Two Studies on the Importance of Founding Narratives to Entrepreneurial Pitch Success

By Richard Gruss & Zachary A. Collier. They both teach at Radford University.

"Abstract

 

One crucial function of the entrepreneurial pitch is to alleviate investor uncertainty about committing funds to a startup in the early stages of development. New ventures rarely have sufficient hard data to substantiate their future success quantitatively, so investors often need a qualitative reason for putting their faith in the entrepreneur. Storytelling, as a powerful and time-honored method of transforming the intangible into the tangible, can go a long way toward establishing legitimacy and alleviating uncertainty. In this research, we empirically test whether the inclusion of an origin story in an entrepreneurial pitch significantly increases the probability of obtaining funding. This research consists of two studies. In the first study, we analyzed 486 pitches from six seasons of ABC’s Shark Tank and observed a significant relationship between the presence of a founder story and funding success. In the second study, we confirmed causality via a randomized controlled experiment. This finding has implications for entrepreneurs, in that it encourages them to concentrate on the narrative they are telling in their pitches. It also has implications for investors, in that it invites them to reflect on how important investment decisions might be swayed by presentational aspect of pitches."

3 Obscure Business Storytelling Books Every Leader Should Read Now

By Esther Choy of Forbes. Excerpts:

"For some time now, storytelling has been understood as a powerful leadership tool. When storytelling is promoted in a business setting, the main benefit ascribed to it is its potential to give an audience information in a quick and memorable way. As neuroscientist Paul Zak’s studies have demonstrated, stories give audiences “better understanding of the key points a speaker wishes to make and enable better recall of these points weeks later.”

However, storytelling has the potential to have an even greater impact. Since COVID, we have seen an increasing appetite for personal narratives and for taking a human-centered approach to organizational structures. As the popularity of Brene Brown’s leadership text Daring Greatly bears witness to: human connection is a vital ingredient for personal and professional thriving. Brown explains, “Connection is why we're here… it's what gives purpose and meaning to our lives.”

It is a culture of storytelling that can drive this kind of connection that focuses on purpose and meaning. The three books on this must-read list below are for leaders who want to understand the full potential of creating a storytelling culture. Though these books are not obviously business storytelling books, if you read them, you will walk away with a firm understanding of why storytelling is a game changer for any organization that wants to empower its people to connect, speak up, and think creatively."

1. Career Counseling: A Narrative Approach by Larry Cochran (SAGE Publishing, 1997)

"This book effectively linked the power of narrative-making to the business world. Understanding how stories help us see and know ourselves will empower you to tell stories that create workplace connection and cohesion.

Cochran’s theory moved the field of career counseling beyond assessments and personality tests, by getting people to dig deeper to understand themselves through storytelling. With narrative-building tools, Cochran argues, people are able to investigate and understand the hidden web of influences that are shaping them into the people they are becoming. Without these narratives, we too often rely on cliches or what we’ve heard others say before to make sense of our own trajectories. Narratives can help us reflect on and understand our own intrapersonal choices. Though writing to an audience of career counselors, the frameworks are applicable to other areas of business leadership and intrapersonal awareness."

"2. Tell Me a Story: Narrative and Intelligence by Roger Schank (Northwestern University Press, 1995)

3. How To Be Interesting: In 10 Simple Steps by Jessica Hagy (Workman Publishing, 2013)"

"Storytelling is integral to everything we do"

That is a quote from the late Hasbro executive Brian Goldner. See Toy Executive Pushed Industry to Be Big-Screen Powerhouse by Paul Ziobro of The WSJ. Excerpts:

"Brian Goldner believed toys should have a leading role in Hollywood.

A rising star at Hasbro Inc. just a few years after joining the company in 2000, Mr. Goldner was making trips to California to pitch studios, producers, and others on a big-budget, live-action movie based on Transformers, a toy line of transforming robots the company launched in the 1980s.

Mr. Goldner waxed poetic about the franchise’s characters and lore. When he was done, he often heard laughter, or silence, his colleagues have said. Hasbro, at the time, made toys for movies like “Star Wars”—not the other way around.

He eventually got buy-in from film director Steven Spielberg, who signed on as executive producer. The six Transformers movies have logged more than $4 billion in box-office sales world-wide, overcoming doubters—including some inside Hasbro—who advised him to stay away from Hollywood. “I don’t think I abided by that very much,” Mr. Goldner had said."

