In this episode of Innovators Inside Podcast, Ian Bergman speaks with Garnet Heraman, co-founder and GP at Aperture Venture Capital, about vertical AI, quantum software, enterprise adoption, and how investors can identify the next major technology shift.
As artificial intelligence moves from excitement to execution, the real question is no longer whether AI will change business. The more important question is where AI will create durable value.
The answer may not be found in generic AI tools, broad chatbots, or surface-level automation. The strongest opportunities are likely to come from industry-specific solutions, deeper infrastructure, and a clearer understanding of how technology markets form over time.
Here are five lessons on vertical AI, quantum computing, enterprise adoption, and the future of venture capital.
Here are the five key takeaways from their conversation:
AI value is shifting from general-purpose tools to industry-specific applications.
Generic enterprise AI can be useful, but it is often difficult to defend. Broad chatbots, knowledge management tools, and general productivity assistants can be copied, bundled, or absorbed by larger platforms. When a solution is too broad, it becomes harder to build a lasting advantage.
Vertical AI works differently. It focuses on specific industries, workflows, and business problems. Instead of trying to help everyone with everything, vertical AI solves narrow but valuable problems in areas like healthcare, insurance, finance, building supplies, and other complex markets.
The opportunity is not simply to apply AI to a category. It is to understand the category deeply enough to know where AI can remove friction, improve decisions, reduce waste, or unlock measurable value.
In many markets, the winning AI companies will not be the ones with the broadest promise. They will be the ones with the clearest use case.
Enterprise technology often moves through two very different phases: aspiration and utilization.
Aspiration is when companies get excited about a new technology. They want to experiment, invest, and signal that they are participating in the shift. Utilization is harder. It is when the technology becomes part of real workflows, changes behavior, and produces measurable outcomes.
AI is currently moving through that gap.
Many organizations are interested in AI. Many are testing it. Some are spending aggressively. But experimentation does not always translate into adoption, and adoption does not always translate into business value.
This is a familiar pattern in enterprise technology. Cloud software, digital transformation, and machine learning all went through periods where excitement moved faster than usage. The same dynamic is now playing out with AI, only at a faster pace.
The companies that succeed will be the ones that make AI practical, not just impressive. That means clear use cases, simple integration, strong ROI, and a product that fits how people actually work.
New technologies often feel unprecedented, but markets tend to behave in familiar ways.
The internet, cloud computing, enterprise software, machine learning, AI, and quantum computing may be different technologies, but they still move through recognizable cycles. Hype attracts attention. Early adopters test the limits. Infrastructure develops. Applications emerge. Markets consolidate. Value moves from one layer of the stack to another.
That pattern matters because it creates signals.
Capital movement, customer adoption, government support, policy interest, geopolitical relevance, and increased startup activity can all indicate that a market is beginning to form. No single signal is enough on its own. But when multiple signals cluster together and momentum increases, the pattern becomes harder to ignore.
This is especially important in markets that feel chaotic. The pace of change may be accelerating, but people, companies, and institutions still need time to adapt. Even in a fast-moving technology cycle, adoption is shaped by human behavior, incentives, budgets, trust, and timing.
The future may be uncertain, but it is rarely patternless.
Quantum computing is often discussed through the lens of research, labs, and hardware. That makes sense in an early market. But hardware is only one part of a technology shift.
Every major technology paradigm eventually needs a usable software stack. Developers and enterprises need middleware, APIs, orchestration tools, algorithms, control systems, and integration layers that make the technology easier to apply.
That same pattern may emerge in quantum.
As AI usage grows, demand for more advanced infrastructure may grow with it. More utilization means more complexity, more computation, and more pressure on the systems that support large-scale AI applications. Quantum could become part of that infrastructure story, especially as markets begin looking beyond experimentation and toward practical implementation.
The next major opportunity may not only be in building quantum machines. It may also be in building the software layers that make quantum useful.
When a new technology wave begins with hardware, the software layer that follows can become one of the most important parts of the market.
Some of the most practical applications for quantum computing may emerge in industries built around complex modeling and high-speed decision-making.
Finance is one of the clearest examples. Asset management, trading, portfolio optimization, and risk analysis all depend on evaluating large numbers of variables quickly. If quantum computing improves how these systems model probability, risk, and optimization, it could change how financial institutions make decisions.
Climate finance is another major area to watch. Climate risk involves enormous complexity. Weather patterns, insurance exposure, supply chains, infrastructure risk, regulation, energy systems, and market behavior all interact in ways that are difficult to model with traditional tools.
Better computational tools could change how companies and investors understand risk. They could also influence how markets price organizations that fail to adapt to climate-related financial exposure.
That is where quantum becomes more than a scientific breakthrough. Its business impact may come from helping industries make better decisions in environments where complexity is too high for traditional systems.
The future of venture capital and innovation will not be shaped by hype alone. It will be shaped by the technologies that solve real problems, the customers who are ready to adopt them, and the infrastructure layers that make those technologies usable at scale.
Vertical AI shows why specificity matters. Enterprise adoption shows why excitement must become usage. Historical patterns show that even disruptive markets move through recognizable cycles. Quantum software points to the next layer of infrastructure. Quantum finance shows how new computational tools could reshape decision-making in complex markets.
The biggest opportunities often appear when a technology moves from possibility to practical use. That is the moment when markets begin to form, customer behavior begins to change, and the next layer of value becomes visible.
Have a question for a future guest? Email us at innovators@alchemistaccelerator.com to get in touch!
Timestamps
🚀 Introduction to Garnet Heraman 00:01:05
🧭 From immigrant roots to startup leadership 00:02:08
💼 When startups became a lifestyle 00:04:19
🔁 From operator to venture investor 00:07:12
🤖 How Aperture thinks about AI investing 00:10:04
🧠 Why vertical AI matters more than generic AI 00:12:20
📈 Enterprise AI adoption and the utilization gap 00:15:18
🏥 Healthcare AI and payment integrity 00:20:36
⚡ Where we are in the AI adoption cycle 00:23:11
📚 Why history helps investors spot patterns 00:26:02
🔮 Predictive AI and the future of communication 00:30:23
⚛️ Why quantum is becoming impossible to ignore 00:34:00
🧩 The link between AI utilization and quantum infrastructure 00:35:29
📊 How Garnet identifies market clusters and momentum 00:37:06
💻 Why quantum software may be next 00:39:04
🧪 Learning the quantum market through experts and research 00:41:05
💰 Quantum finance, asset management, and trading 00:45:00
🌍 Climate finance and quantum risk management 00:46:19
🎙️ Final thoughts and where to follow Garnet 00:49:06
00:01:05:23 - 00:01:09:19
Ian Bergman
Garnet. Welcome to Innovators Inside. Great to have you on.
