try them on?

Shoesite founder Nick Swinmurn was convincing. His idea was to build the Amazon of shoes and create the world’s largest shore store online. His pitch was simple. Footwear was a $40 billion industry at the time in the US, of which catalog sales made up $2 billion and e-commerce would continue to grow.

Hsieh warmed to the idea but not the name. Shoesite seemed too generic, he thought. And it limited the business from eventually expanding into other product categories.

Hsieh told Swinmurn to come back with a better name. He came back with Zapos, derived from zapatos, the Spanish word for shoe. Hsieh suggested adding another p so people wouldn mispronounce it as ZAY-pos.

Thus was Zappos, the much-feted online shoe retailer, born. Tony Hsieh created a business that combined profits, passion and purpose. He described it as building a lifestyle that was about delivering happiness to everyone, not least himself.

He sold it to Amazon for more than $1.2 billion in 2009.

From Delivering Happiness: A Path to Profits, Passion and Purpose, by Tony Hsieh. 

China, a place where names take on a whole new meaning

When people want the Real Thing in downtown Beijing they ask for a can of Kekoukele.

Close your eyes and listen hard and yes, it sounds somewhat like Coca-cola, but it conveys its essence of taste and fun in a way that the original name could not hope to match. It means, literally, “tasty fun”.

According to the New York Times, China is a place where names are imbued with deep significance. The art of picking a brand name that resonates with Chinese consumers is no longer an art. It has become, says the Times, a sort of science, with consultants, computer programs and linguistic analyses to ensure that what tickles a Mandarin ear does not grate on a Cantonese one.

Consider Tide detergent, Taizi, whose Chinese characters literally mean “gets rid of dirt.” (Characters are important: the same sound written differently could mean “too purple.”)

There is also Reebok, or Rui bu, which means “quick steps.” And Colgate — Gao lu jie — which translates into “revealing superior cleanliness.” And Lay’s snack foods — Le shi — whose name means “happy things.” Nike (Nai ke) and BMW (Bao Ma, echoing the first two sounds of its English and German names) also have worn well on Chinese ears.

Taking care of his Precious Horse

Having a foreign-sounding name can lend a cachet that a true Chinese name would lack. Many upscale brands like Cadillac (Ka di la ke), or Hilton (Xi er dun), employ phonetic translations that mean nothing in Chinese. Rolls-Royce (Laosi-Laisi) includes two Chinese characters for “labor” and “plants” that more or less have become standard usage in foreign names — all to achieve a distinct foreign look and sound.

On the other hand, a genuine Chinese name can say things about a product that a mere collection of homonyms never could.

Citibank is known as Hua qi yinhang, which literally means “star-spangled banner bank,” not bad if you still have faith in American banks. If you are looking for the local Marriott, you’ll have to ask for Wan hao, or “10,000 wealthy elites.”

That’s not quite the mood whenever I check in to the Marriott. One of 10,000 maybe, but wealthy and elite is a stretch, even with my gold card.

Netflix and the lesson of Kodak’s museum brand

We love like family brands we accept and use to organize our lives. We respond as people do when they are betrayed, whether it’s justified or not.

Netflix is one such brand.  The DVD-by-mail company built a loyal customer base of almost 25 million who loved the control of ordering movies via the web and watching at their convenience. For the last three years, it finished either first or second in a national survey of customer satisfaction with e-retailers. That’s an intense level of brand connection.

A high-profile series of botched efforts to separate its core DVD service from its newer, video-on-demand-style streaming library has destroyed much of that goodwill.

Insult was added to injury when Netflix practically declared that its core DVD-by-mail service was for Neanderthals who still feel weirdly attached to antiquated entities like the Postal Service. They were no longer eligible to be members of the Netflix club – they’d have to pay extra to use a service called Qwikster.

Twitter and the blogosphere were aflame with indignation. Appropriate scorn was heaped upon the name, although much of it missed the point. The stock tanked and more than 800,000 subscribers decided there were better alternatives. Now, while all this demonstrates a staggering ineptitude when it comes to understanding brands and the relationship people have with them, the pity is that, until this meltdown, Netflix was thinking intelligently about its future.

Buried in a mea culpa email Reed Hastings addressed to subscribers was the real burning platform issue that he is rightly concerned about.

Who's next?

“For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

The market that Netflix has had to itself is clearly changing. Digitization of content is laying waste to traditional industries that either can’t see the writing on the wall or choose to ignore it. Amazon and Apple between them have destroyed Borders, Blockbuster, Tower Records and (almost) Virgin Megastores. Netflix wants to be on the right side of this equation.

If there’s any company that keeps Reed Hastings awake at night it should be Kodak.

Here is a revered American company and, at one time, a powerful global brand brought to the brink of bankruptcy by its addiction to the fat margins of its core film business and its reluctance to change. Over the decades Kodak has displayed all the behavior of a company in the thrall of its own brand, which digitization has all but destroyed.

Founded in 1880 by George Eastman the company is struggling to complete a challenging transformation from a company reliant on a dying business to a seller of consumer and commercial printers. This from a company that invented the digital camera. The brand belongs in a museum.

In Clayton Christenson’s classic treatise “The Innovator’s Dilemma”, technology giants are frequently toppled by “disruptive” technologies that erode seemingly impregnable businesses, often with startling speed. This is partly because it’s easy for incumbents to dismiss the disruptive potential of a fledgling technology–a classic hazard of linear thinking–and partly because adapting to the new world would itself disrupt existing, and usually highly profitable, business relationships.

Netflix deserves some credit for trying to buck this trend. With the high fixed-cost DVD business on the verge of stagnation, the CEO took the almost unprecedented step of effectively blowing it up in order to speed the transition to streaming.

He’s also just received a valuable lesson brand management. Don’t count Netflix out.