Wolfgang Hammer - The Power of Story - [Invest Like the Best, EP.447]

0:00The best operators have a relentless focus on leverage, finding ways to multiply their impact rather than just working harder. But here's what I see happening in finance teams everywhere. Brilliant people getting buried in expense management busy work. If you think about it, you become a finance leader because you love strategic work. Modeling scenarios, optimizing capital allocation, finding the insights that actually move the business forward. But instead, you're chasing receipts and categorizing transactions. It's the opposite of leverage. This is exactly why I'm so bullish on what the team at Ramp has built.

0:28Kareem and Eric understood that every minute spent on manual expense management is a minute stolen from high leverage work. So they automated all of it. automatic categorization, receipt matching, spending controls that actually work. I love the network effect that this creates. When finance teams at companies like Shopify and Stripe automate the mundane stuff, they free up cycles to think bigger, to ask bigger questions, spot patterns others miss, and make the kind of strategic bets that separate great companies from good ones. The math is simple. Get your time back, focus on what matters. Check out ramp.com slash invest and see what happens when you eliminate the busy work.

1:00Cards issued by Sutton Bank, member FDIC. Terms and conditions apply. As an investor, gaining an edge means having the right tools. And one platform leading the way is AlphaSense. Trusted by 75 % of the world's top hedge funds, AlphaSense is the market intelligence platform that gives institutional investors access to over 500 million premium sources. From company filings and broker research to news, trade journals, and more. And with its recent acquisition of Tegas, it also includes the world's largest library of expert interview transcripts, over 200 ,000 calls covering more than 24 ,000 public and private companies.

1:32All in one platform so investment teams can move faster, go deeper, and make high conviction decisions with confidence. Now, AlphaSense is transforming the research process with the launch of its deep research tool, part of the next generation of its AI-powered platform. Unlike other deep research tools, AlphaSense's version is purpose-built for investment research. It runs multi-step iterative analysis using AlphaSense's proprietary content, including those 200 ,000 expert transcripts, and in minutes surfaces insights that would take multiple interviews and days of digging to uncover. It's like adding 10 analysts to your team, helping you accelerate analysis, deepen understanding, and make sharper decisions.

2:08See it in action at alpha-sense.com slash invest. In asset management, growth often depends on customization. It's the nature of the beast in our industry. And I know having experienced the problem firsthand as an active manager, it's a competitive differentiator to tailor products and services to clients' preferences. Those of us growing our businesses always want to say yes to customers. It means delivering a tailored portfolio, a tailored report, or a tailored expectation for service. Saying yes leads to growth, and it also leads to customization and a big trade-off. The more you grow, the more complexity you absorb.

2:40The more you say yes, the harder it is to scale efficiently and consistently. That's where Ridgeline comes in. Ridgeline automates customization. It gives assay managers the ability to deliver personalized experiences at scale without adding headcount, manual work, or operational risk. Having been an early design partner myself, I saw firsthand the power of taking an entirely clean sheet of paper to building the system we've all been waiting for, a front-to-back platform that combines all of a firm's core functions on a single dataset. It's how leading firms stop choosing between growth and efficiency and start saying yes to both.

3:13I believe the best firms will be built on Ridgeline as their operating system. I also believe there'll be a leading case study in combining the power of systems of record and AI. If you haven't spent time with them yet, I urge you to see what Ridgeline might unlock for your business.

3:28Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus Review, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus Review along with all of our podcasts at joincolossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum.

4:04This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. My guest today is my friend Wolfgang Hammer. Wolfgang is a successful film producer and executive who helped create House of Cards and ran several major studios, including Lionsgate, CBS Films, and Miramax. He's now building a new kind of film studio with support from Mitch Lasky and Mark Andreessen. Wolfgang also helps founders and CEOs use storytelling to better understand what they do and why it matters.

4:45In many ways, this conversation is a manual for how to find that story and communicate it in a way that resonates. Wolfgang shares the questions and tools he gives leaders to help them do the same. Our conversation explores how stories work, what great ones have in common, and why understanding your own story can be transformative. We talk about the three layers every story must have, the external, the emotional, and the philosophical, and how they apply to building companies and leading people. So many CEOs at both startups and massive Fortune 100 companies have Wolfgang to thank for changing how they think and talk about their business.

5:17And I hope this episode gives you tools to do the same. Please enjoy my conversation with the great Wolfgang Hammer. I'd love to ask a bunch of questions about work that you've done with companies and helping the founders of those companies distill down the narrative of them, their business, their product in a way that's transformative for them. I know you've done this with startups. You've done this with massive companies we probably can't name. It's a thing you've done over and over again. Can you describe in as much detail, crazy detail as you're willing to, the method that has started to emerge from this curiosity you have about certain builders and what you do with that curiosity and how you help them?

