When starting up, much of a founder’s focus is dedicated to the product: Does it work properly? Would people pay money for it? Besides product development, validation, iteration and customer acquisition – founders also have to keep an eye on cash flow, which may mean constant fundraising.
With so many startup tasks to juggle, branding often falls by the wayside – but it’s creating a recognizable and trustworthy brand that may be the most important of all. Besides cultivating an image that’s both familiar and well-liked, startups also need to consider the importance of brand protection.
Take the cautionary tale of Spacious for example. You may be familiar with Hong Kong property search tool Spacious HK, but have you heard of Spacious UK – a platform that helps startups look for ideal places to work?
Spacious HK had registered trademarks in the UK, which ultimately forced the London-based startup to change their name. While they were aware of startups with the same name in Hong Kong and the US, they assumed that operating in a difference space and market would prevent any future issues – but they were wrong.
According to Spacious HK’s founder Asif Ghafoor, his startup first registered their trademarks in mid 2013. Although they filed their UK trademark shortly after Spacious UK started operating, its effective date as per the priority system was the same as their previously registered trademarks. The moral of the story? For any startup with global ambitions, brand protection is imperative.
To learn more about what startups should do when it comes to brand protection, we had a chat with Simon Squibb – CEO of Nest Investments and the founder of marketing agency Fluid. As an expert in branding and startup investment, Squibb has been personally involved in creating 200+ brands in the past 25 years and the topic of brand protection is one he is truly passionate about.
How much time, energy and resources should a startup put into developing their brand image?
It depends on the company but it is wise to follow a few simple steps when deciding a name and then investing in ensure it works long term.
- When selecting a name check it is as unique as possible.
- If you go with a generic name check if it’s possible to trademark it and you can search this easily and for free online. At least apply for the trademark in the market you operate in and perhaps consider getting the trademark in the markets you plan to go to in the near future. Don’t use the name if you cannot trademark it. In most markets you need to also use the brand to hold onto the trademark within 3 years so keep this in mind. If you don’t expect to use the brand within a market for 3 years, then perhaps don’t waste your money getting the trademark. But be mindful that this could cause you issues later when you do expand.
- When creating the brand, make sure you have designed something original, both name and symbol, and does not accidentally look like someone else’s brand which in turn can lead to you getting into a lawsuit later!
It is important to note: Don’t think because you own the local URL of your brand name that it means you have the trademark for your company name. This is a common mistake I have seen in startups.
What does the brand / IP protection process look like?
For a trademark in Hong Kong it’s only about HK$10,000 to get a trademark sorted but the real costs can come in enforcement of the brand trademark. Perhaps consider buying a standard legal letter that allows you to cheaply warn those using your trademark of the trademark, but be prepared to spend big bucks if you need to take more serious action – such as if someone uses your trademark and you need to force them to stop.
The Spacious UK vs. HK story makes clear the importance of brand protection.
Do you have any other stories on brand protection you’d like to share?
At Nest we have invested in so many companies that we have seen every issue there is around the topic of trademarks. Perhaps one of the most upsetting cases was a company we invested in that was doing very well. It turned out a trademark law firm itself saw the success of this startup and actually did what’s called trademark squatting. Basically saw our startup was scaling, and had not secured the trademark, and this unethical ‘trademark law firm’ registered the startups name as a trademark under their own ownership and then basically blackmailed the startup to pay for the trademark or be forced to change the name.
In this case, the startup decided to pay the law firm for the trademark but it was a costly mess and a very expensive lesson learned. Although the trademark law firm was unethical in doing this, there was actually no law to protect the startup. This highlights an unexpected further threat to startups and the need for startup founders to think about this issue as soon as possible.
What kind of advice do you have for startups on brand protection?
I think brand is one of the most important things to consider and think carefully about when building a company that you want to last. For example, as more and more apps and ideas are out there , especially ones asking for credit card details or data from users, its becoming more and more important for startups to create a brand that can be trusted. Trademark is one element but the detail of the brand value is just as important.
I recommend startups spend time working on making their brand values, core belief system and DNA of your brand as clear as possible – for example: What you will do with people’s data. You need to make sure the image and brand design reflects the merits of your company and the brand mission. As a startup, funds are tight of course but invest in bring in this area with as much passion as the product (as it is a big part of the product).
If you can bring in a brand expert to help you as in the long run it can mean the difference between a user clicking ‘Yes’ to giving you access to their data and downloading your idea, or saying no and your business never getting traction – even if it is the best idea ever.
Simon Squibb on Startbase.HK: Simon Squibb
Nest Investments on Startbase.HK: Nest Investments
