#3 Henry Fernandez: A Journey of Bold Vision & Exponential Growth

I would say Winston Churchill and for a number of reasons. The first one, he was irreverent, eccentric, some people sometimes accuse him of being crazy. We'll talk a little bit about that borderline between genius and craziness. But a lot of what he did was he had a mission. He had a strategy. The mission in his mind was to free the world of Nazi Germany and Hitler. He had a strategy how to achieve that. He needed to sell that strategy to the British people and the world, especially the American people, and he needed to inspire people in order to keep the faith over a long period of time. And he needed to demonstrate determination. Especially in that famous speech that he gave when he said never give in, never give in, never, never. He basically said we are not going to be defeated. We will prevail. And he was able to navigate an extremely difficult period of history, especially for the UK, during that time, especially from the summer of 1940 when France was run over by Nazi Germany to November 1941 when Pearl Harbor was attacked by the Japanese and the Americans came into the war. So I think you have a character here that was highly unusual. He was extremely eccentric and was able to create major achievements in life at the time. And he had that incredible confidence in himself, his ability to see through problems. And eventually, he didn't know how he was going to solve it. I'm sure in moments of weakness he thought that Germany was going to invade the UK and the UK will cease to exist as an independent country. I'm sure he had those nightmares, but he projected an image of we will figure out the path. We will get there. I don't know what it is. I don't know how, but we will get there. So leaders in business and in other organizations that have achieved incredible things in life have this ability to see the future, this ability to inspire people to that future and work backwards and say we'll figure out the path. Leaders like this have an incredible optimism, an unshakable belief in the future of what their cause is and an ability to be confident enough that even if they don't have the answers to navigate towards that future, towards that end, they will figure out the way. And Churchill is one of those people that epitomizes that.

You always have those, for an entrepreneur typically, there are a lot of traits that you need to have as an entrepreneur. But two fundamental ones are that unshakable belief in what you're trying to achieve that is going to work, that is going to create a company or create a new product, create a new revolution or whatever. And secondly, that you don't yet know the path but that high level of confidence that you will figure out the path to get there.

Absolutely. I never met anybody who achieved an incredible feat in life who doesn't have that optimism, sense of purpose, galvanizing people, inspiring people and creating this environment around him or her that we will figure out the path, we will figure out the way, we will craft a way to get to that future. And there are not too many people in life that I know of that have achieved great things that don't have that.

Yeah, I think one of the most difficult things for human beings. We're incredible creatures with a lot of attributes, but one of the things that we don't have because of our heritage is long-term perspective. The ability to see five years out, 10 years out. And it's not that we're not equipped to do that mentally, analytically, emotionally. It is more that we do not have the predisposition to spend time thinking about what the world will look like or what a particular situation will look like that far out. And the people that do that, the people among us that do that are called geniuses because they have this ability to see how the world would look like 10 years out. And it is not because they're true genius. It's not that they have an IQ much higher than ours. They just spend the time thinking about it. They have the ability to sit down and have the patience to shape it, to try to see it, to try to develop it and to try to then work backwards from there. Most of us, most human beings don't like doing that. How many people in your life do you know that will tell you what they're doing 10 years from now or even five years from now? Even people that you know are planning vacations, how many people plan vacations one or two, three years from now? They don't, right? And the worst of us plan vacations like three months ahead of time as opposed to a year or two ahead of time. So that tells you that's how we're made up because we're made up, we're human beings, human race made up of thousands and thousands of years, tens of thousands of years of evolution. And that evolution never taught us to be long-term because we needed to focus what to eat that day. When we were hunters and gatherers, we needed to focus. We weren't going to focus what we're going to do a week from now. And the most you could do was if you live in a cold weather, you needed to focus on how to survive the winter, but that was it. You couldn't go beyond that. So how can we as a human race retrain ourselves that easily when we have had tens of thousands of years of shaping us into being short-term? It's very hard. But that's what a lot of incredible people in life have, that ability to shut the short-termism and focus on the long term and have that long-term perspective and they achieve great things in life.

First of all, I think I've been blessed all my life with having developed an ability to dream about the future and not only dream at night but daydream about the future. So when I was a teenager, I tried to think in whatever professions I was contemplating at the time, trying to think about, okay, I'm 18 years old, I'm 16 years old, if I were 30, what would I look like in that profession? Whether it was a banker, whether it was an investor, whether it was a politician or whatever, I would try to analyze myself at the age of 30 and then daydream about it. When I honed in to the specific areas, when I was growing up, I wanted to be a politician helping the development of my native country of Nicaragua in Central America. So when I was dreaming about it, I would actually envision myself creating certain policy and the effect of those policies and what they will mean for the country, what they will mean for development, what they will mean for wealth creation for the country and all of that. And I was very comfortable in that environment. I was a little more of a loner and an introvert. I eventually forced myself to change but I was definitely a loner and an introvert. So I was very comfortable in my own skin. I was very comfortable being alone and not around a lot of people and thinking about these matters and then working backwards to see that. So that taught me the incredible power of first of all dreaming and secondly creating an image of yourself 5, 10, 15 years from now and more importantly working backwards from that image and say what are the experiences, what is the education, what are the network of contacts that I need to have, who do I need to learn from to become that person?

