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Jesse Draper — Halogen Ventures

Wednesday, May 25, 2022

Halogen Ventures invests ($250k – $1M) in consumer tech companies led by women (The Skimm, Carbon38). Jesse Draper shares her perspective of growing up 4th gen VC, how she learned to be fearless, and much more.

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Today I’m zooming with Jesse Draper from Halogen Ventures. Halogen is an early stage venture fund here in L.A. investing in consumer technology companies led by women. Halogen has made over 50 investments in companies like The Skimm, Carbon38, Flex, HopSkipDrive. And Jesse is also a fourth generation venture capitalist, which is incredible. Who can say that? It’s awesome.

So, Jesse, where are you? Where you holed up right now? And and, you know, does this situation change your investing at all?

Oh, yes. First of all, I am holed up in Los Angeles. Probably like you and I feel like just every day I feel like a crazier person like this is one of those things you kind of dream that you never think is going to actually happen. And just the things I’m telling my kids right now, I’m like, we’re gonna go for a walk around the block. But you can’t touch any one. So if you see your friends, don’t hug them.

We can’t play with them. And I’m like, I’m gonna. I messed up my kids for life already. Like, they’re just gonna be these crazy germaphobes. I mean, what a weird world right now. But, yes. What was your second question? Well, I lied about investing.

And you guys are you’re in fund two, right now. Right.

We are working out of a fund two. Yes. And we. It is. I mean, yes, of course, I had to change my investment strategy. I also just felt super depressed about the whole thing or I was like, oh, my God, so many people are going to lose their jobs. This is week one. We already have companies laying off anywhere from one to 60 people.

And the thing that’s really brought me out of this funk is I now have seen companies transform their entire businesses, put businesses that were not online, online in a matter of days, launch new product lines. And like you realize, you bet on these entrepreneurs for a reason. And that has been the most inspiring thing I’ve ever experienced.

Yeah, I love that.

I agree with you. You’re betting on these teams and you don’t know you can’t foresee these pandemics. How about like investing? I’ll just say, like, I found it really hard to continue investing without meeting people face to face.

Yeah. I mean, we very quickly pressed pause on all new investments because we wanted to have one on ones with all 60 plus of our companies just to be like, hey, how’s it going? And I mean, to be completely frank, I art our whole strategy, our investment criteria. Everything ended up coming down to three things. And it was like, do I believe in this founder? Can they execute? Do they have enough runway to get through the next year?

And are they coded sustainable because it’s no longer like are they recession proof? It’s like, are they? It’s a whole different. Like, everything is different now.

You know, companies that were recession proof that the government as a customer or like drive kids to school like those people are going to school.

That’s not supposed to be a recession proof business, you know. And so that’s been fascinating to watch. And just it’s. Yeah. So we had to flip it on its head and were really focused on our current portfolio. And we’ve just press pause. And I feel it’s like excruciating to do that because you know, as well as I did, we were in the middle of leading three deals and I just said, hey, guys, I’m so sorry.

And it’s very different. To all the sudden get working out of your homes as well. Oh, it’s horrible. So much quality family time.

Do you find that there’s certain advice that you’re giving a lot.

Oh, I love this question. I. Yeah, and I also feel like you always want to be friendly with your founders. I’ve done my best to be friendly and you know, but sometimes, like when you sit on the board, you have a closer relationship with that company because you have a larger checking and or whatever it is you you know, you really are in charge of showing them the mirror and saying, hey, look, here’s what’s really happening.

And so we did a Zoom call with like all 60 of our companies. And I I’m usually like on the edge of it’s gonna be great, like you guys get through with it.

And I was like, you know what? I actually need to kind of terrify them right now. And so, yeah, I feel like I’m over and over. I’m saying you will not get outside investment, period. And they’re like, oh, but we had these great conversations going on and I’m like communist. We can tell me they’re still going on. And they’re like, you’re right. They pulled out. I’m like, yeah, the only like you’re gonna have is probably raising internal rounds.

And I just want you to be realistic about that. There’s a few founders. We’re going to be fine. It’s just the next couple of months. So actually, we’re recommending 12 to 24 months of runway as our most venture capitalists in this industry.And then I love the founders that are coming to me saying, but, Jesse, we’re still going to hit our numbers. Our numbers are going to be great. And I’m like, no one gives like no one cares about your numbers. I don’t know if I can swear on this podcast. Guess no one cares about your numbers right now.

It’s literally about survival. So you just survive right now through the new year and you will be doing fine. I feel so grateful that we are in direct to consumer because this is just the moment where. Retail is transitioning to direct to consumer, like all of the traditional retailers, we all knew this moment was going to happen, but all the traditional retailers are pulling their orders and like they’re figuring out what to do. And so if you are in a direct to consumer business, like you’re very, very lucky right now because people are living in their homes.

