According to Australian businessman Mark Bouris, there are three things every entrepreneur should think about before pitching a business idea to a potential investor: One, know the business' purpose; two, have a handle on and a process for dealing with failure within the business; and three, to know who and what the business is accountable to.
Speaking at the 2015 SydStart in Sydney, Bouris took the audience of Australian entrepreneurs back to 1999, when he had, what he called, a market-disrupting idea.
"The business was called Priority Acceptance Corporation," Bouris said. "This business, with a crap name, was in a little office in North Sydney."
"It was all grey; a light grey, not even charcoal grey. The chairs were grey, the desks were grey, and the carpet was grey -- and you had to go outside just to change your mind, the room was that small."
Bouris said there was an opportunity, through technology, by way of capital markets allowing non-bank people to do what banks do -- lend money -- but with lower overheads, he was able to lend money at a cheaper price.
"If you want to be a disrupter, you have to be cheaper; offer the same service at a lower cost," he said.
After changing the company's name to Wizard, based on the nickname given to football players, Bouris said he headed down to find himself a partner. Just as businesses are experiencing now, Bouris said finding funding was a grave issue.
"Every so many years, capital opportunities arise -- but we haven't had capital opportunities in this country for a long time," he said. "I actually think that from now on, given Malcolm Turnbull and Wyatt Roy's innovation push, that it's going to start drawing capital in this country."
Bouris said when he was ready to give Wizard the push it needed, there was capital available to him.
"There was a tech-boom, and tech-boom companies wanted to converge financial services, media, and that was a capital opportunity; media companies wanted to buy up financial services," he said. "A capital boom is coming."
Bouris said a business needs to be built ready for the time when the capital is there, despite the fact it might not happen.
"I think it's actually starting to happen now; it's coincidental that we now have a prime minister who is very much understanding and sympathetic toward this industry," Bouris said. "Everything is lining up, for everybody."
According to Bouris, the next step for Wizard was walking into the office of Kerry Packer. Whilst not all startups have the ability to talk to an Australian media tycoon with the money to invest, Bouris said what Packer taught him back in 1999 still rings true 16 years later.
"This story is old, but the fundamentals remain," Bouris said. "The art of closing the deal is very important; never think it's done and never underestimate who you're closing it with."
Bouris said that he walked into Packer's office, with what he believed to be an impenetrable business model.
"I would call it a startup. It wasn't making money and it was burning profits," he said.
"My objective was to get money from him, and he turned around and said, 'I don't give a shit about the due diligence those other people have performed, I'm going to do my due diligence'."
Bouris said this attitude needs to be expected from people when trying to get money out of them, and said that they want to look a person in the eye to see what they are made of.
"I said to Packer, staring down at me through his cigarette: 'My business is Wizard Home Loans'," Bouris said. "But he said back at me: 'What business are you in? -- and don't say home loans'."
"He said to me: 'Look son, you're a disruptor, I like disruptors, I've got a history of investing in disruptors, I'm going to help you out here'. Packer told me I was in the business of people's hopes and dreams, that I was not there to sell a home loan, where people are going to borrow money off me and have to pay it back over 30 years, every month," Bouris said.
He said a business purpose closely relates to its audience; it has to know its audience. Bouris said a startup needs to find out what people want, and sell it accordingly.
"If you're an electrical contractor and you've installed the latest super-douper air conditioning systems, you're not installing an air conditioning box -- which is boring as hell -- rather, you're supplying comfort, piece of mind that if something goes wrong you'll be back there to fix it, that it is efficient, economical, and environmentally attuned," Bouris said.
"In the mobile phone business, you're not selling a grey box -- Apple doesn't sell that -- they're selling the ability to socialise, a communication point; it's entertainment, it's data. They're not selling a grey box."
He said a business needs to be certain that it is what an audience wants, not just something that is being jammed down their throats.
Speaking on failure, Bouris said it is something that is much more acceptable today, adding that in the US, it is nearly considered an art form to fail; in Australia, though, it is considered bad to fail.
"Me, I have no problem with failure," he said. "I have a fear of failure, I don't want to fail, it keeps me up at night, but I don't care if I do."
"At the time I thought Kerry wanted to hear that I had not failed, so I told him I hadn't, to which he responded with, 'Well what use are you to me?'"
Bouris said failure needed to be respected, and the ability to get out of it helps, too. He said a business does not need to be a screaming success to be attractive in its new idea, or to its potential investor.
"Kerry Packer didn't mind that; he actually preferred it," Bouris said.
Bouris urged startups to take advantage of the incubators and startup accelerators available today.
He said accountability is a form of mentorship, and according to Bouris it is not about someone telling someone else what to do -- rather the role should be flipped, with the mentor asking questions, and holding the mentee to account.
"Accountability is the most important thing, I think, today that will make a business successful," he said.
Bouris likened starting a business to going to the gym.
"If you go to the gym on your own, or do exercises at home, you're never going to work as hard as with a friend or a personal trainer; don't think you're going to be able to hold yourself accountable," he said.
"You have to find these environments where someone is holding the blow torch to your belly and asking the hard questions."
Bouris said it is a tough road being an entrepreneur, and an even tougher road being a startup. He said if the fundamentals are understood though, it can happen.
"My view is that Sydney, for example, has better entrepreneurs than any other country in the world -- a better ability, yet we underplay ourselves," he said.