The Name Game

Every morning that I go to the gym I usually see a few friends engaged in their morning workouts. This morning I bumped into Mike Moran – a former Raindance colleague who is still employed by the company that acquired Raindance, Intercall. Mike told me that this is the last week the service will be called Raindance - at last the end of an era is near.

Most people don't know this but we went through five names at Raindance in five years – here is the real story:

We founded the company as Intellistat Media Research in April 1997 with $500K. We were going to compete with Nielsen Media Research to provide more accurate television audience ratings. It was a great idea – one that would still work today – but no one would fund us since we weren't an "Internet" business. Since all the startup capital was our own, Jim and I decided it was time to pull the plug. We made a deal, Jim would run the company for two weeks while I took a few folks, including Todd Vernon, into the conference room and tried to figure out a new idea. Sure enough – like selecting a new Pope – we emerged with a new idea. What took over a year planning we undid in a two weeks.

We became Vstream literally overnight. We had the domain name, the 800 number and the idea – stream corporate video content to users' desktops to extend and enhance their communications. Four weeks later, we closed our first round of financing $1M (September, 1997) from Centennial and the yet to be formed US based Softbank (we were Brad Feld's first deal with Softbank).

Times were great but shortly after closing our $10M round in August, 1998 we had a strategic offsite. One investor made the comment, and everyone agreed, that if we didn't have $3M in revenue within the next year we'll shut down or sell the business. That sucked, no way was the company ever going to hit that milestone – streaming media was too new inside corporate environments to see that kind of traction. The problem was no company had a central library of video or audio content – it was all over the place – we had to sell one off events inside each department. We hypothesized that if we could jack into the corporate meeting environment we'd be able to record and warehouse content. So we created an audio conference platform that had streaming capabilities built in. The business took off and by November 1999, we rose a $100M VC round and formed a $20M joint venture with Vivendi in Europe. The problem was we were now in two businesses – streaming and audio conferencing. We liked streaming because of the hype Broadcast.com was getting – but the revenue was in audio conferencing. Our name didn't make sense anymore – we weren't just streaming – the audio sales folks were complaining it confused prospective customers. We struggled with a new name and decided to keep Vstream – changing was just too hard.

We then embarked on a massive ad campaign while at the same time preparing our docs to go public. We filed our S-1 as Vstream. At the same time Voicestream (cell phone company since acquired by T-Mobile) sent us a letter saying we were infringing on their name. We really weren't – but we didn't have a trademark and they had lots of money. Since we didn't like our name anyways we decided to change it. As one board member put it, "There is nothing like a multi-million dollar ad campaign to flush out any trademark issues." (I don't think that was a complement).

We landed on Evoke. Changed our name officially, refilled with the SEC and started fresh with a new multi-million dollar ad campaign. Our campaign really targeted the bay area and we ended up upsetting a small company there called Evoke Software. Neither of us had a trademark on the name Evoke. We owned the domain and were in a very different class of business – we could mutually coexist (like Delta faucets and Delta Airlines). In fact, that is what their CEO said and we agreed that if we added "Communications" to the end of our name there would be no problems. We drafted agreements, sent it to his attorney and away we went. As a sign of good faith, we proceeded to redo pending ads as "Evoke Communications", we refilled with the SEC and we thought everything was fine. Well the CEO never signed the agreement and changed attorneys. Meanwhile we were getting ready for our IPO roadshow so no one was focusing on this – the CEO had promised me it was resolved – just minor attorney issues.

We went public in July,2000 with this issue pending – the bubble was bursting – everyone was scrambling for cash. When the dust settled in August of 2000, the CEO of Evoke Software hired a third set of attorneys and they looked at a newly IPO'ed company as a source of cash. The fact was we were hemorrhaging cash to the tune of $20M a quarter – the IPO raised less than half of what we hoped. We knew we were going to have to cut big time to survive. This name issue was upsetting me – it was a pimple compared to the other issues at hand. I sent an email to a common investor (GE) asking them to put pressure on this little company to drop the issue – it went something like this, "Dear John (not the real name) please tell the CEO of Evoke Software to drop this case. We're the bigger company and have more money. If they don't like our name make them change theirs – we will sue them until we win because it will be cheaper than changing our name especially after our IPO! Love Paul"

We dug our heals in and the attorneys ramped up. Through a process called discovery every email, piece of paper, agreement, etc. was gathered and mutually shared – this became the evidence for the case. Turns out we had a great email back up system at Raindance and this email made its way to the other side. This email was one of maybe 2000 emails internal and external to our company between every possible individual that was affected by this issue. Well we went to court and even though our attorney assured us we had the law on our side – the judge used his emotion and my email was his justification to sock it to the big guy (who wasn't really big and was bleeding profusely). He issued a $5M injunction prohibiting us from using the name Evoke - he was gracious and gave us 90 days before it came into effect.

We needed this issue to go away. Since we were about to cut the company in half and we needed to cap our expenses I decided it was time to settle (even though our attorneys thought we could win on appeal). We got in a room with the attorneys and I negotiated as best I could considering the circumstances. It cost us $960K – of which insurance covered about 80%. We also spent probably $500K in attorney fees to get us to this spot. We also spent another $50K hiring a naming expert and getting a name that was very clean from a trademark perspective. We spent the first half of 2001 changing our name again and by July, we were Raindance Communications.

My advice – don't do what I did.

Comments

[Micah Baldwin]

In early 2000 I worked for a small startup in Emeryville, who merged with a company in Buffalo. Neither company had a name that would have worked, so we spent several weeks coming up with a new name. The favorite of the Emeryville group included Current Wisdom, which the new CEO hated (he went with the stereotypical dot com name of the day). So I paid $35 and registered the domain name.

I used it in my consulting business, and when my search company launched in 2003, I continued to use the name. When I sold the company in 2007, I negotiated to keep the name.

So, seven years later, my naming adventure cost me $35.

But, man, your story is so much better than mine...

Wait - so what's the lesson here? Don't have god email backup systems? Don't send emails for attorney communications, use the phone instead?

;)