Rex Woodbury - Consumer behaviour and techtonic shifts, Social Media 3.0, Pre-seed investing and being true to yourself

You might grow up in a small town where there are a thousand people and you are the odd man out, the odd woman out. You are really the only person with some really weird interest or you just feel really different in other but online, you know, one in a thousand. I mean, there are four and a half billion people online, that means there are four and a half million people as weird as you with that interest. And so everyone can kind of find their tribe and community hello everyone.

I'm here with Rex Woodbury, the founder and managing partner of Daybreak, an early.

Stage venture capital fir in New York City.

Before founding Daybreak, Rex was a partner at Index Ventures, the premier venture capital firm that invested in Adyen, Revolut, Roblox, Discord and Figma, among many, many others. Rex focuses on the application layer of technology, often investing in Internet software and marketplace businesses with a potential for viral adoption. He also writes Digital Native, a publication about people and technology that reaches 50,000.

Weekly read, which I highly, highly recommend. During this episode we discuss about the art of early stage investing, the pros.

And cons of social media, and the power of technology to bring people together. Enjoy. This episode is brought to you by Cedars, Europe's leading private investing platform. Since 2012, it has helped more than 1,000 businesses top up fundraising rounds totaling over £2.6 billion, with additional investment from hundreds of thousands of investors. Cedar's portfolio includes Oddbox, Selma and Revolut, as well as VC funds like Passion Capital who have each raised millions on the platform. Their products now extend far beyond just primary equity raises with their VC funds product giving eligible investors unprecedented access to venture capital as an asset class from as little as £100. To learn more, head to cedars dot.

A big fan of your newsletter. I've been reading most of your posts on social media and also I've read like the last one that you wrote with the Art of Early Stage Investments. Very much looking forward to have this chat with you.

I appreciate it. Yeah, I've been writing Digital Native for a few years now and working as a venture investor the whole time, but realized I haven't really written about actually the art of investing and sort of how I think through founders and markets and products and most of the writing in Digital Native kind of focuses more on large macro trends. What are the startups building along those trends, hastening them along. So this one was a little bit of a departure. But yeah, I mean it's good to mix it up once in a while. But I appreciate you reading along and excited to Have a conversation today you.

Talk a little bit about market sizing. So you say that you don't really look that much at the market size, but the team is very important and that you want to see that the founder has the X factor. Do you want to tell us like, how do you assess a team and an investment opportunity?

Yeah, I mean, so Daybreak is pre seed and seed focused and I always like to use the word artisanal. I think in venture over the past few years we've seen kind of a financialization of the asset class, almost an industrialization of venture. And I think at its core, venture is structurally built to be a cottage and niche industry where, you know, there are only a handful of companies every year that become the breakout kind of power law companies. That is, you know, the venture model is predicated on. And that's why it's important to be in early to have good ownership and be more kind of that artisanal craftsman like venture player versus the kind of spray and pray at the early stage that some more kind of asset management like firms that have moved earlier have done the last few years. So, you know, Daybreak is very much built on that vision that there's a gap of the next generation of firms that need to be kind of craftsmanlike, early stage and hands on at pre seed and seed. And that really is about the founder at that stage. My view is, of course market matters, of course product matters. There are only so many business models that can actually underpin those $5 billion, $10 billion companies that we need to rely on in venture. So yes, as an investor you need to be able to assess what are the right business models, an attractive market with the right dynamics around, you know, is it capital intensive? Is there going to be a lot of, you know, dilution to my capital? Is it a winner take most market or you know, is there built in defensibility? Of course those things are important. But at the end of the day, I really think that early stage investing is all about a person and having conviction in one person or in a team. And that's why it's about intuition as well. You understand what drives people and what that X factor is quite a difficult.

Task where on one hand is just super, super early. So you need to believe in the founder, but at the same time you need to assess the market and understand maybe like the market structure, like the framework in which that market operates. How do you balance that? How do you balance the assessment of a market? Do you look, let's say at profit margins, at Existing companies, How do you strike that balance?

