Stories Startups Tell Themselves & Stories They Tell The World

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NXTP

9 min readMay 11, 2021

Growing a startup is hard. And it is in the hardest of hard moments, when success looks farthest off, that you must stick tightest to the plan.

Geoff Ralston, current president of YC, recommends developing a watertight story as a way of weathering difficult times. To move forwards, you must cultivate a guiding narrative about your work, something you can place your trust in and that you can convey to others. What you need is a creation myth for an epic, one that casts you in the role of a hero setting the world right. I would encourage you to see yourself in such grand terms.

In a previous post we talked about how self-knowledge sharpens a founder’s understanding of team, customer, market, opportunities, and her own talents. It is a way of discovering the stories we tell ourselves about ourself and whether they are helpful or limiting, true or false. Here, acknowledging the fundamental appeal of stories, we’d like to understand this power and bring it to bear in crafting a narrative for your startup and the good it will bring to the world.

Why It Is Important & How Does It Work?

We want stories.
Millenia of evolution have wired our brains to value stories, even in excess of the facts at hand.

To make sense of the world in memorable ways.
The things we choose to remember and forget are those that make sense to us.

Stories provide us with a sense of order that helps with this. They allow us to see whether something computes before we go through the trouble of committing it to memory.

We tend to believe that the correct way to make decisions is to rationally analyze the implications and map out all the possible scenarios. The reality, sadly, is few decisions are come to so rationally. The influence of a good plot can far exceed data. We require simplification and we prefer to believe that which is simple.

Stories and myths had the power to draw ancient armies into battle and lead people from disparate tribes to work alongside one another. They can still inspire that trust. They can bind employees to your mission and turn your customers into your strongest evangelists.

Few still place stock in ‘ homo economicus’. Behavioral economi cs is the rare example of complexity winning out (though when the alternative is so patently false…). It is abundantly clear that most of the decisions we make privilege on our emotions — that is, when we make decisions at all. Advertising has understood the appeal of (and to) the subconscious since the early days of Freud’s nephew Edward Bernays. It is that industry’s most heavily mined resource. Less cynically, you can use emotion to win employees, customers, suppliers and investors.

Stories have power.
Steve Jobs believed Walt Disney was the most powerful person in the world for all the fluency and persuasiveness of his storytelling.

That power is often underestimated.
The economist Robert Shiller warns how those in his profession underestimate the strength of narrative and how it can effect a firm’s value. You might think of this in terms of story stocks, those firms that trade far in excess of their fundamental value because of something elusive.

A startup’s future can be seen in how it tells the story of its past.Sam Altman believes successful founders must express their vision — their ideas, their sense of what the future holds, their optimism — and they should be able to do this in the story of ‘who they are’ and ‘why they do what they do’.

First tell your story to yourself. Then share it with others. Understand your own script and how limiting or liberating it might be. You must do this for yourself before you can clearly share it.

Changing your story can changes your life. Don’t take our word for it; better, take Lori Gottieb’s.

Believe it.
How effective our narrative might be is directly proportional to how much we believe is possible.

Be as authentic as possible.
For you to believe your story, certainly for others to, it must be as real and authentic as possible. That should be your standard of truth.

Stories can be self-fulfillingly prophetic.
When enough people believe in the same collective myth, often it ends up happening. If enough people think a Bitcoin is worth $100,000, the price can be driven to that conclusion just as the pointer on a Ouija board moves.

Beware and embrace the reality distortion field.
Steve Jobs’ desires were so far in excess of what it was believed possible — and yet they came true! — that Andy Hertzfeld, early Apple employee, invented a term for this effect: the reality distortion field. Storytelling can motivate people to achieve the impossible.

Emotions matter.
As economist Daniel Kahneman puts it: “It is emotions that create bonds between people.” Your story must be able to appeal to those emotions.

Do no coöperate with self-deception vs truth.Yuval Noah Harari explains in his books (and in this video) how we coöperate with stories that present a cosier view of the world because we prefer a pleasant self-deception to cold truth. One famous (and eternally relevant) example is how the politician who tells the truth is likely to lose the election, while he who tells a more soothing falsehood will win.

Consistency builds trust. Kahneman adds that stories have more strength when they are consistent, not when they are truthful. What he means is narratives should be coherent from an emotional point of view, with heroes with whom we identify, villains that are easy to hate and who represent what needs changing in this world. Victory for our hero should reward our fantasies about the world that we want to achieve.

