Today we are talking about narrative and numbers. And the tension between the two.

“Narrative driving numbers early in the life cycle and numbers driving narrative later.”

From Narrative and Numbers by Aswath Damodaran.

The idea is simple and also hard to live by. Narrative drives numbers early. Numbers drive narrative later. And that back and forth never really stops.

I think in narratives. I like numbers, but I like narratives better. Narrative is another way of saying vision. Or purpose. Or the dream. It is what you tell yourself. What you tell your family. What you tell other people. It is what fuels you when you do not have much else to work with.

Narrative matters most at the beginning. When you are building something new. When it is just an idea. When all you have is belief and how hard you are willing to grind to get there. But numbers matter too. Because if the numbers do not map to the narrative, the narrative is fake. And eventually the numbers build a story of their own.

The same thing applies to people. You can have a vision for your life. A dream. A story about where you are going. But if your behavior and your numbers do not support it, something is off. The narrative is not wrong. It just needs to be checked.

The point is not to abandon the narrative. You never do. The point is to keep it honest. To let numbers inform it without killing it. To let the story evolve without lying to yourself about what is actually happening.

Narrative fuels you. Numbers keep you honest. You need both.

This is WORK. Underlined.

Watch full episode on YouTube.

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