Yeah, I mean, definitely understanding the key question for investing, which I think has gotten lost these past few years, is eventually can this business generate cash flow? Right, like that is actually what matters. And we forget that because the time horizons are so long in tech and there's become this dynamic of hot potato where as an early investor you say, who cares if it generates cash flows in 10 years? Because I'm just going to kind of pass the hot potato to the series A and series B and C and D director and actually maybe exit in one of those private rounds or There are all sorts of dynamics that have come to play in early stage venture. But at the end of the day the question is, is this a fundamentally sound business that will generate cash flow that actually is sustainable and is going to be profitable one day? So margin structure matters a lot. I mean, that's why SaaS is really elegant because it's got such wonderful high gross margin. And you know, I mean, to your question on other dynamics in the market, you know, I always like to look for kind of a viral adoption pattern or sort of network effect. I think that is essential in these early businesses for them to actually hit escape velocity. Really all startups are, they're a type of new business. There are plenty of new companies and businesses launched in the US each year. Not all of them are a fit for venture or are true kind of technology startups because the ones that are venture backable should have that potential for virality, for hitting escape velocity, for growing very, very quickly. And you know, you mentioned market sizing and you know, I mentioned in that piece kind of the classic example of underestimating market size could be something like Uber, right? Where in the early days if you did a market sizing analysis for Uber, you might say, well, you know, the yellow taxicab market is only so big and blah, blah, blah. And what you would have missed is that great products like Uber can expand the market because geolocation made it easier to call a car to anywhere. And you know, the, the ratings, the dual rating system made it safer and more trustworthy to take a car. And you know, there are many different features that expanded the market through a better product. But you know, Uber is also a classic marketplace where it has a tipping effect. And once you get liquidity in the market and you've got the supply side and demand side building, you can build in really great things like referral loops. There was great word of mouth and it's a business that we saw able to grow Very, very quickly through venture funding.

And how do you check virality or the potential for virality in a product at such an early stage? So pre seed and seed and maybe like just to follow up, like what do you see in the market right now? Like what are the terms for pre seed seed? I would assume that entrepreneurs had to become a little bit more disciplined building something at pre seed, even like having revenue at seed. What do you see in the market?

Yeah, I mean to answer your first question, I think that goes back to why it's all about the entrepreneur. I mean often at precede and seed there aren't products in market, there aren't early proof points of traction or engagement or retention. And you know, ideally maybe by seed you're able to see kind of a strong K factor, referral motions happening and really early signs that there's actually viral growth here. But usually a pre seed you wouldn't see that. And often at seed you're also not seeing that with the best founders. It's, it's just too early. And so I think the question becomes, you know, is this entrepreneur someone who understands the levers to pull in his or her business? Is this someone who has a really strong kind of clarity of thought on the product side and what are the different hypotheses on how virality will build to be built the product and then also how the go to market motion is going to work? So that's why, I mean I think, you know, partially is does this market, does this business model support that kind of virality? But mostly it's about does the entrepreneur understand how to create that virality? And to your question on precedent, seed, I mean, you know, I was looking at some data recently and preceded seed haven't quite come down in the same way that late stage rounds have. Right now they're still at, you know, kind of frothy ish prices. I think the average precede this year. Oh gosh. I mean it was like in the 7 to 10 range. I think seed was up from 12 to 13 post or something and average seed round was kind of like 3 million or so. So there hasn't been a huge correction. I'm anecdotally still seeing a lot of top seed rounds done in kind of the 15 to 20 range. Precede maybe, you know, more of a 2 on 10. But I think we are seeing more entrepreneurs be open to a true pre seed. In the past few years we saw a lot of founders kind of skip pre seed and raise a frothy seed 4 on 165 on 20 kind of these bigger, we call them mango seeds or peach seeds in the industry sometimes. But I think we're seeing a reversion to actually entrepreneurs saying it might be more intelligent and savvy to raise a small bit of capital, maybe raise a million million and a half, iterate quickly find product market fit and then raise more of a true 4 to 5 million seed. And that is sometimes a safer path versus setting yourself up pre product really early on for that kind of frothy seed round. And then realizing the hurdle for series A is quite high. And there's a lot that you need to build to justify a huge step up in valuation. And many founders who kind of raised in that 20 to 25 post range the last few years, I think regret it a bit because the series A is difficult to get done.

And tell us a little bit more about Daybreak. How big is the fund? How many deals do you want to do per year? Have you already deployed some capital? I think I read something.

