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Restart the clock and it's hot
Picture a company seven years into its life that has just started to inflect, maybe because of AI or something else. Last year it grew 200 percent, but in absolute terms it sits at 8 million dollars of revenue, seven years in. Funding is hard to find because the narrative of the company is that it is old and small.
Change the name, tell a different story, and arbitrarily start the clock two years ago, and the same numbers become a hot company.
The way out is flexibility on narrative and story. Private markets are driven by narrative because the real product, realized cash returns, takes a decade to arrive, so story decides what gets funded while the numbers stay the same.
How much does narrative drive startup valuation?
NYU finance professor Aswath Damodaran argues in his 2017 book Narrative and Numbers that a valuation needs both a story and a set of figures. He holds that the story shapes the assumptions that go into the numbers. A young company with little history leans most on its story. The approach is taught widely in business schools.
Have companies reinvented themselves like this before?
Instagram began in 2010 as Burbn, a check-in app with many features, and was reduced to photo sharing before its launch. Slack grew out of Glitch, a game built by the company Tiny Speck, which was shut down in 2012. Both companies kept their teams and rebuilt around something that had caught on. In each case the product changed while the people stayed the same.
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