In Search of
Narrative Violations

Let's get an uncomfortable truth out of the way: It's a crazy time to build a technology investment firm.

The venture capital ecosystem is flooded with record levels of capital. Meanwhile, the very narratives that drive investment decisions have become algorithmically optimized for engagement rather than truth. Popular narratives form and spread at hyperspeed, and distinguishing fact from narrative flourish has become increasingly difficult.

Just as capital powerfully influences our behavior, so too does narrative. Within the technology industry, narratives are constantly generated on multiple layers: Entrepreneur, company, category, industry, and societal. At each layer, they tend increasingly toward the extremes. Entrepreneurs are cast as heroes or villains. Companies are rocket ships or death spiraling. A category is the next global megatrend or a house of cards.

Bombarded with conflicting information and in a rush to deploy capital, it's tempting to look for shortcuts to drive investment decision making. Allowing a popular narrative to decide for you is the most seductive of shortcuts. When everyone takes the same shortcut at the same time, everyone competes to deploy more and more capital into the same set of companies.

Popular narratives at the category layer tend to be the most troublesome. Surging capital and spiraling narratives about the next huge market catalyze to form a perfect storm. Whenever an easily understood and easy to replicate new startup shows even a glimmer of promise, the hallucinations kick in.

New global categories are conjured up in mere days based on a nascent startup's early success. If it can be cloned, it will be cloned. Remixed, reused and repackaged with a superficially different veneer by dozens of teams. Each funded by dozens more investors.

Narrative mirages create the illusion of a market so large that anyone who owns even the smallest slice of it will be richly rewarded. Lost in the haze, it is easy to forget that the extraordinary returns generated by technology have been generated almost entirely by only a few dozen companies globally. Almost none of them fit into an easy to define category with multiple winners.

At ORIN&CO, we aren't immune to the siren song of the narrative mirage. We've made mistakes in the past, investing based on narrative vs. substance. But we try our best to relentlessly question each narrative layer in pursuit of the truth about a company.

Rather than chase popular narratives, ORIN&CO's approach is to invest when companies are incongruent with the narrative. Simply put, we search for narrative violations.

The term narrative violation aptly describes many of today's greatest technology investment opportunities. They are either too one-of-a-kind to fit with the popular narratives of the day, or they violate what the narrative gatekeepers deem plausible or possible.

Believing in an idea that violates the popular narrative is lonely. Building a company around that idea is doubly lonely for entrepreneurs. It entails all the challenges of building something new from scratch, but offers none of the status game advancement bestowed upon entrepreneurs pursuing "popular" opportunities.

As a result, these companies are granted immunity from clone wars by narrative shade that can last for years. They also remain systematically underestimated by investors. By the time the popular narrative catches up to begin resembling truth, these companies have grown beyond their fragile early days. And at that point — when they have bent the narrative toward a new reality by sheer force of will — they have already become unstoppable.

The best time to invest in a company is when it's most in violation of a popular narrative.

Narrative violations are highly idiosyncratic, so unearthing them is admittedly more art than science. One starting point is to identify categories that were narratively hot for investors in the past but that most have cooled on today. Another starting point is to search for companies that cannot be easily categorized at all.

Narratives can inspire us. They can move us to stand for something. They can make us feel connected to others. All of these are important, especially today.

Yet when the pendulum swings too far, narratives become a shortcut for thinking and we shortchange our future. We've become addicted to consuming the narrative; its dopamine hits are delivered by the decisecond on every screen.

As our keystrokes hunt for the next narrative high, thousands of possibilities that will never be remain trapped beneath our fingertips. When we allow popular narrative to dictate who, where, and what is worthy of our time or capital, breakthroughs that could transcend remain overlooked, underestimated, or simply fade away.

Against all odds, a few brave entrepreneurs violating the narrative today will come to define profound new truths tomorrow. We're on a mission to find them.