Yeah. Yeah. So I actually registered this fund as something called 506C which is unique. So when you register a fund in the US you can be 506B or 5,6C. Most people do 506B, which basically means there's a non solicit. You can't really talk about the fundraise until it's done. And that's why we usually see kind of articles announcing a fund once it's completed. For me it just felt more authentic to do 506C which basically allows you to talk publicly alongside raising the fund. You know, there are some hurdles to that. It basically just means more paperwork. You have to show that everyone is an accredited investor and kind of do a little more paperwork in the sort of fund formation documents piece. But it felt more authentic to me just because a lot of the vision for Daybreak is modernizing venture and how do we actually bring this industry into 2023 and the 2000s. And for me that part partly meant more transparency, you know, more kind of openness with investors, with founders, like what are actually the mechanics of building a fund. And so my hope has been that we can demystify that a bit. So I think I first wrote about it right when I was kind of finalized to the thesis for Daybreak. And I've continued to write about it alongside the fundraise. But the high, high level is, you know, it's, it will be around a 30 million fund or so focused on pre seed and seed we write 500k to million dollar checks. And, and that means we sometimes lead at pre seed or co lead at pre seed. Sometimes we can co lead at seed or invest alongside a great lead that we like. And so it has that flexibility, but it's really kind of early stage focused and we really focus on that kind of0to1 with entrepreneurs.

Was it hard to raise the fund? I would assume that the markets were just much more difficult than 2020 or 2021.

I mean, it's so funny. People, people ask, yeah, oh, it's a difficult market, is it? And I say, well, yeah, I've never raised a fund before, so I really haven't had a one for how to go about it. But I think it does give a lot of empathy for founders where I can now say to my entrepreneurs, a lot of the GPs at bigger firms haven't really raised capital ever. And I've been on the road having dozens of conversations and just like my founders who understand, they say, I've said the same kind of talking points to a million different people. I'm like, I've been there, I get it. And by the way, I know how to raise capital and I think that will come into play in helping you hopefully in your future rounds. So that was another reason I think building in public was helpful for me in that, you know, it's just been very freeing to be able to talk about Daybreak as I build it, as I raise it, I'm able to make early investments as we close some capital. But then also I think it gives me an edge in working with entrepreneurs because I'm able to say, you know, I understand the minutiae that you're going through where, you know, I've been dealing with trademarking the name and fun formation docs and setting up bank accounts. And I do believe that starting a company is much more difficult than starting a fund because you have to really build a differentiated product. And in many ways in venture, the product is sort of, you know, built in decision making and sort of, you know, less tangible. But it does give a little bit of empathy and I think, you know, entrepreneurs respect that kind of entrepreneurial journey.

Absolutely. And just touching maybe a little bit on product differentiation, like, how do you think founders should think about product differentiation at Precede or Seed? Like, do you think it's something that you need to be focused on or you just have to iterate on the product and see what works and that will kind of guide you in the product differentiation journey?

I think it's a little bit of both. I think, you know, often at pre seed it is very early. And so I think the best founders have clarity of thought and a hypothesis and a lot of conviction in what they think is going to be the right approach, but also a lot of open mindedness to understand what might not work, what might be something that could be tried if this doesn't work. So it's kind of a balance of clarity of thought, conviction and not being so, so wishy washy or not having a point of view. I think, you know, usually you want an idea that has merit. It's rooted in your own lived experience or work experience. You've done a lot of work in the market, talking to customers, you know where to start. But the best founders also are pretty open about what they don't know. And that always gives me a lot of, you know, kind of solace in the fact that they probably know what they know if they also know what they don't know. And it's a little bit of self awareness. And so I think it's very fine as a founder to say this is our view, this is what we think is sort of the differentiated insight that's missing in this market. And this is why, you know, there's a compelling why now that's this is why this approach and this product and this go to market is going to work. That said, you know, there are all of these variables, these ABC variables that we don't know and we're going to learn in the next six months from the market's feedback and we're going to iterate quickly based on that feedback.

You have I think like what, 54,000 subscribers. Some of the posts that grabbed my attention was on social media and online communities and a lot of people tried to find belonging through Internet communities. What are your learnings after doing so much research on the topic? So I know that you wrote about Bilibili, you wrote about Instagram, you wrote about Snapchat. Where is social media heading?