So actually, tell me a little bit about what you invest in. Good question, too.

I mean, because I know it’s consumer tech, but I don’t know where you draw the line.

So we invest in a couple different categories, but we. Yeah. So I say direct to consumer. There has to be a female in the founding team of five. We don’t define that by any type of equity. I want to make sure there is a female in the leadership position. We have about 60 plus portfolio companies. We have three male CEOs, which I like to highlight because people seem to think you hate men. And when you invest in women and I’m like, no, we actually really like men.

We just want to make sure there’s women in leadership positions. And so when I say direct to consumer, to me, that’s something touching the consumer. So we have everything from social media to, you know, actual physical CPG type products to a couple of the verticals we invest heavily in in our fashion transportation. We do do some work from home products that would probably fall under more where you invest in in terms of like V to be data analytics.

We tried to also invest in companies that facilitate the consumer experience in some way because we have all of these incredible products. And so we were betting on like how consumers behave in the future. And so yeah, you mentioned a few of our companies in the beginning. Carbon38, The Skim. You know, we’re infestors in that company called Squad. That’s doing great right now. It’s like a new social media app that is sort of like if SNAP Chat and Zoom had a baby and teenagers are just sitting at home playing on it. 

And so, Jesse, do you have when you’re betting on how consumers behave in the future, do you have some ideas yourself going into this? Like do you have some things, some big trends you think are like the really exciting things that we’re all going to behave in the future?

Yeah, I mean, we were. Yeah, I mean, we have a company called Shipsi see, for example, that we invested in. That solves same day delivery. We know her for everyone who is not Amazon and Link, obviously people are just like clawing her door down right now. Every small business in America is like, wait.

So you talk to us and we were thinking about it, but now we’d like to go. We’re ready like we would like to deliver.

So if we are all working from home and getting everything delivered and we schedule our Uber pick up and it feels like we’re never going to just hang out in the town square anymore. 

I have thought a lot about that. And I think I always think like food is always going to be where we gather, which is why I think you’re seeing more things sold on shelves when you walk into restaurants and things like that, you know? So that’s where we always gather because people come together for food and beverage. But yeah, we’ll see how. For years I believed in kind of the pop up shop model in general because it is such a cost for a startup to launch a store.

Are you leading these rounds?We do lead rounds.

Sometimes we’re like the first institutional money and we rate 250 thousand to a million dollar checks and for initial investment. And then we follow on as well for about a third of our companies.

And what makes it really exciting, like I think I listen to you only. I listened to you the funniest podcast I’ve ever heard. I saw you on your brother’s podcast.

Oh, no. We need to do that. I was so I don’t know. We were just like fighting or something. I don’t even remember it. I need to listen to it. But I know a couple people that brought this up to me and I’m like it was probably like a brother sister wore the whole time.

No, it was good. It made me like you both. I was like, oh, I like them out of that. That was good sibling dynamic. But where was I going with this?

I actually don’t know where I started that conversation. Yeah. I have no idea where I was going with that. 

Maybe I’ll just ask a little bit about your background, because we have really covered that. So. Tell me about yourself and the team here. So I mean, fourth generation venture capitalists like super interested in how your upbringing. Your father is a legend in investing. How that influenced you.

Yeah, I mean, we our family is really close and still is very close. We currently have four funds amongst our family. My dad has a fund, my brother Adam has a fund. My brother Billy has a fund. I have a fund. And that’s just our biological family. And my grandfather does social enterprise. He’s still working and, you know, in his nineties. But we are just our family is really close. I think growing up, I was definitely exposed to many incredible startups and founders.

And that was really this world. I knew very well through my dad and he was so generous with his time and he would like bring me to conferences and I would teamspeak and all these other people speak. And so I do feel like I’ve been in this business for a very long time. æsthetic then went to UCLA for college. And I I felt like but there weren’t any women in this business. So like, what do I do? And as a young girl growing up, my mom took care of four children, which is like the hardest job in the world.

And I appreciated 10 times more right now. And I don’t know how she did that. I’m like I literally, you know, I went into this family situation and like, I would have like four kids. I have two and I’m like, I’m done. But, um. But my aunt was an actress and she was a very successful actress in the eighties. Your name was Polly Draper. And so as a young girl, I was like, oh, that’s what women do.

And and so I always sort of idolized her and was like, OK, I’m going to get a traditional job as a woman. But it’s true. Like, you want to be what you can see and as they say. And so I went into acting. I was on a Nickelodeon show. I did a bunch of movies, and I quickly realized that my time could be much better spent. I would like go to these cattle calls and everyone would look just like me and were probably just as talented and usually more.

