We’ve been extremely busy this week pitching prospective investors. After great meetings with Venture Capitalists, Angel Funds and other rich folks that like to put money in start ups, Brian and I are both very optimistic [fingers crossed].

I’ll post more next week about our fundraising adventures and our new name (we’ve got one!). Have a great Labor Day!

Naming this new company has been a struggle, in large part because we place a huge importance on this step in the start-up process. It impacts everything, including things like recruiting and fundraising that set the path of company well before a single customer even sees the name. I ranted a bit in my last naming post about how hard it is to pry a good dot-com name away from the domainer industry. In this post, I’d like to talk about the rules we apply when someone puts another potential name on the whiteboard for consideration. Think you’ve got a good name? Then step up to the Board and we’ll see if your name is up to snuff. (Note: these rules are somewhat specific to the consumer-oriented business we are starting)

Tier One Considerations:

• Can the Dot-Com Be Registered/Purchased? The rules we set out below mean most of the names that make our whiteboard have already been registered by someone, and buying the name is the only potential option. In fact only our “frugal” CFO was brave enough to put a name on the whiteboard that wasn’t registered: Spinningdoor.com. He registered it himself and made the argument it was perfect for the company. We told him he only liked it because it would cost the company $9. By the way, he has it for sale (ds@spinningdoor.com) if anyone is interested
• Is the Name Fun? One of the best things about a consumer offer is that you can have fun. Unless you’re out to cure cancer or market to bankers or lawyers, have some fun with your name. We love names that make people smile.
• Could it be a Mega-Brand? Picture it on the side of a stadium, sponsoring American Idol, on a blimp. Can you see it? If not, subtract a point.
• Is The Name too Limiting? Usually the best candidates will have either nothing to do with the actual product or service or only suggest certain elements of the business to a consumer. These are easy to protect as trademarks and don’t unduly limit the company down the road as the business may change (for example, naming a company www.beer.com may make it difficult to sell something different later). We tend to favor names that give us a completely open canvas (like Jellyfish did).
• Is it Easy to Remember & Spell? This is where most of our names fall off the map. We set up three tiers here: 1) completely made up words; 2) actual words, misspelled; and, 3) actual words with the correct spelling. We really favor tier 3. As a start-up it is hard enough to get someone’s attention; don’t force them to remember a funky made up word or misspelling. This doesn’t mean you can’t succeed with a tier 1 or 2 (consider Google or Flickr), but why make your job harder by naming your company Kulabyte or Cuil? If your neighbor told you this kind of name, would you remember it two hours later? How about two months?
• Is it Bold & Unique? We love names that stand out without zillions of dollars of marketing. The best names make you smile a bit and ask “what do they do?” One word of caution: picking a bold name will put you close to the idiot/genius line. I remember getting an e-mail from a college student at Michigan State right after we put up the Jellyfish.com blog pre-launch. The e-mail basically said we were a bunch of idiots for picking the name Jellyfish and that their entire dorm floor was still laughing. I saved that e-mail (in fact, I still have it) as a reminder not to ever hire anyone from Michigan State
• The Word of Mouth Test As a final test, I love to think about how easy it would be for an early adopter of our product to tell someone to try it. Do they feel good/cool/savvy saying the name? Does their buddy remember it?

Not many names make it through this criteria. And it’s easy to get depressed when you spend so much time brainstorming that the name Spinningdoor.com starts to look good (sorry Dave) or you find yourself spending time on dotomator.com (raises hand). But we’ve done of good job of staying true to our rules and reminding ourselves that we are setting a very high bar (we’d reject most of the start up company names profiled on TechCrunch, for example).

To date, we’ve only gotten a few names through this process, at which point we run a full trademark search, talk to our trademark counsel about any issues and try to buy the domain. A few of our favorite candidates have fallen off the map here. But we have gotten a great name to the finish line. As soon as we finalize the dot-com purchase, I’ll let you know what it is.

There has been a lot of discussion over the past few days about the future of Public Relations in a new media world. The debate was kicked off by Robert Scoble in a post in which he took a subtle kick at the traditional Public Relations route for start-up companies. In the days since, Steve Rubel, Michael Arrington and a host of others have chimed in. The basic question is this: Does a start-up company need to hire a traditional PR firm in order to get attention/press or do companies with good products always rise to the top of the attention heap?

PR was a key part of our success at Jellyfish.com. We launched Jellyfish in June of 2006 with a Wall Street Journal article covering the launch. That coverage started a snow ball of press, and helped us attract top talent, raise more money and get the attention of Microsoft which later purchased us.

