How reading fiction can make you a better person and contribute to startup growth and venture returns

How reading fiction can make you a better person and contribute to startup growth and venture returns

In today's fast-paced and highly interconnected world, it can be easy to lose touch with our own humanity and the experiences of others. However, modern research suggests that reading fiction can help bridge this gap and make us better people. Not only does reading fiction allow us to neurologically relate to other people's experiences, but it also correlates with improved social interactions and the ability to read the room. In fact, reading fiction can change us on an individual level by cultivating empathy within us.

According to poet John Keats, "Nothing ever becomes real until it is experienced." This sentiment is echoed by research which suggests that fictional books can effectively be empathy-building tools, offering us the closest we can get to first-hand knowledge of someone else's experience. Studies, particularly the work of Natalie M. Phillips, have shown that when we read fiction, it not only activates the temporal lobe, which is the language processing center of the brain, but also increases global blood flow in the brain. This means that reading fiction revs up the motor cortex, which is the part involved in physical movement, and areas of the brain linked to sensory experiences such as the olfactory bulb, which is responsible for our sense of smell.

But how does this relate to being a better person? Well, research has found that the immediate experience of being drawn into a fictional tale has a positive association with "affective empathy" - the capacity to share another's feelings and emotions. In fact, individuals who were captivated by a story were more likely to pick up pens that a researcher "accidentally" dropped, as one study found. Another study discovered that they were also more likely to ask for additional information about a charity. These findings reinforce the idea that reading fiction can enhance our affective empathy and predict immediate helping behavior.

When we read fiction, we can, to some degree, experience the experiences of others, getting us neurologically one step closer to the understanding necessary for empathy. This understanding is not limited to empathy alone. Research also suggests that reading literary fiction can improve our theory of mind and emotional intelligence. By immersing ourselves in the perspectives and emotions of fictional characters, we are able to expand our own understanding of the human experience and develop a greater capacity for empathy and emotional intelligence.

While reading fiction has the potential to make us better individuals, it can also have an impact on startup growth and venture returns. Seed-stage investments, in particular, tend to yield more extreme returns than later rounds. This is due to two reasons: startups tend to grow faster in their early stages, and seed investments have longer to compound these higher growth rates. In fact, research using AngelList data has shown that growth drops off in a startup's second year of funding and continues to decrease from there.

So, how can investors avoid missing out on the best seed deal and maximize their returns? The simplest way is to put money into every credible deal. Simulations on 10-year investing windows for seed-stage deals suggest that fewer than 10% of investors will beat the index, even if they have skill in picking deals. By broadly indexing into every credible deal, investors increase their expected return at the seed stage.

In conclusion, reading fiction not only has the power to make us better individuals by cultivating empathy, improving our theory of mind, and enhancing our emotional intelligence, but it can also have an impact on startup growth and venture returns. By understanding the neurological benefits of reading fiction and the potential for empathy-building, we can incorporate this practice into our lives and strive for personal growth. Additionally, investors can take advantage of the higher growth rates in seed-stage investments by broadly indexing into every credible deal. So, whether you're looking to improve yourself or boost your investment portfolio, reading fiction and investing in seed-stage deals may hold the key to success.

Actionable Advice:

1. Set aside dedicated time for reading fiction each day to immerse yourself in the experiences of others and cultivate empathy.
2. Consider diversifying your investment portfolio by broadly indexing into credible seed-stage deals to maximize your expected returns.
3. Engage in discussions and book clubs centered around fiction to deepen your understanding of different perspectives and enhance your emotional intelligence.