Daybreak Dialogues | Rex Woodbury (Daybreak)

Welcome to founder Friendly, NYU's first student led technology and venture capital podcast. Here we provide an inside look into startups and VCs to help you break into the industry and learn more about the latest technology and trends. Today we are joined by Rex Woodbury, founder and managing partner of Daybreak, a venture capital fund investing in pre seed and seed companies at the forefront of behavioral and technological shifts. Rex is also the author of Digital Native, a popular weekly newsletter with over 60,000 subscribers that explores the intersection of technology and human behavior. Join us as we discuss topics such as how creating content helps position Rex to be a better investor, biggest behavioral shifts in the younger generation, why Rex is biased towards first time founders, as well as even his favorite Taylor Swift songs. Trust you will not want to miss this episode.

Hey everyone and welcome back to Founder Friendly. Today on the show we have with us Rex Udberry. Rex is the founding partner of Daybreak as well as a very prominent writer of the Digital Native. Previously, Rex has experience at Index Ventures, tpg, Goldman, as well as startups at Calm and Airtable. Welcome, Rex.

Oh, thanks for having me. Great to be here. You know, we were just chatting before about I feel like when I was your age I did not know what venture capital was. I barely knew the options available for people who are interested in tech and startups. So, you know, kudos to you guys for being kind of ahead of the times and hopefully this is a helpful conversation for, you know, the NYU community, the New York community, other young people who are interested in learning about tech and startups, venture.

Awesome. Rex, would you like to give us an introduction of yourself? Anything that we might have missed?

Yeah, I mean, I guess I'm in my own entrepreneurial journey now. So I started Daybreak not too long ago as sort of the thesis for Daybreak, which is an early stage venture firm. We're based here in New York, is, I call it kind of a back to basics venture. So the idea was that looking at the industry as a whole, over the last few years we've seen sort of this over financialization or over industrialization of venture capital and it's begun more to kind of resemble asset management and less the kind of artisanal venture that the original ethos of the industry came up in. And you'll hear me use that word a lot, artisanal. And the vision for Daybreak was I don't want to be the huge, huge multi stage firm. I think we can seize this sort of gap in the market for a more craft like early stage player, which is really all about high conviction, partnering with founders, hands on partnership, working really closely with founders at the earliest stages and we invest at pre seed and seed and usually lead or co lead rounds and then work really closely with founders in that first 12 months, 24 months to sort of build the product, figure out the go to market, hire the early team and get things off to the races. So that's what I'm doing now. I started more in kind of traditional investing world and sort of at a number of bigger firms. But kind of the through line of my career I think is an interest in how technology and people intersect, just how kind of our generation is coming of age with the Internet and now AI and software and cloud and all these major kind of shifts that are changing how we communicate and earn a living and how we create things and just the different ways that people go about their lives. And I think the best part of being a venture investor is you get to spend time thinking around how the world's changing and trying to predict the future and find the kind of wild ideas that are going to shake up how we live and think and work. So I feel privileged to spend my time that way.

Yeah, that sounds great. Definitely want to dive more into daybreak later on. But as for now, kind of talking more about your previous experiences in that traditional banking, growth equity role, how do you think those experiences at those big firms kind of shaped you as a person? And also were there like any big lessons that you learned along the way?

Yeah, I've sort of progressively moved earlier in my career from more private equity to growth to venture and now really pre seed and seed. And I think as you move earlier it becomes more and more about people when you're investing at late stage. You know, I kind of cut my teeth with financial modeling and doing cohort analyses and digging into the data room and numbers. And I think it was a good way to get a good education in financial analysis, business metrics, understanding sort of different knobs you can turn in a business. And you know, I think it's, it's shocking that a lot of people in early stage world forget that, you know, our job is finding companies that can be one day cash flow generating. We all forget that as venture investors or founders. But I think it gave me a good appreciation of that. I think it gave me a lot of the toolkit. I always forget whether it's left brain or right brain, the more kind of like analytical, you know, horsepower. But they gave me a lot of that. Which now actually I think comes into handy as A fund manager where you're thinking about things like portfolio construction and how much you want to reserve for future investments and some of the kind of nuts and bolts of, of running a venture firm. But I think over time I've moved closer to where I'm interested, which is less financial engineering and more people. And pre seed and seed is all about people. I think it's can you identify really exceptional human beings and then you know, what are the big crazy ideas that might just be big enough and crazy enough to work and then work with them to do that. And so I would say the earlier you move and the earlier I moved in my career, the word investor feels less like a fit and more kind of business. Building is really what I think early stage venture is about. It's can you be really hands on, in the trenches with your founders thinking around, is this product roadmap the right one? Is this go to market clever? How do we build an organic morality? Just kind of the questions that are going to determine the success of the business. And then can you find the right people? I think all of business really is about allocating two resources. One is labor, one is capital. And of course as a venture capitalist you're investing capital, but you're also trying to figure out who are the people, the labor that you can sort of allocate to the business in the different ways that it needs so that you can have one of those kind of outlier outcomes that we're all searching for.