Yeah, it's a good question. I mean I do think social is a very tough category for venture and I do a lot of consumer ish investing. But I always say consumer ish because a lot of the investments I do are B2B but they also build along these kind of big shifts in consumer behavior. And I think consumer is a tough word because a lot of the best consumer companies of the last decade are kind of picks and shovels. What I mean by that is my partner works at Fair. It's a B2B marketplace. It's doesn't touch necessarily the consumer. These People out here on 15th street right in front of me probably don't know fair, but they've probably shopped at a store that sources products through it. Similar with Shopify or you know, some of the great kind of prosumer like companies of the last decade notion Slack, Figma. They're very consumer like in their adoption pattern but they are enterprise software businesses. Social I think is a tough category. I mean it is true consumer I think it is a tough one. Now we're in a portfolio of, you know, consumer investments. You probably do want some exposure. Maybe it's a one, two social companies but it's so binary. You have to have such product velocity and evolution and really a product visionary as the founder. We've seen so many kind of hot buzzy photo sharing apps over the past few years. Whether it was paparazzi or Bereal or dispo or now lapse and locket, I mean there are a lot. I think what is challenging is the rise of them to number one in the app store shows that there is consumer demand for something different. But there is such kind of velocity and product execution that is required to maintain that. Right. We saw this most prominently probably with Bereal where you know, it was a compelling enough kind of, it was more of a feature and it was structurally difficult to monetize because time spent on the app was you know, by definition quite low. But there was no second act that came from the company. I mean they had all of these users, they had the downloads, but there was nothing really that they moved quickly enough to capture that attention and zeitgeist and so it's just a really difficult category. I always say the next consumer social company probably looks a lot more like a Roblox than an Instagram. And what I mean by that is all these photo sharing companies, I mean they're sort of Instagram 2.0 but they really are just kind of similar to Instagram in a lot of ways with slight twists on authenticity or things like that. I think the next kind of social company is something that's probably 3D, more immersive, more game like and we'll see what comes. I mean, you know, there are a lot of kind of roadblocks for Gen Z, Roblox, for Gen Alpha companies coming out, a lot of kind of generative AI plus Roblox companies. But to answer your question on the community, I mean one of the key theses behind Daybreak and one of the areas I like to invest is this idea that, you know, so many of us are Lonely. There's this mental health crisis, this loneliness epidemic, and part of it is ironically due to social media and due to technology. But at the same time, technology is also a potential solution and the right companies and the great, the right founders can find ways to combat that isolation and loneliness. And you know, I could talk all day about what that actually means in practice on the startup front, but it is a core theme of ours.

If you would have to build a new LinkedIn tomorrow, how, how would you go about it? How would you get, let's say, your first 1,000 users?

Well, I think that's a funny question because I really do actually think one of my hot takes is that LinkedIn is probably the hardest disrupt of any of the the social networks. I mean probably every year in venture there is a hot new company that aims to be kind of LinkedIn 2.0 or LinkedIn for the next generation. And the reality is the network effects are incredibly strong on LinkedIn. I mean you've got certainly we all, all have our whole work histories there and the vanity of checking our profiles. You know, one of my favorite things about LinkedIn is back in the early days how the founders mentioned that they were shocked to find out that the profile people viewed the most was their own profile. Which I think plays into, you know, kind of the concept of the seven deadly sins in consumer technology of vanity. But I mean there's such a strong base of recruiters there too and it has a really kind of unique business model that is much more multi pronged and multifaceted than most of the social companies. So you know, long story short, I think LinkedIn is hard to disrupt. That said, I mean work is changing very dramatically and that the younger generation wants much more kind of autonomous, self directed, flexible work. And so if anyone is to disrupt LinkedIn, I think it is one of two approaches. One is being a more blue collar, I'm given that LinkedIn targets white collar work and so that's a potential wedge and the other is targeting more kind of freelance and project based work. And so is there a better way to show, you know, I worked on this freelance design project and you know, this company can verify that I did a great job and oh, by the way, I worked with these people I add as collaborators and that's kind of a viral, viral network effect there. You know, a lot of companies have gone after this contra does something like this poly work started with a thesis similar read CV has done some interesting things. I think the challenge is that it is very difficult to disrupt LinkedIn it's not to say you can't build a good business as sort of a, you know, a freelancer marketplace or freelancer kind of job site, but actually, displacing LinkedIn is a formidable challenge.