00:01:09:21 - 00:01:14:02
Garnet Heraman
Hey, thanks for having me here. And I'm really excited to to do this.
00:01:14:03 - 00:01:42:01
Ian Bergman
Yeah. Well I'd appreciate it. I'm sitting here. It's, you know, kind of midweek, late spring. And I have honestly felt a drought in my week of interesting conversation. So I've actually been looking forward to this, this discussion because, you know, such a fascinating entrepreneurial investor backbend. Well we'll see. You know, we'll see. For folks that don't know you.
00:01:42:03 - 00:02:08:21
Ian Bergman
I'm just so pleased to welcome Garnet Karaman onto the pod, co-founder and GP of Officer Venture Capital, but also involved in something new that I'm going to let you explain. But Garnet, like, maybe we can start by just having you introduce yourself in your own words. How did you come to be sitting on a podcast today talking about innovation and change and, you know, venture and beyond?
00:02:08:26 - 00:02:42:28
Garnet Heraman
Well, again, thanks for having me. And it's such a it's an honor to kind of share a very indirect, convoluted route to get here. But I started as the son of an immigrant, you know, mom from the Caribbean and kind of a scholarship kid all the way through and all the way through. The MBA got out of my MBA in 96, right, right at the beginning of the.com era in New York and had exactly two job offers, which is not exactly not exactly swimming in options.
00:02:42:28 - 00:02:53:09
Garnet Heraman
Right? One, one was to go to Hollywood and work in the studio business and some producers phones, which is like a little, a little weird.
00:02:53:10 - 00:02:55:03
Ian Bergman
The classic intern.
00:02:55:06 - 00:03:21:28
Garnet Heraman
With an MBA, no less, right? I mean, and there were people who had gone before me that had an MBA and a CPA, and they were answering phones. I was like, so, you know, it really was like one of those, Robert Frost, you know, fork in the road moments. And the second job was to, was to be the CEO of the startup, this internet company that was being spun out of a nonprofit.
00:03:21:28 - 00:03:31:07
Garnet Heraman
And I took the I took the yeah, that route made all the difference as the as the following says, that's that's how I got started.
00:03:31:08 - 00:03:52:28
Ian Bergman
It's a bit of a contrarian. Wow. I mean that all you know, we live in a time when I think venture and startups have had a cultural moment and are kind of pervasive. But, you know, I remember the pre-COVID era and I still in school, but like, I didn't even have a concept of what a startup was. I knew what AOL was, and that was pretty cool.
00:03:53:00 - 00:04:05:22
Ian Bergman
But like, you know, it is a bit of a contrarian bet looking back on it. Do you remember yourself as thinking, wow, I'm doing something weird or taking a risk? Or did it just seemed natural?
00:04:05:24 - 00:04:16:12
Garnet Heraman
This is how I know we're going to have a great conversation, because, you know, I don't often feel like the guy interviewing me is smarter than I am. I think you might. You might actually be smarter than I am.
00:04:16:15 - 00:04:19:26
Ian Bergman
I'm going to I'm going to take that for the undeserved compliment. It is.
00:04:19:27 - 00:04:42:25
Garnet Heraman
That is that is a well-deserved compliment because of just the way that you're framing it. So when you think about what you just asked, you know, it. It maps into this like paradigm that I try to share with people. And a lot of people just don't get it. So, you know, I was like, hey, you know, when I started, this was not a career at best.
00:04:42:25 - 00:05:15:28
Garnet Heraman
It was a job. And over the over the course of time, right. It went from being kind of like like like a B level second tier job, potentially right to a career. And then at a certain point, I would argue right around 2010 or 11 and in a different generation, people 15, 20 years younger than us. Yeah. If you and I are the same age, and then all of a sudden it morphed into a lifestyle.
00:05:15:28 - 00:05:29:14
Garnet Heraman
And that's what I think you were implying, that it's so smart. It's so you say cultural moment. I say it went from a job to a career to a lifestyle. I'm pretty sure the lifestyle thing is really accurate, right?
00:05:29:16 - 00:05:37:24
Ian Bergman
It is reality today, although I think, you know, people that have attempted to live the lifestyle maybe have had second thoughts about it because it's not an easy one.
00:05:37:25 - 00:06:03:22
Garnet Heraman
That's the nature of a lifestyle, right? And that's the nature of being young because you're trying on different lifestyles. Right? And then you settle on something that works for you. But but in any case, so so the real reason I knew it was contrarian to your other, your other, you know, bit of language. When I told my mom, my immigrant mom who wanted me to be a lawyer, banker or doctor, what I told her I was going to be, you know, working for a startup.
00:06:03:24 - 00:06:08:15
Garnet Heraman
She. I think she cried, actually.
00:06:08:18 - 00:06:27:25
Garnet Heraman
Because she's so deeply perturbed by the prospect, by the prospect of not not having a regular income and having to sing for your supper at different times. Whatever. Right. I mean, all all the stuff that we take for granted as as founders and entrepreneurs.
00:06:27:27 - 00:07:12:00
Ian Bergman
It clearly led down a path of lots of lessons that have accumulated. But also, you know, some some productivity and some positive outcomes. So so talk me through. You got this great job starting to realize what it's like to be an entrepreneur. What was, in brief, the journey from that moment to the point in time when now you're thinking about, you know, not just investing, but you're thinking about, you know, what are the actual problems that matter in the world, you know, behind which we want to deploy resources, new ideas, new constructs, etc..
00:07:12:02 - 00:07:29:27
Garnet Heraman
Well, for me, it was fairly organic path, and it really kind of centered around this, this I don't I don't know what to call it, this sort of a run of dumb luck in a lot of ways. Maybe it was just like a fearlessness of, like playing on the edge of whatever it was the edge at that point.
