Lessons in Storytelling
Lesson 1: You are not the Hero
Paul Graham once said you can usually tell within seven minutes if you want to invest in a founder at the pre-seed stage. The extra three minutes in the YC interview is for politeness.
How can he tell so quickly?
Great founders tell the story of their company and vision in a way that invites the venture capitalist, the customer, and their employees to want to join them on the journey to success. It is the essence of great fundraising, standout sales and marketing, and successful hiring in a tight labor market.
The reality is that for some founders, particularly at the early stage, some of the story is already legible and compelling to investors. Perhaps the founder went to GSB or HBS or is spinning out of a prestigious role at a hot company like Stripe. Maybe they’re taking a tool they built at Facebook and generalizing it as a SaaS startup or they’ve previously built a successful company. Founders like this often get their first check or two fairly easily. If they’re in a hot sector, they might get pre-empted prior to any real traction as funds look to deploy their capital in what looks like a potential winner. This capital momentum and brand signaling can make hiring easier. Eventually, they’ll need to forge product-market fit, but the path has been made substantially easier.
However, for a lot of founders, this isn’t their story. For them, storytelling will make or break their ability to get that early capital and convince talented people to join their company when they could be raking in big bucks at FAANG. Even for highly-credentialed founders, having a great story can upsize the valuation or quality of the fund they’re working with. Every founder can find value in being a better storyteller. It is the fuel for the startup engine. Without it, you’ll never get off the blocks.
I’m going to talk about a lot of the essence of great storytelling and persuasion this year.It’s one of the most crucial elements of startups. Yet, it feels rather under-discussed besides VCs telling founders that it’s important and vaguely suggesting they’ll help them with their pitch deck before a Series A. Underlying this is an implicit assumption that some people are just “natural” storytellers like Steve Jobs and others will simply never be good at it.
However, if you want to be a great CEO, you’re going to have to learn new things all the time. You’ll have to learn how to hire, manage, and fire people. You’ll have to learn how to steer the ship through the trough of disillusionment. You’ll have to learn how to eventually shift from a product/technical focus to a leadership and management role. Signing up to be a CEO means signing up to be a learner.
“The best CEOs are learn-it-alls, not know-it-alls.”-Peter Fenton, Benchmark
The temptation when we aren’t naturally good at something is to assume we can never learn it and give up, winging it when we have to face the trial. Psychologists call this a “fixed mindset”: it’s been written about extensively elsewhere so I’ll skip over it for now.
The key lesson is that no matter what you’re doing you must shift your mindset to be willing to learn, fail, get up, learn, fail, and get up again. This mindset is best reflected in this classic Michael Jordan commercial.
This applies to everything in your life if you want to achieve greatness. Just because you’re not naturally Steve Jobs doesn’t mean you should throw your hands up and assume you can never maximize your own presentation performance.
The reason you do that is not because you’re afraid to fail as is most commonly thought, but because you’re afraid to work hard at something and then fail anyway.
Malcolm Gladwell isn’t my favorite writer because he often cherry-picks data to fit his conclusions, but he wrote something that has stuck with me ever since I was a teenager:
“Why don’t people work hard when it’s in their best interest to do so? …
The (short) answer is that it's really risky to work hard, because then if you fail you can no longer say that you failed because you didn't work hard. It's a form of self-protection. I swear that's why Mickelson has that almost absurdly calm demeanor. If he loses, he can always say: Well, I could have practiced more, and maybe next year I will and I'll win then. When Tiger loses, what does he tell himself? He worked as hard as he possibly could. He prepared like no one else in the game and he still lost. That has to be devastating, and dealing with that kind of conclusion takes a very special and rare kind of resilience. Most of the psychological research on this is focused on why some kids don't study for tests -- which is a much more serious version of the same problem. If you get drunk the night before an exam instead of studying and you fail, then the problem is that you got drunk. If you do study and you fail, the problem is that you're stupid -- and stupid, for a student, is a death sentence. The point is that it is far more psychologically dangerous and difficult to prepare for a task than not to prepare. People think that Tiger is tougher than Mickelson because he works harder. Wrong: Tiger is tougher than Mickelson and because of that he works harder.”-Malcolm Gladwell
If you show up having slapped together a deck that loosely follows the Sequoia template and ramble through your pitch haphazardly, and then every VC passes on you, you can say “Oh well, I’m just not a natural storyteller” or “They’re biased and they can’t see how great I am!” You can shift blame either to your lack of natural abilities or to their proclivities. Even if either or both is true, you have to ask yourself: is this a useful belief for me to have?