In closing, let's get personal a bit from the outside. You know, it looks like you had, like, this perfect career and perfect life. You went to Goldman Sachs, TPG Index. Now you have your own fund. But maybe you can tell me about a moment that you struggled in your life and what, what were the learnings that came from it?

Yeah, I mean, I think I. I think, you know, this is such a social media concept we were just talking about as well, sort of like the highlight reel and us always kind of overestimating other people's lives and the shininess of it. I mean, I am very fortunate in that I come from a very loving family and, you know, feel, feel grateful. We're talking just after Thanksgiving, and so I feel like, you know, especially kind of grateful and thankful for that. That's what I mean. I think, you know, I had a lot of kind of formative experiences growing up with a lot of kind of internalized shame. And so I had a very long closeted period. I came out when I was sort of, I think the last week of sophomore year in college, around my 20th birthday. But I probably knew I was gay when I was like, 8, 9, 10, very early. And so I kind of had that, like, decade of putting on a facade. And there's a lot of great literature out there where there's one book called the Velvet Rage, there's one book called the Best Little Boy in the World, but it kind of. They all build on this concept of, you know, I think a lot of gay men in America at a young age internalize a lot of the shame for being different or not kind of adhering to stereotypes around masculinity or what they should be. And so they instead seek a lot of external validation to sort of compensate for that and try to be really perfectionists and learn to constantly kind of iterate and refine themselves to seek approval from others. And I think, you know, I'm a classic people pleaser, and it has been a long journey to get away from that and actually do things because I want to do them. You know, the beautiful side of that is, I think, you know, the flip side of people pleasing is a little bit of compassion and empathy, but at the same time, it also, in order to really challenge yourself, in order to really be happy, you really kind of do have to March to the beat of your own drum. And so a lot of my friends had helped me shift that worldview a bit. And, I don't know, I mean, I think someone was asking me this weekend. We were kind of talking about seeing our friends for Thanksgiving back home and our siblings and then coming back. And I was at this kind of big gay party on Saturday night. And we're kind of like, wow, we feel so fortunate to be gay. Because, you know, right when I came out, probably like a year or so after, someone asked, like, oh, if you could take a pill and be straight, like, would you? And I was like, of course. You know, I mean, I was probably, like, 21 at the time. I was like, why would anyone choose a harder life where they're, you know, part of the small minority group? And don't you want to be, you know, the normal, normal sort of person with an easier go at things? And, I mean, that could not have shifted more dramatically over the past. Probably starting around, like, 23, 24, 25, when I embraced that identity more and kind of was like, actually, no. Like, not only does this give me insight into a really unique culture and piece of society, but it also gives me this shared kind of through line and connection with people all around the world and a lot of empathy and compassion and a community, no matter where I go. And I think it has been the most vibrant part of my life. So I've really kind of, I think, gone over that arc of a lot of internalized shame and seeking validation and still fighting those things, but come a long way in that.

Thank you. Thank you very much for sharing that. I remember reading one of your posts where you have this picture with the chicks magnet, which I thought that it's very funny because it turned out, like, to be, like, the opposite of what you actually wanted.

Oh, God. I think that. I think that was. I forget why I put that in one of my pieces. I think it was. Well, it was definitely a Halloween costume when I was in high school. And I think it was, like, me trying so hard to fit in by, like, wearing this funny costume. And of course, it was ironic because I was, like, deeply closeted at the time and no way a chick magnet, but very cringy in retrospect. So I don't know why I reintroduced that to the Internet archives. But here we are talking about social.

Media, how it can push you actually to want to fit in, and then it will drive what type of posts you post on Instagram. But also, on the other hand, you mentioned this Chinese Person that was gay and actually through the Internet, he found a community that was supportive. How do you see these two trends playing in the future? Do you see we'll still have performative social media, but at the same time this niche communities where minorities can find each other and support each other.