You also write the Digital Native. We have huge fans of the newsletter where you cover a lot of things on sort of like consumer behavior, what's happening on culture, you know, the intersection of that. How do you think that has shaped who you are as an investor? Sort of like expertise or just this understanding of what does the consumer really want today?

Yeah, I mean, I think at the end of the day, like every business has a consumer or a user. Like we forget that. Right? Like the lines have blurred a lot between consumer and enterprise. And you know, someone is deciding to use ramp at this company, someone is deciding to use Figma or Notion or Slack at that company. And so for me, what I've always been interested in is how do people make those decisions? How do people interact with one another and with technology? So in some ways that kind of side of venture capital is being an anthropologist of sorts, trying to talk to a lot of people, understand their behaviors and then what are the big behavior shifts that are going to power really large businesses. And so Digital Native kind of arose as exactly that it was me kind of putting out into the world different thoughts and theses I had on, you know, different sectors and markets and startup opportunities. And it started, I mean, I kind of spent the earlier part of my career, you know, and people who go into banking or private equity would have this where someone says, you know, dig into this market and then you sort of go and you do it and it's more reactive. And I was kind of like, you know, I want to be a lot more proactive. I want to put actually my energies into the things I'm interested in and tell people what I'm interested in. And the Internet is such a powerful tool of, you know, if you kind of blast through your megaphone what you're interested in, it leads to a lot of serendipity in terms of meeting people who are building in that space or curious about it. And I think venture capital at its core is all about manufacturing serendipity. It is. How does next generational founder next week starting her company? Think of Rex and think of Daybreak for her pre seed. And my job is, you know, if I can write a long form piece week in and week out, sort of shows her and the rest of the world what I'm interested in. Hopefully someone whispers in her ear and says, oh, you're building in the mental health space. Like Rex has been writing about that a lot. Or, oh, you're interested in resale commerce. Like, you've got to meet Daybreak. And so I always say you can be thesis informed, but have to be founder first and founder led at the early stage. And I think Digital Native works well in being, you know, kind of outspoken on different areas that are interesting to me and different theses, but allowing really talented people in my network to say, talk to this person. You gotta meet this person and creating that serendipity. Yeah.

Has there ever been any instances where founders and I'm guessing there definitely has been founders reaching out to you because of. Exactly. Sort of that example you gave earlier on where you wrote a piece on a certain area and they're like, this is exciting. I love that you're thinking about this. I'm building in this space. Let's chat.

Yeah, it happens a lot. I used to adhere a little bit more to respond to everything. And then Marc Andreessen, I think, has this quote that sort of the first test for him is like, whether someone can find a warm intro or a good connection to him because it's hard to parse through a lot of signal when you're getting A lot of inbound from people in response to a thesis. But if someone can figure out what's really good signal and how, how to get someone to take them seriously, I think that's a really good predictor of can they do that when they're selling candidates and hiring folks? Can they do that when they're selling customers and getting new logos? And so I think for me more often it is someone in my network who reads the piece and then says, you have to meet this great founder sometimes, but more rarely exceptional founders are inbounding directly. I think it is more common that those two examples are good examples I just gave. So I said them for a reason because they were top of mind. One was mental health. I wrote a piece about how there's a teen mental health crisis and unfortunately it's one of the biggest kind of tailwinds happening right now and it's relatively unsolved by technology. And a New York angel was basically like, you've gotta meet these two incredible founders. They're leaving their previous startup to build a sort of team mental health business. And then I invested in that one. And I also said the same thing with resale commerce because I wrote about how resale is the fastest growing segment of retail. It's growing 11 times faster than broader retail. There are all of these tailwinds around Gen Z wanting to shop secondhand, sustainability moving into commerce. But no one has quite figured out how to crack resale with technology. You've got Poshmark and Depop and Thredup and these others. But a lot of them feel like kind of remnants of a Craigslist era of the Internet. And a lot of them are so full of friction and they kind of constrain supply for secondhand. So I wrote about it and then an angel was like, you've got to meet this young woman, she's incredible. She's building exactly this. And then I let her precede. So it's often that way that it comes about where it's that serendipitous kind of connection of can you combine having a good network of surrounding yourself with the best entrepreneurs and angels and operators who know really good talent and then remind them this is a really interesting space. I think this market's big. I think there's a why now here is anyone building here? And then they put the two and two together and you know, the rest is kind of building that relationship and that's what the job's all about.