00:07:29:28 - 00:07:58:06
Garnet Heraman
Right. But in over the course of less, a little less than ten years, I did three startups. All three of them were. Well, let me be careful. I individually exited all three. Two of the three exits were essentially, you know, me being bought out by a private equity group. And so, you know, it's not it's not an organizational exit, but it was a personal exit and it was fairly, fairly enriching.
00:07:58:06 - 00:08:22:09
Garnet Heraman
And that's good. And then the third one was actually a merger with an investment fund. And and that's how I kind of, I don't know, sort of stumbled into the investment business a little bit. And I kept the same cast of characters. I had the same investors for all three. I had the same CFO for all three, and then my CFO for all the companies.
00:08:22:10 - 00:08:34:22
Garnet Heraman
Yeah, I mean, you know, if if it ain't broke, you know, so my CFO for all three ended up being my fund partner in, in our first fund. So go figure.
00:08:34:23 - 00:08:59:03
Ian Bergman
It's an amazing journey. And you know, you're now investing around what I understand to be, you know, practical problems in the real industries. You're in fine. Serve the earnings I think you're I think you're in health care. I want to ask you what that's like today, and I want to I want to preface this a little. Right.
00:08:59:04 - 00:09:37:01
Ian Bergman
Because I think it's important to recognize that you learn through experience by doing some things that are a little country and a little crazy, a little, a little whatever about their, to me, I feel like now we live in a world where people simultaneously assume that any problem should be instantly solvable with AI, but also that the world is changing so quickly that there is an insurmountable and infinite number of problems to solve, and we're constantly trying to play catch up.
00:09:37:03 - 00:10:04:22
Ian Bergman
I can tell you as an investor, this feels really bloody hard. I have absolutely no idea for being perfectly honest where to place facts around AI in today's world. So I'm actually really curious. You know, there's a long way in the ass. You know, like, tell me about your thesis, how it's holding up to allow users of AI and what that means for the corporations that actually depend on this innovation.
00:10:04:24 - 00:10:36:26
Garnet Heraman
Yeah. Thank you. It's a great question. And we'll come back to the, the, the early stuff and, you know, maybe the, you know, my angel investing career before this. Because I think that connects up to the whole spark conversation towards the end. But so the thesis started really early for me. It started, I think, as our second company, the second company was a tech transfer clearinghouse and had relationships with, you know, ten or so Canadian universities in like 30 American universities.
00:10:36:26 - 00:10:53:21
Garnet Heraman
And we were, you know, constantly looking for, you know, patent portfolios and this kind of thing. And we buy them up and then we'd resell them, you know, to Microsoft, to real audio, if anyone even remembers RealAudio, Macromedia, if anyone remembers Macromedia.
00:10:53:22 - 00:10:55:20
Ian Bergman
And then real player, that's the real thing.
00:10:55:22 - 00:11:19:20
Garnet Heraman
That's exactly right. I think I think we I think I met Cuban like back back in the day when he was doing one, one of those before it was like a roll up and all this. And so, you know, the, the, the thesis really started very early around this notion of what are the technologies that are going to be.
00:11:19:22 - 00:11:49:28
Garnet Heraman
Enabling of critical industries and critical markets and that kind of thing. At a certain point, that evolved into things around the notion of what's what's enabling of critical activities, you know, in, in, in, in startups, in the venture business. And so, you know, we've been looking at these things since the early 2000, a lot of some of which are now the foundational components of of what we think of as modern AI.
00:11:50:00 - 00:12:20:13
Garnet Heraman
Right? So OCR, ML, NLP, all of these things, you know, 20 years ago were in existence, just never combined into, you know, a holistic. And so, you know, we've seen that a lot. And so we try to we try to be very attentive to what, what we consider things that are enabling, but not yet part of a larger, not not yet part of a larger nexus of solutions.
00:12:20:13 - 00:12:45:03
Garnet Heraman
And that leads me all the way up to the aperture thesis. The aperture thesis is really, really simple. We parse based on our experience. We parse the the early AI market into. And it turned out to be a good bet. We passed it into a sort of generic enterprise AI, which really looks a lot like knowledge management did ten years ago.
00:12:45:03 - 00:13:13:00
Garnet Heraman
But but whatever. So that was Rag that was, you know, the, the, the omnipresent chat bot, that kind of stuff. Then and we realized like that's going away if, if you don't have, you know, if you don't have $10 billion to spend on developing it, you know, that's, that's going to go away. So then we started looking really hard really early in our fund lifecycle at Vertical Solutions, in very specific high value areas.
00:13:13:01 - 00:13:39:03
Garnet Heraman
Right. So I started looking at it in in healthcare first. And that was actually my first AI investment in late 21. And it's now, you know, series B company roughly a half $1 billion valuation, you know, and probably doubling or tripling revenue every year. You know. So you know, we started parsing AI based on what we had seen previously.
00:13:39:06 - 00:13:52:04
Garnet Heraman
And and later in our conversation, we'll get to, you know, what we think the next couple of segments are. And they all, you know, the punch, the steal my own thunder. You know, the the punchline is it all ends up in quantum.
00:13:52:06 - 00:14:18:14
Ian Bergman
It is interesting because you're you're sitting like you're thinking you're trying to connect to the dots on, you know, new technological waves and capabilities, but also the needs of the people that are going to be buying it. Right. And so AI is really interesting, right? It's it's one of these things where you can find a million and a half scenarios where you can apply an AI solution and great into a workflow, make someone's life a lot easier.
00:14:18:14 - 00:14:42:28
Ian Bergman
And then 10s later somebody's going to come up and be like, okay, that's enough foundation model. So how is your before we get to quantum, how is your sort of AI thesis evolving? But but actually, maybe more interestingly, that how is your understanding of what is interesting in AI evolving? Like what just excites you?
00:14:43:00 - 00:15:18:08
Garnet Heraman
Yeah. So so you know, to I just gave our broad strokes kind of parsing, you know, you know what's below that segmentation is really what's more interesting. And that leads to your question, your current question. So there's a whole series of things that that go into, you know, something taking off versus not taking off. Right. So so the thing that I think I wanted to discuss, and it's the most relevant to like some of the bets that we've made in vertical, vertical AI and the Nexus with agents, you know, vertical AI is this notion.