"He pushed Hasbro far beyond toys and deeper into entertainment using a strategy to build bigger audiences around Hasbro’s brands through storytelling. That, in turn, would drive sales of toys, merchandise and more. During his 13 years as CEO, Hasbro’s market value nearly tripled.

“Storytelling is integral to everything we do,” Mr. Goldner said in 2015."

Seeing your life story as a Hero's Journey increases meaning in life

From The Journal of Personality and Social Psychology. Here is the abstract:

"Meaning in life is tied to the stories people tell about their lives. We explore whether one timeless story—the Hero’s Journey—might make people’s lives feel more meaningful. This enduring story appears across history and cultures, and provides a template for ancient myths (e.g., Beowulf) and blockbuster books and movies (e.g., Harry Potter). Eight studies reveal that the Hero’s Journey predicts and can causally increase people’s experience of meaning in life. We first distill the Hero’s Journey into seven key elements—Protagonist, Shift, Quest, Allies, Challenge, Transformation, Legacy—and then develop a new measure that assesses the perceived presence of the Hero’s Journey narrative in people’s life stories: the Hero’s Journey Scale. Using this scale, we find a positive relationship between the Hero’s Journey and meaning in life with both online participants (Studies 1-2) and older adults in a community sample (Study 3). We then develop a re-storying intervention that leads people to see the events of their life as a Hero’s Journey (Study 4). This intervention causally increases meaning in life (Study 5) by prompting people to reflect on important elements of their lives and connecting them into a coherent and compelling narrative (Study 6). This Hero’s Journey re-storying intervention also increases the extent to which people perceive meaning in an ambiguous grammar task (Study 7) and increases their resilience to life’s challenges (Study 8). These results provide initial evidence that enduring cultural narratives like the Hero’s Journey both reflect meaningful lives and can help to create them."

Some tidbits

See A French Sneaker Maker Grapples With How to Bring Production Home: Salomon has built a new shoe factory in France. Now it must also build a footwear supply chain in a country without one. by Trefor Moss of The WSJ. Excerpt:

"The company is banking on the shoe’s local, sustainable back story being a strong selling point"

See Fiction: ‘Trust’ by Hernan Diaz: Who was financier Andrew Bevel, and how did he successfully short the Crash of 1929? by Sam Sacks of The WSJ. He reviews the book Trust by Herman Diaz. Excerpt:

"Money may be a fiction, but it can be used to “bend and align reality”—that is to say, it’s a fiction that those with the right technique can alchemically transform into facts, like base metal into gold."

See ‘Hidden Games’ Review: Secret Equations: How game theory explains conspicuous consumption, royal coronations, rap lyrics, trench warfare—and more. by Matthew Hutson. He reviews the book Hidden Games: The Surprising Power of Game Theory to Explain Irrational Human Behavior by Moshe Hoffman. Excerpt: 

"Higher-order beliefs also explain indirect speech (“Would you like to come up for coffee?”), which enables plausible deniability. And symbolism. “Symbolic gestures are puzzling,” Messrs. Hoffman and Yoeli write, “because things that don’t matter matter: we put enormous weight on mere words like I’m sorry and I love you and spare no expense on rituals, ceremonies, and elaborate displays that don’t convey any new information.” Public apologies and royal coronations both enable coordination, harmonizing everyone on who’s in debt or service to whom."

See ‘Narrative Economics’ Review: Costly Tales We Tell Ourselves Like songs you can’t get out of your head, familiar story lines about the economy elicit thoughts and emotions; they also impel action. by James Grant. He reviews the book Narrative Economics by Nobel Prize Winning Economist Robert Shiller. Excerpts:

"A Nobel laureate, Yale economics professor and caller-out of the millennial-era bubbles in houses and dot-com equities, Mr. Shiller now entreats his fellow economists to make room for “narratives” in their otherwise quantitatively focused minds. As Mr. Shiller defines them, narratives are contagious stories. Like the songs you can’t get out of your head, they elicit thoughts and emotions. But unlike musical earworms, they also impel action." 

"Mr. Shiller wants not only to identify the stories we live by (or at least spend, hire and invest by) but also to present “the beginnings of a new theory of economic change.” Trying to understand big economic events by studying the data alone, he observes, “is like trying to understand a religious awakening by looking at the cost of printing religious tracts.”"

The Battle of Stalingrad Meets "The Man Who Shot Liberty Valance"

In the movie "The Man Who Shot Liberty Valance" people wrongly believed that Ransom Stoddard (Jimmy Stewart's) character killed the outlaw Liberty Valance when it was actually John Wayne's character. This propelled a distinguished political career for Stoddard after he started out as a frontier lawyer in the old west.