6:01There's a thing in character development where the character at the beginning of a story will have a concept of the world that they believe is fixed. And it's very often a flawed concept. this is always attributable to a lack of self-knowledge. And I think with the case of a great founder who feels that they're building something that's working and then they feel that perhaps the way they're thinking about the context wherein this product lives is limited. With big companies, sometimes they have a product that perhaps is not as good anymore as it used to be and that the conception of the world is antiquated and they don't quite know how to pivot it.

6:36And then there are all these superficial answers that come and you grab from the world what the answers might be. that you need to structure your company around. And my suggestion is always to pull that from the inside. So to access it through self-knowledge. So with a founder, they're simply trying to find access to some buried truth that they haven't looked for in the right way that's in there. When you talk to someone about this like self-knowledge exploration or something, is the thing you're after the underlying reason that they themselves may not know yet why they're doing what they're doing?

7:09Does it boil down to that? The way I think of it is story works in three layers. One, there's the external mechanics of how the character interacts in the world. And you can substitute character for product. That's a requirement. And in the case of technology, it's technical. You got to have something that works. And then there are two more layers, which is a subjective layer of why is this series of events important to me? And what does it mean to me personally? And then there is a philosophical layer. and on a philosophical level, it's probably where you try to find out and you have to steel man this and it's very easy to straw man it, but you got to steel man it.

7:47How you believe the world works today and what people believe makes a good world. Because everyone, most of the time, believes they're doing what is the right thing. It needs to be done the way it's done for a reason. They're mostly not wrong. So there's a sort of almost intractable philosophical beliefs of how the world works and why that's a good thing. And then you juxtapose that with your own personal philosophy of how the dominant worldview is actually wrong. And you supplant that with your own personal philosophy. And ideally you do this, you know, it's four or five points and you do it on a direct refutational basis.

8:25So each one, you say, everyone believes this, I believe that. When this is steel manned, this is really helpful. And then you do the same. So this is on a sort of global level about how the world And when we talk about world, it's probably specific to whatever it is you're building or running. And then they do that for the personal as well. So you can do it for a customer. You can do it for a person you're selling to. How do they believe things should be done? And you juxtapose that with what you think should be done. So there's three layers and you want to hit each one of them. I want to just like drill on these three layers of the story and try to turn it into a device that someone could like take away from this and try to apply to themselves.

9:07If I'm listening and I'm curious about, I'll just keep it grounded in business, like the story of my business at these three levels, is there a good question that I could ask, like prompt myself with to get at the external, the emotional and the philosophical? Can you think of a question for each? I think the external would be, what are we doing? What are we making? What are we selling? What are we buying? Whatever it may be, that's a core function of the company. The philosophical is the why. So you believe in certain ideals, a certain way you believe that the world should be. On an abstract level, it's an abstract why, and emotional is a personal why.

9:40In the founder's case, it's very often why they are doing it. So maybe to rebuild it in the other direction, the questions are something like, how should the world be in a general sense? Well, how do we believe? How do I believe? How do I believe the world should be? Makes a good world and a good life. Yep. The second layer is, why am I doing this? What is it about my specific story that maps back onto that? And the third is, what are we doing about it? and if you tell the company's story in that way, what does it galvanize that makes it worth pursuing in the first place? Because it seems like the thing that I encounter over and over again is even companies making something really great don't know how to talk about themselves for whatever reason.

10:17I'm curious why you think that is, why companies struggle with that, and then why there's such a payoff to doing the work to figure it out. I think sometimes it's because doing the thing is so difficult and complex that the idea of having to frame this now on top of everything else in some sort of philosophical way is overwhelming and doesn't even seem necessary at times. Of course, it's always present and people just are not conscious of it. So when the predicate understanding of what is actually happening is made conscious and it's communicated in a way that doesn't quite name the thing, but is able to metaphorically describe it, it can be extremely inspiring because it simply seems that these three elements of the external, the internal, and the philosophical combined unlock something that moves people very deeply.

11:05I was at Stanford when the turnaround for Apple in its second inning, I should not be using baseball metaphors because I have no idea what they are, but this was a man who had a philosophy, a personal worldview, and knew exactly what he was fighting against at all times, and then acted accordingly with unbelievable discipline and courage, and created something that was a work of art in many ways. He literally wanted to make business art and he kind of did. Every one of these instances is completely unique, obviously. But I think that is what's possible. It also makes it just more interesting in general.

11:38It's very easy to be conformist in some sense because you know what's expected, but there's a lot left on the table too. At the same time, espousing a new narrative or finding a predicate understanding just unlocks a ton. It doesn't need to be this life-changing. Sometimes it can be incremental and just unlock a whole new world of potential that is very easily implemented. And in many ways, stories are very good at creating symbols which represent some sort of transcendental belief that people participate in. So in the sense that everyone has an ultimate concern, something that they're in absolute ways concerned about.

