i believe the owner said in an interview a while ago that the name comes from "red means stop. red stop signs, red lights. with these brakeless fixies, you don't stop, you flow. often you'll run stop signs or red lights, but it's dangerous. You can do it, but watch out. red your dead" (not verbatim, i don't have the interview saved. it sounded something like this though)

so red light, get hit by car. you're dead

it was acknowledged that there was a hilarious typo. people said correct it and start a new company, but they printed all those bike boxes! ****ing comical.