Founders that use character-driven narratives become masters of persuasion
James Clark is a Silicon Valley legend. He was founder of Silicon Graphics (1982) and co-founded Netscape (1995), together with Marc Andreessen. The Netscape browser launched the internet boom of the late 1990’s, making Clark a billionaire following the acquisition by AOL.
In 1995 Clark was diagnosed with a rare blood disease, hemochromatosis, which subjected him to the chronic inefficiencies of the US healthcare system. This life-changing experience became the genesis of his most ambitious project, Healtheon.
Clark’s vision was to eliminate the paperwork and bureaucracy associated with medical care, an undertaking of enormous scale requiring unprecedented investment. Yet Clark’s investor ‘pitch deck’, described in Michael Lewis’s book, The New New Thing, was no more than a drawing on a whiteboard.
The story of how he used this diagram to secure the backing of two VC titans, Kleiner Perkins and New Enterprise Associates, is an exposé of both the VC mindset and the true power of storytelling. Clark’s compelling narrative, supported by his own personal experience, had VCs lining up to invest.
The power of storytelling as a means of securing audience engagement is now widely recognised. Founders preparing their investor pitches may not have the credentials of James Clark, but they do have access to the same techniques.
Yet often in the haste to create the perfect pitch deck, founders lose sight of the fact that it’s the narrative that really counts. The slides are merely a backdrop to support a presenter-focused story.
But why is storytelling such a powerful tool, and how can founders embrace it to become masters of persuasion like Clark?
Stories make us use our brains differently
Research has shown that audiences are more likely to engage with and adopt messages that make them feel personally involved by triggering an emotional response. Two pieces of research are highly illuminating:
Noah Zandan is CEO of Quantified Communications and author of Insights into Influence. He has studied the science behind ‘influence’ and his work reveals that stories make us use our brains differently. Referring to research by Ohio State University on cognitive processes that occur when becoming immersed in a story:
“They call that feeling - of being so lost in a narrative that we hardly notice the world around us - ‘transportation’. And they discovered that when we’re transported by a narrative - whether it’s true or imagined - we tend to view the protagonist more favourably and embrace the beliefs and worldviews the story presents.
Most importantly, though, we tend to believe the story more readily than we would believe a non-narrative account. This is because our brains actually process narratives differently. When we’re taking in straight information, we’re paying critical attention to the message - reaching back for our own existing knowledge and opinions and actively analysing what we’re hearing.
When we’re transformed by a narrative, however, our single focus is on the story. We absorb it entirely, without pausing to deconstruct or doubt what we’re hearing. We’re truly swept away, and this makes us more likely to embrace the ideals and messages the story is promoting.”
Paul Zak is the founding director of the Centre for Neuroeconomics Studies and a professor of economics, psychology, and management at Claremont Graduate University in the USA. He discovered that a neurochemical called oxytocin is a key “it’s safe to approach others” signal in the brain. Oxytocin is produced when we are trusted or shown a kindness, and it motivates cooperation with others. It does this by enhancing the sense of empathy, our ability to experience others’ emotions.
In later research, summarised in his article ‘Why your brain loves good storytelling’, his team wondered if they could “hack” the oxytocin system to motivate people to engage in cooperative behaviours. He reveals: “To do this, we tested if narratives shot on video, rather than face-to-face interactions, would cause the brain to make oxytocin. By taking blood draws before and after the narrative, we found that character-driven stories do consistently cause oxytocin synthesis. Further, the amount of oxytocin released by the brain predicted how much people were willing to help others; for example, donating money to a charity associated with the narrative.”
Subsequent research showed that character-driven stories with emotional content result in a better understanding of the key points a speaker wishes to make and enable better recall of these points weeks later. As a result, Zak advises businesspeople to begin every presentation with a compelling, human-scale story.
“Why should customers or a person on the street care about the project you are proposing? How does it change the world or improve lives? How will people feel when it is complete? These are the components that make information persuasive and memorable.”
The story arc
The skill in the storytelling is not just having the right ingredients. It’s how you connect them together in a way that makes the whole experience engaging. An experience where the listener feels “swept away” and willing to “embrace the beliefs and worldviews the story presents”.
Professional writers use a method known as a story arc, or narrative arc. This is a literary term for the path a story follows. It provides a backbone by providing a clear beginning, middle, and end. A classic ‘arc’ is shown below:
The exposition is the beginning of the story. Here you set the scene and grab attention.
The rising action sets the story in motion, often characterised by problems and challenges that must be overcome.
The climax is the most important event in the story – the tipping point where tensions are at their highest and where the most important actions occur.
The falling action de-escalates the tension, provides answers and eases the audience into the conclusion.
The resolution is where the plot comes to an end, all major problems are solved, and loose ends tied up.
The investor pitch
Investors often say that the greatest pitch meetings have also been the most memorable. The story felt real, it came alive, and they felt moved. When they reflect on such meetings, they will say things like:
How do we use narrative to
create such positive emotional reactions?
1. They felt engaged
Securing strong interest right at the beginning of the investor interaction and maintaining it until the end is what we all wish for. The narrative arc is immensely helpful here.
At the beginning we often refer to the opening gambit or ‘setting the scene’. Great storytellers are able to create powerful images very quickly, often using an analogy, an anecdote, a revealing insight or other technique to help visualise a scene. They use these mental images to frame their thesis, to stir curiosity, to challenge received wisdom, and to set out an alternative vision.
When used skilfully these techniques
can be used to transport an audience to a place where they feel fully engaged. The
slides become almost incidental.
2. They really bought in
To establish trust and become believable you must connect with your audience at an emotional level, human to human. This is vital as you reveal the story, the problem you are going to solve and the unique insights you have that will enable this.
The most powerful presentations are open and honest. Great exponents don't just talk about their mission, they talk about their journey, their sacrifice, and their failures. They explain what it means to them and, critically, what they have learned.
If you can create a human
context, this will make the story highly relatable. By doing so you will create
a connection. This will make you and your story more credible and alluring.
3. They could sense an exciting outcome.
It’s vital that we put ourselves in the shoes of the audience when thinking about our key messaging. In the case of investors, we have to remember they are only going to invest if they can imagine a big financial return.
We make this desire come alive in the investor meeting not just by talking about our unique capability to solve a BIG problem, but by understanding the emotional dynamics at play: the fear of missing out (FOMO) and the fear of looking stupid (FOLS).
In out blog, Founders Need to Understand the VC mindset, we describe these two very powerful emotional drivers. Your narrative must stoke these emotions, just as James Clark did when he met the big VCs of Sand Hill Road.
Not just for capital raising
We have talked here about the power of narrative arc in the context of the investor pitch. But the same applies for almost any other business interaction where we need to persuade - a customer pitch, an employee gathering, a press briefing.
The narrative arc is a powerful framework to help build your story. By overlaying your personal insights, you will draw your audience in, securing their engagement. By transporting them to an exciting picture of the future they will see you as a thought leader and value creator they want to follow.
This article is an updated version of our earlier blog post, Maximising the value of your startup, published in March 2020.