Garnet Heraman: The Mindset Behind Billion-Dollar Outcomes

Intro: Broadcasting live from the Business RadioX Studios in Houston, Texas. It’s time for Houston Business Radio. Now, here’s your host.

Trisha Stetzel: Hello, Houston. Trisha Stetzel here bringing you another episode of Houston Business Radio. Really excited about my guests today. Garnett Heraman, a three time exited founder and venture capital leader who has created more than 3 billion in enterprise value over his career. He’s the co-founder and general partner of the Aperture VC, a fintech and AI focused fund backed by a powerful group of fortune 500 financial institutions. His portfolio includes high growth companies across AI, insuretech and emerging technologies, several already at or near unicorn status. What makes Garnet’s perspective especially unique is that he’s operated across the full spectrum. He’s been a founder, an investor, and a limited partner while navigating multiple market cycles over the past three decades. Beyond investing, Garnet is also known for sharing his insights on leadership, mindset, and performance with tens of thousands of followers, often writing about the intersection of business, mental fitness, and long term decision making. Garnet, welcome to the show.

Garnet Heraman: Hi there. Thanks for having me.

Trisha Stetzel: I’m super excited about having you on the show. And we already started this conversation before we started. So we’re just going to dive in. Tell us a little bit more about who you are.

Garnet Heraman: Well, I am, uh, first and foremost, the son of a single mom, uh, an immigrant, uh, and, you know, a lot of that, a lot of that is conditioned a great deal of my perspectives and I guess my motivations as well over the years. Right. So, um, that’s first and foremost, um, uh, former East Coaster now living on the West Coast. So I’m, I’m an immigrant within, within the country, uh, uh, educated at Columbia, NYU, London School of Economics and grew up in the suburbs of New York, went to school, you know, in the city, uh, so very, very New York centric for a lot, a lot of years. Uh, and on the, on the advice of, of my, my better half in, in 2019, um, moved out to California. We live in Laguna Beach. So that in, and that’s a little bit about us personally, um, uh, you know, professionally, I kind of accidental serial entrepreneur, which sounds paradoxical, but I wasn’t planning on it, and I. It took me a long time to realize that maybe I was good at it. And after about three times and the three exits, I realized that I much rather be on the investing side of things and so started investing around 2008, 2009, you know, lived through the the market crisis, continue to invest. And, you know, dozens of angel investments later started thinking about raising a fund. Um, and I was presented with that opportunity in 2019 and that became aperture. Um, and it’s a $75 million fintech AI fund backed by Bank of America, Truist, PayPal, FIS, MassMutual, progressive, NextEra energy, Duke University, uh, and a few other, uh, I guess luminaries in the, the VC business, uh, like Fred Wilson from Union Square Ventures.

Trisha Stetzel: Okay. Yes. All of those things. So much there. Garnet, can we just. I’d really like to dive in because I’m very curious about what actually drives your your decisions. And then and we can back into some of the other things, the businesses that you founded. But I want to dive right in. So what actually drives your investment decisions in the business that you’re in now? Because I’ve heard you say that it’s not always driven by economics alone.

Garnet Heraman: That’s right, that’s right. I that works on a few different levels. Right. Um, you know, at a, at a macro basis, any GP has an obligation to the LPs, the investors in the fund to stay within certain investment parameters because you literally made legal commitments to, you know, and you have a fiduciary responsibility to do a certain kind of investing, right? So but within that framework, there’s typically, you know, a lot of unknowns, you know, a lot of uncertainty, a lot of variation, you know, a lot of unpredictable, you know, events. And so your, your decision process, you know, is something that, uh, has to be flexible. By definition, um, what I, what I try to do is what logicians and statisticians and mathematicians call heuristics. You know, after 20 years of building things and then looking at investment opportunities, you know, when I had the chance to think about this, I tried to simplify my own process to a set of heuristics, which is just a fancy word for shortcuts. Right? Okay. And so my, my shortcuts are around this triangulation process that starts with the, I mean, you’re, you’re, you know, as a, as a, as a, as a Christian and a veteran, you’re either going to love this or not, but it starts with more personal, um, I want to say personality and, um, um, I don’t know what the right word is. Um, your, uh, your belief system. Sure. And your, you know, your, your framework for, uh, your, your moral compass, your, your, your capacity for work, your capacity for pain and suffering and sacrifice. You know, these, it starts with a much more of a personal profile of the, of the founder or founding team.

