Would You Lose Your House? Alejandro Betancourt López’s Test
A blunt question from a friend shaped how Alejandro Betancourt López sizes his bets. Before committing to a deal, he pictures the worst outcome and asks whether he would still be on his feet if everything went wrong.
“Are you gonna lose your house over an investment? No. Okay. Then you build on that,” he said in 2023 when asked how he decides how much risk a deal can carry.
Starting From the Failure Rate
“90% of projects that are started fail,” Alejandro Betancourt said. “And that’s something you gotta live with.” Alejandro Betancourt López made the point while explaining why founders need a plan for losing before they start.
Federal figures show how common failure is even for ordinary companies. Of U.S. private-sector establishments born in March 2013, 79.6% were still operating a year later and 50.6% after five years, according to the Bureau of Labor Statistics. Nearly one in five closed within the first year. That was the steepest annual drop in the decade the agency tracked. The data covers every kind of new business, from restaurants to accounting firms.
Alejandro Betancourt López’s Homework Before the Leap
Accepting that most projects fail does not mean jumping blind, in his telling. “You have to take risks, but you need to do your due diligence. You need to do your homework,” he said in an October 2020 interview about Auro, the ride-hailing license business he helped start according to his résumé.
A good risk taker, he said, is “completely aware of the risk you’re taking” and knows where they will end up if it goes bad. Someone who works that way can take a loss “and be the next day, ready to the next challenge.” A bad one thinks, “I’m going to jump down the base, and see what happens. Maybe somebody will catch me, and take me to the moon.”
“Nothing risked, nothing conquered,” he said, calling it a popular saying. Then he added a second rule. “Expect the best, but prepare for the worst.”
Sizing a position so that its failure would not cost the family home keeps one loss from ending the next attempt. Alejandro Betancourt López applied the same thinking to Auro’s early license purchases. He has called them a high-risk bet, made before Uber and Cabify needed permits at scale. “We were confident, but were not certain that this will happen,” he said.