Christian Hernandez

The Shape of Things to Come

“I don’t consider myself a financier, nor an asset manager”, he says, “rather, I am someone who gets to fund, support and learn from fantastic inventors. And it’s what I want to do for the rest of my life.”

A pretty definitive statement from someone who is still quite young, but stay with the story and you will see why. Hernandez has been a geek (“a geek who wears cuff links these days“) ever since he taught himself to code at age 12 on his dad’s Commodore 64. “I always had an interest in technology. At that point no one was forcing me to do it. I was just interested in coding BASIC programs and playing games.” He went on to get a degree in economics, but on the side he was always taking technology classes, building sites, and pursuing what was a personal passion of his.

During the first dot com boom, he worked for MicroStrategy, infamous for losing 62% of its market value in one day in early 2000. He was all of 24 at the time and to him, this was nothing more than paper money – just as it was for most of the early dot commers. The company is today still worth $2bn on the NASDAQ, though.

From there he went on to work for other tech companies including Microsoft at the time they launched Windows for smartphones. He then moved to Europe and joined Google, becoming somewhere along the line “the business guy working with the product guys”. A translator from geek-talk to market talk of sorts.

When Facebook called in 2009 and asked him to help them build up their presence in Europe, he joined their first small office in Soho and thought it an exciting opportunity to scale out a platform globally. Today, of course, FB has hundreds of people working in London in a large three story building and Hernandez continues to be a shareholder of the world’s premier social network.

His task at the time was to help entrepreneurs build apps using FB’s platform and on of his first projects was to help King, the makers of Candy Crush,turn from a web-based to a social and mobile company. King Digital went on to float for $ 7bn and this remains a personal point of pride for him.

Christian, together with his long-time friend and partner Eric Martineau-Fortin, had been investing as angel investors under the White Star Capital brand and in 2013 they turned White Star into a Venture Capital fund. Part of the reason for leaving Facebook to launch White Star is his belief that you can build and lead a world class company out of the Europe or out of anywhere for that matter (Spotify, he says, is the first example that comes to mind having been founded in Sweden).

White Star was conceived to operate between two hubs: London for Europe and New York for the East Coast of North America, and works with start-ups in London, Paris, Berlin and Stockholm, New York and Montreal. The partners work with individual and institutional investors, funds of funds and sovereign funds, the rest of the capital coming from family offices who like new tech investments but have neither the knowledge, background or ability to value a start up at an early stage. With White Star they get to look at a lot of opportunities and invest alongside them as companies scale.

The fund invests in earlier stage companies and woks with entrepreneurs hands-on. “That’s the value to entrepreneurs when we fund them”, says Hernandez.

“Out of 100 proposals we receive, we invest in 1 (for many, it’s too early, or they are not within our area of focus). Since we started WS, we’ve received 1600 business plans, mostly unsolicited. Generally, if someone sends an email via the website, it would be too much noise for me to pay attention. I might, however, provide a warm introduction to other investors. If the proposal is of interest to us, we set up a first meeting followed by a sort of a courtship period. There is an average of 3-4 months from this first meeting to the entrepreneur seeing our money, at which point we sign up for a 6-7 years relationship.”

If the first meeting is the offset of a courtship game, once the agreement is signed, entrepreneur and investor begin a relationship that lasts 6-7 years before the “uncoupling” – the average length of time before exit. During the investment period, White Star Capital helps with product and marketing strategy, fundraising and deal structuring.

One of their investment was Summly, an app developed by the then 15 year old Nick D’Aloisio. D’Aloisio taught himself how to code in his early teens, created the app, and sold it to Yahoo for a reported $30m.

“He’s a great role model for people who want to be entrepreneurs -charismatic and personable”, says Hernandez, “He will do another start-up and another one after that. As angel investors, it was great for us to be part of that story. The problem in Europe is that there are not enough inspiring role models. In the US, all mums want their kids to be a Zuckerberg, in China they all want their kids to be the next Jack Ma.”.