Garnet Heraman: And only after that it goes to more of a technical, more of a market, more of a financial set of analyzes. If I can’t get through that first piece, I’m not even going to bother, you know, looking at the rest. And so knowing how important that is, you know, I, I created my own system for what what I called, you know, this contrarian technocrat profile. So what does that mean, a contrarian everyone. You know, you’re, you’re the opposite, right? You, you can’t believe the world doesn’t work the way that you want it to work. You’re mad as hell, and you’re going to do whatever it takes to change it. You know, uh, you’re an evangelist. You’re an ambassador. You’re a, you know, you’re you’re persuasive, you’re argumentative. Whatever. Technocrat is literally the opposite end of the person personality profile. A technocrat is typically that quiet behind the scenes person who you give him or her, uh, a job or a task or a goal. And they, they just start chopping it up into the engineering type mentality, you know, step one, step two, step three, step four, step five. Finished. That that mindset. So when you think about those two things together, I can tell you in 30 years, I’ve probably seen two people who are like that. Mhm. However, if you’re lucky, and if the founders are smart about how they select one another and how they, you know, come together as a team, the team itself has that profile. Okay. So that’s, that’s the, that’s the magic when the team has the profile. Good luck finding a single human being who can do all of it.

Speaker 4: Mhm. Mhm.

Trisha Stetzel: So how does from a founder’s perspective, then as we let’s dig into that a little deeper from a founder’s perspective. In your background, how do you surround yourself with the types of people that are going to bring out the best in the entire team?

Garnet Heraman: Yeah, that’s a great question. And it really cuts cuts to some of these other personal things, you know, that that are in my belief system. So I, I’ve been, uh, I’m a meditator. I grew up very Catholic, you know, altar boy, the whole bit and, um, kind of went away from the church later in life. Um, but only from the standpoint of, uh, just this, not so much from the spirituality piece of it, or even the congregational piece of it, which I still love about the church, but more with the, with regard to Being able to have a direct communication with, you know, a higher being or the higher power or the universe, and maybe more importantly, being being able to draw a straight line between that and what’s what’s in here, what’s in your heart. And so, you know, my meditation practice has been based around that for 20, 25 years now. And so that has become that level of self-awareness becomes critical for any founder trying to understand him or herself and, and being realistic about what they do well and what they don’t do well. And so I look for a level of self-awareness that then goes that extra step that, you know, where they’re trying to attract complementarianism and, and thinking about the fullness of it all. You know, hopefully that makes sense.

Trisha Stetzel: Yeah, absolutely. So we have to know who we are first so that we can find those that compliment or even, uh, fill the void if we want to be just real raw about it, fill the void that we can’t fill because we’re not everyone. We’re not everything to everyone. We are who we are. I love that. So from a values system, I know that you have a strong connection to the veteran community and even how they’re perceived as I’ll call them, leaders or founders. So what do you think organizations are still getting wrong and even right about veteran leadership specifically?

Garnet Heraman: Well, you know, it’s it’s odd. I’ve never in 30 years of business, I’ve never heard anyone say, hey, I don’t think veterans are good leaders, you know? Um, it’s more the opposite, right? And, and in higher, high achieving veterans tend to be high achieving business leaders or leaders. So, you know, for the most part, I mean, either I’m very, very, you know, very, um, you know, um, like I either I’m not seeing everything or literally everything I’ve seen has been positive, you know? And so most of the people I know tend to value them as leaders, as, as board members. Um, and I’ve had the good fortune of being around, you know, a business partner whose dad was a lifetime achievement award winner for the Marine Corps, you know, being around a board member who is a Congressional Medal of Honor winner, you know, and just just seeing the level of, uh, commitment and the level of transparency and the level of sacrifice that they’re willing to make and how that translates from the battlefield or from, you know, the military context to the business context. So it, it, I’ve never actually heard anyone question it.

Trisha Stetzel: So that’s because you’re hanging around in the right circles. I’m just saying you’re attracting the right energy.

