Alejandro Betancourt on Gauging Investments’ Overall Potential & Risk

In addition to launching companies such as asset management enterprise O’Hara Administration and ride-share service provider Auro Travel, Alejandro Betancourt has invested in oil, retail, and other entities throughout his career.

When assessing potential investment opportunities, Betancourt considers several factors — including the management team’s ability to successfully bring the concept to fruition.

“There are many, many great ideas out there,” he says. “But a great idea always needs to be partnered with the right management. People execute the strategy of an idea. Other factors are very, very important — the right timing, the market — but execution is everything. If I believe the right people [are] behind the idea, then I take that bet.”

Supporting New Industry-Disrupting Endeavors

Alejandro Betancourt became interested in one of the companies he backed financially — the Hawkers sunglasses brand — after an investment manager he worked with told him about the founders’ innovative approach.

“He put me in touch with them, and I fell in love with the model,” Betancourt says. “They were taking all these risks when they started Hawkers and trying many things. They discovered that you don’t need sizes for sunglasses — and at the right price, you would take the risk, as a customer, and say, ‘For $20, I will try this because it looks cool, and I’ll order it online.’”

Initially, the company’s founders had actually set out to launch a completely different business — a Spanish language version of the classified ad site Craigslist. However, funding challenges slowed progress on the venture, when one of the founders became intrigued by a unique pair of sunglasses picked up during a trip to the U.S., a light bulb came on, and they decided to start distributing the brand in Spain.

The robust consumer response inspired the four founders to launch their own sunglasses line. By 2016, TechCrunch reported Hawkers was selling its distinctive shades in more than 50 countries and producing an income of $78 million, with 90% of its sales coming from consumers who purchased the product on the company’s website.

Hawkers had also raised $56 million to fund future growth from investors such as Betancourt — who contributed a social media-based marketing plan that helped fuel its early success. At the time, social media wasn’t as prevalent in Europe as it was in the U.S., so sites like Facebook offered a relatively inexpensive way to promote products.

“They discovered the conversion rate was crazy, and they made a lot of money,” Alejandro Betancourt says. “They became one of the largest and fastest-growing sunglasses brands in the world. The industry had established a culture that sunglasses that have any quality have to cost more than $100. [Hawkers introduced] a very good product at a very, very accessible price. [It] was extremely inexpensive to get impressions on digital media; [you’d] spend $100 on Facebook and get $300 in revenue.”

The momentum from the company’s cost-effective social media efforts helped Hawkers transition from being a new entry in the market to a prominent eyewear industry brand.

“It was because [the marketing happened] at the right time, with the right management, the right idea, and the right product,” Betancourt says. “Big companies were not using Facebook to get to their customers — and if nobody’s using it, it’s cheap.”

Ensuring Investments Will Reach the Right End Users

Facebook proved to be a valuable marketing tool for Hawkers after its inception; today, however, because the site has since become a more popular promotional outlet, other less-saturated social media venues may provide a similar value proposition, according to Alejandro Betancourt.

Pinterest and Reddit, for example, offer businesses a chance to promote their goods and services for likely less than a campaign on some other social media venues would cost — with potentially less competition for views, since other industry members may not be utilizing those promotional options yet.

Paying attention to the most effective tactics in the current marketing environment can be crucial. A number of entrepreneurs, for instance, shifted from working with high-profile social media influencers, Betancourt says, to ones with a smaller audience after Facebook’s popularity soared.

“It’s the appetite of the customers and where the conversion rates are more effective,” he says. “It’s a constantly evolving market that you need to test and test. Sometimes we hit a home run; sometimes we get [to second base] — but as long as you’re not striking out constantly, you’ll be a market leader.”

Even with careful planning, assessment, and adjustments, effectively identifying and enacting the best marketing and other operational processes can be challenging. There is always a chance, Betancourt says, that something you try won’t work.

“[In] today’s world, the way to understand how your conversions are working is to really measure it,” he says. “I’m a strong believer that branding strategies are a key element because they make it easier to [get] a conversion when you launch a campaign, [and] to make sales. But it’s really hard to get it right all the time.”

As a result, investors and company founders face some degree of risk in virtually every business decision they make — which can feel daunting, but is ultimately necessary, Betancourt says, to achieve success.

“You’ve got to take risks — because if you [remain static], the company is going to lose market share,” he says. “We live in the digital revolution; it’s like the industrial revolution — if you kept working in an industry where horses [were] your main service providers, you were going to be out of business. That is happening today in different ways. No matter what sector you are [in, there is] constant change. You’ve got to keep up — and to keep up, you’ve got to take risks.”

Investors shouldn’t fear the uncertainty they face, Alejandro Betancourt adds; however, considering what the potential effect a decision might produce can be helpful.

“It’s easy to say and very hard to do — because you always look into the potential upside, but never look into the potential downside,” he says. “You’ve got to be comfortable, when you take that risk, that you can go to bed at night, understanding [that outcome] might be the new scenario when you wake up. [If] you feel you’re [making] a move that would take your company to a new stage, that’s something that you have to try — as long as the downside is something you can live with.”

Related: Alejandro Betancourt, Early Investor of JobandTalent, Discusses Company’s Success in 2021

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