It’s psychologically safe, but it doesn’t get you anywhere.
I’m going to focus on fundraising from VCs, but the lessons should be broadly applicable to any time you’re telling a story: in internal company presentations, in hiring and sharing your company vision, or even when thinking about your sales deck or marketing copy.
A quick note of precaution before we begin with the first concept. It’s rather timely as Elizabeth Holmes was just convicted of fraud. She managed to fool many non-Silicon Valley investors into giving her money.Great storytelling doesn’t create a working product, create product-market fit, or solve technical problems. It is fuel, but you still need to make the car. Never use great storytelling to elicit fraud.
“A fortune made by a lying tongue is a fleeting vapor and a deadly snare.”-Proverbs 21:6
Let’s start with the first lesson today.
Lesson 1: You are not the Hero (for now)
Huh? Aren’t founders the heroes of progress?
Every single VC has some statement to that effect on their website or in their email signature.
And it’s certainly true. Founders are the modern pioneers, creating world-changing companies that generate more prosperity and wealth for all. Despite what some may tell you, successful honest companies create something from nothing, adding positive-sum wealth to a world where it previously didn’t exist before.
Yet, fundraising with the premise that you are the Hero will only set you back from great storytelling. Resonating with an audience starts with understanding that for this short period of time, they are the Hero.
Let’s think about how most pitches go these days:
To you, you are presenting your life’s work, your mission, your raison d’être.
To the VC, you’re one of several meetings they’ll have that day.
You exchange generic 1 min backgrounds that you’ve both said 20x over the past couple weeks.
You dive into your deck that looks the same as every other deck that VC has seen just with the problem and product switched out.
You go through some generic Q+A and then you both click off Zoom, on to your next meeting.
What’s the alternative?
Invite them on a Hero’s Journey with you. By investing in you, they are leaving their ordinary, mundane world and creating a special, new world with you.
As Nancy Duarte, an expert in presentations who worked with Apple and Al Gore on An Inconvenient Truth, puts it, when it comes to storytelling, “You are Yoda, not Luke.”
When you go into a pitch, there’s an underlying tension: you want the investor to part with their money while they don’t want to invest. A venture capitalists’s job is to say no most of the time. They are literally looking for reasons to say no to you. I was part of 200+ pitches last year with the partner I work with at Susa. We made two investments.
The default is no.
Your goal is to move them from a no to a yes.
The way to accomplish this is by evoking something deeply primal in them: the call to adventure. By investing in you and joining you on the journey, their life will be irrevocably altered. They will be a part of something extraordinary, something that changes the world. A new special world will be created afterward.
Jesus was the best storyteller and founder ever. There’s a reasonable argument that Christianity toppled the Roman Empire and built the modern, Western world. Even in today’s post-religious world, its ripple effects are felt in our emphasis on human rights and concern for the poor.
For Christians like me, Jesus is the ultimate Hero. He died and was resurrected to save us from our sins. Through him, death has been defeated.
Jesus always met people where they were and invited them to leave their current lives and find eternal life in him.
One of the most famous stories in the Bible is the story of the Samaritan woman. Jesus meets her at the well and asks her for a drink of water. She is confused because Samaritans and Jews didn’t mix together at that time after a long history of political and ethnic conflict.