Yeah. And on that note about having like a great network, especially in early stage of investing, do you have any tips or like, how do you go about surrounding yourself with the best people and like putting yourself in those situations where maybe you could get the these next deals? And then I guess, more specific to Digital Native, how do you build an online audience?

Yeah, I think on the former point, I mean, I do think there is a certain amount of groundwork in an early career to build that network. I think it is a lot of coffee chats and zooms and getting to know people. I do think depth over breadth matters more. You know, I think you could fill your calendar with dozens or hundreds of meetings that sort of are very transactional, but you don't actually build a really deep connection. And it's better to have five to 10 people who you think are exceptional, top 1% people who attract other top 1% people. And one of my mentors early in my career gave me that advice that surround yourself with top 1% people and they tend to attract other excellent people. I think it's true at companies. It's true of venture. I mean, really excellent people want to work with and spend time with other excellent people. And so identifying those really great nodes and then nurturing them and getting to a level where you trust them to help you out and they can trust you to help them out. So I would say certain amount of grunt work, but identifying who those people are for you and building deeper relationships. And then on the content side, I mean, I love content because it's basically networking at scale. I am not someone necessarily that wants to do a hundred coffee chats a week and fill my calendar back to back to back. But if I can write a piece in Digital Native that goes out to 60,000 people and tells them, you know, this is what I'm interested in, that I can go take an app and they can, you know, read it and work. And I come back and my inbox is full of a couple good intros. And so I think content is nice because it works at scale that way. And, you know, a lot of my friends have had a lot of serendipitous career moments happen through Twitter and LinkedIn. And I think what they all have in common is they spent a lot of time writing about or being vocal about things they were passionate on. And I think there was no kind of faking it in that. Like, I think a big unlock from you was with Digital Native, just spending a lot of time on things I was interested in putting out in the world. That means that unfortunately, no matter what, I'm never going to get excited about a few different sectors, and that's tough, but at least I am really passionate about these areas and hopefully that passion comes through and how much time and depth of thought and clarity of thinking I've put into really mastering a space sector. And so I think it really comes back to like, it's so cliche, but to, to do what you're interested in. I remember my dad had one of those kind of like stickers you put on the fridge when I was young that was like, you know, pursue your passion and you'll never work a day in your life. And I think we can all like, roll our eyes at that because it's become so trite. But it really is true. You know, people recognize when you're inherently curious and interested in things. And so if you can spend time with people in that space or write about it online or kind of nurture that kind of interest, then it pays dividends down the road.

I would love to hear a little bit more on what exactly is your process for writing Digital Native. I think a lot of us, at least those who are interested in venture, have this inherent sense of curiosity. So how do you go about focusing on a topic and deciding that, okay, I'm going to write about this next?

Yeah, I mean, there are definitely weeks where I'm like, oh man, what should I write about? I'm not sure, but I do try to plan ahead and I usually have kind of three or four ideas for the future. So I know, you know, in the next month, I would love to write a piece about how AI and education will interact. I would love to write a piece about a book I read recently called Status and Culture, about sort of how we seek status and then apply that to sort of the digital realm. So I have these ideas and what I do is I create sort of a notion subpage in my kind of central repository of ideas that might be called AI and learning. And then every time I see a chart or a company or a statistic that I think would be good in there, I'll. I'll paste it in there. And then when I go to sit, sit down and write, I have, you know, at least some stuff to put into a framework and shell it out and that kind of thing. But I don't know, I mean, I think you just gotta get something on the page. And I think there's a famous author that says there's no such thing as good writing, just good rewriting. So I think it just, you gotta put it out there and then, you know, Improve it over time and refine it and edit it. But there's nothing to do other than just start writing and synthesizing those thoughts.

Yeah, and I guess talking more about some of the articles you have written, I was specifically interested in the one about the younger generation returning to more trade professions with the incoming AI wave. Like a lot of specialized jobs might be taken over. Do you think this will ever be reversed? Like do you see, I guess people going into more trade vessons and then maybe flowing back into specialized positions. How do you think that dynamic plays out?