12:15We'll talk about it, but it can be many different kinds of things. It can be money, it can be a deity, it can be truth. and to be able to present an ultimate concern around a business organization that makes a product of some kind, I think fulfills personal life picture for the people you're communicating it to. So it just feels more important, it feels truer, and it feels more meaningful and worthwhile. We're going to talk a lot about applying some of these principles to the world of building companies or making things. One of the very first things I can remember you teaching me is something to the effect of everyone focuses on the new when trying to tell you about their thing, but that the right approach is maybe only 20 % new and 80 % familiar or something like that.

13:01Can you say more about this principle of storytelling or of delivering a message or conveying something to people that the trap we fall in of trying to just focus on the exciting new thing? The interesting thing about this whole world is that there are no rules to it. everyone gleans and tries to come up with rules for themselves. Sometimes that seem to work more often than they don't work, but there's no book on this, really. Raymond Lowy, the designer, had a similar rule around 8020. The most tolerable element of new before it's rejected by the human mind is incomprehensible. With the idea of originality and creativity, there's a sort of tension, even that of itself is a story.

13:40There's this tension, especially now, originality is highly prized. And there's sort of this belief that only the very new is truly novel. And with storytelling especially, but I even think, maybe this is confirmation bias, but I even think in business or in innovation, the new is really just the obvious uncovered through systematic trial and error over a certain period of time. So that by striving to stay within the obvious and trying to find a variation on the obvious, I think you have a higher chance, at least in storytelling of discovering something novel that will still feel intelligible enough to categorize in the world.

14:21Some people have an ability to see something truly new and immediately categorize it. Those people tend to be very successful investors, for instance. But generally speaking, I think the idea of original is overrated and the great filmmakers know this. Great novelists know this, that you can begin with something very familiar and make it feel totally new incrementally. Tell me about the short film that you like so much that's nothing more than a camera panning back and forth. It was a project where simply there's a camera installed in the room and the camera would move back and forth across the room.

14:53And each time, uncover a little bit more of the room. And nothing else happens. There's no payoff to it. But the suspense of seeing a little bit more information about the room is absolutely riveting. Even just this tiny amount of new information being given creates enormous suspense. because somehow we're good at anticipating. We're really always anticipating. And each new piece of information gets put into some kind of puzzle. So by the end, the suspense is unbearable. If you think about the power of communicating by starting with the familiar and the known, how would you encourage CEOs, companies, people talking about their thing, use that truth?

15:33What is the method that you've seen the best explain accepted reality before trying to explain their new thing? Is there a method that comes out of this that you think is useful to founders, especially as the group that I'm the most interested in? The reason storytelling to me is so effective is because you have a subjective point of view that an individual can relate to because it's imitating and processing the character's point of view. So it's subjective in that way. The subjective access to storytelling, it would be a universal truth, but that can be only accessed subjectively. Does that mean that in trying to reach the mind of a customer, let's say, the right thing or allocation of time for the founder is to spend most of their time understanding the story of the customer as it currently exists versus how it should be, and then build off of that?

16:21I think that's exactly right. Someone called me, I hadn't heard from them in a while, and they said, we realized we've been selling to the wrong level. We have to sell to C-level as opposed to frontline manager level. And the sales pitch didn't work to the C-level. It was because they had not changed the framework, the subjective personal philosophy. The C-level has a very different worldview of what's happening in company than the line managers. And we worked on it and it was like magic. It was like magic. All of a sudden, closing huge national deals with huge companies because they understood the psychology of the C-level managers.

16:59I think it's easy to forget that you're dealing with human beings who have a human experience at the same time as having a professional experience. And story is really good at seeing these two layers at the same time. There's a subjective experience that a human being has, and then there's the professional experience on top of it. And I think you want to combine these two and understand you're dealing with human beings first and foremost. And I think the greatest founders and the greatest builders understand this instinctively. What did you learn running studios? You've made or been a part of making so many things, so many movies.

17:30Yeah, I always ran these sort of mid-sized places. I never ran a Warner Brothers type place simply because they don't make the kinds of movies I'm particularly good at or interested in. At the same time, it's a very specific skill set to run the big ones. So I ran the mid-sized ones. I think it has to do with being able to communicate in different worlds, which is actually quite difficult because you have to speak the language of filmmakers who live in their own world and then you have to speak the language of corporate because they're reporting requirements, business requirements. You have to speak the language of marketing and sales.