00:15:18:10 - 00:15:43:01
Garnet Heraman
Well, it really hasn't changed in 30 years. The readiness of consumer behavior, the readiness of enterprise, you know, to use it. Right. And if you if you take that frame, at least you said some interesting philosophical questions. Right. So the skipping ahead just a tiny bit. There's a lot of dialog right now about, oh, everyone's ready to spend but nobody's using it properly.
00:15:43:01 - 00:16:07:09
Garnet Heraman
And you know, with, with any, any, any defined ROI outcomes. Right. So that's that's further ahead. I think that's probably, you know, an accurate framing. I think it's a little overdone. But for, for us, for us, there was another framing in that same vein that that was even more important. And it turned out to be like a turning point in the, in the portfolio for us.
00:16:07:14 - 00:16:30:10
Garnet Heraman
So we had a moment where our company called Lafayette Health, you know, had done I think you yeah, definitely done seed where we came in definitely did an A and I think they needed an A bridge. No, it was a seed bridge to get to a. Yeah. And so and there was some big name fintech investors who were on the cap table.
00:16:30:12 - 00:16:52:26
Garnet Heraman
I won't name them because I don't think I don't think their behavior really was very worth highlighting. But so so when it came time to supporting the company to get that bridge, you know, one, you know, fun one, fun two, fun three, they all disappeared and, you know, and and in all fairness, one of them was like, you know, finished with one fund raising, a second one.
00:16:52:26 - 00:17:20:20
Garnet Heraman
So, you know, legit reason. Right. And and couldn't invest anymore. But shockingly, no one stepped up. Right. This is a company that was actually doing well for itself and just hit a hurdle. You know what I mean? Something just took longer than you expected. And so they needed, I think 800 or 900 grand or something like this. And our, you know, tiny little AUM fund, you know, did the entire round ourselves.
00:17:20:21 - 00:17:51:21
Garnet Heraman
Right. And and the question about why why that hurdle, why that delay happened was 100% like the, the, the the miscalculation or something about the, the time it would take for the enterprise user to fully adopt this and where when the behavior is changing, you know, what they changing fast enough, you know, and they go even deeper. The real issue was, hey, these folks in the accounting department, you know, are tasked with revenue management.
00:17:51:22 - 00:18:09:16
Garnet Heraman
Are they going to keep outsourcing it to specialists, or do they want to have access to this 24 over seven and just do it themselves, because it's so much easier in the vertical AI era? And, you know, it's one of these gut check moments. You have to you have to believe that it's headed in a certain direction. Right.
00:18:09:17 - 00:18:11:14
Garnet Heraman
And and we we did.
00:18:11:16 - 00:18:43:09
Ian Bergman
You do. And I you know, I applaud you on your conviction. It's easier to applaud, you know, when it works out, when you're proven right that that the hurdle is temporary. But it is interesting that there's a macro trends. I have to tell you this is the tangent. But, you know, I, I spent a bunch of my early career at Microsoft, and in particular, for a while I was focused on the most fascinating problem that I could never have imagined when I was in school existed in a large corporation that there were hundreds.
00:18:43:12 - 00:19:11:10
Ian Bergman
There were thousands of people at this company that were basically focused on one problem. And that problem was everyone in the world had bought a bunch of Microsoft tech and wasn't using it here. Point exchange, all these iCal licenses. It was well deployed, but underutilized. And everybody was sitting there and being like, oh, you know, if we don't figure out how to drive utilization and adoption, they're going to stop buying my lesson, though from that cycle, right.
00:19:11:12 - 00:19:42:25
Ian Bergman
This sounds like a critique of Microsoft or sales practices. It's absolutely not. My lesson is that there is a cycle of ambitious purchase, right? Like people getting excited. They want to try, they want to deploy. The real world catches up. Aspiration is a better word, absolutely aspirational. And it's it's interesting because nobody's going to look back. Nobody looks back now and says, hey, like cloud document management is not a thing, right?
00:19:42:26 - 00:20:07:02
Ian Bergman
No. Let's mean instead it's about, you know, who can predict adoption? I feel I feel like we're in that era with AI right now, and there will be bugs. There will be a lot of stone ups that hit a hurdle and don't survive the way your company does. Anybody who is looking at this and saying, you know, the super cycle doesn't exist, you know, spend writ large is going to back off.
00:20:07:03 - 00:20:09:22
Ian Bergman
I'll be honest, I think that's crazy.
00:20:09:28 - 00:20:34:19
Garnet Heraman
Yeah. You're hitting on something really, really important there on on this, you know, the lag time between aspiration and utilization, whatever. Right. Or mass utilization. Right. Well actually yeah. So it's aspiration I would say mass aspiration I would say that's kind of where we're at now is that's friction.
00:20:34:21 - 00:20:36:26
Ian Bergman
So I'm certainly there.
00:20:36:28 - 00:21:11:01
Garnet Heraman
So what we you know, what we do as investors kind of now push us into this arena of like, you know, picking your picking your spots. Right. And so I at the time of this healthcare investment, I was looking around and I had some signals. Right. You know, you may or may not remember all of these, but you know, General Catalyst was out doing like all sorts of like patient management, AI and, you know, funds like that were throwing massive amounts of money at the consumer side of things.
00:21:11:02 - 00:21:35:13
Garnet Heraman
Right? This is you know, my my company is not the consumer side of things. It's it's like the payer revenue management side of things. So so every year in this in this country, you know, 300, $400 billion worth of fraud, waste and abuse happens in healthcare and medical billing. And so if you even get a percentage of that, you're like returning massive, massive amounts of money to people.
00:21:35:13 - 00:22:02:10
Garnet Heraman
And my bet I remember having this discussion with the CEO, you not about the money you're saving the enterprises. It's actually about the integrity, pricing, integrity that you put back into the marketplace so that, you know, let's say lower income folks or regular middle class folks get a better deal on their health insurance. And that's really what the long term outcome was or should be.
00:22:02:15 - 00:22:25:13
Garnet Heraman
And so I remember thinking to myself, what lever do we have to like create the biggest impact. So General catalyst would say, hey, you know, let's fix the consumer experience. I don't give a shit about that, per se. Let's fix the consumer wallet. Let let's, let's fix the pricing that makes people live better and kind of start from that visionary moment, right.
