It's all about the narrative.
It's all about the narrative.
Just ask Elon Musk.
All good entrepreneurs excel at telling stories. Many people assume it’s because they have to ‘fake it ’til they make it’—or, worse, “All entrepreneurs lie”, which, I must note, is Bill Janeway’s ‘First Law of Venture Capital’:
[My] experiences [as a venture capitalist] prompted me to formulate what I call the First Law of Venture Capital: “All entrepreneurs lie.” That is, entrepreneurs begin by proposing to change the world through their own efforts. The promises they make to their financiers, customers and employees are sufficiently unlikely to be realized for confident assertion that they will be achieved to challenge any conventional definition of reasonable truth.
Indeed, there are economic reasons why telling stories matters more than ever in the Entrepreneurial Age. One is the fact that most tech startups enjoy what economists call increasing returns to scale.Thanks to the resulting positive feedback loops, a given startup being able to get ahead by even a hair can translate into a significant advantage and lead to securing a dominant position.
As W. Brian Arthur once wrote in his seminal 1996 article on the topic,
Increasing returns generate not equilibrium but instability: If a product or a company or a technology—one of many competing in a market—gets ahead by chance or clever strategy, increasing returns can magnify this advantage, and the product or company or technology can go on to lock in the market.
And the ability to tell a great story, one that resonates with people more than that told by another entrepreneur, is one way (among many) to get that initial early advantage.
Another reason why stories matter is that they’re often the only way to develop a clearer idea of what lies ahead. For example, how can investors form an opinion about a given venture?
Not by looking in a crystal ball, since it’s impossible to predict the impact of technology on a specific market, let alone a specific company. Complexity makes the outcome unpredictable!
Not by studying the past, since we’re going through a paradigm shift and thus data collected during other eras won’t tell us much about what’s going to take place in the future.
How do you compensate for the uncertainty that lies ahead? If you’re an entrepreneur, you do what entrepreneurs do best: turn what looks like a threat into an opportunity. In other words, this uncertainty that clouds most people’s judgement becomes a blank slate on which you can draw your own vision—achieving two things in the process:
You can rally people to your narrative, turning them into supporters.
And if you succeed in telling your story well enough and loudly enough, you can even contribute to shaping the market as your venture grows, thus creating the perfect alignment between your company and its environment, eventually lifting your business up.
If you need proof, just remember that storytelling is precisely what Elon Musk has excelled at—to the point that he’s become the richest person in the world, succeeding in an industry that, 10 years ago, had very, very few supporters. He has managed to tell a story that made people believe, driving a paradigm shift in the automobile market that no one would have predicted even just a few years ago.
So don’t be ashamed to be a storyteller. For tech founders, it’s not just a nice-to-have, it’s a core skill! And if you feel you’re falling short on that front, well, join The Family—and we’ll help you get better at telling your story, sharing your vision, and shaping the world as you move forward!
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