Musk's Hostile Takeover and Rivian's Production Woes

all the details as he hints at a hostile takeover. Plus, we'll get an inside look at Rivan's factory in Illinois and see how the ev maker is trying to combat the chip crisis. Later this hour, and it's expected to be the busiest wedding season in decades, we'll chat with the CEO of Rent the Runway about how all those IDUs could mean big business for the fashion platform. Now to our top story over the weekend, he sent just

a tweet with three words love me tender. He could have been listening to the iconic Elvis Presley song, or could it be a cryptic reference to a potential tender offer to Twitter shareholders for control of the company. Friday, Twitter's board chose the poison pill defense, adopting a provision that would make it harder for Musk to acquire more shares and ultimately dilute his steak. Bloomberg's at Ludlow here to break it all down. At a lot going on here?

What's the late twists and turns. It's interesting because the seven and a half percent game we saw on Twitter shares Monday is the biggest jumps in Tabril fourth, when Elon Musk's steak in Twitter was first disclosed. You remember it jump on that occasion. The broad psychology around this is that we're moving towards an outcome that would be more favorable for shareholders. See you talk about the poison

pill defense. Twitter can issue you shares that investors can buy at a discount apart from Musk, anyone trying to acquire a state greater than fifteen percent in the company. Here's the thing coming me ins my Bloomberg terminal. This is the other side of the debate. We're trading at

around forty five dollars a share. That's the blue line, or forty dollars to share I say that's the white line, the blue line is the average, and this twelve month price target, which is even lower, and that green dot on the right hand side of the screen is the fifty four dollars twenty cents per share offer that Musk currently has on the table, and the thinking is this could be lobal. Musk has been tweeting for three days about how Twitter's board has a duty to the shareholders

to consider his bid a f juiciery duty. But the other side of that debate is they have a fiduciary duty to get the best possible offer for them. We're so far away from seventy three dollars a share, which is the fifty two week high on the stock, so some consideration. Final point two names top of the list for fidelity platform right now. Retail investors are buying into Tesla and Twitter, and it's in tressing because how many

tweets has must send in the last few days. And some of the school to thow out there is that he's trying to get momentum behind a movement, just like he's on Tesla getting retail investors on board. Is he trying to get those retail investors on board with Twitter as well, and all right, thank you. The question now becomes, could Musk team up with someone else to make this

Twitter dream a reality? Bloomberg Intelligence suggests Musk could partner with Oracle, for example, in a private equity consourtium that includes Toma Bravo to combat Twitter's poison pill, while raising the bid ten to fift to about fifty billion dollars. The Wall Street Journal is reporting Apollo Globals also considering joining in. Bloomberg's Max Chafkin joins us. Now, Max, if Ela Musk really wants to do this, what does he have to pull off? What does he have to pull

together in this moment? Well, you have a couple of issues, one of which is that, you know, Elon Musk because this huge Twitter following, obviously he's able to move markets. On the other hand, in order to kind of pull together some sort of consortium, you're gonna have to convince a bunch of other rich guys, whether it's uh, you know, Larry Ellison or whoever, that they want to sign up

for this wild ride. And pretty much, you know. One of the ways that Elon Musk has distinguished himself, of course, is by by being the most risk happy of anyone. So it's it's a little bit hard to imagine who comes together in that consortium and if they're really willing to go for it. Now, As someone who's interviewed Elon Musk many times over the last couple of decades, masks, what's your sense of how serious he is about this and marshaling the amount of capital that he would need

to pull this off? And or do you think he's just messing with investors? Well? I think with Musk, you know, it's always a little bit of both. Right. If anyone watched this, uh, the interview that he did last week at the TED conference, you know, you saw that he hadn't really thought through a bunch of the kind of crucial aspects of what this transaction would be. On the other hand, Elon Musk is an incredible marketer. He somebody who likes to kind of go where the trends are

pushing him. So you could sort of see a situation where he almost, I don't want to say accidentally, you know, winds up owning Twitter, but but where he kind of

gets carried away by events. And I think, you know, if you're a Testlas shareholder, probably the best thing that could happen here would be for Musk to not be able to buy Twitter, but be able to have just a huge, you know, cultural, you know moment, and and not get blamed when the deal falls apart elon Musk potentially ending up owning Twitter by accident, that's an interesting thought.

