Narrative Capitalism

Increasingly, high-quality narratives are shaping what people choose to believe. I was fascinated by a point made by Sam Lessin, where he described how entrepreneurs today are raising billions of $ by getting investors onboard and even public markets to place bids on their narratives, regardless of whether those narratives ultimately turn out to be true.

A history of tangible output allows founders to command a premium on narrative-based valuations. Elon has delivered across multiple ambitious narratives electric vehicles, Neuralink, and space exploration. As a result, SpaceX benefits from a massive trust multiplier (with valuation projections nearing ~$1.5T), largely driven by Elon’s credibility.

In contrast, narratives multipliers can also collapse entirely in case of fraud or no output. Elizabeth Holmes and Sam Bankman Fried both lost their narrative premium when they failed to match their promises. Once trust breaks, the multiplier tends to zero. Elon’s trust multiplier, on the other hand, continues to expand with every launch.

This creates a narrative valuation flywheel. Even partial output (as little as 20 cents on the dollar) can keep the flywheel going. A stronger narrative from a trusted founder attracts more capital, which then fuels an even stronger narrative, either within the same industry or across entirely new ones.