4 Keys to Crafting a Winning Startup Story Investment decisions are supposed to be based on rational analysis. But don't discount the power of a compelling narrative to engage a funder emotionally.
By Peter S. Cohan Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Like many technology entrepreneurs, I'm more comfortable with logic than storytelling. But entrepreneurs need to be able to tell an engaging story to attract capital and advice from investors.
The gap between many entrepreneurs' weak storytelling skills and the high demand for that ability is so often seen that one venture-capital firm, Greylock Partners, hired Elisa Schreiber, a marketing partner to help the firm's entrepreneurs to tell their stories more effectively.
As she wrote in Fortune, "I work closely with entrepreneurs to help them shape their company's communications strategies. No matter the sector, I have found that the organizations who effectively tell their stories are the ones who can recruit the top talent, acquire long-term customers, and build brands that endure."
With or without an expert marketer on staff, entrepreneurs might benefit from trying to shape the tale of their startup journey into one of these four narrative arcs -- assuming they have the facts to back it up.
Related: How Storytelling Can Create Brand Value for Your Business
1. David beats Goliath.
A story that pits a powerless individual against a well-organized and powerful entity always captures interest. In many cases, this is how entrepreneurs start out and this story genre is particularly appealing to Americans.
One of my favorite examples of this tale is how William McGowan took on the mighty AT&T and eventually challenged the company in court, leading to its breakup. McGowan joined Joliet, Ill.-based Microwave Communications in 1968, "investing $50,000 in the company that was trying to challenge AT&T for the long-distance business between Chicago and St. Louis," according to the Los Angeles Times.
Joining Microwave Communications in 1968, McGowan invested $50,000 in the Joliet, Ill., company that aimed to challenge AT&T for the long-distance business between Chicago and St. Louis.
Eventually McGowan gained control of MCI and started to expand it by building microwave towers around the country. But AT&T would not let MCI have access to its local customers to sell them its long distance service.
In 1974, MCI sued AT&T and in 1980, the courts required AT&T to spin off its seven regional Bell telephone companies.
AT&T chairman Robert E. Allen said of his rival, "Bill McGowan will go down in business history as one of America's foremost entrepreneurs. He was at all times a tough and colorful competitor."
2. The hero is embattled but perseveres.
Another compelling entrepreneurial tale is when when the protagonist is knocked down, stands up again and keeps finding a way to circumvent the obstacles.
Hong Kong entrepreneur Steven Lam kept getting knocked down: He failed his high school entrance exam. After living with his uncle in the United States, he moved back to Hong Kong and started a company to deliver takeout boxes with advertising. He ran into trouble securing delivery vans, built an app to solve that problem and a potential investor almost stole his idea.
But he kept at entrepreneurship and his new company, GoGo Van, and is now prospering.
3. Facing repeated failure, the inventor never gives up.
Another variant of the startup tale that investors might find riveting is the narrative of the dogged inventor who surmounts repeated failure. But rather than give up, he keeps trying and ultimately triumphs with his gadget. His business turns the corner and enjoys an upward climb.
Such was the case of Sir James Dyson, now a vacuum cleaner billionaire. He created 5,127 vacuum prototypes over 15 years before he got one that he could sell.
As Dyson wrote for Wired, he endured the invention misfires repeatedly. "By the time I made my 15th prototype, my third child was born. By 2,627, my wife and I were really counting our pennies. By 3,727, my wife was giving art lessons for some extra cash."
He admitted that these were beleagured times, but added, "Each failure brought me closer to solving the problem." It wasn't the final prototype that made the struggle worth it. "The process bore the fruit. I just kept at it."
Related: Why You Need to Become a Better Storyteller
4. The hero stumbles into success.
Another type of entrepreneurial story that rivets audiences is when the protagonist accidentally stumbles onto a path to success.
PayPal co-founder Max Levchin, an immigrant from Ukraine, gave me a firsthand account of his experience with this in a 2011 interview. He liked building operating systems for computers and co-founded Confinity, making operating systems for the handheld Palm Pilots. But few buyers were interested. So he decided to focus instead on building operating systems for a digital wallet, but received a tepid response.
One aspect of his software garnered email attention. Users wanted to apply his software to pay for items being auctioned on eBay and implored him to make the online auction currency easier to use and faster. Eventually Levchin gave in to customer demand and built up his software's auction currency function. Confinity merged with Elon Musk's X.com and is called PayPal after the digital wallet product. In 2002, eBay acquired PayPal for $1.5 billion.
If your startup follows one of these story arcs, your odds of engaging your listeners and convincing them to invest will increase as well.