Near the end of the movie, after Stoddard has told the real story to a reporter named Scott, we get the following exchange:

Ransom Stoddard: You're not going to use the story, Mr. Scott?

Maxwell Scott: No, sir. This is the West, sir. When the legend becomes fact, print the legend.

I thought of this while reading a review of the book The Lighthouse of Stalingrad: The Hidden Truth at the Heart of the Greatest Battle of World War II by Iain MacGregor in today's WSJ. The review was by Andrew Nagorski. See Click here to read it. Excerpts: 

"Mr. MacGregor points out that “the mythologizing of the struggle for Stalin’s city can sometimes distort the true history, which in itself is unambiguously heroic.”"

"what actually happened was never enough for Soviet propagandists: they felt compelled to spin an unabashedly heroic narrative that overlooks inconvenient truths. This valuable addition to the body of work about Stalingrad goes a long way toward righting the balance between myth and reality.

Mr. MacGregor vividly describes the frantic Soviet efforts to beat back Field Marshal Friedrich Paulus’s Sixth Army as it reached the city. House-to-house, factory-to-factory fighting became the order of the day, and Gen. Vasily Chuikov, the commander of the 62nd Army, quickly adopted the tactic of “hugging the enemy,” positioning his troops as close as possible to the Germans, then striking with small mobile groups.

To illustrate his point about the mix of fact and fiction, Mr. MacGregor zeroes in on one of Stalingrad’s most legendary episodes: the Red Army’s push to take control of a strategic building code named “The Lighthouse.” In the official version, Sgt. Yakov Pavlov led a small band of men, representing a symbolic mix of Soviet nationalities, as they charged into the house and wiped out its German occupants. Subsequently, “Pavlov’s House,” as it became known, was hailed by the 62nd Army’s newspaper as “a symbol of the heroic struggle of all defenders of Stalingrad.”

Investigating these events, Mr. MacGregor combed the records and interviewed Pavlov’s son and Chuikov’s grandson. While he does not doubt Pavlov was a fierce combatant, he discovered contradictory evidence about who really took command of the lighthouse—and whether the legend of the battle comes close to matching what really happened. He concludes that “the imagined story line was deemed more important than the actual truth.”"

Our memory records very little of our lives. So how does the brain reconcile our sense of self?

In "The Self Delusion," author Gregory Berns explains why our self-perception is a "sort of fiction" 

By Mary Elizabeth Williams of Salon. Excerpts:

"I am not myself lately. Then again, was I ever? I'm not the self I was a year ago, or the one I will be in five minutes. My sense of reality is ephemeral, and my circumstances are constantly rewriting the narrative. My brain wants to make sense of all that, though, so it keeps trying to find order and actualization. But what it keeps writing, as Emory University psychology professor Gregory Berns puts it, is its own "historical fiction."

In his apt and timely new book, "The Self Delusion: The New Neuroscience of How We Invent — and Reinvent — Our Identities," Berns, author of "How Dogs Love Us," explores the neuroscience of self perception and the clever, confounding ways we attempt to tell the stories of our lives."

"The brain is a type of computer. In particular, I think, along with a lot of neuroscientists, that it's fundamentally a prediction computer or a prediction engine. That what brains evolve to do, which is try to make internal models of how the world works so the owner of that brain can survive and outwit competitors. Or if they're prey, to avoid predators, always just staying one step ahead of things.

The better prediction that the brain does, the better the person or the animal will do. There's been a strong evolutionary pressure to make brains very good at anticipating things that might happen in the future."

"humans overlay it with a narrative on top so that we have a way of putting meaning on things, if you will.

The anticipation bit is not just about what's going to happen. It's the consideration of the world of things that might happen. And not only that. We also have the capacity to look back in time and imagine things that might have been, the what-if scenarios. These are all various forms of predictions that the brain has evolved to do, to help humans in particular flourish in this world."

"we're going to be different in a year or ten years. We have to construct some mechanism to link all these together. The way we do that is through narrative and storytelling. We have to, just for our own psychological health, construct something that links all these versions of ourselves together. Otherwise, the alternative is completely existential, that there is nothing unifying past, present and future, and the universe is random. Psychologically, we can't handle that."

"our brains do not appear designed or evolved for continuous recording, or at least recalling things in kind of a continuous fashion. Our brains are not video recorders in the sense that a camera is. It seems as if the memories themselves are laid down in an episodic fashion and those episodes are defined by when things happen.

