Narrative and Numbers: The Value of Stories in Business
Table of Contents
1. A Tale of Two Tribes
2. Tell Me a Story
3. The Elements of Storytelling
4. The Power of Numbers
5. Number-Crunching Tools
6. Building a Narrative
7. Test-Driving a Narrative
8. From Narratives to Numbers
9. Numbers to Value
10. Improving and Modifying Your Narrative—the Feedback Loop
11. Narrative Alterations—the Real World Intrudes
12. News and Narratives
13. Go Big—the Macro Story
14. The Corporate Life Cycle
15. The Managerial Challenge
16. The Endgame
Damodaran's success in combining storytelling with traditional financial analysis and valuation is unprecedented. The book has the potential to be a cornerstone of both traditional valuation and business "pitching" as it shows how individuals from each world can benefit from co-opting tools from the other. The author takes us on his personal journey into the realization that numbers need a narrative in order to make them persuasive.
-- Paul Johnson, Nicusa Investment Advisors
Professor Damodaran's point-counterpoint case studies make valuation a good read. Self-critical in his contemporary examples, he wisely cautions the reader that quality valuation requires both the right and the left side of one's brain—the number cruncher and the storyteller.
-- Thomas E. Copeland, University of San Diego
Damodaran, instructor to many on valuation, clearly demonstrates that quantitative valuation formulas are not sufficient: they must be applied with a more qualitative narrative about the business. But qualitative analysis has its dangers, not the least that we insert our own biases into the narrative. Damodaran nicely weaves stories into the more formal quantitative analysis, with check and balances that yield a more confident valuation.
-- Stephen Penman, author, Accounting for Value
No one has contributed more to the craft of valuation than Aswath Damodaran. In Narrative and Numbers, he correctly shows that you can't understand the stock without the story. After Damodaran's eye-opening tour, you will forever appreciate the vital contribution of human nature to number-crunching.
-- Michael Mauboussin, Head of Global Financial Strategies, Credit Suisse
Damodaran takes us to the place where Joseph Campbell, Warren Buffett, and the best quantitative analyses of Nassim Taleb intersect, and his journey uncovers new value and risk missed by analysts who bias themselves by relying solely on storytelling or number-crunching. It's a hero's journey best supported by humility—and this first-person account of Aswath's own evolving narratives, analyses, and valuations of Alibaba, Amazon, Uber, Theranos, Ferrari, and more. He may have started as a quant, but Damodaran's now one of the most balanced analysts—and wonderful business and financial storytellers—writing and teaching today.
-- David Foster, CEO, Business Valuation Resources