We wouldn’t have gotten that article without a traditional PR firm. But that doesn’t mean I’m sold on traditional PR. Frankly, I think it is a necessary evil. Here’s the Jellyfish recipe:

1) Join the Blog ecosystem. After coming up with the Jellyfish advertising concept (now used as the basis for Microsoft Live Search cashback), Brian and I immersed ourselves in the blogosphere. We found the thought-leaders in the industry (folks like John Batelle and Scott Karp) and we made reading them a daily part of our job. It opened up our world and made sitting in Madison, Wisconsin not so limiting.

2) Launch our own blog. We spent a great deal of time on the Jellyfish blog pre-launch, discussing the search market and the problems with that market that were creating our opportunity.

3) Engage the bloggers in our industry. Once we had our own content and something relevant to say, we reached out to the important bloggers and a few of them started to follow our story.

4) Hire a traditional PR firm. In our case a firm in the Valley (Connecting Point). This was last on our list and it came after we’d already gotten a beach head in the new media world ourselves.

Why did we hire a traditional firm? Because we needed access. Like it or not most tier 1 bloggers AND almost all of the traditional media use PR firms as gatekeepers. Being headquartered in Madison, Wisconsin, has a few advantages, but access to national media and bloggers is not one of them. It might as well be Siberia to many in the Silicon Valley world.

In the case of Jellyfish, we got the attention of John Batelle, Scott Karp and Pete Cashmore without a PR firm on the strength of our business ideas and our personal contact strategy. But there were many other blogs (TechCrunch, Om Malik, Greg Sterling) that didn’t give us access until our PR firm opened up the door with an introduction. And we didn’t even get a whiff of attention from the traditional media world until our PR firm started leveraging their relationships to get us in the door. The reason seems pretty simple, a reporter at the Wall Street Journal (or any other Tier 1 target) gets inundated. They need gate keepers to filter our the crap and a good PR firm can earn that gatekeeper status.

My takeaway from that experience is the following:

1) PR Starts with the Company Leadership. Our PR firm was fantastic at making introductions, but they didn’t give us much else. Completely outsourcing everything to them would have been a disaster. The pitches and the substance behind those pitches came from us after a lot of hard work. You get out of your PR firm efforts what you put into it. Bloggers/New Media should be approached in a direct, personal way, not with scattershot form Press Releases. We are starting those efforts with our new company right now on this blog.

2) At the end of the day, it is still who you know. Like it or not, you need to hire a PR firm that has great contacts or you run a HUGE risk of not getting the attention you deserve. This is where I take issue with Scoble and Arrington, who argue that good ideas cut through the clutter. In Scoble’s example, a buddy of his clued him into the company. I need to get into his network, and I live in Madison, Wisconsin. I don’t run in his circle, but I can hire someone who does. We didn’t get into TechCrunch (or the Wall Street Journal for that matter) until we leveraged a contact from our PR firm. And it wasn’t because we didn’t have an interesting idea (in fact, our Jellyfish cash back concept, now in Microsoft’s hands, has been the subject of multiple posts on TechCrunch since). And TechCrunch is just one of many that didn’t pay attention without that PR introduction.

3) Get a PR firm that has great relationships. The best thing a PR firm can do in our new venture is tell us they are extremely busy and can’t take our work. If I’m selling the firm on the idea and why they need to take us on, that is a huge message. It tells me they don’t pitch every company that walks in the door with some cash. It means their relationships with media are solid. And at the end of the day, that is what we are buying with a traditional PR firm.

I’m going to take my own lessons right now by using this content to reach out personally to Scoble, Arrington and the others that are talking about this stuff right now. It is the start of building New Media credibility for our next venture. Wish me luck!

It is getting really, really hard to name a new company. We’ve been working for months on a name for our new start-up, made dozens of offers for dot-com names, and done several full trademark searches, but we still have “New Co” on the door.

How bad has it gotten? We just offered +$200k for the dot-com name of a small, mythical, woodland creature and we likely won’t even get a response from its owner. Mark Cuban recently blogged about how state and local taxes and paperwork are huge barriers to entrepreneurship, but I think the domain name system may be the biggest hurdle of them all.

When Brian and I started Jellyfish.com just over two years ago, the process was much easier. We brainstormed a couple of weeks, found Jellyfish.com for sale on a domain auction site, paid $25k for it and were off to the races. Perhaps we just got lucky. But I think the process is getting tougher by the day.

Here is my theory why:

1) The “Domaining” Industry is Booming.