Bloomberg's Max Chafkin as always good to have you. Many questions remain about how exactly Musk wants to change Twitter if he acquires it, but he's made it clear he wants it to look it sound more like a free speech town square. Here's what he had to say during a Ted talk last week. I think it's very important for that would be an inclusive arena for free speech where well, yeah, so yeah, um, Twitter has become kind

of the de facto town square. Um so uh. It's just really important that people have the both, uh, the reality and the perception, uh, that they are able to speak freely within the bounds of the low. To discuss, we're joined by Teddy Goff, co founder and partner at Precision, a leading strategy and marketing agency, also the former digital campaign manager for President Obama. So, Teddy, do you think this is a fight over free speech or is it

something else. Well, I think it's largely a fight over power. What I mean by that is, you know, everybody understands this is not exactly a matter of free speech in the sense that nobody's being thrown into prison for anything that they tweet. You know. The important thing I think to keep in mind is Twitter and all the social platforms are driven by algorithms that determine the likelihood of of U seeing this or that post when you log in.

And the question of who control who writes those algorithms, um, you know, is really consequential. So it's not a matter so much of um, you know, free speech. Most people have the right to tweet whatever it is that they want. It's a question of, um, you know, which which tweets and posts get out algorithmic promotion and wind up in the feeds of millions of people, and which one s don't. And I think the view of Musk and obviously this is sort of validated by the fact that Donald Trump

got kicked off Twitter. That's sort of appointed supports his point is that these algorithms are written in a way that you know, sort of effectively censored conservatives, even those who aren't literally kicked off the platform feel that they are sort of shadow band or or that there's a thumb on the scale preventing their virality. And so I think the question how these things are written? Do we

have transparency into the way these things are written? And ultimately you know which tweets you know go viral, which one s don't is hugely consequential, and I think that's what this is really about. There's also the question of whether a free speech to square can really exist on the Internet or anywhere. Reneed the rest of the Stanford Internet Observatory wrote in The Atlantic, the public square metaphor places wholly unrealistic expectations on what social media is or

should be. It may simply be that when networks grow past a certain size, they become unmanageable. I mean, do you think Twitter has ever really been a public town square? Well, no, because of this reason of algorithms. You know, in a public down square, um, you can shout whatever it is you want to shout, and the people around you are

going to hear it. On Twitter, the whole you know, mechanic of the of the platform, the whole idea of it is your tweet can go out to millions of people who didn't make the choice of following you, you know, just because um, you know, it gets it starts taking off, and then the algorithm boost situ into feeds all around the world. So it's really sort of fundamentally unlike a town um square, where you know, you're sort of um, your reach is sort of limited by the volume of

your voice. UM. You know, that's obviously not the case on Twitter. I do agree that these these platforms have all become sort of ungovernable if you just look at the um, you know, the empirical reality. Both Democrats and Republicans are livid at Twitter. The Republicans are livid that Trump and some of his allies got booted. The Democrats think that Twitter is the reason Trump and some of his allies moved from the fringe to the political mainstream

in the first place. The same debate obviously happens you know, arguably even more um caustically over Facebook. So you know, I I think that these platforms play a huge role in the discourse of the country. UM. Twitter especially to a weird degree, because even though it's smaller than Facebook by numbers, it has a disproportionate share of journalists spending all day there, and so things sort of make their way from Twitter into the nightly news and the local

news and the daily papers all around the country. And um, it is obviously the case that these these questions are fundamentally political, and um, you know, the way that these platforms have have navigated these questions as obviously uh alienated both sides. So the question is, you know, should if if if, as you say, Twitter is ungovernable or maybe ungovernable, then then then what should happens? You know, it's a private company, is the Elon is Elon Musk the answer?

And if if not Elon Musk, is it? Is it a public utility? Is it? Is it something else? Um, I personally think it's probably not Elon Musk. You know, there's been a lot of um, a lot of people mainly Elon Musk, you know, sort of allies and supportae of the past couple of days saying hey, look at for instance, Bloomberg, look at the Washington Post. The Washington

Post was bought by Jeff Bezos. There's a really critical difference between the Bloomberg Washington Post model and we love what Elon Musk is proposing, you know, UM, Bloomberg and and bezos don't march into the editorial boards editorial board rooms at at at Bloomberg Media and at the Washington Post and demanded change in coverage. They pledge not to UM. Musk is sort of doing the opposite. He has essentially pledged to alter the way that information is shared. And

this NATed on on Twitter. So there is a question of media consolidation. He's obviously not the first billionaire to get into the media ownership game, but he's the first at least in this you know, sort of cohort to do so with an express agenda behind that. And that agenda is not UM the sustainment of media or you know, public information. It's a it's got a political bent to it.

