Another Big Tech Company Already Tried What Elon Musk Is Doing — Will the Results Be Just As Bad?
Twitter isn’t the first company to change names. How’d it work out for some of those other businesses?
You’ve surely heard the news that a certain huge, well-established Internet company is changing its name. That’s right, Overstock.com is officially becoming BedBathandBeyond.com!
What? You thought I was referring to Elon Musk changing Twitter.com to X? I suppose that’s big news, too, but I’m more interested in Overstock.com’s decision because the people running Overstock have a much better sense about the potential consequences of a poorly executed name change. After all, while you might not remember this about Overstock, and they probably hope you’ve forgotten, the company already tried changing its name once. In fact, in 2011, more than a decade before Elon Musk’s current attempt to switch from “Twitter” to “X”, Overstock’s then-management team decided their site would henceforth be known as O.co.
How’d Overstock’s change to a one-letter name workout? Not so great…
The company spent hundreds of millions of dollars on everything from TV commercials to renaming the Oakland Coliseum the O.co Coliseum. But the entire plan embarrassingly blew up in their faces. Consumers didn’t understand that “.co” was a valid domain name, so they kept typing in “O.com,” and, as a result, Overstock’s website was losing millions of visitors.
Whoops!
While the switch to a single-letter naming scheme is a fun coincidence between the stories of Overstock and Twitter, the more important similarity is the purported reason the two companies changed their names.
In the case of Overstock, company leaders felt like an “overstock” brand was inhibiting their ability to expand into other commercial markets with bigger profit margins (e.g. luxury goods, high-end fashion, state-of-the-art electronics, etcetera). They had trouble securing goods from companies who didn’t want their products branded as “overstock,” and consumers weren’t always interested in buying more expensive goods if they seemed like manufacturer surplus.
In the case of Elon Musk, we have to wonder if something similar is happening. According to reports, Musk is rebranding Twitter to X because he hopes to evolve the platform into an all-in-one, do-everything gateway app along the lines of WeChat in China that handles everything from news to phone calls to purchasing to payments. To be fair, I suppose the idea of paying my mortgage, calling my family, and purchasing clothes all on a platform called “Twitter” does seem weird, but isn’t it equally weird to do so on an app called “WeChat”?
Whatever the case, the story of Overstock.com’s short lived transition to O.co seems like an interesting comparison for what to expect with the company formally (and, perhaps, future-ly?) called Twitter. Whether Overstock’s owners liked it or not, people already knew, understood, and trusted the Overstock.com brand as being a place where they could buy surplus goods for less money. The company wasn’t going to convince consumers it was something else just by changing the name. That’s not how brands work!
Think of it this way: You’re in the market for a car and you can choose between two nearly identical cars. They cost the same amount of money, have all the same features, similar styles, and so on, but one says “Ford” on it and the other says “Aaron’s Motors.” Which car do you buy?
Obviously you buy the Ford! You’re about to spend thousands of dollars on a car, and the Ford Motor Company has existed for over 120 years. It’s a brand you can trust. In contrast, Aaron’s Motors is a brand I just made up. You’re not going to immediately trust that the car being sold by a company you’ve never heard of is worth your hard-earned money.
Brands are things consumers learn to identify with over time. That long-term identification ultimately creates an unbelievably valuable level of trust that allows consumers to feel comfortable buying a company’s products and services.
Overstock.com was a well-established brand people understood and trusted. O.co wasn’t. It didn’t have consumer familiarity or trust, and, as a result, it failed.
Similarly, Twitter.com is a well-established brand people understand and trust. X is not. Considering the fact that Twitter is already hemorrhaging both money and users, we have to wonder why Musk thinks abandoning an incredibly valuable and well-established brand is worth the risk.
Somewhat coincidentally, the answer to what Musk is thinking might be mirrored by Overstock. Overstock, as I mentioned at the beginning of this article, is undergoing another major brand change. The company just purchased the intellectual property rights for bankrupt US retailer Bed Bath & Beyond and is re-branding its US and Canadian websites to BedBathandBeyond.com.
Why does Overstock’s management think switching from Overstock.com to BedBathandBeyond.com is a better idea than their failed attempt at switching to O.co? The answer is simple: Brand value!
The Bed Bath & Beyond brand is already well-established and has enormous amounts of consumer familiarity and trust. It’s a name that’s almost certainly bigger, better, and more trusted by consumers than Overstock. As a result, buying the Bed Bath & Beyond brand finally allows Overstock to shed its “overstock” label without forcing consumers to familiarize themselves with a new brand. It’s a brilliant business move and, I suspect, one that’ll pay huge dividends for Overstock.
My guess is Elon Musk thinks he’s doing something similar. After all, one of his first companies — a company he ultimately sold to PayPal — was an online banking/payments company called X.com. According to reports, he’s always wanted to build a massive company called X, and rebranding Twitter is his way of doing it.
That’s fine. I have no problem with Musk pursuing his dream. However, if he wanted my advice (which I’m sure he doesn’t), I’d remind him that this isn’t a case of him adopting a well-known brand like Bed Bath & Beyond and merging his company into it. Instead, the rest of the world isn’t nearly as familiar with the X brand as he is in his own mind.
If Elon Musk wants to change Twitter to X, he absolutely should, but he’s doing it wrong. He should consider slowly introducing the X brand into the company’s core business. Maybe create TwitterX, the premium subscription model, and then slowly expand the “X” brand to include experimental features until it becomes so big that it overtakes Twitter.
Or do something else.
Or don’t do anything at all.
I suppose I don’t really care. I don’t tweet regularly… errr… I don’t X regularly? In that sense, I suppose I don’t have a major stake in the company, and the big shift from Twitter to X doesn’t directly impact me. However, as someone who cares about companies and the power brands, it makes me sad.
Why would someone unceremoniously decimate such a well-established brand?
I suppose I’ll never know. What I do know is that if I’m ever in the position of controlling such an enormous brand, I’ll value and protect that brand above just about everything else. And you should too. Brands are a consumer’s gateway into your product, and once it’s tarnished, it’s expensive to fix. The people at Overstock.com learned that lesson the hard way. I suspect the people at X are about to learn it, too.