Most of the day, nothing happens. I don't think it's been calculated, but we go through the day, probably 90% of the day is pretty static, and then the other 10% is just stuff happening. That's going to vary from day to day. When stuff happens, when something in the world changes or something changes in you, those are the things that we encode in memory and those are the things that get stored.

When you recall a memory, you can't call up the exact recording of what happened. You have these sparse instances that you can call up. But you still have to fill in the gaps somehow, because they're not just still images, they're highlights. It's the highlight reel of the day, or of your life."

"The brain has to fill in those gaps. The thing I've become fascinated about is, how do you fill in those gaps? The best answer I have is that they're built on what psychologists call schemas. Or if we want to be mathematical about it, I call them basis functions. These are the templates that get laid down early in life as children. These are the stories that we hear when we're young, because those are the stories where the child doesn't have many of their own experiences. Not much has happened. Those are the templates for understanding the world, when the parents tell their kids stories.

These are fairy tales and fables and simple stories, good versus evil. These are going to be culturally different depending on where you grew up, but there are some common themes. Importantly, those are the templates that stay with us throughout our lives and help us interpret these episodic events as they happen to us. They provide a ready framework for slotting things into as they come."

"The brain is a prediction engine. It's that way because there was, at some point in time, a survival advantage to that, and there still is.

If you think about the alternative, let's say that life is just a series of random events that are completely unconnected to each other. If that were the case, then there really wouldn't be any survival advantage to having a predictive brain, because if things were random, then there's nothing to predict.

The fact that we can predict things is also a reflection of the world that we've evolved in, that there is some amount of order there, certainly not 100%, but there's enough order that brains can extract it. That drives things, even when there is no predictability or causality. It's not like you can turn off the prediction engine; it's always going.

That's where superstitions come from. It's like if two events happen in close proximity to each other, then the brain's naturally going to equate them in some causal way, even if they're not. That's how superstitions arise. Then you can consider superstitions the building blocks of storytelling or fables."

"Self-identity comes from the story that you tell about your life, which is the historical part. But it is a story. I hope to convince the reader there isn't just one story for anything. That story is one that you choose, and you have the capability of telling in different ways.

In that sense, it is fiction. The story you tell yourself is a sort of fiction. It's almost a delusion. The story you tell about yourself to other people is probably a slightly different version, so that's a different fiction. This goes on and on.

I hope to convey in the book that the stories you choose to tell, we have control over that to some degree. Actually, the best way to shift your storytelling, if that's what you want to do, is by controlling what you consume."

"For me, I don't feel beholden to my past self, if that makes any sense. Some people have an ethos that they have a life purpose and then they have to carry on a legacy. And for some people, it can be very heavy. It might be passed down from generations.

I like to think that I've shed some of that; [sounds like Joseph Campbell quoting Nietzsche who said something like you must slay the dragon "Thou Shalt"] I'd be lying if I said I've done it completely. I think COVID in particular has made us all aware how short life really is. I've resolved to do what I want to do in however many years I may have left on this earth [that sounds like following your bliss]"

See also this Goodreads, Inc. 

"“Nietzsche’s words that relate to this with respect to masks and the processes of life. He speaks of three stages in the life of the spirit incarnate in each of us. Three transformations of the spirit, he calls it. The first is that of the camel which gets down on its knees and asks, “Put a load on me.” That’s the period of these dear little children. This is the just-born life that has come in and is receiving the imprint of the society. The primary mask. “Put a load on me. Teach me what I must know to live in this society.” Once heavily loaded, the camel struggles to its feet and goes out into the desert — into the desert of the realization of its own individual nature. This must follow the reception of the culture good. It must not precede it. First is humility, and obedience, and the reception of the primary mask. Then comes the turning inward, which happens automatically in adolescence, to find your own inward life. Nietzsche calls this the transformation of the camel into a lion. Then the lion attacks a dragon; and the dragon’s name is Thou Shalt. The dragon is the concretization of all those imprints that the society has put upon you. The function of the lion is to kill the dragon Thou Shalt. On every scale is a “Thou Shalt,” some of them dating from 2000 b.c., others from this morning’s newspaper. And, when the dragon Thou Shalt has been killed — that is to say, when you have made the transition from simple obedience to authority over your own life — the third transformation is to that of being a child moving spontaneously out of the energy of its own center. Nietzsche calls it a wheel rolling out of its own center.”

 

    ― Joseph Campbell, Trick or Treat: Hallowe'en, Masks, and Living Your Myth"