I could see it being a decades long shift. I mean, I remember first reading about this and seeing some chart maybe last summer, last fall. Right when sort of AI mania was happening and people were sort of seeming to be scared of AI automation and thus kind of prioritizing jobs that use your hands and maybe are less vulnerable to automation. They might be more vulnerable to robotics and other forms of automation. But you know, that's a debate for another time. I think a lot of it is actually more of this like nihilistic attitude to the corporate ladder just as much as AI. I think a younger generation basically wants to be self employed, wants autonomy, wants flexibility, wants to be admired for their profession. And so the idea of working for the man or climbing the corporate ladder is very off putting because they've grown up kind of seeing their parents or grandparents or loved ones lose their jobs during the Great Recession or during COVID And it just feels very unstable and unself reliant to put a lot of your eggs in that basket. And so that's led to certainly where you see trade profession. But I think that same tailwind is powering things like being an Etsy merchant or being a Roblox developer or being an online tutor and all of these different platforms that kind of underpin new forms of Internet native work, which I think are really interesting. And those businesses can often be really large technology outcomes if they underpin economies of work on them. It'll be interesting to see if trade schools, you know, stick around. And my guess is yeah, a lot of people want to be kind of self employed, work with their hands. But I think I'm much more bullish on the idea of just self employment in general and you know, more autonomy of work than specifically trade skills.

Got it. So like more entrepreneurs.

Yeah, I mean, you know, I think one example is one of my companies is a company called Flagship. It lets anyone with an online following launch her own storefront so she can become a small business owner and curate all of her favorite products and earn a nice cut of every sale that happens through her store. And so what it does is the mom and pop shop out here on 15th street probably has huge setup costs of, of rent and getting going, but she could basically launch an online equivalent of that mom and pop really quickly and, and go from being just an influencer doing sponsored posts to being her own small business owner. Amazon has millions of people earning a living as third party sellers. Certainly you know, whatnot with live streaming you've got a lot of these kind of new platforms, just even Notion and Figma now, right. Have like robust communities built on top of them where people earn a living selling apps and templates and things like that. So I just think a lot of the best companies kind of undergird these work economies where people can earn a living. And it's really the definition of a platform. And usually the biggest technology businesses are platforms.

Got it. And I think that's definitely interesting because just with like technology itself, that barrier of entry into monetization of your own skills, your own like content, your own knowledge, like that barrier is decreasing. So more people are just growing increasingly interested in putting their own ideas or idea like skills out there. So that's definitely fascinating. Something else that I'm curious about and just like zoom out a little is what do you think are some of the largest trends or the largest shifts that we are seeing in terms of behaviors and wants and our generation also of like in the younger generation?

Yeah, I mean, I think, you know, to finish the point on that one and related to your question, I would frame a lot of that into business in a box platform. So this idea that a lot of the best kind of software out there can just allow anyone to become their own business and run and manage their business. And I think that's a big generational shift. You know, that's self employment or at least kind of self reliance. And we see business in a box platforms, you know, grow. Therapy is doing really well in the mental health space. Nourish for dietitians, which I'm involved with Honeydew, one of my companies, through Daybreak for Dermatology. You know, I think there are a lot of these different platforms. We've seen a lot in healthcare specifically, but you know, just different ways to kind of spin up your own business and abstract away a lot of the complexity in terms of invoices and scheduling and booking and management of all of the backend. And so I think that's a really interesting shift. I think that'll Continue to happen. Sort of a, a disaggregation of work that is powered by a lot of those behavior shifts that we talked about earlier. You know, other ones that interest me. I think mental health, being destigmatized always interests me. I think sustainability broadly, especially how it applies to commerce and how we sort of consume products, transact, sell, that's always very interesting to me. You know, the first name of Daybreak, before it was called Daybreak, was tectonic, because a lot of the things that I like to think about and write about and invest behind are these tectonic shifts of human behavior. And then one of my mentors was like, that's way too private equity in name, very austere and serious. And he was like, you should pick something more hopeful and optimistic. And so I chose Daybreak, which I think implies more of that lens of optimism in early stage. But you know, I think some of these tectonic shifts have powered some of the biggest technology businesses in the past. And I think paying attention to sort of the big generational shifts this time will help us understand what businesses break through in the next 10 or 20 years.

Yeah. On the end of sustainability, that's always been this very interesting topic of conversation because in the past, like two or three years, we saw sustainability rise up in the sense that regulations like the SEC mandated disclosure of emissions just on that end as well as a lot of companies are focusing their social branding, how they come across on that front. But at the same time, it's largely reliant on consumer behavior. A lot of it does come down to the consumers or like someone within that chain giving up some profit or some sort of like convenience just so that you could, you know, be more sustainable or that you could drive greater social good. What's your take on that? Should we remain optimistic about it? And if not, like, what are like the considerations or like the nuances around it?