00:22:25:14 - 00:22:46:25
Garnet Heraman
And work backwards to payment integrity for the enterprises. That's that's how we that's how we decided, or at least that's how I decided because I sourced the deal. I, you know, we have a small investment committee. You're looking at 50% of the investment committee. So yeah, it's it's all I needed was one vote.
00:22:46:27 - 00:23:11:12
Ian Bergman
What does that tell us kind of about willingness to adopt these, you know, tools that drive enterprise value kind of in industry writ large. Like, I know I don't ask me to extrapolate from anyone, but just more broadly, as you look across your LP based, partner based startup base, you know, there is that that lag. So where are we in the leg cycle?
00:23:11:14 - 00:23:35:03
Garnet Heraman
Yeah, definitely. Somewhere between mass aspiration and and you know, tipping point of utilization in my opinion. But but but but what's really different even from 21 till now is that that rate of change, the rate of advancement from one segment to the next, it's I would, I would argue, doubled or tripled, maybe more. So it's moving super fast, right.
00:23:35:03 - 00:24:01:09
Garnet Heraman
And I see it now. So I continue to make the same bet. At the risk of sounding really stupid and repetitive, I continue to make the safe bet that I made with this company. You know, across regular like PNC insurance, you know, then like whole building supplies, right? Like, I just, I yeah, my mind, my mind thinks in patterns and like templates.
00:24:01:09 - 00:24:23:15
Garnet Heraman
And so I kept looking around like, hey, does this does this template analysis, you know, and prognosis, does it hold up for all of these other places and all of these other places in the market? Really blue, blue ocean opportunity, blue water opportunities, whatever it's called. And so far it seems to be like a reasonable way of looking at the market for.
00:24:23:15 - 00:24:24:06
Ian Bergman
Yeah, I think.
00:24:24:06 - 00:24:26:10
Ian Bergman
That's actually I mean, I think that's fantastic.
00:24:26:10 - 00:24:53:00
Ian Bergman
But the lesson to me there is that no matter the rate of change, real perceived, no matter the super cycle that we're in, there are patterns. There are historical precedents that you look at and you can say, hey, how can I apply in the straight? And this isn't you know, I'm not talking about the the Twilight. Oh, all these seeds are just pattern matches.
00:24:53:00 - 00:25:16:27
Ian Bergman
And they keep investing in, you know, what they know and understand. You know, I'm talking about the understanding that, yes, like the history does repeat. There's oh, there's a great book I read at this point a couple of years ago. And this is really bad live on a pod. I'm going to forget the name, but it's basically like everything is the same and into something like that.
00:25:17:00 - 00:25:44:26
Ian Bergman
And it goes through all of these super cycles where you can identify the pattern and then follow it, you know, from cycle to cycle to cycle through history. And I, I actually hear the reason I'm harping on this is I actually find that because when I talk to customers, portfolio companies, when I talk to founders, when I talk to almost anybody, there is an undercurrent of fear that I actually haven't felt before us.
00:25:44:27 - 00:26:02:07
Ian Bergman
And it's fear that we are in an unknown world. And I think there's some truth to that. But I like, I don't know, I get rid of that. These patterns exist because they tell me that we're actually all still people behaving like people in chaotic human systems, if that makes any sense at all.
00:26:02:08 - 00:26:33:02
Garnet Heraman
It makes perfect sense. So I'll go back to my college training. You know, I was trained as a historian and, you know, and before I did my MBA. And so it's almost impossible for me not to take this macro economic macro trend, macro like market shaping, market movement, sort of perspective on things. Otherwise, you know, if you start from the other end of the analytical spectrum, like, you know, very minute, you know, I try to make sense out of it.
00:26:33:03 - 00:26:57:27
Garnet Heraman
It doesn't work in my opinion. Right. So you have to you have to make these high level bets, you know, based on things like, you know, historical templates, historical patterns and but, you know, now the next part is going to sound like a real dick, but I just don't think enough people are educated enough on the on the macro historical, you know, political economy, geopolitical perspective.
00:26:58:01 - 00:27:21:00
Garnet Heraman
You know, I unwittingly I had a solid grounding in that, you know, before I became a long before I became an investor. So my, my thesis at Columbia, at Columbia was, you know, it was it was like 50% of the professors that reviewed my, my graduate thesis was were excited and thrilled. And the other were like, he's a faker.
00:27:21:01 - 00:27:26:09
Garnet Heraman
You know, he shouldn't even get past this thing. So I'm going to give you the title and you'll.
00:27:26:09 - 00:27:26:25
Ian Bergman
See lots.
00:27:26:25 - 00:27:28:12
Garnet Heraman
Of the title of the.
00:27:28:14 - 00:27:30:07
Ian Bergman
The razor thin margin there.
00:27:30:09 - 00:27:49:00
Garnet Heraman
The, the title of the honesty that I wrote was called The Geopolitics of Kleptocracy. And the subtitle was Why Corruption is a legitimate Form of Government. So fast forward, fast forward to the Trump era. And.
00:27:49:02 - 00:27:58:09
Ian Bergman
I don't think I've ever said this allowed before. But like, I kind of want to lead the master's thesis or under that which I'm the one that was.
00:27:58:12 - 00:28:21:21
Garnet Heraman
I'll dig it up. I'll dig it up. It was it was fun. It was fun. But, you know, back in the late 80s, you know, the examples I was using were not, you know, we were the first world. So it doesn't apply to us. But that's that's interesting. What I was using was like, you know, Africa and Mexico and things like this and specific regimes, you know, analyzing specific regimes and specific behaviors.
00:28:21:21 - 00:28:45:04
Garnet Heraman
And it you know, it holds together, right? Because it it keeps people like, you know, acting in a certain way. It maintains authority vertical, you know, vertical authority. So the guy at the top can control everything below him. And you know, if you don't do that, then it's just chaos. Yeah. There was a lot there's a lot of reasons why it's legitimate from like a historical governance standpoint.
00:28:45:06 - 00:29:09:04
Garnet Heraman
I had no idea how relevant it would be to like the wider world, like, you know, 40 years, 30 years later, whatever it is. So I love that you think about this stuff historically, because that's how I start my analysis. You know, I'm a very top down kind of guy. I have when I'm not talking to a professional like yourself.