And so I had I would be on this Nickelodeon show for six months at a time and then I’d have a six month hiatus where I’d go audition. And so I started this text talk show out of my parents garage. It was called The Valley Girl Show is hilarious.

Let me just say it’s hilarious. I got sucked into the black hole of teen years. So it’s it’s so excruciating. I haven’t watched old episodes for maybe 10 years.

Oh, no, Jesse, I made a fabulous cut for you. And I was like, oh, I’m going to make a fabulous cup. I get it. Jesse laughs. Billy is one sitting over it. Oh, good.

I cannot wait. I. Oh, my God. I can’t even. The bobcat we used to call a fluff cup and we found out that was a porn term. And so it was like, no, no, we’re not calling it the fluff cup. We can’t call the fluff cup. And I’m like, oh, sorry, I didn’t know that. But I’m so quickly transformed into the bad cup. But we. And for those of you out there who are not listening, we.

It was a you know, it’s just like a fun game. We played on our show called the Cab Cup, not a fluff cup. To be clear, but it was called the Valley Girl Show. I had no idea what I was doing, but I I started I had my brothers help me film the first episode. And we got incredible guests from Silicon Valley that now you would know. Well, it was like, you know, first season I had like Eric Schmidt, who at the time was the CEO of Google.

And I know we were the first tech talk show because no one cared. No one cared that I had Eric Schmidt on my show. They’re like, yeah, yeah, whatever. And you can Google. This was so early days was like 0 8 0 7 0 8. And I’m. We did it for a long time. I did. I did. And then we we took it. I worked with everyone from like Forbes and Mashable. It was like early days of digital distribution, took it to TV.

We were nominated for an Emmy. And I’m so through that, though. I just also media is just the Wild West. I mean, I have so many just like it’s just still very broken. We’re seeing a lot transform right now, which is interesting. But having been and now every element of media, it’s just it’s just broken. Like we were barely breaking even on the show I ended up getting blackmailed by my producer. It was just like a crazy time. And so I decided through the show I had made this initiative to interview 50 percent women in tech and they came. You know, I was one of the first people to interview Sheryl Sandberg before her book came out. And that changed my life like dramatically, I want to say in every single interview I ever have, because like her coming on my show made it OK for women in tech in general to come on my show.

And I’m forever grateful to her. But so through that, women came and I said, a nose. Sometimes you’re a little too early for the show. Love what you’re doing. Can I write you a Penney’s check? They didn’t have a lot of money at the time. I mean, I was writing like one to five thousand dollar checks, whatever I could afford. Sometimes I’d like negotiate sweat equity and be like, I’ll be an advisor, I’ll get you media exposure.

And some of those deals ended up doing really well for me when I sold on the secondary market for a twenty five X return in less than 18 months. One was carbon38 like one was. So like they’ve done great. So I use that to raise fund one. And now, as you mentioned, we’re on fund to. So many questions about it. It’s really your episodes are really amazing. Do you think there’s certain gas that you got that that’s sort of the public perceives incorrectly right now?

You know, it’s interesting. I. I I’ve been thinking about the show so much recently because I started it in 0 8 0 7 0 8. And as a venture investor, I have been studying those companies and like how they came out of it. And I had like Drew from Dropbox on my show when it ended up on the cover of The New York Times style section. And then they went public and I had like Eventbrite on and they went public.

And it was like I found these companies so early, like they just started. And so I’ve been thinking a lot about that. And obviously things change. I mean, in terms of commenting on how they’re perceived by you know, I think there’s always there’s like such a political answer. I think there is always ten to one hundred sides to every story. You know, it’s like if you were in their position, I bet you would see things differently, too.

Do you find that you’ve got some really interesting answers or like you learned something about your guests? Yeah, I mean, I always tried to find new things about them, so like I broke the news that Sheryl Sandberg had formerly been an 80s aerobics instructor, and then I was like, is that what is like?

Yeah. I mean, I guess so. We were quoted like three times in The Wall Street Journal, which I still think is just hilarious. It was like according to the Valley Girl shows your Uber use. But so I would dig and dig and dig because otherwise, you know, every interview is the same. 

And then you interview the people from like CEOs of corporations and things. And they would be much more teeth pulling interviews because they’re very I would call it like PR ified. And so you can’t you. I’d be like, how do I get them out of their box? Like what? So then I would throw these crazy questions out and be like, do you like horses? They’re like, why are you asking me if I like horses? Like, I don’t know.