Yeah, I mean, I'm certainly, you know, always optimist. I think people do want to buy sustainability or sustainably. I think the problem is that people probably prefer a good deal over being sustainable. I think you see this with Gen Z and some of the biggest contradictions. Right. So every Gen Z, you see all these surveys, you know, 80% prefer the sustainable product that are unsustainable. You know, there are always all these data points that are saying, you know, people want to shop sustainably. Yeah. Gen Z has powered Shein to be like a 50 billion revenue business a year. Right. And so what gives? Like, that's not good for the environment. I think the reason is that people do want the sustainable option, but they also want the $5 dress or the $6 shirt, you know, and so I think you have to understand that and then lean into both of those behaviors. Right? Like, Shein's not going anywhere. Zara H and M. They're not going anywhere. How do we create technology solutions to make sure that those items don't end up in landfills or get them reused or recycled? And that's why two of the areas of interest to me in commerce are. One is resale commerce, you know, kind of powering the circular economy. And the other, which is related, is solving the excess inventory problem for brands. Like, how do you actually get that into off price or resell it or, you know, figure out how to not just liquefy it or put it in a landfill. But I think you just have to understand that consumers have told us, you know, over hundreds or thousands of years how they'll act and they'll always choose the low price. And. And I do think that there is a newfound emphasis on sustainability. And we've seen some of the brands that break through, right. Everlane or Wilby Parker, Patagonia even, really emphasize that ethos. But, you know, people still want the good deal. So we have to understand that behavior and work around it.

Definitely. I think that just reminded me of this company that I read about earlier called Ghost. I think they're like a B2B market that just offloads, like, inventory.

Yeah, exactly. Yeah, exactly. I mean, Ghost is doing exactly that, right? Like, they're helping the retailer reroute their inventory to the right place. And it's a tough problem. Like, it's a tough business to build. There are a lot of moving pieces. I think one really interesting insight too is can you tie the merchandising to the excess inventory team and inventory management team? Because, you know, sort of like. And put marketing in there too. Like, understand the whole life cycle of a good. Normally, say the marketing team emphasizes all colors of a sweater, but, oh, this year, like, blue is really in. So the blue has really been front and center for their marketing. And that means that, oh my gosh, Blue is usually 10% of sweater sales, but this year it's 40% or 50% because it was trendy and emphasized by the marketing team. Well, the merchandising team is going to be a little upset if they hadn't known that ahead of time. And, you know, manage with, worked with marketing to ensure that they have the inventory for that. And so then they end up with way too many whites or way too many green sweaters. And so you can see sort of the life cycle of garments are really interesting and there are so many moving pieces and it's a complex business to nail. But I think there are a lot of really interesting optimization pieces and software and AI that you can build to make that a much better experience for everyone involved. And of course, like a $20 trillion retail industry.

Yeah, I guess pivoting a little bit more to Daybreak, I was wondering, I guess how is your experience starting a fund? I know that must be very challenging to do.

Yeah, I mean, I think like starting anything is a labor of love. I think there's always a lot of minutiae to go in. I probably certainly, you know, didn't even think through like half of the things I'd be spending my time doing. You know, you're setting up trademarks through the name and working with fund formation lawyers and bank accounts. And I think it gives me a lot of empathy for entrepreneurs. It is also very energizing. Like, I think it is fun to think through, how should this job be done? How do we build a partnership that aligns incentives in the right way? How do we construct a portfolio that, you know, makes sure that we can earn each founder reference and work really hard for our founders? And it's really fun. Like, I think it, you can move quickly and be a lot more nimble and agile as a smaller fund one and sort of as some of these behemoths. And I think you have a different selling point to founders where you can say, you know, a million might not matter much to the sequoias or indexes or Andreessens or some of the big ones, but it matters a lot to Daybreak. And you know, we're going to work really closely with you to make sure you succeed. Because, you know, if you succeed, we succeed and then, you know, we're friends with all those people and please work with them down the road and we know them and we'll intro you. But I think it's a different selling point to founders, really, that kind of like hands on, artisanal, again, partnership. And so it's been nice to be able to sell and really believe in what I'm selling. And then to LPs, I mean, that I think has been a muscle to build as well. You know, I think so much of this job is, so much of any job is sales. Right. In venture, it's selling to the entrepreneur, it's selling to LPs I think, really trying to show them that your product is different. And thankfully, I believe in the Daybreak product and believe in its uniqueness and differentiation. And so to LPs, I think that is hopefully resonating where you can say, you know, you have to squint a little bit. Right? We're still day one, really for Daybreak, but hopefully in five years and 10 years we've built something really special where we're consistently delivering top tier returns to our LPs and certainly working with many generational founders and hopefully we were part of the kind of founding story in those first couple of years of the business. So, you know, it's a fun job. We get to kind of predict the future or try our best. We get to work with brilliant people who can see the future and then want to manifest it. And we get to just kind of think through interesting spaces and ideas and markets and try to, you know, skate to where the puck is going. So I love it. I feel very lucky that, to answer your question, it is a lot of work, but it's also the right work that I want to be doing.

Yeah, it's great to hear that Daybreak is with this super collaborative model with these startups starting the fund itself. Were there any challenges that you think people don't really expect going into creating a fund?