So you know, whether Twitter and these other platforms ought to be UM regulated as public utilities or not UM I think, you know, to me, it's concerning that one individual, by the way, it could be a you know, you know, I'm a democratic, could be a Democrat want individual to take over one of these companies with an express purpose of UM changing the way that the group terms of

service and the algorithm works. Which again is ultimately about who controls the discourse and are you know these sort of fringe uh physicians able to be disseminated in mainstream to millions and millions of people and what that does to our politics. So he's basically got an agenda in that sense. Um. I think his agenda is uh. It might be aligned with the economic incentives of the board of the shareholders, but it's probably aligned with the public

did well. It remains to be seen exactly what his agenda is. Teddy Goff, co founder and partner at Precision Strategy, is always good to have you back here on the show. Coming up, Elon Musk hinting at a hospital. It's hostile takeover, but what will really happen. We're gonna have a conversation with Stanford professor Curtis mill helped about why this particular takeover attempt might matter more than the many others that

have come before it. This is Bloomberg. Elon Musk set he made his best and final offer for Twitter last week at forty three billion dollars, but is now hinting at a hostile takeover that would involve a tender offer backed by other susters I want to bring in Curtis mill helped Stanford Law School professor and senior fellow for a broader view of this and talk about what's particularly notable about this potentially hostile takeover. Professor Millpop, thank you

so much for joining us. You have studied hostele takeovers all over the world. What makes how this is evolving here different from what you've seen before? Well, I think in terms of the the actual offer itself there, this is so far playing out according to a standard playbook in the United States of an unsolicited bid for a public company followed by the target company's management adopting defensive measure of the poison pill. So so far, nothing so

so special. But when you think about the company that is the target here, a social media company, I think this is quite unique and it really picks up on the conversation you are having with your previous guests about who gets to control public discourse in the form of these these platforms, and so I think that's very distinct of many social media companies and other tech companies have adopted dual class capitalization structures, meaning that the founders retained

control of the enterprise by ownership of stock with super voting rights. Twitter did not do that, and now we're seeing one of the potential consequences of an unsolicited bid for the company. Switch raises a lot of very fascinating new new questions that we haven't seen before. It's interesting, given how criticized the dual class share structure has been at Facebook at Google in terms of potentially giving those founders too much power, how likely is it that Twitter's

poison pill defense will actually work well? So the board is instituted the poison pill without shi Older approval, which is of course the beauty of the poison pill for for US managers. Unlike defensive measures in other parts to the world and the uk A in Europe or in Japan, where shareholders would have to approve the defensive measure, in the United States it's not required, but they will have to answer ultimately to the shareholders. They cannot simply sit

behind the poison pill. They're going to have to justify why not letting elon must tender offer go forward is in the best interests of the corporation and it's UH and its shareholders. But I think that this may lend momentum to the movement toward adoption of dual class capitalization structures. There already is considerable momentum around this. Many of the I p o s in recent years have been founder

control dual class UH structures. And I think that other founders out there who are coming through the through the pipeline are going to be looking at this and asking themselves whether they want to someday be faced with the situation that that the Twitter board is and probably concluding no,

we we did not. So I think this is going to lend, you know, momentum to the controversy over dual class talk and the question whether is this actually in the best interests of society because these founders can be um insulated from short term market pressures, or does this just reinforce having a small number of extraordinarily wealthy people

controlling these incredibly important and powerful platforms. We're looking at a graph here of the amount of followers that Musk has on Twitter, about a third of the daily active users on Twitter overall, a third a third of Twitter's daily active users. You know, how does that change the equation here quickly? Does that make this you know, UH more unfair or gosh, I don't know what the word is,

but there's something different. Well, I think, just going back to the conversation you have with the previous guests, we have this anomalous situation which we live in a capitalist society. This is a pro for profit firm. The board of directors of Twitter is charged with doing what's in the best financial interests of the shareholders. And yet we have a corporation that is enormously powerful and influential in public