Garnet Heraman: And I, you know, I, I, I hesitate to say this, but, you know, I’ve, I have members of my family who have served, but they’ve never, they’ve never I don’t believe any of them were actually, you know, in the military, in the in the battle theater. You know, they’re they’re like engineers and, and, and, uh, maintenance people and stuff like this for the, for the, you know, military aircraft and materiel and that sort of thing. Um, I also really thought very seriously about like, you know, West Point when I was and military academies in general. And, and I, I don’t know that that was a good enough student to get in. And I, I didn’t really understand the process, but in the course of my lifetime, I’ve met multiple West Point grads, multiple Air Force Academy grads, naval 1 or 2 Naval Academy grads. And I realized how intellectual they are, you know, and so, you know, that’s another part I think maybe people don’t appreciate is that there’s a deep intellectual tradition within the the military academy system.

Speaker 4: Yeah.

Trisha Stetzel: Absolutely. All right. We’re about halfway through our conversation, and I know folks are really interested in learning more, maybe connecting with you. Where’s the best place for them to find you or connect with you?

Garnet Heraman: Oh, sure. On two two ways. Probably the the preferred way would be on LinkedIn. Uh, you know, my name is fairly unique. I don’t think there’s another garnet on, on LinkedIn. And so that, you know, you can email me or direct mail me there. Um, and I, I think that’s probably the best way actually.

Speaker 4: So okay.

Trisha Stetzel: Fantastic. So you guys can find Garnet on LinkedIn. It’s GARNETHERAMAN. All right. So I know a lot of founder owners, people who decided to open a business in their area of passion. Garnet. And as you probably know that often times when we have a passion for something, it may not make us the best business owner from a business development perspective. So what would you say to those who are listening today that have gone into business in a very high passion of theirs, but they’re not they haven’t quite yet figured out how to be a good business owner. What would you say to them?

Garnet Heraman: Yeah, you know, back to the contrarian technique, right? I mean, try to surround yourself with the right people and the right people. In this case, as always, is one who complement your core skill sets. Um, you, you know, in this, in the, in the setting you’re thinking about, you know, obviously you want to see that shared passion and, and purpose and, you know, in immersion in that, in that particular, um, field. Uh, but I think you also want to see some, you know, alternative ways of doing things, alternative viewpoints, alternative perspectives And try to try to triangulate, try to make it more additive than divisive. You know, um, uh, the other thing I would think I would tell people over and over again is, you know, have realistic goals for your business. Putting aside software companies and tech companies and unicorns and IPOs, the backbone of America is not is not what I do for a living. Right? It’s not it’s not these types of businesses. The backbone of the American economy is small and medium sized companies. You know, local mom and pop shops, as it were, main street shops. Um, and, you know, and some of them omnichannel, they’re, you know, bricks and mortar and online and that’s cool. Um, but it’s those types of businesses. So when I say be realistic, you know, be realistic. If your company is making a certain amount of money and supporting a certain number of employees, you know, you don’t need to be thinking overly much about, you know, hey, how do I get to be a 50 or $100 million company? They think more about your your quality of life. Think more about your employees quality of life and stability and security, and aim high on those on those metrics. But that would be my advice for a lot of small business owners.

Speaker 4: Yeah.

Trisha Stetzel: What about those who just bootstrapped and they’re like, you know what? I got some cash in the bank. I’m going to go build my business. And then they run out of that money and they’re not sure what to do next. Like where, what, what would you say to those who have reached the peak of they’ve run out of cash?

Speaker 4: Yeah.

Trisha Stetzel: And now they’re at this level and they know they could get to the next level, but they’re just not quite sure how to get there. What about those?

Garnet Heraman: Well, depending depending on what level of, of, of, you know, um, revenues you’re, you’re working at when that happens. Yeah. There are different options, right. Uh, if you’re, you know, really small, um, you know, but have the chance to get to, let’s say 8 or 9, you know, 8 or 9 figures or eight figures, let’s say, um, you know, I, I think that there’s a lot of the, a lot of like online funding sites and there’s a lot of angel syndicates in a place like Houston. I know there are, there are angel syndicates and not every angel wants to invest in a software company. Some of them are much more interested in like traditional businesses. So, you know, there’s an investor for everyone out there at that level. You know, when you get when you get to a much larger level, there are professional, you know, investors at, at different commercial banks and as well as different private equity funds. Um, uh, you know, right now is a great time to be in the private equity businesses because some of these, um, you know, very unsexy legacy businesses are now getting rolled up. Uh, I’m an investor in a metal coating company. You know, why I literally have never been inside a plant that does metal coating, so I have no, I don’t know a thing about it, but the CEO came to me and said, hey, you know, this is a very fragmented business and I’m going to go and buy six others in this region, which is the Rocky Mountains. And together we’re going to look like this instead of, you know, this much smaller, much, you know, much less sexy business, like, okay, that makes sense, you know, so and as it turns out, it was a good bet. You know, it was a very good bet. So metal coating.