I mean, there's certainly the minutiae and like, I think, you know, you spend a lot of time with fund formation lawyers and fund admin and, you know, a lot of moving pieces there. But I think at the end of the day, it's all about working with exceptional founders. And so I think the sooner you can show that it's not just a strategy on a page, but, you know, we're able to find these great founders for win the right to work with them, partner with them, deliver real value the better, and then it gets easier from there. And so I think, you know, it is a tough time to start a venture fund. You know, historically it's probably the toughest time. In the last 15, 20 years, it's a market correction. LPs haven't had many exits themselves and so they're not very liquid. Right now. The denominator effect has happened, which means that they're overexposed to privates relative to publics and so aren't necessarily making many new fund commitments. So it is a bit of a crazy time to start a fund. But I think on the flip side, that makes it a really good time to be investing. Right. I think there is a Talent unlock happening where a lot of young people and really talented people are leaving their startups or companies and starting their own thing. And we're seeing a technology shift, a big platform shift at the same time as all of these behavior shifts we've talked about at the same time as this market downturns. I think you can work with really exceptional people at pre seed and seed and that's kind of a much better time, I think to be starting a fund than a couple of years ago when it was easier to raise but you might be paying nosebleed prices and kind of not necessarily getting the ownership you need. And the market was just much less disciplined. So now I think if you're disciplined and love what you do, then it is a challenging time to raise. But if you're patient, it's going to be a much better, you know, 10 or 20 year starting point.

That's exciting. What are next steps or like plans for daybreak? I understand that it's still at the very early stages, still waiting, you know, definitely need a few more years before you get confirmation your investments.

Yeah, the sales cycles in this job are long. But I think, you know, I, I was just talking to my dad about this earlier. I was like, yeah, it's, it's a very hard job to know if you're any good at for a long time. But I think what gives me solace is I'm very excited about the entrepreneurs that we work with. I think they're exceptional, they're executing well. You know, I would work with all of them again in a heartbeat. Which gives me a lot of comfort to say because even if some exhaustion factor happens in the company doesn't work out, I think I am controlling the variables that I can control with finding exceptional people building in really attractive markets with good business models and you know, that gives me comfort. So I think we're executing our strategy well. I think, you know, over time we want to build the team, probably be three to five partners long term, be more kind of disciplined, thesis driven, early stage. I'm sure, you know, someone will point to a clip of this in five or ten years and say, but you said you were going to be this and now it looks very different. And so I think that's always one of the dangerous parts of the known unknowns. There are probably my thinking on this might change radically as I learn more about being a fund manager and sort of as my LP helped me see around corners and mentors help me understand, you know, what it means to move from fund one to fund two, to fund three. But some things won't change, which is I think that artisanal and craftsmanlike approach, being high conviction, being founder first, being very disciplined on the stage, we invest the kinds of founders we work with. So all of that, I hope is core to the DNA of Daybreak long term. But there will be some evolution or fun size in the spaces we invest in and the people on the team.

Awesome. And out of curiosity, Rex, I know you started Daybreak. You founded other organizations in the past before as well. Have you ever thought about a founder in the traditional sense of a startup? Has that ever been thought across your mind?

Yeah, I mean, it's certainly something I've thought of. I think certainly starting Daybreak has scratched some of the entrepreneurial itch that I have. Right. And I do think I'm more of an ideas person who enjoys kind of thinking through those early crazy ideas and less of sort of a operations execution person. And so I would definitely, I think the lines between pre seed and incubations are so blurred. Right. I think in the early days you can be really a thought partner to a founder and figuring out what the right business model is, what's the name of the business, how do we incorporate all of those things? And so I wouldn't be surprised if down the road, Daybreak has more of a formal kind of incubation engine where, you know, right now I have probably five ideas in my head where I'm like, I keep seeing companies in the space but haven't quite found the right founder. I would love to have a company doing this or back a company that's doing this. And so down the road, does that look more kind of like the Daybreak team doing a lot of market work and forming a point of view and customer calls and then, you know, having an idea for an incubation and assembling the team to do it, maybe. I think there's always a bit of an adverse selection problem and you want the founder to be sort of the one with a lot of the insights and market understanding and founder market fit, et cetera. But I don't think it's impossible. Like primary does a good amount of this thrive does a good amount. I think at the early days, again, the lines between builder and investor are very blurred. So I think that'll scratch my entrepreneurial itch. Hopefully we will do many incubations and pre seeds and I feel like I am at least in those early, early days of building companies. And that's the part I like. So I think that all scratched the entrepreneurial part of me.

Yeah. And I guess like reemphasizing on the point on the importance of founders at those early stages. I was curious, what do you think are some deal breakers when it comes to founders? Like there's a great idea but there's this quality of the founder that you dislike.

