The Next BIG Thing
J. Skyler Fernandes
Dynamic physicist, technology futurist and Simon Venture Group Founder ranked as PowerList 100 VC
By John D. Adams and Robin Jay
“In today’s e-commerce world, physical retail still represents about 80-90 percent of all sales, and it continues to be a much more profitable business model than e-commerce. The revenue of Simon Property Group (i.e., Simon Malls) is more than Amazon.com and Apple.com combined.” — J. Skyler Fernandes
Step aside innovation disciples of Steve Jobs or Elon Musk. The futurist to follow is J. Skyler Fernandes – a man who has almost singlehandedly aggregated the most innovative entrepreneurial inventors and integrated them into retail ecosystems that bridge the divide between online and brick-and-mortar storefronts. Fernandes, the founding managing director of Simon Venture Group (SVG), is far from your typical venture capitalist. He was introduced to physics at a young age by his musician father, who shared and encouraged his interest. His business acumen was inherited from his grandfather, a Portuguese immigrant who created the “grocery store” concept and went on to develop the highly successful Fernandes grocery chain, a grocery real estate company, and was the guiding force in instituting the grocery bar code system.
Fernandes studied physics and foreign policy at Harvard while in high school, and then graduated early from NYU, summa cum laude. His unique background in science, mathematics and international business relations has led to a culmination point working with the largest retail property group in the world. In short, he is a renaissance man for the 21st century. This is his story.
Spokes on a Wheel
At first glance, you may not think that a physicist and tech wiz would be an ideal fit in the world of big finance and venture capitalism. Considering Fernandes’ impressive achievements in all he does, one must acknowledge that for him, a man with a degree in economics and foreign policy, his previous experiences have acted as spokes on a wheel. To wit, each constituent part works to reinforce the whole. His amalgam of strengths afford him greater breadth of application and dynamic capacity.
“In middle school and high school, I just became immersed in the quantum physics space,” reflected Fernandes. “I really wanted to get into the world of commercializing quantum physics, of understanding how quantum computers work, and how, in the future, you could use quantum computers for encryption in sending sensitive data, whether in the financial industry or government … [I began to question] if you can use quantum computing to model things such as how a galaxy forms, [then perhaps] you can use a quantum computer to model future drug discovery that would solve cancer, or very complex financial modeling for hedge funds.”
His college internship with Standard Bank in New York led to a fortuitous encounter with Euvin Naidoo, (one of Forbes’ 10 most powerful and influential men in Africa, and now the first South African Partner and Director in Boston Consulting Groups’ Johannesburg office). Both were often the last to leave the offices at night. One evening Naidoo approached Fernandes. “Euvin said, ‘Who are you? You’re always here at the end. What do you do?’ And so we got to know each other. I shared with him my passion for physics, my passion for business. He became a mentor of mine. We started talking about the commercialization of quantum computing… So I started learning about the start-up world, the venture capital world and I was very interested in immerging markets and big growth opportunities.”
Naidoo eventually proposed that Fernandes join him in launching the South African Chamber of Commerce in America (SACCA). Together they created a variety of global initiatives, like the African Entrepreneurship Platform, which helps identify Trans-Atlantic African entrepreneurs to trade technology between Africa and the U.S. During that period, he also worked with Stephen Hawking’s AIMS (African Institute of Mathematics and Science) Initiative and the Next Einstein Program.
“Part of the agenda was understanding that Africa has a ~ 900 million population, and now 1.2 billion, which is kind of a frontier market that is developing rapidly. I established the Missing Middle Initiative which was launched at the World Economic Forum, focusing on creating a new breed of venture funds.”
Those experiences allowed Fernandes to pursue greater investment banking roles with Suisse Credit Group, a multinational financial services holding company headquartered in Zürich. He was also part of the team that lead historic deal representing Barclays, the British multinational banking giant, acquiring Lehman Brothers during the financial crisis.