The Stock Market may be in tough shape, but times are good for domain speculators. Forbes just ran a piece on flipping domains yesterday and there is sophisticated money moving into the space, so this isn’t limited to Mom and Pop operations. (I guess I feel better after reading that cpc.com just went for $202,000). Why is this industry thriving? To quote your Grandfather (who likely told you to invest in real estate) “because they aren’t making anymore of it!” Consumers have been trained to go to the dot-com space and with a finite dot-com supply comes opportunity.

The other lynchpin in the domainer industry is Google AdSense, which gives domainers the ability to charge rents on all of their virtual property. The formula goes something like this: register as many names as you can for $9 a pop, slap up some contextual “Sponsored Links” from Google, let the virtual properties start to earn rent, and wait for some sucker (err, I mean visionary entrepreneur) to come along and offer you six figures. Here is an example of the type of dead end site we keep turning up time and time again as we brainstorm potential New Co names:

When you are making lots of AdSense “rents” off of a domain, you aren’t in a hurry to sell it. Seeing a website like this at the end of a dot-com name you are coveting for your next start-up typically means “Not for Sale.” If end users stopped using the dot-com address as a search tool and clicking on the first sponsored link they bumped into, the entire industry would likely implode. But this isn’t likely to happen anytime soon.

2) Everyone Wants to Be an Ad Network, Further Limiting Supply

To compound the problem, the domainer industry has also caught ad network fever. Online ad networks are hot. If you can engineer your business to fit into this space, you’ll see lots of M&A activity and very high valuations. When M&A kicked into high gear in this industry a year or two ago (capped by Microsoft’s acquisition of aQuantive for $6 billion last year), many of the big players in the domain speculation industry decided that the sum of their domains was much greater than the parts. They stopped selling off their best dot-com properties to gain the scale and reach needed to play in the advertising space. This drives the prices up on the already precious few dot-com names that are still for sale. I don’t mean to sound bitter, as I salute anyone who can make a living doing creative things, but these guys sure are making my job harder.

In my next post I’ll talk about our rules for naming and the process we are going through at New Co to come up with the next Jellyfish.com name.

I love posts on business failures. Not because I enjoy seeing people fail, but because I’m always impressed by people who treat failure as an opportunity to learn/grow/focus.

When you’re at ground-zero in a new start-up, the fear of failure creeps into your mind quite a bit, so it was great to see the poster child of dot-com failure surface recently in an introspective post about her rise back from the Pets.co graveyard. Thanks to Niki Scevak over at Bronte Media for clueing me in (NYTimes coverage here).

Every start-up deals with the sock puppet to one degree or another, so it was great to see Julie’s come back. It reminded me that you need to surround yourself with people that handle failure well, especially in a start-up. I learned a long time ago from Brian that failure=opportunity when you work in a start-up. As we build out our new team, we need to continue to surround ourselves with people that share this view and don’t run for the hills or point fingers when the sock puppet makes a visit.

Unfortunately, I’ve never figured out a good sock puppet test in the interview context. Please let us know if you have one.

Why isn’t there a blog that covers the company start-up process from the inside? Brian and I asked ourselves this question recently as we left Microsoft (and Jellyfish.com, the company we sold to them last year) to jump back into the start-up world again. The web has made life so transparent. We figured that there must be a start-up founder or two that opens up the kimono to share their daily business challenges from the inside. I mean substantive content, not simply Twittering about who they just met or what they ate for dinner, which may be interesting for different reasons.

We couldn’t find one. Granted, we didn’t look that hard, but if one does exist it wasn’t easy to find (clue us in if you have one to share). With the notable exception of the blogging done by Riya’s CEO a few years ago here, and a periodic post on a mistake/lesson learned by a start up leader (my recent favorite is here and here), there doesn’t seem to be anyone blogging in this way.

We are going to give it a try.

We’ve been at this new, yet to be named start up for about two months, and we continue to face many of the same decision points, milestones, and pitfalls that we have seen in our past start up experiences. Why not open up and share these with you? Hopefully, you’ll find it is like dissecting that frog in 7th grade biology. Sure, you can watch a frog hop around, but cutting one open gives you an entirely different perspective.

Idiot or Genius?
Starting a company is hard. One of the hardest things is the need to push to be bold and different. To stand out. And in doing so you run risks. Brian and I call it pushing the idiot/genius line. You need to push this line, take chances and stand out, or your start up will fail. To keep our sanity, we remind ourselves that it is ok and necessary to be on this line.

I guess this blog concept is no different. It may be one of the dumbest things we’ve tried in our start up efforts, or one of the best (we hope you tell us what you think). But that is life in a start up.