00:29:09:06 - 00:29:35:07
Garnet Heraman
The way I describe this to like non investors is, hey, I have a pet thesis, and then I go out into the marketplace and I marry it to the opportunities or try or try to try to marry it to. Right. You know, so I'm out there looking for these specific things. But where do those things come from? They come from that, that starting point of like a historical, you know, market pattern, market templates, market.
00:29:35:14 - 00:29:43:20
Garnet Heraman
You know, this is how I knew we would be parsing the AI stuff the way that we did. Because, you know, I've seen it before. I've seen it before.
00:29:43:21 - 00:30:00:10
Ian Bergman
Well, okay. So and I think that's really important. Like I said I find it reassuring. But I also think it's really important to understand that sort of, you know, your character that is by this idea that you've seen it before. And I think for for many people it is.
00:30:00:13 - 00:30:23:03
Ian Bergman
One there. There are some things, though, that are changing. I think it's not the first time in the world that there's been some fundamental change that has, you know, led the disruption in society. But there are some things that are changing. They seem like they're coming more quickly. You know, one, I did this little investigation recently. I just kind of went down the rabbit hole.
00:30:23:06 - 00:30:46:01
Ian Bergman
I was curious, but I went down the rabbit hole of, you know, thinking about wait and see and communication because I was, you know, I was frankly, bimbo named the lack of time to think in the world. Right. Like and I was like, well, didn't people used to like the letter and then sit for a month? And. Yes, actually.
00:30:46:02 - 00:31:09:15
Ian Bergman
Right. But but here's what's actually interesting. Like, to me, what's interesting about latency of communication is not the fact that 300 years ago, you know, you would write a letter, it would take a day, a week, a month, a year to get there, and then they would sit on it for a month and in turn and then, you know, you go through the telegraph and clipper ships and telegraph and fax machines and email, blah, blah.
00:31:09:18 - 00:31:30:09
Ian Bergman
I thought it was interesting. What's interesting to me is that very recently, we seem to have reached a tipping point where I can actually write a response to you before I get whatever you sent me, you know, to begin with. And I don't quite know what to do with that predictive capability in our eyes and intelligence to exist.
00:31:30:09 - 00:31:35:04
Ian Bergman
But, but, but it feels like a fundamental change. It feels like something that hasn't really happened.
00:31:35:06 - 00:31:52:21
Garnet Heraman
Give me an example. Because, you know, auto autofill is the thing that freaks me out. Like when I'm writing things and it's telling me what to write or where the, the AI assistant on on on different writing programs and emails and stuff. You know what? So what is it more than that that you're talking about or.
00:31:52:22 - 00:32:18:28
Ian Bergman
No, I'm talking to you about the fact that, you know, realistically, I hate to name their companies, but I'll do it. The big data sets, the Meadows, the Googles of the world, like in probably with a fairly high confidence. Predict what you're going to say when you meet a a net new PC or partner or someone in the ecosystem.
00:32:19:00 - 00:32:39:24
Ian Bergman
Right? Like just by looking at the email data set. And if you give that person access, you know, maybe not to the base information, but you could actually tell that person, hey, it's coming. And so now you have predicted AI writing emails and back and forth, but you get to the point where you can actually predict an entire back and forth conversation without of actually happening.
00:32:39:25 - 00:32:45:25
Garnet Heraman
Okay, so you're really pushing it to the I got it. Okay. Yeah. Yeah, yeah. No, that that is I, I believe.
00:32:45:27 - 00:33:09:19
Ian Bergman
That there are changes like that but a fundamental we haven't quite, you know, figured out what to do with it. I'm using this as maybe a hacky lead into something that you're working on next. Right. Because there are some other fundamental changes coming up in the Alchemist portfolio. I think in the last six months, we've invested in eight quantum startups.
00:33:09:21 - 00:33:37:18
Ian Bergman
Right. Startups operating in. Well, well, yeah, we you know what stage, right? A bunch of small trucks and they're all amazing companies. But, you know, but that's a, that's a, that's a measurable percentage of our, you know, overall investments across the era. And it's growing. Quantum is a dog art. It is something I don't understand. It's black magic to me.
00:33:37:18 - 00:34:00:09
Ian Bergman
And I was looking at your LinkedIn I scroll to the top and one that say it's in quantum finance boardroom. So you know probably sir, what are you seeing? Tell me what your pattern matching is filling you and what you are seeing coming in the future and what you're doing about it with the quantum space.
00:34:00:10 - 00:34:22:00
Garnet Heraman
Let's do the life lesson like slogan mantra for because because this is a perfect example. Like you and I, talking today is a perfect example of that thing I was talking to you about earlier. Like good, good luck is residue of good design. I have no idea. I, you know, prior to your statement, like 30s ago, I had no idea you guys were quantum investors.
00:34:22:00 - 00:34:54:05
Garnet Heraman
So, you know, so that's that's good. So, you know, part of this conversation is more meaningful. Maybe it's becoming. Maybe it might become relevant to one or more of your companies in the future. But. So how am I thinking about this? I'm thinking about this as, like, I'm on this AI journey. I literally said this to the to the underwriters for the, the public investing vehicle that we're we're doing and we're on this AI journey.
00:34:54:09 - 00:35:21:19
Garnet Heraman
They started in late 20. You know, we made a couple of good bets, maybe more than a few good bets, whatever. And now, as I think about the future of each one of these high performing companies in the portfolio, I just don't see how they could avoid. I don't see how they could avoid, you know, having some quantum aspect to their infrastructure, to their platform.
00:35:21:21 - 00:35:29:25
Ian Bergman
Why is that? Because of an inevitable like onset of a new technology or platform. But like, well, you know, I'm not really curious about that.
00:35:29:26 - 00:35:58:22
Garnet Heraman
Starting with the infrastructure piece, the I mean, it's really simple, right? Because the the need for quantum infrastructure increases in direct proportion to the utilization of the AI. Pretty straightforward actually. Right. So that's that's what I was that that was the, you know, the kind of linchpin moment for me personally. I was like, So here I am betting on utilization.
00:35:58:22 - 00:36:23:03
Garnet Heraman
And sometimes I'm right, sometimes I'm not. But if I'm right, you know, like, maybe we're right a couple of times, three times in this portfolio, you know, the more mass adoption, the more like, like massive scaling on the utilization that happens, the more dependent on certain kinds of infrastructure. This this company is going to be and its success and its shareholders.
