Narrative and Numbers: The Value of Stories in Business
by Aswath Damodaran
Aswath Damodaran is a professor of finance who has written several books on business valuation, including The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit.
In this book, he computes valuation based on the business narrative. “One of the most important lessons I have learned is that a valuation that is not backed up by a story is both soulless and untrustworthy and that we remember stories better than spreadsheets.” Conversely, “when a storyteller has wandered into fantasyland, the easiest way to bring him or her back to Earth is with data that suggests the journey is either impossible or improbable.” Thus, “you need to bring both stories and numbers into play in investing and business, and valuation is the bridge between the two.” Continue reading