Speaker 4: Who would.

Garnet Heraman: Oh, I almost forgot. Because you’re in Houston. You know, you know what’s driving a lot of the the demand for metal coating.

Speaker 4: Space.

Garnet Heraman: Space and satellites.

Speaker 4: Okay. Very interesting. Wow.

Garnet Heraman: It’s one of the things we’re all. What’s old is new again. Yeah.

Speaker 4: Mhm.

Trisha Stetzel: Very interesting. So let’s fast forward to where you’re at now. Who are what? What kinds of engagements are you getting up? Are you having right now? Who do you want to talk to? Are there people out there who might be listening that know people they should send over to you? Garnet, who are those people?

Garnet Heraman: This is going to sound schizophrenic because I’m going to speak both as a fund investor and a and a personal investor. Okay. I never stopped, you know, my personal investing, even though I’ve been, you know, fund manager for a good number of years. So on the, on the fund side of things, you know, pretty much anything in the AI space, any, anything that’s, you know, doing something compelling in AI. If there’s an overlap with the fintech or insurance side, then that’s great. If not, that’s also fine. You know, we have a fair amount of latitude in the aperture fund, uh, investment thesis. Um, uh, on the personal side, um, uh, I am looking at, I have a, I have a like a personal thesis that I look for, I look for companies that are, that are not, you know, ten and 15 and 5 million. I look for companies that are sub 5 million in revenue that have the ability to add a little bit of technology and, and either, you know, accelerate, uh, on the five to get to like, let’s say seven, eight, ten. Um, but what I invest for on, on the personal side of things is cash flow. And so I, I tend to make deals. If I, if I put in 100 or 200 or whatever, you know, I tend to, I tend to make deals where I can, um, share in the free cash flow, the operating cash flow. And, you know, I’ve done that a couple of times successfully. And I, my goal is to keep doing that. And what it does is it just, it, you know, it, it stabilizes all of the other risky pursuits that I have in other parts of my life.

Speaker 4: Yeah.

Trisha Stetzel: That’s the one thing you can kind of lean into. It feels good, right? We all we all need that regular. Yeah.

Garnet Heraman: The entire business is based on, you know, losing nine times out of ten. And and that one time out of ten is going to be a whopper. So, uh, the other part of my life, I try to make sure that nine times out of ten, I make money.

Speaker 4: I.

Trisha Stetzel: I’ll, I’ll compare that to, uh, my favorite first business, which is the dog walking, dog walking and pet sitting services. I gotta have my regular dog walks. Garnet. I gotta have my regular dog walks.

Garnet Heraman: Uh, so let me tell you, the economics in my neighborhood here in, you know, this fancy part of Southern California. It’s 30 bucks, 30 bucks, a half hour per dog. And each every time I see my dog walker, you know, who works in this neighborhood? He’s got eight dogs, and he’s doing eight hours a day, five days a week. So you.

Speaker 4: Did. That’s.

Trisha Stetzel: It’s a volume business, my friend.

Garnet Heraman: And between you and me, Trish, I guarantee you half half of his payments are in cash. So, no, no offense to the IRS, but I’m guessing. I’m guessing. I’m guessing a lot of that money doesn’t get reported.

Speaker 4: Yeah.

Trisha Stetzel: We didn’t talk about that on the air. If you guys are listening, just ignore ignore this part of the conversation. Oh my goodness. All right. So we’re getting to the back end of our time together. I’d love for you. Would you share a, just a favorite story? Do you have a favorite partner story or founder story that might resonate with someone who’s listening today?

