Assessing Narrative Quality

Every founder tells a story. The market opportunity, the solution, why now, why them.

Some of these stories are visionary. Others are delusional. The difference often isn't obvious until it's too late.

What Is Narrative Quality?

It's not about how compelling the story is—lots of bad ideas are compellingly told. It's about how the story holds up under examination.

Good narratives have internal coherence. The pieces fit together. The why leads to the what leads to the how. There are no logical leaps that require you to just believe.

Good narratives adapt to new information. When you introduce a challenge or contrary data point, the founder engages with it. The story evolves but remains coherent.

Good narratives distinguish between facts and assumptions. The founder is clear about what they know, what they believe, and what they're betting on. There's no conflation of hope and reality.

The Coherence Test

Ask three questions at different points in the conversation:

1. Why are you building this?
2. Why is now the right time?
3. Why are you the right person?

The answers should connect. If they don't, the founder hasn't thought through how these elements reinforce each other—or the story is constructed rather than discovered.

Example of coherence: "I spent five years in this industry and saw [problem] repeatedly. The tools available are inadequate because [structural reason]. The market is finally ready because [specific change]. I'm positioned to build this because [relevant expertise]."

Each piece supports the others. The narrative emerges from the founder's experience rather than being assembled for the pitch.

Example of incoherence: "This is a huge market. We're using AI. I've always wanted to start a company. The timing is good because [general trend]."

The pieces don't connect. It could be any market, any technology, any founder.

The Adaptability Test

Introduce information that challenges the thesis: "I spoke with three potential customers who said they tried solving this themselves and it didn't work. What does that tell you?"

Strong narratives incorporate it: "That's interesting—it confirms the problem is real enough that they tried. The failure probably means [hypothesis about what went wrong]. We'd need to understand if our approach addresses those failure modes."

They engage with the challenge, form a hypothesis, and identify what they'd need to learn. The narrative evolves but remains intact.

Weak narratives dismiss it: "Those customers probably didn't have the right resources. Our approach is different. Once they see our solution, they'll understand."

They deflect rather than engage. The story is rigid rather than adaptive.

Assumptions vs. Facts

Listen for the language founders use:

Facts: "In our pilot, three customers paid us. They report 15% efficiency improvement."

Assumptions: "Customers will pay because this saves them money. We'll see 10-20% efficiency gains."

Conflations: "Customers pay us because we deliver 15% efficiency gains." (Have you measured this, or are you assuming causation?)

Strong founders are crisp about the distinction. They know what they've validated and what they're betting on. They can articulate the assumptions that, if wrong, would kill the business.

Weak founders blur these lines—sometimes because they're performing confidence, sometimes because they genuinely don't see the difference.

The Second-Order Test

Ask: "If you're successful, what does the world look like in five years? Who loses?"

Strong narratives have a theory of change that includes consequences:

"The incumbents will struggle because [specific vulnerability]. Some will adapt by [likely response]. The market will bifurcate between [segment A] and [segment B]. We'll own [specific position]."

This shows they've thought beyond "we win"—they understand competitive dynamics, market evolution, and the ripple effects of success.

Weak narratives are vague or overly optimistic:

"We'll be the dominant player. The market will be much bigger. Everyone will use our approach."

This shows a lack of detailed thinking about how success actually unfolds.

Vision vs. Delusion

The line between visionary and delusional is surprisingly thin. Both imagine futures that don't exist yet. Both commit to paths that seem unlikely.

The distinction:

Visionaries have a detailed model of how the future unfolds. They can articulate the dependencies, the obstacles, the risks. They're right more often than chance because they understand the mechanics.

Delusional founders have an outcome in mind but no coherent model of how to get there. They're right only by luck, and when the path doesn't materialize, they don't know how to adapt.

You can test this: "Walk me through the next 18 months quarter by quarter. What needs to happen? What could go wrong? How would you know you're on or off track?"

Vision produces a detailed, contingent plan. Delusion produces generalities and best-case assumptions.

The Trust Signal

The strongest narrative signal might be this: The founder tells you something that could kill the deal.

"Here's the assumption that worries me most. If it's wrong, we're done."

"Here's where I could be deluding myself."

"Here's the argument against this that I can't fully rebut."

This level of intellectual honesty signals they're operating in reality, not constructing a pitch. They trust you to engage with the challenges rather than dismiss the opportunity.

When a founder hides weaknesses, it's because they don't trust you, themselves, or the strength of their case.

How to Practice This

Narrative assessment is a pattern recognition skill. You get better through repetition and feedback loops.

During diligence:

• Record the founder's story at the start
• Note any changes or contradictions as diligence progresses
• Flag assumptions that never get interrogated
• Track which challenges get engaged vs. dismissed

After investment:

• Compare the narrative that secured funding to how things actually played out
• Identify which early signals predicted success or failure
• Build a library of "narrative patterns that worked" vs. "narrative patterns that didn't"

Over time:

• Your intuition about story quality will improve
• You'll spot incoherence faster
• You'll know which challenges are worth introducing and when

The Caveat

Narrative quality isn't everything. A founder can have a brilliant, coherent story and still fail due to execution, timing, or luck.

But narrative quality is necessary. You can't execute your way out of a fundamentally incoherent story.

And over time, you'll find that the founders who succeeded had stronger narratives from the start—even if everything else about the business changed.

Learn to recognize it. Weight it appropriately. And when the narrative doesn't hold up under examination, walk away.