discourse and in political discourse, uh specifically. So that's a very unique situation, and I think that the way this plays out is going to have ramifications in Washington, of course and elsewhere, because this is not just a garden dry, hostile takeover. Curtis Mill helped Stanford Law School professor, thank

you so much for sharing your perspective with us. Today shares a riv and lower today, the electric vehicle maker has been hampered by the global chip crisis, but is trying to ramp out put Bloomberg's at Ludlow toward Rivan's factory in Illinois, with the company's CEO productions ramping up here in normal Illinois at Rivan three point three million square for e V factory. The company's building three different electric vehicles, and it's not easy going. Our biggest challenge

today really resides around the supply chain. It's a small subset of the components in our vehicle, which we do have on a constrained basis, and it's limiting the overall output for production. A big part of the problem a lack of semiconductors. The plant is split up with two separate body lines and two separate general assembly lines. One

fork is dedicated to consumer products. Rivan is focused on its battery electric pickup called our one T, but it's also working on small volumes of the R one S SUV. The other body in general assembly lines are building two versions of an electric delivery van for Amazon. But the ability to share the core technology backbone between those battery pack drive units, network architecture, e SU topology, the electronic stack, the perception stack really is what fueled the ability to

go quickly. We got a behind the scenes look at the plant where workers were alongside hundreds of highly automated robotic arms. Sheet metal, steel and aluminum is brought in as coils. Massive industrial stamps generating huge force shape the metal into panels that fitness specific product. The body shop fuses all of the panels and structural parts together using advanced welding techniques. Then it's to a high tech paint

shop where multiple coats are applied. Next, we're off to general assembly, where the top hat or body is married with the skateboard, which includes the motors, battery pack, and telematics. Moving along the line, everything from doors and windshields to the steering wheel and entertainment systems are added. After final tweaks and quality checks, it's off to the lot to await delivery. Rivim forecasts it will build twenty five th dvs this year across the two consumer models and ten

thousand vans for Amazon. It built little more than t v s in Q one. Despite the challenges, the production rate is improving. It's incredibly exciting to see records being set in terms of the output or the production rate. Things said almost on a daily basis. To meet that demand long term, Rivian plans a second five billion dollar plant in Georgia and hopes lessons learned in Illinois will

help it hit the ground running. Ed Ludlow Bloomberg News in normal Illinois are Ed Ludlow there well Gladet University an Educational Institution for the Deaf and Heart of Hearing is getting the commencement speech of its dreams. Apple CEO Tim Cook has agreed to deliver the speech after a student invited him via Twitter. In American sign language, he describes how blown away students across campus were by Apple's original movie Coda. Cook will speak at Gladet on Friday.

Welcome back to Bloomberg Technology. I'm emily changing in San Francisco. Let's get back to our top story. Elon Musk trying to buy Twitter, the world's richest man. Twee in his latest salvo that if he successfully acquired Twitter, the board salary would be zero dollars. For more on the most recent twist and turns are at Ludlow back with us, and that's not all. Yeah, it's it's an interesting tweet

to make. And he's been digging at this idea about fiduciary duty that Twitter's board has to present his offer to existing shareholders. By the way, we're looking again at that seven and a half cent gain on Monday, biggest jump since April four, when Mosques stake in Twitter the original state was first disclosed. And it's interesting because he's trying to make this about being the right thing in

the interest of shareholders. And his additional point is the board in not passing on that offer a and not fulfilling their fiduciary duty. But also they don't have the same vested interest as shareholders. Why he keeps poking at the number of shares or the volume of shares that Twitter's board has. If you strip out Jack Dorsey, who steps down from the board anyway later this year's he's saying that they can't have economic interests the line with

shareholders because they own a negligible amount of stock. And luckily for you have I had a few hours of free time today, so we crunch the numbers. Thank you, ed, And this is the point, right, These are negligible volumes of shares that each board member has. Most of the board members on Twitter's board are paid a salary for what is essentially a part time job. It ranges from say two hundred thousand, three hundred thousand dollars, and they

have negligible amounts of shares. Even in the case, for example, let's pick out Omid Cordistani has four thousand shares, that's only zero point zero point zero point zero two of the flow, and so he keeps hammering home this idea, do what's in the best interest of shareholders, and his main argument appears to be because they don't hold that much stock on the board, they're not aligned with those interests, right, And of course they it's still got Jack Dorsey on

the board. Who's got it been out almost a three percent stick. But that's only un till may thank you. I want to continue this conversation about Twitter's board and what the board could do to stop our potential takeover by Elon Musk, and what Musk needs to do if he's really serious. I'm joined out by Andy Freeman, co had of the Shareholder Activism practice at Olshan from Uloski. Any.