Absolutely. Even today, I'm in my mid-60s and I envision myself at 75, at 85 if I'm blessed to live to that age, at 95. So I said to myself what are you going to be doing at 95? What is the kind of life you want to have if you're lucky enough to get there. And then I said I envision myself with good health and without good health and how would I respond to that. And obviously the shorter term for me is 75, mid-70s, because about 10 years from now. And I think about what do I want to be, I think about what is my position in the company that I run, what will be the activities I will want to be doing, and what would I want my family to be? What do I want my kids? What relationship do I want to have with my kids? I even think about where would I want to live? Would I want to live in a place that is very close to my kids and my grandchildren or do I want to be in a distant location and what are the implications of that? I haven't resolved that but what are the implications of that? So that's on the personal side. On the business side I try to envision my company MSCI and what it will look like 10 years from now. What size of a company will it be? How many employees in what locations? What clients do we want to have? What products do we want to offer? What size of valuation we have? What return to my capital providers will I provide during that period of time. So I call that my 10-year corporate strategy. And then once I look at that with my colleagues at MSCI then we work backwards. But obviously we don't live in an isolated world so in order to understand a company like ours which is very global I need to develop an image of what will the world look like 10 years from now, what would the role of China be, what would be the role of Europe, what's the role of America, what's the role of emerging markets, what's the role of capitalism where we are obviously a provider of solutions to the global investment and finance industry. So I need to envision what will the global asset management industry look like? What will the private equity firms look like? Better yet the alternative asset managers look like, what size will they have? What will global wealth management look like in this context of development of management of savings for wealthy people in the world. So you need to have a paradigm of your environment 10 years from now, you need to have sensitivities around it. How about if it is dramatically different one way or another what it will look like. There are times in which I think about we have lived in America largely in a period of peace and prosperity since World War II. We've had the Korean War, the Vietnam War, the Afghan War, the Iraqi War, etc. But those cannot compare to World War II. So therefore I try to envision a bad scenario which is what if the world is at war for a period of time, what does that mean for survival for me and my family, for my business. You don't know how shape that will take but you need to be ready for that. When I was growing up I learned this old saying that fortune favors the prepared. So I have no problem going through scenario after scenario in my head and trying to see what my response to that scenario is. And frankly, a lot of people, family members, friends, colleagues at work say, 'Henry, you're crazy. Why are you thinking about that? Why are you wasting your time?' And you know what? I like it. It's not as if it's a torture for me. I like figuring out different scenarios. I like playing them out in my head. It's the kind of exercise that makes you better, makes you more resilient. And actually, it's the kind of exercise that makes you even more confident because once you figure out a scenario that is good and that you prosper in it, you feel very good about it. So that's among the things that some people that are always prepared do.

No, I don't block out time for this. I do it whenever it presents itself. So when you have a long weekend and you have a little more time, I sit there and maybe watching a movie or maybe reading a book and sometimes it takes me a long time to read a book because after 20 pages in the book, I start daydreaming about something that the book did. So I spend 20 minutes reading and then an hour daydreaming about something that came out of the book. And then I go back to reading the book. So it takes me a long time because I use a book to sort of judge my ideas, to force me to think about things that are being said. But it could be a movie of any kind. It could be an action movie, could be a drama, could be whatever. But I'm always looking for that stimulus that is going to make me think about things not just be passively watching or passively reading. So this concept of blocking out time to think has never worked for me. When I've done it, I don't want to think about it, when I've done it, I'm too tired or something else comes up. So it's not very conducive to creativity to do that. I grab the moments whenever they come. I could be at work. I could be driving. I could be on a plane. I could be watching a movie. I could be talking to my kids. And all of a sudden, something prompts you. There's a stimulus there. So, a couple days ago, I was talking to one of my sons. And we were trying to talk about what it means to have multi-generational success, for example. He's 25 years old and he's working right now. So imagine a 25-year-old having a discussion with me about multi-generational success. So I said what about your kids? How are you going to teach your kids? How are they going to teach their children? So we start talking about the families that have had multi-generational success, whether it has been in banking or in investments or whether it's been in the arts. You have a lot of families that have had generations of artists. So what does it mean? What is the secret sauce for a family to have multi-generational success? So that's an example of we were just having a conversation about something and his career and what he wanted to do and all of a sudden this turned into that discussion. So I let it go. We stopped talking about his part of it and we got into a one and a half hour discussion about multi-generational success. So again you got to take the opportunity when the opportunity comes and capitalize on it because it is there, it is that moment and if you let it go it may not come back, that conversation may not come back for a long time.