Memories are how we describe them.Julia Shaw describes how our memories can be modified by the stories we tell. Memories are not how events literally happened but how those present described them and talked about them in the months and years following.

The only way to unseat a bad story is with a better one.
George Monbiot makes the case (narratively) that the best way to change behavior is not with facts and figures but with a better story to replaces a broken one.

Avoid the narrative fallacy of using stories about the past to describe the future. Nasim Taleb points out how easy it is to explain any past event but how it is almost impossible to predict the future. Why? Because these stories we tell about the past, which we need to sooth us and remember past mistakes, colour our vision about what will come next.

We have to choose the conflict and the villain.
Conflict is what generates the narrative tension and will keep us interested, and the villain who may not be expressly named has to represent what we want to change.

How to Structure a Startup’s Narrative

From the lowliest Amazon memo up through The Avengers 3, all great stories share the same structure. They sit atop a unique or monomith, best popularised by Joseph Campbell as the hero’s journey. Campbell, an American anthropologist and mythologist, drew this basic blueprint from hundreds of epics in a variety of cultures and set it down most famously in The Hero with a Thousand Faces and a later series of talks with Bill Moyers. Out of obscurity and a humdrum life, a hero emerges who can transcend a series of obstacles on her way to righting the world and discovering her true nature.

We are going to use this model of the hero’s journey as the structure of our startup (this video can help you get up to speed sharpish). Seeing yourself and your work in epic terms can help you find its structure. There are ten stages:

1- Ordinary World

You, before you so much as dreamt about your startup.
You might be a lowly farmer on Tattooine, but there is something within your past experience that suggests greatness to come. What is that?

2- Call to Adventure

You face the question your startup will answer.
You assemble your merry band of co-founders and set out on your path.
You know it will not be easy, you have never founded a startup, you are a first time founder, you do not know if the MVP will work, you do not know how to fund it, etc.
While many do not pass this stage, you have decided to take a chance.

3- Refusing the Call

Quite rationally, you lay out all the risks of starting off down the road.
You acknowledge the security of a stable, standard job.
You experience doubt.

4- Meeting with the Mentor

Your first investors help validate the opportunity, your first clients are interested in your MVP.
You might find inspiration — or a mentor — in Steve Jobs’ Stanford graduation speech.
You might (go with it) even simply see a sign that leads you to believe you have what it takes to make something.

5- Crossing First Threshold

This is the point of no return.
This is when you get the support of your family, quit your job, set up the company, and embark on the entrepreneurial life.
Life will never be the same.

6- Test, Allies, & Enemies

Challenges appear. You: recruit a team; assemble the technological infrastructure; find first customers getting frustrated; are not ready but you move on; have to adjust the value proposition.
You have to clearly define who your enemy, the old way of doing things: For Uber, taxis; For a logistic company, the State-owned mail monopoly.
You bring all your training to bear and learn from everything you see in this stage.

7- Approach the Inner Sanctum

This is the challenge that we have ahead of us
You are writing your own epic, and now is when everyone must work together as: now is when the hardest decisions arrive; all the low-hanging fruit are gone and it is only hard work and sticking to the plan from here out; you will encounter a ‘dragon’ that represents all your deepest fears about the work, whether in the form of negotiations, conflict with a competitor, product launch, the next round of investment or M&A; if we do not succeed at this stage, the road ahead will be much rockier; if we do succeed, we are that much closer to changing the world.

8- Ordeal

If things do go haywire and you need to pivot, then pivot from the ashes like the phoenix.
You stake all right now.
You don’t explain or justify or backtrack but keep pressing forwards.

9- The Reward

You have the ring, you answered the question your startup set out to.
You might not have saved the world, but you have made it that little bit better.

10- Return Home, Resurrection, & Return With the Elixir

You tell the story of your success and use your experience to help other entrepreneurs find their own path.
You invest and mentor others to pay things forwards.

Further Resources

If you are interested in the subject, here is a list of additional resources to deepen your thinking.

1- 🎥 The Science of Story — Dylan Moore at Stanford’s GSB

How we interpret information and how we can use that information to tell better stories
How our mind fills the gaps in our stories with things that we do not say

2- 🗣 Daniel Kahneman and Yuval Noah Harari in discussion

3- 📘 Sapiens — Yuval Noah Harari