“Jesus answered her, “If you knew the gift of God and who it is that asks you for a drink, you would have asked him and he would have given you living water.”-John 4:10
How’s that for an intriguing hook? One subtle element of great storytelling is not everything needs to be immediately clear right away, it just has to draw you in. In Steve Jobs’ announcement about the iPhone in 2007, he starts by saying that “this is the day I’ve been looking forward to for two and a half years.” We don’t know why, but need to learn more.
The Samaritan woman asks him what he’s talking about and where Jesus can get this living water.
“‘Everyone who drinks this water will be thirsty again, but whoever drinks the water I give them will never thirst. Indeed, the water I give them will become in them a spring of water welling up to eternal life.’”-John 4:13
That’s the call to adventure. Jesus did not say, “I’ve come here to die and save you from your sins” or even “I am a great teacher, listen to my parables.” He instead offered a chance to leave her life that would end in death for a new world where she would have eternal life.
The coming of the new world is cemented where Jesus paints a picture of what will be created where Jew and Samaritan alike will worship God rather than be mired in the current world of petty squabbles.
“...Believe me, a time is coming when you will worship the Father neither on this mountain nor in Jerusalem. You Samaritans worship what you do not know; we worship what we do know, for salvation is from the Jews. Yet a time is coming and has now come when the true worshipers will worship the Father in the Spirit and in truth, for they are the kind of worshipers the Father seeks.”-John 4:21-23
The Samaritan woman takes the next step, going back to her town and “many of the Samaritans from the town believed in him because of the woman’s testimony” (John 4:39). The message of Jesus goes to a whole new group of people because of his invitation to her.
The call to adventure should always lay out a significant gap between what is (the ordinary world) and what could be (the special world).To take it back to fundraising, by investing in you, the VC will leave their previously mundane life behind into a thrilling new arena with you.
This reversal in perspective is the key to any great presentation. Everyone is the “main character” of their own life; you’re just making a brief (at least, for now) appearance in their life. If you start from the premise of “Hey, I’m amazing and it’s self-evident why someone should invest in me,” you may be right, but you might not get the investment. It’s a variant of “If we build it, they will come.”
When Elon Musk talks about Tesla, he doesn’t talk about how he’s a genius or his backstory as an ex-PayPal founder. Instead, he tells you how you’re participating in the move away from fossil fuels and fighting against climate change by buying one of his cool cars. It’s a call to adventure: a new world that you, the buyer, can participate in and help co-create.
That’s the feeling you want to elicit in your investor, this feeling that if they don’t invest in your company, they’re missing out on a life-changing call to adventure.
We recently invested in a company that helps farmers get access to grants and build financially healthier businesses. What made the story so compelling was the invitation to build a future of regenerative agriculture: the founder was able to paint a picture of thousands of small local farms thriving and providing people with healthier and sustainable food. It wasn’t about her background or that she was a farmer’s daughter—although that certainly added credibility—it was the vision of a new world where we weren’t trapped with Big Agriculture food that was destroying both the planet and our health.
The feeling that stuck with me throughout all the subsequent meetings and when we finally made the decision to invest was: I want that new, special world to exist. I have to join her on this adventure. All of us can see the obstacles ahead, the dangers, the risks of investing. But nevertheless, we’re willing to jump.
Read Fred Wilson’s post about investing in Coinbase’s $5m Series A in 2013, a bet that turned out to be worth billions of dollars at IPO. While the founders were clearly special as we found out over the years, he’s also incredibly excited for the vision of a new world that a decentralized peer-to-peer currency can create.
