Storytelling is everything. Apple just announced their VR headset, and as I watched the presentation, I realized that Apple is probably one of the best storytelling companies in the world, even better than Disney. For every single processor, they have a name; for every single part of the computer, they have a name. Suddenly, you start thinking, “Oh, this must be better because it has a name.” They give every single version of their operating system an exciting new name, too.
Okay, now storytelling, like anything, can be a force for good or a force for bad. It’s a force for good if management uses storytelling to explain exactly what they’re trying to do. If they get the right shareholders on board, that will allow them to make decisions that may be painful in the short term but will pay off in the long run. I mean, if you think about almost any aerospace company, it takes 10, 15 years from the point where you start thinking about a plane or an engine until that plane or engine gets off the ground.
That’s a long investment cycle. That’s a lot of cash flow that goes out the door without a reward. Management that can sell its vision and direction through storytelling will be a lot more successful than management that can’t communicate to its shareholders. Obviously, the same thing applies to communicating to customers, the way Apple does. And of course, storytelling without a foundation of truth is just simply lying. You need to have truth behind your story. I find that, for me, both as an investor and a writer, storytelling is incredibly important for my business, because this investing story is my favorite one to tell.
When I was working on my first book, Active Value Investing, I talked it over with a friend who is of German heritage, and this friend basically said, “Vitaly, when you work on the book, make sure it doesn’t have any extra words in it. You know, it has to be very efficient.” So I thought, well, this is great advice. And so I went and picked up my friend’s book to read. I couldn’t get past the first chapter, and I do this for a living. Okay, his book was very efficient and read like a Mercedes-Benz instruction manual. It had very few stories and got right to the point. But storytelling is the least efficient way of communicating.
If you look at the number of words in a story, it’s going to be a lot less efficient than if I just give you things in bullets. But storytelling, if it’s done right, is what keeps you reading. It’s what keeps you engaged. So I think, in life in general, storytelling is essential. When you run a company, whetheryou have thousands of people coming to work every day or just a handful, if those people are just there to collect a paycheck, then you’re just an afterthought. In other words, if somebody else gives them a bit more money, they’ll just go to work over there. But if your storytelling gives them the heart and the drive to work towards something greater, then your competition is not going to be able to seduce them away.
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