I mean I certainly. Ego. I think the problem with ego is that I think it goes with the understanding that the founders belief that they know everything. I think the best founders can very clearly articulate what they do know and what they don't know but need to figure out. And I think the best founders are quite low ego and very self aware and are able to articulate in a presentation or in a meeting, hey, this is our thesis of why this hypothesis. But we need to prove this out and we're going to do X, Y, Z and then we're going to iterate quickly. So I think definitely ego, you know, mercenary, not missionary. I think the frost of the last five or 10 years has led to different waves of kind of more tourism into starting a company where it becomes the sexy thing to do and capital is readily available. And so a lot of people can start companies. And I hate when fundraising becomes a metric of success and celebration. You know, you see all of these kind of big announcements and we've raised this much money or people say my prior company we raised 80 million and we forget it's. It's not about how much you raise, it's about how much cash flow you generated ultimately. But at least you know the revenue you grew and your margins and things like that. So I think you want someone who celebrates the inputs and celebrates landing new customers and hiring a really great person and all of that and not necessarily sort of vanity metrics. So finding missionaries really is the key. Why is this person going to run through walls when the going gets tough?

Yeah. And I guess expanding more on that point kind of entrepreneur tourism. How necessary do you think it is when you're finding a startup that the founder is a serial entrepreneur?

Oh, I actually have a bias toward first time founders. I think that they have more of a chip on their shoulder. I think that they have a lot to prove. They're also like, I think we lump in second time or third time founders into different buckets. Right. It's a lot different if you sold your first business for a billion and personally pocketed half of that and maybe that person, you know, isn't as motivated for the second one to be a success. There's another second time Founder who learned a lot from their first business, but walked away with zero. But, like, actually more of a chip on her shoulder to prove herself again. So I think there are different flavors, but I really like people who say, this is my shot. This is my life's work. I want to be running this for decades to come. I think those are the generational founders that we're looking for. And, you know, people forget that venture is not the right product for every company. It is definitely not the right product for most companies. I think taking venture dollars sets you up to some expectation of growth and outcome, which can be stressful for a company and its employees and its founders. And so it's an important decision. Do I want to bootstrap or do I want to really go for it with venture dollars? And not every business model is set up for that kind of rapid growth and outlier power law outcome. But from a Daybreak perspective, from a venture perspective, our job is to have those companies that are $5 billion, $10 billion businesses. And so every company that Daybreak works with, every founder, should be aspiring to build something that is a generational company in that way.

That's definitely awesome to hear and extremely inspiring. I'm. I'm curious. Earlier on, you alluded to many times your mentor or like your mentors within this industry or just like within broader career for a young professional, for someone out of college, what's your advice on seeking mentorship and maybe even like selecting a mentor?

I've never really been that intentional or purposeful with it. I think I've let it happen more organically, just kind of, I think doing really good work, earning a good reputation as someone who works hard, who's curious, who takes their work seriously, who wants to develop and grow, and then I think that naturally will sort of bond you with people who respect that and see themselves in you. So always been a lot more organic, I think, again, following kind of areas you're interested in and just being authentic in terms of how you're spending your time. Authentic, acting with integrity, working hard. Those are all of the things that I think attract more experienced folks to young people and allow them to want to help nurture you and grow.

Yeah. And adding on to that, who has been your biggest inspiration? I'm just curious.

Oh, my gosh. I mean, obviously I have to say my dad, because it's a cop out answer. And I don't have to name anyone I like, worked with or pick a favorite, but my dad's just a really interesting person. He's a Physician and mountain climber and writer. He was a big writer. He's written a couple novels and a filmmaker. And he's just kind of this renaissance man who I think is really interesting and was a single parent, most importantly to my brother and me, raising us, and has been an amazing dad. And so I think just. I've always aspired to be someone who's interesting and interested in a lot of different things like him. And so my interest in people, in the more kind of like, anthropology part of venture, definitely stems from his fascination with culture and people and how all of those different things intersect.

That's awesome. And we definitely see that your different areas of expertise and all the different published thought pieces that you have. It's extremely amazing. There is this other question that we are really curious about. So, Rex, I'm not sure if many people know about this, but we saw this photo of you, you know, running a half marathon in a suit, and you had an amazing time. You had an hour, hour 21 1. I think that was insane. What? Yeah. What's the story behind that?

