How do VCs Use the Tranche Approach to Balance Risks, Relationships, and Rewards?
Explore how Venture Capital firms use a tranche approach to allocating startup capital to manage risk and foster relationships and healthy investment outcomes.
We've talked before about key traits for a winning CEO, but one desired quality that hasn't yet been mentioned is the ability to instruct and inspire through storytelling. Effective leaders use experiences, both good and bad, to illustrate what, when, and why to their teams, as opposed to just dictating dry facts or directives.
Cultural anthropologist Mary Catherine Bateson said that "the human species thinks in metaphors and learns through stories." When facts, beliefs, or processes are placed inside the frame of a story, they become instantly more understandable, relatable, and engaging compared to exposition. Importantly, stories not only bring context to why or how something should be done, they also typically get more "buy in" compared to just telling others what to do.
When something must be learned, there are several conventional methods for transferring knowledge. The first is through overt training, such as a formal learning course, or informal instructions ("do it this way"). There is also apprenticing, which is essentially letting one person watch another person do something as a way to transfer knowledge. They look over your shoulder and you then look over theirs to ensure they're doing it correctly.
The downside of these methods is that they are time-consuming, slow processes, which is a problem when something needs to be communicated quickly and retained. In comparison, research has shown that messages delivered as stories can be up to 22 times more memorable than just giving facts alone. Storytelling as a method of instruction can be especially useful in our current times as companies either stay remote or begin to bring workers back into physical offices after more than a year of working from home. In either case, storytelling is a useful way to engage remote workers or quickly remind or refresh "in-office" workers on business practices.
There are many ways to tell stories. For example, in a staff meeting, a department manager might relay a recent story in which a worker went "above and beyond" to provide superior customer service, as opposed to just reminding the team to always be professional, courteous, and responsive in their jobs. Even HR leaders are in a sense storytelling when they use role playing to show acceptable and unacceptable ways to handle an office or personnel situation.
In my own firm, I've told stories to newer team members about fundraising conversations I've had with potential investors in order to illustrate successful approaches and help them anticipate and better answer questions. I also often use storytelling in my work with the startups in our investment portfolio, relaying the experiences of other young companies that have successfully found ways to navigate market challenges or setbacks.
And, in this piece for Forbes, I used my experience rowing for the U.S. National Team to offer some lessons on how to build a great startup team. That's storytelling too. Regardless of what story is told and for what learning purpose, the key requirement is that it be a compelling vignette centered around encouraging a desired behavior, process, or belief. The phrase "if you can see it, you can be it" is often equated to the need for role models to illustrate to youth, especially, what they can do or become. But this same principle also holds true in effective storytelling, where the story's teller (the leader) creates a story arc that is vivid enough to hold a team's attention and enables them to envision their own practical application of the lessons contained within.
Teaching through storytelling is hardly new — parables have been used in religious writings for centuries. And, stories have always been told as part of business, from customer case studies designed to win over sales prospects to marketing and advertising. Almost all memorable brands have a compelling story behind them. Perhaps it's time to hone your skills as a storyteller, ensuring that they are also used internally to instruct, inspire, and engage your team more effectively.
This article was originally published in Forbes and reprinted with permission.