18:01You're in these different worlds and your job is to understand the language of filmmaking and the language of business and the language of marketing. They run interference so the thing can happen. What could CEOs learn from filmmakers? Two groups that like lead a group of people to make a thing. I've always had this weird obsession with filmmakers. I don't know why. Maybe it's the fact that the thing they make, it ends, the project ends and then it's on to the next. It's not just this like continuous thing that you have to constantly build. And that's appealing to me in some way. You've worked with some of the amazing filmmakers and appreciated their art.

18:35What could one learn from the other? I come back to this ability and willingness to take ultimate responsibility, which is really not what most people want to do at all. And for some reason, especially filmmakers, I have a true vision of what it is they want to be doing, which means they're birthing this project and they take ultimate responsibility from beginning to end and then do it again and then do it again. each time risking total failure, staking their entire being on this one next thing. They're running these pretty big temporary startups that get funding from the outside world. It's like they get distribution from someone else, not themselves.

19:12So I think it's courage. And it's also courage to espouse their particular worldview. And all the great filmmakers have a very particular worldview. I think it's extraordinary. It exists at all in the world. someone like that exists who will do that even if it fails and then is willing to do it again. And some of the CEOs I've gotten to know are artists in some ways. This is difficult stuff, especially when you have 100 ,000 employees. I mean, and you're owning it too. But to answer the question more precisely, I think it's the willingness and the courage to espouse a specific kind of worldview that perhaps is a little bit counter, but sends in some tension to the dominant own worldview and own that anyways.

19:54Having been and worked with lots of CEOs that have chosen this ultimate responsibility, how would you articulate the job of a CEO? In your experience, when you've seen people do that job well or do it poorly, what are the good ones in some basic sense doing really well? All society is communication. And that because of its complexity, communication breaks down into buckets of specialty. But it's in essence being a master communicator of an almost infinite amount of buckets. And knowing to context switch between them and understanding the language games that each one of these buckets plays, but never forgetting the core principles underneath all this, some of it is unspoken.

20:31So I think the people I've observed, especially as one person that I admire enormously, is doing a massive turnaround. And he has been communicating the same marching orders for two years to this huge company. Everyone around him was in doubt. and the results are finally coming in and he's right. So it's imposed, he's a whirl against all these obstacles, but he was able to do it because he could communicate exactly what he was doing almost in these three layers to anyone, but always adjusting, never the philosophy, but always sort of adjusting the emotional component to whomever he was speaking to so that each person could hear.

21:04The point needed to be conveyed so they could be at peace knowing that they're done their bit for this thing to work out. And to be able to communicate that in such a way that the people you're speaking to can hear it because you're adjusting this emotional, subjective emotional component to them. I think that to me is the secret of great communication. What is an iconic character to you? And I ask that because I feel like most people maybe selfishly want themselves to be like an iconic character in their own story, their company, to be an iconic thing in the world that it operates. You see what iconic characters, what things come to mind?

21:38My view today, and it might change, but it has probably to do with an ability to be a Greek hero, which means to live and espouse a worldview that is universally disliked. That's iconic. I'm really interested on this pure narrative level in what Elon Musk is doing, because it's so unconcerned with the traditional hero trajectory. He's almost Greek and this idea of breaking societal rules, if you will, that you get to some platonic ideal that is worth more than acceptance. And I think all stories have in common the idea of resilience, that a character will overcome these obstacles and things are not working.

22:17And there isn't enough knowledge and enough power to go where one must go or one has been impelled to go and keep going anyways. So this idea of resilience and to keep going anyways, even though the obstacles are getting enormous, I think inspires that begrudging admiration. None of this is a moral evaluation. And no one cares what I think was good or bad on a personal moral level. But on a narrative level, I think it's absolutely fascinating that you have someone willing to step out on such limbs all the time. Is that just fighting death? And yes, everything is in some ways a death project. Absolutely.

22:51Who feels that creativity, the art of creating negates death and therefore is the purest expression of a battle against the inevitable. And Tolkien has this famous clip on YouTube. He's like all stories are about death. And I think he's absolutely right because it's the ultimate stakes. And it's the stakes everyone lives with every day. And we get up and do things anyways. To go deeper on that, so we all have to die and therefore a certain kind of story is appealing? I think it has to do with a perceived power differential. That we're completely powerless in the face of death, at least for now.

23:22And that is a fantasy to acquire more power. And then because we have this capacity to imagine the future and we can imagine really much anything, We have an ability to create our own cherished outcome. They're overcoming this weakness with the power fantasy. Robert Towne, who was a great screenwriter and wrote China Town, and he recently died. Wonderful life and a wonderful career. He said this to me at lunch years ago when I was a young executive. He said, stories are either desires fulfilled or anxieties purged. And I think he's right. These are great minds who've made great films. And it's never left me.