I mean, I think there's always going to be a performative aspect to online presence or social media. I mean, humans are often performing for each other in some way. I mean, we're just social animals. And I mean even sort of quote unquote authenticity of photo dumps on Instagram or the spontaneity of Bereal. I mean, there's a lot of performance underlying that, right? Like, I think there is a. You know, people are like, I'm going to post this blurry photo as my third post in my carousel on Instagram because it shows I'm like too busy having fun to like pick, take clear photos. You know, I mean, I think it is. There's always a performance aspect. But what you're saying gets at something that I really love about the Internet. And one of the reasons that I got obsessed with technology and consumer behavior, which is that, you know, I really do fundamentally believe that the power of the Internet is connecting people in new ways and finding new forms of community. And, you know, you see that in Discord has 19 million weekly active servers. And they are so niche. And I think there are 3 or 4 million subreddits out there for kind of the most random communities you can imagine. And I always think of a quote from Jack Conti at Patreon where he said, you know, you might grow up in a small town where there are a thousand people and you are the odd man out, the odd woman out. You are really the only person with some really weird interest or you just feel really different in other. But online, you know, one in a thousand, I mean, there are four and a half billion people online. That means there are four and a half million people as weird as you with that interest. And so everyone can kind of find their tribe and community. And the Chinese founder that you mentioned, I mean, he's the founder of a gay dating app called Blued. And I always say, you know, dating apps are an impactful company first and foremost because they can actually introduce you to your life partner, arguably the most important, you know, decision and connection of your life. And then, you know, he, he really talks about in. In the gay world, I mean, gay dating is much more prevalent. I think for straight couples, it's like 40 or 50% of people meet online. I think for gay couples, it's more like 70 or 80% now. And yeah, I mean, it, it is a really powerful tool to be able to connect with people in new ways. And, you know, this extends way beyond dating. I mean, you know, it's people meeting people in, in Roblox and of course on Instagram and TikTok with its parasocial content sort of putting you in front of strangers. But it's a really interesting theme of online belonging. And of course that also plays into a little bit of loneliness and we have to regulate that and put in the right guardrails. But I think it's a very compelling argument for why technology and social media even are actually net positive externalities for society.

And what are some shifts in consumer behavior that will push point towards a product that will increase belongingness?

I mean, I think the destigmatization of mental health is one piece. I think, you know, you see a younger generation, you know, partly because of people being so open online to talk about their struggles and these topics that, you know, younger people are just much more willing to seek therapy, seek out, you know, help in other ways. And that's a big generational shift in the first name of Daybreak, before it was called Daybreak was actually Tectonic because the things that interest me are these kinds of tectonic shifts in technology adoption and human behavior. One of my mentors was like Rex, that is way too severe a word and austere and pick something more you. And Daybreak's a little more hopeful and optimistic and I think he was right. But Tectonic captures mental health, being destigmatized. It's a tectonic shift. And there are many different ways to invest behind that or build companies behind that. It could be a B2C marketplace, like a headway. It could be a B2B company, like a modern health. It could be an AI chatbot, like a Wobot Health. You know, I mean, there are a lot of different businesses riding that shift and also catalyzing that shift. That's one example of, you know, one compelling trend to follow now.

Interesting. And I saw other 776 invested in this group therapy app, which I thought that it's very, very interesting. So you just get together in a group of five to six people and you just talk through your emotional state. So instead of having a psychologist is more like a peer support group?

Yeah, I mean, I think that's, that's true. I mean, I spend a lot of time talking to kind of Therapists and learning about the space. And I think for a lot of young people, group therapy is actually quite beneficial because it just makes you feel that you're not alone in this challenge. And that's particularly true for things like eating disorders where a lot of the treatment can just be understanding that there are other people going through this problem. And basically it's a challenge that it's not just you. So I think there are lots of interesting business models around that. And the unit economics for group therapy can often be more compelling than for one on one therapy too. It's just a convoluted and crowded space. And so you have to find the right go to market.

Which investor do you admire and why?

I mean, I started writing Digital Native largely because I was reading Fred Wilson at USV's Writing For Many years and sort of admired how prolific he was. And that changed my view that I felt like too many venture investors were doing content but not actually having a point of view or an opinion which sort of defeated the purpose. And of course that's because you have sort of a timestamped history of like your theses and predictions and often you're wrong. But my view was, you know, it's more interesting to just take a point of view and have a stance. And I've been wrong many times, but I think at least I'm proud that I like put out my thoughts there. And so I always tried to do that with Digital Native and Fred always did that with his writing, so I'd probably say him. And then I also, you know, a lot of Daybreaks, that kind of vision is built around kind of emulating a lot of aspects of USV and that I think they have been very disciplined in their fund sizes. They've been disciplined in being more artisanal and early stage and high conviction. And I don't expect us ever at Daybreak to be a 50 person team, certainly not the 500 person kind of asset manager. I think we'll be ideally kind of a lean partnership of three to five folks in three to five years and you know, kind of stay kind of nimble and small. And so I like how USV is, is thesis driven. I always say you have to be, you can be thesis informed, but founder first in this job. And that's kind of the tone I like to strike with Daybreak, where, you know, we have a lot of views of where the world's going and where the compelling opportunities are. But. And it's all about the people and finding the people who are able to build that into reality.