First of all, how much does it matter that Twitter's board members without Jack Dorsey don't collectively own a large number of shares? Is that unusual? Yeah, Hiamily, thanks for having me on. You know, it's it's not too unusual. And that line of arguing is just quite frankly, not

going to get Musk very far. The board is protected by the Broadly Way and the differential aspects of Delaware's Business Judgment Rule UM so going forward with a fiduciary duty based argument, when you have a company and a board like Twitters, which I view is you know, highly defended, the it's a staunch defensive profile. You have a company here, and I look at a hundred or so public companies a year to assess the pathway to a hostile bid.

You know, looking at Twitter, they have a classified board structure in place. Yes, they're looking to potentially declassified, but that's a three to three year out plan. Uh So for now they're they're protected in the way that they only have one third, roughly one third of their board up for election this year, and in fact that number this year is just two directors out of the what

will be a ten member board. You need majority control to uh forced through a hostile bid like Musk's here and um, when you think about Twitter's profile again, shareholders can't call special meetings, they can't act by consent, they can't remove directors without cause. He needs to somehow find a way to give shareholders a voice. We've been hearing that through his Twitter feed over the past several days, and you know, there it's starts saying he doesn't have

a pathway. He has a strategy here, and we'll see if he employs it. So let's talk about that. If he really wants to get this done. If Elon Musk really wants to get this done, what does he need to do? In my view, it's it's a one two punch strategy. He launches a hostile tender offer, and knowing Musk his pension for four twenty cannabis jokes, why not Wednesday for twenty launching off normal tender offer and combine that simultaneously with launching a proxy strategy. And it's a

little bit of an out of the box strategy. But Musk is an out of the box guy. Uh. It's called a withhold proxy fight. And what he would do He missed the vote on nominating for this year. Uh, that ship sailed late in late February. So those two candidates, he can't nominate for those seats himself. What he can do is run a full blown proxy fight seeking to ensure that those two directors do not get a majority

of the votes cast at the annual meeting. Importantly, what it does is it gives him a platform for a shareholder referendum on his offer. He uses those two directors who would be in the what I call the firing line in terms of Igan Durban and Patrick Pischett and puts the full weight of the pressure on their election in order to try to prevent them from from receiving the votes they need to be elected, and that would

be the way that shareholders can have a voice. So how likely is it that he can pull off a one two punch or would this require more punches than Elon Musk has hands. It's it's gonna look the board, the way the board is situated and the way it's heavily guarded, the way I see kind of to give it a Star Wars analogy, the board right now is sitting there at like the Death Star with the force

field protection of it's it's heavily defended. If the board wants to sit back and just say no and do a resistant, robust strategy for twelve to fourteen months, they can do just that. But that's not to say must can't mount pressure and he can do it through this withhold strategy. But that's just a small bite at the apple in my view. The really big bite at the apple comes next year at the annual meeting. Even though

the facto majority control won't be up. What you do, have our four directors out of the ten up in with two of them being biggas Uh, the CEO and the chairman, so you can get effective control in three. I know it's nobody really wants to wait that long. But what you do is you start to You start to chip away at them. You keep the pressure on. You run the proxy fight this year. You try to build and mobilize a the withhold strategy to reject the

two directors this year. And you see where that gets you. Maybe it's enough to move the needle and the board sees the writing on the wall and know that they're going to face the music soon enough. All right, love all the metaphors from the gloves to the death star. Andy Freeman, co ed of the share Older Actives in practice at Ocean from Wolowski, thank you so much. As we were talking, the trial date was set for those Tesla investors suing over go private tweet that Elon musk

Uh sent all those years ago, still making ways. That trial now set for January sevent so early next year, come up, will we see a crypto based social network or is it too early? We're gonna talk about that and much more with Mercedes Bent of Light Speed Venture Partners well discuss all things consumer, crypto, n f T S and more. And that is next. This is Bloomberg Crypto market swings continuous. Bitcoin drops to its lowest level in more than a month, along with other digital assets tumbling.