00:36:23:04 - 00:36:49:21
Garnet Heraman
Right. And so that was you know, it's not that complicated. That was my that was my observation. And so when I then I started going down the rabbit hole on quantum right, you know, quantum infrastructure, quantum security, quantum finance. And boy, let me tell you, Ian, I haven't seen a rabbit hole like this since, well, since since the beginning of AI.
00:36:49:22 - 00:36:52:19
Garnet Heraman
I mean, you know, it was just like, there's a lot.
00:36:52:20 - 00:37:06:15
Ian Bergman
Well, that is fascinating and a little bit scary because I don't actually understand what that rabbit hole looks like. So, like, what's the signal that you're seeing that is, I mean, both interesting but also in impetus to do something.
00:37:06:15 - 00:37:34:04
Garnet Heraman
So I mean, I am I'm kind of a cluster. I think about the way I think about patterns, let's say. Right. Because the different ways to define a pattern, I, my two main ways is cluster and momentum. Right. And they're obviously related. So I look for multidimensional on the clustering. So what do I mean by that. You know being done countries where the deals are being done.
00:37:34:06 - 00:38:06:06
Garnet Heraman
You know levels of the venture cycle and the feeding chains where these deals are being done, government support, policy support, geopolitical consequences. So I look for clustering. Right. And when you think about all those things, right, and many more around the notion of broad quantum, you see the cluster is huge. It's huge right. So that's that, that that led me toward the next thing which is momentum.
00:38:06:06 - 00:38:33:07
Garnet Heraman
So is the is the rate of activity changing. And that that's pretty obvious. That is changing and it's obviously increasing. And so you know, those just those two things alone, I mean, would be two of the modalities that I try to look at when I look for a pattern. There's other ways to think about it. But, you know, at the end of the day, I've never seen an emerging pattern where those two modalities were thumbs up or green light or whatever.
00:38:33:07 - 00:38:38:15
Garnet Heraman
And it turned out not to be a pattern. I've never, never seen it.
00:38:38:16 - 00:39:00:18
Ian Bergman
Okay. So I'm going to I'm going to buy that and I'm going to say great. Like, you know, the indicators, indicators of solid. But there's something really real here. As, as, you know, as somebody with some experience in the world, you know, what does this mean to you to do? Like, are you thinking about are you thinking about renting and repeating the same old playbook?
00:39:00:18 - 00:39:04:26
Ian Bergman
Are you thinking about doing something new to get involved with?
00:39:04:28 - 00:39:29:07
Garnet Heraman
Well, it is a little bit of both. I mean, this whole conversation has been fascinating to me because, you know, on one valence, it's about patterns and market, you know, market coalescing, you know, playbooks. Right. Because I think I'm not going to put words in your mouth. I think we agree that the market, the playbook for market coalescing, you know, actually doesn't change that much from one paradigm.
00:39:29:08 - 00:39:30:28
Ian Bergman
I think that with that. Yeah.
00:39:31:02 - 00:40:09:04
Garnet Heraman
Yeah. So we're you and I are definitely, you know, copacetic on that one. So what I started to do after I saw the, the cluster and the momentum piece that I thought I was trying to map it back into the playbook. So and so, you know, when I looked at it, what I, you know, in my own, you know, my own personal opinion is that the lab slash, the research lab slash hardware part done to death and, and even and even that is having a moment in the funding and the public capital markets.
00:40:09:06 - 00:40:33:07
Garnet Heraman
It's having a major moment where just that crap is, is, is compelling. So taking a page out of these legacy playbooks, I'm thinking to myself, fucking software's next. So it's not it's not so it's not a it's not a brilliant leap. It's so obvious. Right. Software, middleware, orchestration, APIs, algorithms.
00:40:33:09 - 00:40:35:19
Ian Bergman
All the things from a stack.
00:40:35:21 - 00:40:56:02
Garnet Heraman
Control system. Except you're exactly right. See, I mean, the all of the, the non hardware like aspects of the of the, the typical stack that defines a new tech paradigm G what a surprise. So that's where that's where I look at.
00:40:56:04 - 00:41:05:19
Ian Bergman
How do you learn. How do I mean how do you learn about the things that are different because, you know, there's, you know, maybe you get the same stack. You know, the still the same block grams.
00:41:05:20 - 00:41:31:15
Garnet Heraman
There's a playbook for this too, right? I mean, we we we we were joking around prepaid cast recording about this. This is, you know, a lot of the ways that I think about this are kind of duplicative from, you know, previous attempts to self educate and immerse and refine and get to some level of like mental, intellectual, analytical clarity.
00:41:31:16 - 00:41:59:21
Garnet Heraman
Right. And so the the playbook I've used is the same I used for AI. And it was the same for cloud before that. And, and the same for, you know, internet and social before that. So I started talking to other fund managers. I started talking to because I have a tech transfer background. It's just something that I started talking to a bunch of like, professor, you know, types, you know, who were in quantum.
00:41:59:25 - 00:42:23:20
Garnet Heraman
I started talking to you mentioned quantum findings boardroom. So the folks behind that are kind of a mix of like academic and and and enterprise. And so I just by chance was connected to one of the, the leading, one of the founders of that group who is writing extensively. So I guess who's background is probably more academic, right.
00:42:23:21 - 00:43:02:27
Garnet Heraman
And, and you know, we you know, we talked at length about different things. And and then another way that I did this was I started trying to make some assumptions about like, which pieces of this which market segments would be the most amenable for software solutions related to quantum? And pretty quickly, you know, trading and believe it or not, once I started looking at trading, then I started looking really hard at climate risk climate finance, because it's dictating so much of the risk in the in the marketplace these days, and not just for industries like insurance, pretty much for everything.
00:43:02:28 - 00:43:25:03
Garnet Heraman
Right. And so when I got there, then I, you know, I really started to think, think a lot about risk management. And from risk management to finances, obviously it's a small it's a small step. Right. So, you know, the audience is not going to know this. You're going to know that. Why did that asshole have so much time on his head?
00:43:25:03 - 00:43:34:09
Garnet Heraman
It's 100% because of the rehab, the the because of the, you know, the convalescence on the knee surgery. Right? 100%.