Definitely see it in myself. I try very hard not to project it. I try very hard not to give that impression. Others do the opposite. Others try to project that impression of craziness so that they are viewed as disruptors or it makes their job easier if they project that image. I try not to but for sure there are moments like that. I had a Eureka moment a little bit like that before I went to graduate school of business. I was in a PhD in economics at Princeton University and I was trying to master the subject of macroeconomics and monetary policy, monetary theory and I was going after it with such a vengeance, with such a zealousness that there was a period of a few weeks in which I saw the abyss. And I tell myself and I remember vividly that period. I said, 'Henry, if you push a little harder, you're gonna go nuts. You really want to go crazy. You may not come back from this because you're forcing yourself so out there in these theoretical concepts and all of that that what about if you don't come back? What about if you just damage your brain and you just don't come back?' So I had to stop, I retreated a bit. In my career, the biggest things that I've done, whether it's a large acquisition, whether it's fighting a downturn in the company or whether it's fighting activist investors or trying to push people to the frontier of what we do, I feel that I am at the outer edge. I'm pushing myself and pushing people to a sphere that some people could consider crazy. But I try to do it with a sense of responsibility, with logic as opposed to just trust me. And that's a little bit of the Winston Churchill discussion we were having earlier. There were times in which this fellow was probably crazy in thinking that they were going to win, in thinking that he was going to convince the Americans to come into the war and things like that. So I think there is an element of irreverence. I normally call that, I don't call it craziness. I call it irreverence in incredible leaders and people who achieve great things in life. They lack that reverence. I normally sometimes call this also lack of obedience to authority. They challenge the status quo. They challenge the normal thinking. They challenge the social norms. They challenge the boundaries of success or power or whatever. And that's what motivates them. That's what gets them over the line to do great things in life. And that's no different than the social revolutionaries in the world. When I was at Georgetown as an undergrad, I studied economics and political science and much more history and political science and economics. One of my fascinations was to study revolutions in the world, a lot of it because my own country was going through its own political revolution so I needed to understand it. So I studied the Russian revolution, the Mexican revolution, the American, the French, the Chinese revolution and all of that. These are social revolutionaries. These were not, people call them political but they had a different idea of the organization of society. And therefore those people really stretched the envelope dramatically. You think about the American Revolution. It was a completely new form of government that they were trying to create. So those people were irreverent. Those people had no fear. They were out there in the frontier of thinking and that's what I pride myself to always want to be. Of course, I don't want to cross and fall into the abyss, but there have been times in my life in which I've been very close to it, but thankfully I pulled back.

The best thing that can ever happen to somebody. Of course you don't want to have a fatal failure. But based on my own experience, I wouldn't be where I am today if it hadn't been for all my failures. And I think failures plant the seeds for success in the future. And again it's not that we walk around every day wishing that we fail, but we will fail. It's just the law of nature that we will fail at some point in something either socially in our families, in our friendships or in business or in your work environment. And therefore the issue is not whether you're going to fail or not. The issue is what are you going to learn from that failure in order to apply it to future circumstances. And there are a lot of people in the world that when they fail, they don't want to talk about it anymore. They want to bury it. They want to forget it. I'm not a master at all, but when I fail at something, I go through it thousands of times. Why? Why did this happen? What did I do wrong? What decision in retrospect I should have made better? And I don't do it because I want to torture myself in the failing situation or reliving the failing situation. I just want to learn from it. I want to learn from it so that in the future I can apply those lessons. It's very hard. It's harder to learn from successes than to learn from failure. And it's normal. When you have a lot of success, you're high, you feel great, you talk about your success, but when you fail, it hurts. It hurts so badly that again some people don't even want to talk about it. They want to bury it. But if you master the art of enduring that difficulty and that pain and learning, you're going to be successful. So my own company MSCI, when I took over this failing business at the time, I had failed three times. And at least one of them was pretty bad. But because of my ability to learn from those things, I didn't have all the learnings and all the lessons when I created MSCI but for sure I had an enormous amount of experience in failing. So I had failed in business three times. I had to leave a country because of a communist revolution. And for the years, I think it was at least three or four years after that, it was one of the worst periods of my life. Because I didn't know, I was a political refugee. I didn't know where I was going to live. I didn't know if the United States was going to let me live in the country. I didn't know what career I was going to have. I was lost. I was lost. And I went through an enormous period of examinations, retrenching, rethinking. I ended up honing in on a theme, which is what is the meaning of life? What's the purpose of life? So it's not just failure in business. I had enormous failure socially which is I was part of a society in a country called Nicaragua. I could no longer be part of that society. I didn't have any more friends in that society. I didn't have any belongings. I didn't have any attachment. But I didn't have anything else. So that's a failure that you need to deal with. That's a big deep hole that you need to dig yourself out of, similarly to a business failure. It could be a personal failure also like a marriage, or a big setback in your family with a family member. I grew up, there were five of us. I was in the middle and my oldest brother who was 10 years older than me suffered from very severe cerebral palsy. So you have to grow up with that adversity. How do you help him? How do you make sure he doesn't die? So anyhow, life presents to you a number of challenges, some of which are failures. And if you disregard them, you're not going to be a hugely successful person if you don't learn from them. If you don't use them as a catalyst to do better things in life, you are disregarding an incredible ability to learn.