Garnet Heraman: Sure. You know, I’ve seen a lot of really good things, a lot of bad things over the years. Um, you know, so I’ll just, I’ll stick with the, you know, positive, you know, I, uh, have a personal investment that I made that was in a very, um, unusual space. And, you know, uh, spent almost a year and a half, uh, with this founder, uh, I, you know, I gave up my Saturday mornings and my weekends and night time and, and he took this, uh, he’s, he had a small boutique consulting group that did a lot of AI work over the last 20 years, including really interesting work for the, for the government, for the military, uh, during the first Afghanistan war, where he was fresh out of grad school and he was being paid to predict where the bombs were going to fall and things like, I mean, it’s one of my favorite AI stories, right? So but working with him to take some legacy intellectual property that was very raw and not very productized and figuring out what what he could do with it. And then, you know, having a whole lot of setbacks over the last year, over the first year. And then eventually it became such a powerful product That I shared it with my fund partner. Right? So two, two people run the fund. The two people are on the investment committee. So if I have an investment in something, I have to recuse myself. Right. Okay. So the but the really gratifying part of this was like, I recused myself. I gave it to my, my fund partner and, and aperture invested within days. And because it was such a powerful tool. So, you know, being able to work with this particular founder who’s a very intellectual, but also very, um, warm and purpose driven and open hearted, you know, to get to this point and then seeing it, you know, manifest as an investment opportunity for my own fund. That was, I would say that’s been the highlight of my investment career so far.

Speaker 4: That’s amazing.

Trisha Stetzel: I can see that you’re really connected to humans and that that makes a big difference in the, um, in the decisions that you make. And I love that you value these human connections. All right. I have one last question for you as we wrap up. For someone who’s listening now to the conversation that we’ve had, and they really want to build something that’s meaningful and long lasting. What would you tell them as one mindset or habit they should start developing right now?

Garnet Heraman: Oh boy, that’s a good question. Um, uh, I, I think. I have to kind of put this together to really answer it in a, in a, in a powerful way and integrate what I’ve seen over these years. I, I think it would have to be that develop habits that, that, uh, break down the barriers between your personal beliefs, your values and your, and your operating business and skills, your business skills, you know, if you manage to do that, you know, in any way, you know, small ways in, you know, in your entire life, you’re going that you’re going to be a much better business person. You’re going to be much more driven. You’re going, you’re, you’re, your values will be more manifest to the, your customer and the, the, the external market. Um, it just, it’s just breaking down the barriers between any, any, any personal beliefs and any, any, any business, you know, goals and decisions that you have. If you manage to get those two in sync, you’re, you’re probably going to be a very successful, you know, at whatever you do.

Speaker 4: Yeah, absolutely.

Garnet Heraman: It goes back to your your question about passion, right. Um, and you’ll and so your question specifically was about what happens when, you know, you, you hit that plateau. If everything is in alignment, you’ll blow through that plateau. You’ll find, you’ll find the right answers, you’ll find the right resources and, and you’ll, you’ll move on to, you know, levels that you hadn’t even dared to dream about.

Speaker 4: Okay. I feel pretty.

Trisha Stetzel: Good about this conversation because we just came full circle.

Speaker 4: Yeah.

Trisha Stetzel: Where we started is where we’re ending. This has been amazing. Thank you so much for taking the time to be on with me today. I think this has been a wonderful conversation and will resonate with so many people who are listening today.

Garnet Heraman: Oh, I’m so, so excited to hear it. And I’m glad. I’m glad we got the chance to share these stories. And I hope, I hope it touches, you know, even just one, one person who is either, you know, on the verge of starting something or struggling with something. Um, because I do, I feel really strongly like the, the most patriotic feeling I have is literally that, you know, we built, we built our country by building our business.

Trisha Stetzel: So absolutely. All right, you guys, I know you’re so interested in connecting with Garnet now, so please go to LinkedIn. You’ll find him at GARNETHERAMAN. Thank you again for your time today.

Speaker 4: Thank you so.

Garnet Heraman: Much for having me.

Trisha Stetzel: Absolutely. All right, you guys, it’s all the time we have for today. If you found value in this conversation that Garnet and I had, please share it with a fellow entrepreneur, a veteran or Houston leader ready to grow. Be sure to follow, rate and review the show. It helps us reach more bold business minds just like yours. And of course, your business, your leadership, and your legacy are built one intentional step at a time. So stay inspired, stay focused, and keep building the business and the life you deserve.