Our crypto contributortional I Bossic here with more snale. How long is this going to keep up? It's a great question here because we did see cryptocurrencies drop. We saw Bitcoin dropped about thirty eight thousand, five hundred and eighty at some point today. But at the other hand, we are seeing it rebound. We have it now above forty almost forty one thousand, really volatile here, Emily. But the

question here is twofold one. What is going to be the next catalyst to help push bitcoin higher because right now it is staying within this tight range. And the second question is kind of get much lower. You do have some strategists like at twenty two V research that these you can get significantly lower down to the thirty levels. So the question is who is right? And the question is also to what extent does this depend on other factors?

As risk aversion starts to be more volatile and broader markets. Alright, Shnali, thanks so much. Stay with us as we move onto our next topic, and that is crypto communication. That is the subject of musk discussion with Elon Musk trying to buy Twitter to to to talk about that and more. I want to bring in Mercedes Bent partner at light

Speed Venture Partners and Mercedes. As we know, there's a huge crypto community on Twitter, and I'm curious what you think Musk sort of butting in here, potentially even making a hostile takeover or attempting a hostile takeover, what having Musk more involved in Twitter could mean for the crypto community. The crypto community is extremely fond of Elon Musk, and he in some ways I think is lead agent amongst the believer crowd, and I think that if he were

to become more involved in the community. I certainly think there's been a lot of speculation around whether that would mean a more decentralized messaging platform, whether the you know, a centralized entity is necessarily the best. There's a lot of talk about what type of speech would be allowed. Um, but I believe the crypto enthusiasts to be extremely, extremely happy. So much of the conversation has been around cryptocurrencies and

payments and the economy and assets and investing. Twitter does allow for some of this through the Lightning network. How then does social media and commerce start to merge. I think this is one of the big areas that has been not fully realized yet in the crypto space, is a social network that is entirely crypto neated. And I think there's a couple of different ways that it could

come about. I think, as as you're mentioning messaging, if we think about a crypto native messaging solution, whether that is um happenings through an existing messaging network or sport, there's a lot of really interesting players saying, hey, how do you message somebody who has a wallet that you can see there's really interesting stuff in it. You know, you might share some affinities or identities, but you don't

have no way to contact them. So there needs to be a core messaging infra layer of both the application and infra layer to to kind of solve this. Mercedes, talk to us about what's happening on the consumer front when it comes to cryptocurrency. Obviously, we hear so much about n F t s, and for so many people it's just should I buy bitcoin or not? What do you think are the main trends They're really going to

define the consumer side of the market this year. I think one of the really big areas that there was a lot of talk about last year but continues to be this year is DOW tooling DOWS to centralize. Autonomous organizations are a new type of entity where people form around an interest or a purpose. There's the Ukrainian Down, there's the Climate Dows, there's DOWS focused on sports where investors in down like companies that are not fully dows,

the companies like fan controlled football as well. And we think that these organization types are going to be a really popular way for people to collectively organize and vote and act together on the interest area that they care about. And so I think that DOWS and really need right now a discovery layer and an aggregation layer to say, hey, here's all these interest areas you might have. You can find them and participate in these communities with tokens and

actually put your money where you're about this. So I think next you know, we might see dows replacing even Facebook groups in the future. Yeah, it's fascinating. I mean, what other applications of dows do you see really taking off in the next year. We've seen fundraising for Ukraine, we've seen investing, we've seen investing in n f t s. But what's the next phase. It's a great question. I wish I had the crystal ball. I think that we're going to continue to see people say, hey, you're invested,

We're interested in doing this collective action. It might be investment clubs. This is a big one that we're seeing companies like Syndicate and are, you know, putting together groups and saying you can invest together. It might be I mean, I'm a venture capitalist, but it might also be an alternative to funding. Think about angel list and other crowdfunding networks. That one is a really big one that I think is going to be on the rise later this year.