Formulae for success
After more experiences: building his own Angel Fund, One Match Ventures; giving a TEDx Talk called “Innovating the Funding of Innovation”; creating “The Best Startup Investor Pitch Deck”; and becoming a partner at Centripetal Capital Partners; Fernandes was approached by Simon Property Group, the global leader in retail estate ownership, management and development.
Fernandes recalled, “Simon was thinking about launching a venture group and asked if I would like to launch it for them. And I said, ‘Maybe, it all depends on what type of venture group you’d like?’” They weren’t sure, but remarked that they were looking for a smart person with a good brand that could help determine the right type of venture structure and strategy.
After doing his due diligence, Fernandes was intrigued and agreed to come on board. “We ended up creating a venture group that is largely focused on investing in the industry of retail. I’d say about two-thirds of our investments are focused on helping retailers do their job better both online and offline, as well as rising new brands. And probably about a third of our investments are really targeted for things that Simon can use to improve the in-store experience within its properties. So those end up being more Internet of Things (IoT), smart cities, and smart building technology. It’s really more about making sure that we can continue to play a very meaningful role in helping retailers do their job better and improve the overall shopping experience.”
Perhaps most surprisingly to Fernandes, and to us, was the knowledge that in today’s e-commerce world, physical retail still represents about 80-90 percent of all sales, and it continues to be a much more profitable business model than e-commerce.
“Everything comes in cycles, but I think e-commerce has played itself out. At least, pure play e-commerce is dead. The best way you can get to profitability is by having an omni-channel strategy, which includes physical retail.”
The Advent of A.I.
As Fernandes elaborates on the benefits of enhanced e-commerce, the conversation turns to Artificial Intelligence (A.I.) and programs like IBM’s Watson. “Perhaps the easiest way to understand A.I. is to break it down into all of its verticals: You have machine learning, which is probably the most simple and straightforward. You give it a lot of data and it learns and builds upon that.” What about some people’s fears that A.I. could become a danger to humankind? “That’s critical to what Elon Musk and a lot of people in tech are working towards… How do we create A.I. to be safe and not to be concerned that sometime in the future we’re being led by an A.I. dictator? There are two leading theories: The first is Distributed A.I., where no one person has complete control over how it works.” The second? “If we can incorporate our cerebral cortex, our brain, into A.I., in essence working side by side, we can achieve more alignment in the speed of communication and connect our brains to a computer essentially becoming part of that A.I., which will ensure our future existence from being taken over by a pure A.I. dictator.”
The Human Factor
Putting aside nightmare scenarios, Fernandes returns to the benefits he has gained from combining numbers, technology and human experience. “The way I live my life is relatively analytical. I created an Excel model for how to pick my wife… I came up with all the criteria that seemed to be important to me and I ranked each criteria and I gave them weight. I had about 30-40 characteristics… Love was important, for sure, but you need more than just love if you really want to make it last a lifetime.”
Today, Fernandes is married and has a 2-month-old son, Summit. “We have a foundation built on not just love. We are best friends. A lot of people have asked for that Excel model and we have it online so you can download and customize it for yourself … I love her so much and want to support her in any vision she wants to realize. She wanted the same thing. She also wanted someone who wouldn’t make fun of her being a vegetarian. “The first books I’ve read to Summit are Quantum Physics for Babies and Quantum Entanglement for Babies, which are real books! I’m constantly having adult conversations with him … I just want to give him every tool possible to have a successful, happy life.” In the end, it seems no matter how analytic, we all strive toward the same goals.
The Next Big Thing: The Game of Entrepreneurship
You know you have a match made in heaven when you and your wife can collaborate on creating a board game used by the world’s top entrepreneurs. Then again, J. Skyler Fernandes did find the perfect wife using a self-created algorithm!
The Next Big Thing is a board game where players take on the role of startup founders, bootstrapping using their initial cash savings and superpower skills (i.e., programming) to create a minimal viable product, gain initial traction, and then raise multiple rounds of capital from investors, increasing the value of their company and founder’s equity. The winner is the player who exits (“cashes out”) with the most money by creating the company with the largest valuation while still maintaining the most founder’s ownership and generating the most positive impact on the world.