Magic vs. Logic in Entrepreneurship

I’m often asked the question “What is more important to corporate innovation or external financial investors – an idea that’s Magical (appeals to their creative or emotional side) or an idea that’s Logical (appeals to their critical reasoning, rational side)”?

It reminds me of the question posed by Niccolo Machievelli in ‘The Prince’:  Is it better for a ruler to be loved or feared?  To which he wrote:

“Upon this a question arises: whether it be better to be loved than feared or feared than loved? It may be answered that one should wish to be both, but, because it is difficult to unite them in one person, is much safer to be feared than loved, when, of the two, either must be dispensed with.” 

 So taking this analogy, the investors would prefer an idea that’s both Magical and Logical, but if you can’t unite both qualities in one idea, then focus on Logic since that’s what the investors will prefer.  But is there really a choice to be made?  I think not.  This is why teachings in any ‘startup school’ are divided into two main phases:

  • Opportunity & Solution Description (Magic) – Prove Desirability of the idea
  • Execution, Financials, & Next Steps (Logic) – Prove Feasibility & Business sense

Both aspects of an idea are equally important to ultimately achieve success.  However, your ‘Logic’ part of story won’t even be heard if you don’t convince people of the ‘Magic’ part of the story first.  Thus, in your investor conversations, you’ll be opening with Magic and closing with Logic.   And if you’re mostly talking to investors at ‘demo days’ (which I hope is not the case), also think through the purpose of your demos – Are they to highlight the Magic?  Prove the Logic?  Or Both?  Remember the key word is Prove.  Yes, that means you needed feedback from actual customers no matter what YOU think is faith or fact.

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