Paint a picture of the world they’re helping to instantiate by investing in you. Mindlessly sharing your resume is generic. Founders often read off their background starting with where they went to college and their stints at companies, maybe spending a bit more time at their most recent one and how it’s relevant to what they’re doing now. That’s boring. Investors hear that 5-10x a week. Instead, tell them your true, authentic story, how it made you who you are today, and why that led you to founding your startup. You may feel like your enterprise SaaS startup cannot have the same exciting backstory as a consumer app or healthcare company, but that’s false. If you’re willing to give up 10 years of your life to work on this company, it clearly matters to you for some reason. Why? Why are you willing to stay up late at night and on weekends working on this company? What is the new world that will be created in 10 years if your company exists and is successful? I often have to ask in pitches, “What’s the grand vision?” If that’s a question your investor has to ask you, you’ve probably failed already. It should be immediately clear from your storytelling.
Create common ground with them and create a “story of us” that you’re inviting them to join. This means knowing your audience: what makes them tick, what are their dreams/hopes/cares, what do they value, WHO are they? All investors want financial returns, but most think they're doing good in the world. Even if you are skeptical of that, remember that everyone’s the hero of their own life: regardless of how you feel, this is how they will view their job. I realize that especially in the age of Zoom, most of us can book more meetings than we really have the bandwidth for and it may be difficult to give this level of attention to detail for each pitch. However, my suggestion would be that at least for the ones that matter to you, the funds you really want to work with, spend a few minutes looking at their previous investments, look at their Twitter if they have one, maybe even listen to a podcast appearance on 2x speed. People are often very revealing about what matters to them and who they are on these platforms.
Finally, tell them why it’s now the time to leave the status quo and go on an adventure with you. I’m not saying anything revolutionary here: the “why now” is a common slide in decks where founders will often talk about the market dynamics or technological shifts. That’s great, but be more specific and concrete. Show them how the new world is only possible if your company is created. Or create in them the certainty that this world is happening and it’s simply their choice whether they’re going to be a part of the adventure or watch it from the sidelines. Whichever choice is the right one for you depends on your market and product, but always frame it so the “why now” is abundantly clear.
If you do this well, they’ll be chomping at the bit to invest in you. When it comes time to make a decision or when they have to pound the table in front of their colleagues as to why the fund should invest in you, they’ll be animated by that spirit of adventure. Humans live our lives by stories and they’ll want to add you to theirs.
The VC websites are right. Founders are the true heroes and VCs are, at best, the stage hands in service of them. Yet, that reality doesn’t mean that’s the best way to sell someone on investing in you. In fact, the roles will reverse once they offer you a term sheet. Now, they’ll be pitching you and asking you to let them participate in your hero’s journey.
This reframing is key to great sales no matter who the target is. When you’re recruiting an employee, you could make the pitch about you and how the employee will help you accomplish your goals. That may work, it may not. What will really work is making the pitch about them and their journey: how by joining your company, they will embark into a special world and if successful, a new bliss will be created, for the world and for them.
In the startup ecosystem, you are the hero. But if you want to secure an investment and tell a great story, flip your mindset temporarily. See yourself as the mentor, the one inviting them into a great adventure. Jesus called the Samaritan woman even though he was the one who would ultimately save her.
When you succeed, history will still write you as the hero in the end.
I began studying these concepts recently for my own improvement. These concepts are valuable for both the founder and the venture capitalist.
Tim Draper gave her a seed check, but at the very earliest stages, it’s often a bet on the person. Holmes was smart and clearly a powerful persuader: taking a bet on a founder and an idea for those reasons alone is completely reasonable. When she actually had to show her product’s efficacy, no legitimate VC invested.
David Perell has a great essay on this: https://perell.com/essay/why-youre-christian/
The juxtaposition of “what is” and “what could be” will be the subject of at least one or two upcoming articles. It’s the core of any persuasive presentation.
The “story of me, story of us, story of now” discussed in the previous three paragraphs is another great narrative framework that will be the subject of an upcoming article. For a sneak preview, watch Barack Obama’s 2004 convention speech and how effortlessly he weaves these elements together. Notice how he doesn’t start with the facts of his background, but tells it to you in a compelling story.