Sign up to get Backchannel's weekly newsletter, and follow us on Facebook , Twitter , and Instagram. The warping effects of narratives are everywhere, from Uber to Snapchat to Elon Musk. Before we get to those examples, it helps to start with a tale that begins — as so many tech stories do — with fear of a bubble.
In October , The Information reported that BlackRock and Fidelity mutual funds each marked down the value of their holdings in Dropbox. As the Journal put it:. At least 11 of 49 venture-capital-backed U. A media frenzy followed: The Financial Times reported that Fidelity had written down the value of its stake in Snapchat by 25 percent.
Fortune noted that T. Rowe Price and The Hartford had marked down more than a dozen private companies, including Pinterest and Evernote. So which was it? Were mutual funds a reliable arbiter of private company valuations?
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To me, the more interesting question is about narratives. The theory of gravity says objects attract other objects in the universe using a force that is directly proportional to their masses. Like so many origin stories, including those in Silicon Valley, the one where Isaac Newton came up with his famous theory when he saw an apple fall from a tree is probably a myth.
The Law of Narrative Gravity posits that the public and press are drawn to narratives, and the more widely accepted or massive a narrative, the more it attracts and shapes the perception of facts. Which brings us back to unicorns and mutual fund markdowns. Which narrative was more prevalent in the fall of ? Here, again, is that sentence from the Wall Street Journal about the challenges of private tech companies after going public:.
In other words, only 22 percent of venture-backed tech companies are worth less since going public. That seems…reasonable? Facts that might directly rebut the narrative can be easily dismissed. According to a Google search at the time, the markdown news cycle generated articles. The markup news cycle?
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Just five. Narrative gravity exists beyond tech.
The gravitational pull of a prevailing narrative is hard to resist. Narrative gravity is one of the strongest forces in the universe, especially when it comes to negative news cycles. The worst negative news cycles occur when a story reinforces an already-bad perception of a company, an established negative narrative built from previous news.
The story gets pulled towards the popular narrative like a black hole — even if the new facts are ambiguous.
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The Invisible Force That Warps What You Read in the News
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