It's all about the people. And what gets you unreasonably excited nowadays.

I mean, I really. I just kind of geek out about all aspects of tech and people in the intersection of the two. I mean, you know, right now, I guess, you know, seeing AI in real time and, you know, just the past year we've had from, you know, it's been about one year since Chad GPT launched and you know, tools like Mid Journey or like Magic and, you know, it just feels like we have so many kind of incredible moments and we're very early in the application layer there. But, you know, the kind of through line I think of my career and interests are, you know, that intersection of people in tech or culture and tech and understanding how people use technology to communicate with each other, to create things, to earn a living, to collaborate. I mean, that is. That is interesting to me. And it's. It's both B2B2C. It's B2B, it's B2C. But it's really around these elegant, beautiful products that make life more enjoyable and easier for people.

And tell me about a book that had an outsized impact on your life.

Yeah, one book that comes to mind is a more recent read. It's actually called Tiny Beautiful Things by Cheryl Strayed, or Strayed. So she was actually the author of Wild, which was made into a movie with Reese Witherspoon and Tiny Beautiful Things. It's actually this compilation of when she was. Before she was really a prominent author. She took this job writing column online anonymously or pseudonymously called Dear Sugar and her name was Sugar. And she would kind of. People would write in and say, you know, I'm struggling with, you know, my. My relationship with my dad is really afraid, and I'm not sure whether I should invite him to my wedding or, you know, I had a miscarriage and, you know, my partner is not really understanding of it or all these really kind of thorny emotional issues. And the way she responds isn't like a normal advice columnist. She weaves in her own story. And it reads more like a memoir. But it's an incredible book and one that I came out of it being like, yeah, I really, truly think this gave me a better window into humanity and made me a more empathetic person. And it's a beautiful book. It's very moving. It's a lot of different vignettes that are assembled together into this cohesive whole. But that is probably the book I recommend most often to people and usually People are really big fans and like it so. Tiny, beautiful things. I recommend that to anyone but listening.

Tiny, beautiful things. And the last question, If Rex from 10 years ago would listen to this episode, what would you tell him?

I mean, I think it took me a little bit in my career to start thinking more first principles about the things that interest me. And it's such cliche advice of, you know, do things that are interesting to you and that's, you know, that's what you should do for work. And of course, it's a quite privileged thing to do and say as well. But I don't know, I mean, it took me a little while. I was. I was kind of on a path that I thought I should do and, you know, kind of following more of a ladder. And then I stepped back and asked myself the question which I always tell younger people to ask themselves as well of. You know, when you're reading the newspaper or, you know, a more updated version would be like, when you're like reading articles online or even when you're watching YouTube videos, like, what are the things that actually are interesting to you that you want to learn about, that you want to read about? And for me, it was always really people and technology and so that helped me kind of hone in on the things that I really like and spend time on and less sort of being reactive and more being proactive about spending time on those things. So I wish I'd gotten there a little sooner. I think, you know, hindsight's 20 20, but, you know, that that would be my advice just to kind of actually be truer to the things that interest you.

And what changed? I mean, when did you come to the realization that you have to be more true to yourself and find out what you are really interested in?

I don't know if it was anything specific. I think it was just kind of getting a little older and realizing that the path to both happiness and. And success is, I think, being a little more first principles, thinking and doing things because you want to do them and because you believe in them and less trying to please other people or follow a path that other people expect to be.

I read this article. It was a palliative nurse. She was assisting people in dying and she said most of the people have five regrets and one of the top regret is not being true to yourself. Alrighty, Rex, thanks so much for taking the time. This was a pleasure.

Thank you. Wonderful to chat with you and look forward to the next one.