The shape of things to come…

“There is a combination of trends happening right now that I get excited about. There are, for example, all the developments taking place in the mobile phone industry – the super computer that we all carry in our pockets. This super computer is now tied to the internet, itself the world’s largest super-computer. You can buy a smartphone in Africa for as little as $30 and it is amazing what you can do with it. The handset is just the access point, but data and computing power are the real magic. This magic could be getting from A to B using Google Maps or ordering your lunch online, or playing your favourite song on Spotify.What is amazing about this is that we all have the ability to control our environment via a portable device connected to the Internet.

“The flip side is that children today expect instant gratification – they expect to touch a screen and something happens, but that’s not of course the way real life works.

“While the current interaction requires you to look at your screen, things are changing rapidly and everything is becoming more accessible. The Apple watch is a good example of a wearable computing device, but by no means the only one. One young entrepreneur I know has started producing jewellery with a sensory input that alerts you when you have received an urgent message. This removes the necessity to constantly check your screen. The Apple watch sends a different buzz for different applications. Wearable devices that streamline your routine and save you time will become much more common in the immediate future.

“3D printing is already impacting industrial production and within the next 5 years it will revolutionise the home. When that tiny screw for your Ikea furniture piece breaks and is impossible to fund, you’ll be able to recreate it yourself.

“The human race has recently sent a digital file of a wrench into space, so that astronauts onboard the ISS can manufacture it thereit’s amazing.

“Again: We emailed a wrench to space!

“3D printing will both lower production costs and widen accessibility. Several companies are doing interesting things with DNA printing which opens up avenues for genetic manipulation and engineering in humans, but poses important ethical questions.

“Personally, I am not sure where I stand on this – I’m excited by some of the implications, yet also scared by others.

“Robots are already prevalent in manufacturing but will soon be among us, the consumers, and will become a part of our lives in the next 10 years. Who exactly will manufacture them, and in what forms, I don’t yet know…

“Self-driving cars are already being tested and make eminent sense. Not only can one be productive sitting in the back seat, but cars being driven remotely is more logical because we humans are emotional beings that get easily distracted.

“The current problem with the computer being used as a driver is not technological, but rather to do with regulations and human interaction.

“What’s going to happen within the next couple of years is the emergence of driverless trucks, with their own ‘super’ highway lanes. These will be self-regulated, highly efficient transport systems that will save time and resources.

“These changes will apply not just to macro economics but to all of us as individuals and will change the world as we know it fundamentally.

“White StarCapital is not a bio-tech investor but I am aware of some very interesting developments in this area also. Health devices that track blood pressure are already in use and will become mainstream – we will all carry them. We may even become part-machine/part-human in the future – the first legally certified human cyborg is already a reality.”

What is the next frontier in terms of new tech investments?

“Right now I am spending a lot of time searching for investments in the area of artificial intelligence and machine learning. In the next 5 years I know I will be learning about robotics. I recently had a business plan about satellites in space. Cyber security is another very interesting area.At some point in the future, there will be cyber wars, with people being able to shut down the internet for several days, perhaps even a couple of weeks. Everything will stop and this will be a macro issue, a state issue, because we have become so dependent on the internet.”

Are we setting the next generation up for a disaster?

“As a parent, of course I am concerned about this. It’s a question of what people do with their free time. New technology should free you to learn new things and enhance your brain and knowledge, but in practice, it is not necessarily the case. We have an outdated idea of what leisure time is and tend to spend it watching TV and playing games. I measure my leisure time in terms of how many books I have read and this means reading physical copies, not digital content.

“As for what specifically White Star Capital would be looking to invest in, we want to work with people who understand that the world is global and the cost of technology very low – people who understand also that they need to be capital efficient, faster, and that their value proposition has to make sense.

“As an investor, one would never be an expert in everything, but one has to be expert enough to ask intelligent questions, test entrepreneurial ideas and make sure the business makes sense.

“I know that no other job that would give me the same intellectual stimulation as this one does…”