00:43:34:11 - 00:44:00:09
Ian Bergman
So it gives you time to productively go down the rabbit hole, though. Interesting. Because, you know, some of these lines are kind of throwaway lines that they, you know, at first. Right. Then my job, oh, you know, list management to finance and have a small leave. And quantum is obviously people there actually not small. They're not actually small idea simulations.
00:44:00:09 - 00:44:23:10
Ian Bergman
And so it gives me a sense of where the where you're focusing now. And, you know, I got to tell you, the thing that excites me the most about quantum is that I actually have trouble wrapping my head around the impacts when quantum computing the structure is likely there. Right? And this isn't the like I don't understand the science.
00:44:23:10 - 00:44:48:11
Ian Bergman
That's a that's a whole other catalog. Right. This is the I don't, you know, it's it's hard to pierce the veil right with AI. I feel like I can pretend a lot of science fiction has been written and blah, blah, blah, where our quantum software stack operating in trading desk or list management or climate finance actually don't know what the entire it.
00:44:48:13 - 00:45:00:10
Ian Bergman
We're running low on time here, but do you have like one of you kind of pithy thoughts on where the next frontier of quantum and financial services might take us?
00:45:00:12 - 00:45:20:27
Garnet Heraman
I'm feeling really strongly about about things like asset management, like active asset management, you know, like program trading kind of thing. You know, and when you think about the impact on that, you know, you think about, hey, you know, on a daily basis, you know, these, you know, these guys who are overpaid on Wall Street will go rebalance the portfolio.
00:45:20:27 - 00:45:39:28
Garnet Heraman
And and they have programs to support that. Whatever. Right. What about what about no guys. You know. And what about like from second to second the portfolio is rebalancing and trading. Right. That's that. So that's one impact right. And presumably for the better right. So you you leak out incremental profits for the.
00:45:40:02 - 00:45:57:28
Ian Bergman
Whole maybe I mean, is this an asymmetric advantage that is going to be held by you, or is this like actually the nature of the nature of quantum could make so efficient and so pervasive that the democratizing force. I mean, that's kind of an interesting thing.
00:45:58:03 - 00:46:19:15
Garnet Heraman
Yeah. Yeah. I don't I don't know of far enough to answer that question at this point. I would argue that the organizations that are going to use it first at scale are going to be the, you know, the big bullish bracket banks and that sort of thing. That's pretty obvious. Bet after that, I don't know. I mean, it could be it could be a good outcome like you're describing with the democratization.
00:46:19:15 - 00:46:49:07
Garnet Heraman
Or it could be just literally like some, you know, asset management oligarchy, you know, and and I don't know, but but the second impact thing, you got me thinking about this too, because I had fallen down this rabbit hole and arrived at Climate finance. And I can't name the fund because I think it's still very like stealth. But I recently came across an example through a friend of mine who's a sustainability ESG expert, this kind of thing.
00:46:49:07 - 00:47:13:01
Garnet Heraman
And I was telling him this thesis about how I think quantum is going to going to, you know, blow up the entire, like, climate finance world because of superior risk management. So the number of factors involved with predicting weather risk and, you know, to it's like infinite, right? It's the old moth effect, the butterfly effect or whatever. Who the hell does what's going to happen?
00:47:13:02 - 00:47:41:18
Garnet Heraman
So when we when I started talking about this, you know, he told me that he had come across this fund and I love this so much because I, I hated the entire concept of ESG investing, you know, or, quote, like or traditional impact investing. He told me he'd come across a fund that was taking the opposite perspective, but was trying to encourage the same positive ESG impact outcomes in the marketplace.
00:47:41:19 - 00:48:03:14
Garnet Heraman
What do I mean by that? They're going around. They're going around. They're raising this massive billion dollar fund to go out and make bets against companies and industries that are not moving fast enough to incorporate climate risk into their pricing, into their. And I'm like, oh.
00:48:03:16 - 00:48:07:03
Ian Bergman
They're calling they're showing the leg.
00:48:07:06 - 00:48:12:00
Garnet Heraman
In some cases they will be shorting it, you know, actual like transactions short.
00:48:12:02 - 00:48:14:24
Ian Bergman
And others effectively doing.
00:48:14:26 - 00:48:40:12
Garnet Heraman
Intellectually shorting. Right. Because what they're doing is say, you guys, you guys are not moving as fast as you should be on quantum. And so we're going to we're going to we're going to nail you for it and take the profits and then walk away. And I'm like, that's the most genius ESG fund thesis I've seen in. I mean, I've been looking at impact for over a decade, and this is the hardest thing.
00:48:40:14 - 00:49:06:16
Ian Bergman
I do love that. I mean, and I, you know, I wish them luck and I hope it works in its own right, but I like it as a way to kind of help those the episode, because it's also it is an innovative pattern. It's a bet on a super cycle that you know, that climate impact matter is, but it's an innovative approach in pattern, and that's really cool and I wish them enormous amount of luck.
00:49:06:19 - 00:49:32:25
Ian Bergman
Well, on his phone and we are out of time. And we didn't even get to talk about innovation and liquidity and spark. So maybe next time you come on, we can dive deep in that, because I know it's a topic, but I just want to say thank you for coming on innovators inside. It's been it's been an absolute pleasure for anyone in the audience who wants to follow you, wants to get more of these thoughts and nuggets of wisdom.
00:49:32:25 - 00:49:37:15
Ian Bergman
What's the best way you on LinkedIn? Do you publish Substack? Like where can they find you?
00:49:37:20 - 00:49:50:15
Garnet Heraman
Absolutely. On LinkedIn, you know, it's a it's a it's as easy there as anywhere else. And I don't have to recite anything. Just, you know, it's just my name on LinkedIn. You're not going to see too many garnets.
00:49:50:15 - 00:50:02:18
Ian Bergman
So no. And we'll get yeah. We'll link in the show notes. So follow Garnet on LinkedIn. Thank you so much for coming on Innovators Inside. I look forward to continuing this conversation on and off camera.
00:50:02:20 - 00:50:15:15
Garnet Heraman
Yeah, I have to tell you, this is one of my favorite podcast episodes ever. And I do a lot of these things, and I truly like just the level of intellectual stimulation on this call. It's been worth it to me. Thank you.