Oh, my gosh. I just. I was planning. I was a year out of college. I was living in New York. I would go to work in a suit and tie every day. I was planning to run the New York Half Marathon. And I read some article about a guy who had set the world record for a half marathon in a. A suit and tie. And I was like, I could run that time. Like, might as well try to break it. That'll be something fun. And it's kind of ironic because the half marathon course goes right next to my office, and it's kind of like my commute. And so I thought it would be fun. And I. I lucked out with really cold weather on a March day for the New York Half Marathon. And other than some, like, chafing on my neck, it was not that uncomfortable to do. And then I set the record, and I think, like, literally a week later, someone else ran faster in a suit. And the downside of some of the press that it got was that it very quickly was beaten a number of times. Now it's way out of reach for me. I don't even think I was officially ratified because you have to send in video proof of you doing it. And then a couple of my friends were like, are you gonna go break it? Do it again? I'm like, you don't wanna be the guy who's, like, the serial suit runner. I think doing it once is fun, but it's, like, time to move On. And so it was a fun thing to do once. And I like a good athletic challenge or quirky thing to do. But no more suit running for me. Unfortunate. No more suit running.

You can say you're the original, you know, the trendsetter.

I think my brother and I are gonna bike and run and swim across Scotland in the fall. There's a race that goes from one one end of Scotland to the other. You take two days to do it and you sort of hike and bike and then you kayak. And it's like this kind of different terrain, almost like an interesting triathlon of sorts, from one end of Scotland to the other. So we'll do that. That'll be the next athletic conquest. And it's fun to have those things to just keep you motivated.

Is that. Is there going to be a costume theme?

No costume theme. No. No costume theme. I think we're done with that for a while. Yes.

Got it. Awesome.

And I also saw that you did write an article with Taylor Swift in it.

Big Taylor Swift fan. Yeah.

Yeah. I was wondering, what is your favorite Taylor Swift song?

Oh, man. Okay. Well, today we're recording this. It's the day that Tortured Poets comes out, so it's a big day. I've been a Swiftie since before it was cool. Although I feel like everyone says that, but I was like an OG 2000, 2006 fan. And my 30th birthday last year was Eras tour themed. I would say probably I'm a big Folklore Evermore guy, and so I'd probably say Marjorie is up there for me. Tis the damn season, you know, August. Those three from those two albums are probably in my top five.

Know all too well.

10 minute version, obviously that's like probably her best song, but it's very cliche to answer that, so I tried to go a little more off the, you know, beaten path. Yeah, for sure. For sure.

Well, I'm not the biggest Swifty guys, so I'm sorry that I'm not able to participate in that comment.

I've educated many people, but no, I'm just a big fan of pop music and EDM too. But I just love, kind of like, again, the things that interest me are movements and culture and the zeitgeist. And I think it's been interesting how she's kind of captivated the imagination. And the article I think you're referencing was actually what. What lessons businesses can learn from Taylor Swift, which I think is one of the quirkier digital native pieces, but an interesting one that managed to Mention community management software like a company called Common Room and how Figma and Notion and others manage their communities and tie that together to the way that the world's largest celebrity now has been very online first and managed her community. And there are a lot of other lessons, I think, to draw from her rise for startups. So. But it was also just an excuse for me to get to write about Taylor.

And we are coming towards the end. So final question, Rex. Do you have any advice for us, you know, like undergraduate students, even like graduate students who are just breaking out into like the work. Oh, trying to enter venture or like just starting a career? Any words or anything that you wish that you yourself knew or learned about.

Or life advice or life advice. Oh my gosh, that's. That really went up a notch there at the end. Well, the, the career advice I was going to give, I was just Googling, like there's this Japanese term called ikigai, which is sort of this intersection of, I think it's like mission, passion, profession and vocation or something. But it's sort of an intersection of like, what are you good at? What can you actually earn a living doing? What do you enjoy doing? What does the world actually need? And I think if these concentric circles that someone can Google, it's I K I G A I, I think. But I always liked that because I do think it's a good thought exercise of someone young to think through of not just doing consulting or banking or working at Google or Facebook because those are, you know, the paths that people from undergrad go to, but really being kind of thoughtful around. Okay, what are, what are the different skills I have? What are my passions? What is like gonna meet my goals for autonomy and income and things like that? And then where do they intersect? I just think that's a good exercise. I wish I had done sooner in my career. So I would recommend that from the career perspective as well as related to what I said earlier. Just talking to a lot of people and getting to know like, you know, increasing your odds of serendipity. And then from a life advice perspective, I think, I mean, my favorite quote probably whenever anyone says like, do you have a mantra to live by is none are so old as those who outlive enthusiasm. I think it's a thorough quote, but I think, you know, you don't want to lose enthusiasm for, for what you do for the people you spend time with. So always finding things that allow you to be enthusiastic.

That's great.

I love that. That is, that is awesome. And with that. Thank you, everyone. Thank you, Rags.

Yeah. Thank you, guys.

An amazing conversation, Sa.

F.