I don’t I don’t ride horses. I’m like, no, I’m not asking if you’re ride horses. And then they would sometimes roll with it. 

I tried. I asked Ashley, I was like, give me some dirt on Jesse.

She. She did. She was good. She was like, well, we just went on like a we had like a management retreat or something, a team team outing. And we all had to have words for each other. And she said, I think your words were colorful and fearless were two words that she gave me, you know, and that was what I was going with.

Like, how did you become number one? How did you become fearless? Like, how do you help people become fearless? I think you just can’t let that something you know, I think my dad definitely has inspired me to be like he has no problem being the opposing view to anything. And you’re never gonna be everyone’s favorite person. I’m sure like any female, especially like you go through, you’re like like me, like me, like me, like me, like every everyone wants to be like know.

And I think at a certain point, you just have to realize, like, not everyone is going to like you. And that is okay because you don’t want me to be friends with everyone, you know, be the best person you can be. But I try really hard not to get. Not to sweat the small stuff and just. And also being in the media. I have like the worst. Oh, my God. Like this. Today’s media is like, yay, women empowering women.

I was trying to do that in like 0 7 0 8. And so was Sheryl Sandberg. And I was trying so hard and I was screaming for these like role models. And women did not want to support other women at all. They were horrible to be horrible. And I mean, I was like in my 20s is wearing little pink dresses to like, you know, business conferences. I was like one of like three women in the room.

And I’m sure, like, I look back and I’m like, I get it. Like, maybe they just didn’t like me. I was like, screaming for attention somehow.

But they I think I went through so much in the media that no media really affects me now. So like Valleywag would write these horrible articles about me without having interviewed me. And then like seven years later when I actually was relaunching the show, they wrote the same article. I was so excited, like a new press and like it’s like a rebrand. And you’re saying, did you learn through all these questions and shows you did like, yeah, I was ready to relaunch the show.

And then Valleywag basically like reposting the old article that they’d written from seven years ago without doing any research or realizing like we were now on a network. And, you know, it was like they were horrible, horrible to me. And so we got I got so much bad press from that show in the beginning that I was just like, I don’t care anymore. You just mean, no, whatever.

Well, I’m sorry to hear it first off.

But I also kind of think, like when you say you made you so much stronger than late. Yeah. Like I one day I’m going to bump into the Valleywag guy. I mean, he’s hiding from the world, you know? Yeah. I’m actually really good friends with actually using me somehow. I’m going to talk about this. I’m really good friends with Brian Goldberg from Bussel. And he I mean, they tore him apart, too. And he was so excited.

He’s just them. And he’s like the moment he bought them. I bought Gawker.

Yeah.

Well, I mean, but that’s kind of my advice for people when they are fearful and like this and they are sweating the small stuff. It’s like go get beat up some more and like you can go get beat up in big ways. And then the small stuff doesn’t seem all that important or something. Right. Good.

Yeah. Yeah. But also like you grow and like all those experiences are so positive. Like when I look back and I’m like, yeah. You know, maybe I needed like a big, you know, like hit to the ego. I was so clueless. Like, I had no idea. You know, you look back and it’s like that made me stronger. I’ve learned so much. I learn how to run multiple businesses. Like I mean, I think you would probably, you know, like you’ve probably learned so much, you know, in that amount of time to like everybody has.

Yeah. Well, I think also kind of bringing it back to business here. But like especially women, I think need some of these fearlessness lessons. And so, you know, I was fascinated by your business because you work with all women. A lot of.

Right. But those are guys. That’s kind of daunting to me. I’ve always been in the tech world. It’s old men. I’m used to it. Tell me some about this focus on women.

Do you think you give different advice to women? 

Yeah, in terms of women. I mean, yes, I definitely give different advice to women because we’ll have you know, we do these demo days and we’ll have pitch days. They’re like cold pitches every two weeks. We’ve like ten fifteen companies come in and usually it’s women. We have a few men come in and pitch, but they come in. They pitch in. So you really do have. We have some good case studies on like the rapid repetitive behavior of these women.

You know, we saw like five thousand deals last year. I’m not saying I have every single one come in, but we see a lot of women pitch and they’re all missing. It’s like they try to convince you more often than not. They try to convince you why not to invest as opposed to why to invest. And I now I’m so upfront, I would just say to them, like, hey, I love this company. Your numbers are like out of control.

Like this is you’re doing so much better than all of your competitors. And for some reason, you’ve told me all the reasons I should not invest. Instead of why I should so, like, go figure out that confidence thing and come back to me. But that said, women have so many positives like in this world of non-profitable public companies. People ask us about our portfolio and I’m like, oh, that that’s not an issue. Like our companies are profitable or like they will be profitable in a matter of months.

You know, they have it all mapped out. And, you know, we have a company that raised one point two million dollars in the first year and a half, was doing 20 million and like may never have to raise again. 

But so we’re more our companies are more profitable. I think also male versus female ego. I’m definitely not the smartest person in the room.

I’m sure you know, everyone listening is smarter than me in some way. And I think that’s women think that way. And I think that’s a really positive thing to be able to hear lots of feedback and really put it together in a thoughtful way. But, you know, we’re more reasonable. We like tune in. We have the E Q and going on. Yeah.

Go get some cash then. Anyways, I love men too little boys.

So I really love men. What is what is good traction, though?

I mean, just so women know, like if they’re coming to you and they’re doing ten thousand dollars a month. Is that good traction or what are you guys. I know it totally varies.

We say, you know, some kind of traction. Like it depends. Yeah. Depends what the industry. But like some examples, I would give us like a million in revenue. You know, if you are pre products like show me some proof that like there is a need one hundred thousand users or even like fifty thousand users.Got it.

Anything else on Halogen?

And just kind of pausing, thinking I do have a fabulous cap that we babka value. Oh, let’s do it. I’m so excited. You ready for the babka? I am ready for the babka.

I actually didn’t get it in a cup because I had to go downstairs. OK. Here’s the address. Me number one. Jesse Draper’s stilettos.

Oh, my God. I’m six foot tall and I wear a six inch heels and I used to get where it’s supposed be quick. I’m even better at this game I use. People used to give me a hard time about being too tall, a talk show host. And unlike Conan’s tall, he’s still taller than me when I wear. OK, great. Thank you. Next up next up, these especially fast, Jesse Gamel. This one says mentorship.

So important. If you don’t have mentors, go find them. Sometimes they look like friends. That’s good. That was fast this one says the Drapers.

Wild, crazy, kooky performers. Interesting. Like, what was it, dinnertime conversation? It’s all business or it’s a performance or an art project that’s got a lot of talent shows.

We have our annual art contest where we have like a legit gallery show where we’ve all drawn some sort of picture or sculpture of my grandfather. And it happens on his birthday. So I have like 30 years of. Grandfather Art under bedtime. That’s awesome. We all draw pictures of my mother’s stove, which is weird, but you’re OK.

I wish I had like a new muse to be on it because I was not a whole lot more I can do.

Well, I’ll give you ideas. He can be a Christmas tree ornament. He can be so many things. Gingerbread houses of your grandmother. Yeah. Okay. I love it.

Next up, feminism. We need men involved. Agreed. And I think they’re getting there. This one has something on both sides of the paper. We’re going. What I read for a Sandhill Road is the last one.

I grew up around there and I still don’t understand why it’s like being so Hollywood, I guess because it was a pretty quiet place and still is. Interesting. But when it’s there, when you’re there, you think you’re the center of the universe. I did not think that it was really boring. We would go ice cubing on the weekends. If you don’t know what that is, it’s because you’ve never been that bored.

And what about L.A.? How do you like L.A.? I love L.A. I’ve been here for about 15 years and I love the Bay Area. I mean, it’s what it was such a great place to grow up. But I like that there’s always something new. Like I know every corner in Menlo Park, you know?

Yeah. But L.A. tech scene. It feels it feels sort of happier here to me.

Yes, it’s. It has a balance. We work just as hard, but like there is a balance, too. I mean, you can go to the beach for a meeting.

Yeah. Yeah. And it’s growing, which is fun. It’s fun to meet all the other v._c._r.s in L.A.. Anything else I missed about Halogen? And that’s really important.

You’ll probably be, you know, back in business in a little bit and and going back to investing in women. Yes, we are, we are. We’re just sort of getting through this moment and we probably still will through this, but we. I’d say just if you guys need to, you know, cut your coffee addiction, you should go buy some tea drops direct to Consumer Tea Company. You drop it in water. It’s bagless tea and it’s it’ll mix up your coffee habits.

Great. And I can order it online. I’m shameless plug. Yes, I love it. No, it’s great. I’ve seen them. I know the T drugs. Great. I actually I was trying to research doing the research last night.

I ended up buying. You know, I was at carbon38. I was like, what is Carbon38?

Yeah. But some like snake print legging. Leggings. Yes. Yes. Those are so cute.

Which ones did you get? They’re white with snake with the gold snake print.

Oh, yeah. Yes. So those are so great.

Yeah. If you need some leggings while you’re hanging at home and up carbon. Totally. OK. Great.

I think this is all my questions that I’ve only got it. Thank you. I don’t even know where I went on this interview.