Mercedes has been so much to watch partner at light Speed Venture Partners. Thank you for joining us along with Lumberg Shinali Bask We're on the cost of one of the busiest wedding seasons in forty years. As life continued to return to normal post pandemic, fashion rental platform rent the Runway posted its fourth quarter earnings last week, and while they saw revenue grow more than from last year, the company is still reported in that loss that but

it was narrow were than expected. Joining me now, CEO, Jen him Engen, great to have you back with us. Look, you know you've been telling the story since Rent the Runway went public and unfortunately it seems like many investors aren't buying it. You have shares down more than sevent um since the I p O. Why do you think that still is? Well? First of all, we're so proud

of our Q four results. We beat on the top line in the bottom line, and I think one for your really one for us showed the resilience of our business model through a year that was anything but normal. And now we're entering into one of the best macro environments ever for Rental and we're excited to have the investor community watch us grow. So let's talk about the boon for weddings this year. What kind of an impact do you think that will have on the business. It

really drives cost efficient customer acquisition for us. So we've seen that people come to Rent the Runway because have an upcoming event and then we're able to give them an incredible experience and convert them into kind of an everyday subscriber. So what it does is that the growth this year and events builds our business not only for two and we gave guidance oft revenue growth for this year, but it also builds our customer funnel for years to come.

So this is just incredible for our business all around. That said, you still got investors out there who think costs are are are still too high, that it's going to be difficult to turn a profit. You say, rent the runway will be profitable. What is the strategy? So we in our last investor call addressed profitability. We can get to profitability with the cash that we currently have. We gave the number of average subscribers three thousand subscribers

were at positive free cash flow. We're managing the business to that positive free cash flow. We gave a target that we're gonna be a just e bit of profitable within the next three to five quarters. And as you can see, our gross margins are just a even of margins and our free cash flow margins have been growing quarter of a quarter and as revenue has been growing and kind of returning to the business we have incredible operating leverage because this is a business with a lot

of fixed costs. We've built that offe space for a subscriber base that can be much larger, and you'll see it be much larger this year. So here's the question, is address for you know, five weddings this year enough to convert those users into long term paying subscribers. Well fift of our subscribers are former customers, so we've done a great job historically at converting those one time renders

into subscribers. We're doing an even more sophisticated job this year at positioning subscription from the get go as a cost efficient way to get dressed for multiple events, because we know that it's not just the two point six million weddings. That means two point six million rehearsaled inner and bachelorette parties and Sunday brunches and honeymoons and gallas. So we're really trying to leverage this momentum in the macro environment to show people that there's a better way.

And then remember that the cost of clothing has gone up year over the year, which means the value proposition of renting becomes even higher. But could this boon and weddings be temporary? What happens next year? What are the trends next year if it's not um a wedding bonanza. Well, our business, you know, is built on way more than just parties. So seventent of how people rent is for their everyday life, for going to work, for casual occasions. All rent the Runway needs in order to grow is

an environment where we're not sheltered at home. So we're so encouraged by the macro environment where people are just returning to normal, and that means they're returning to rent the runway. What weddings are this year are just an accelerant that will bring millions of new customer awareness into the brand and we're then able to convert them again for many years to come. So how are our conversations

with investors going? You know, now that you have to answer to these public market investors instead of venture capitalists. What do you think it is that they still don't appreciate about the story? Well, I think that we've had a lot less time to educate the investor market than we did in the private markets. Remember we only went public in Q four, and I think that this year is going to be a year where we can show progression in all of our margins, which can we can

show very strong revenue growth this year. We've given strong guidance against Q one and against the full year, and I think that it's all about building a track record. We don't expect things to change overnight. We want people to watch us, to be engaged with this brand, and we're really excited to show people what we can do. So do you think that share price is going to turn around? I think it will all right. Paid the picture for the next year, we say equation and the

macro environment that we're facing. I mean the picture for the next year is that we're going to have a revenue base that enables us to drive the business towards adjusted the bit of profitability. We're going to continue to make the right choices to build a business for the long term, which means increasing our subscriber engagement, which drives higher our crew over time, which brings customers into the brand. We're making it easier to find clothing that fits you

that you love. So I think that this is really the beginning of the next chapter of our business and really excited to outline for investors, this very clear path to profitability that we have, all right, Jennifer Hyman, CEO of Rent the Runway, thank you as always for stopping by. And that does it for this edition of Bloomberg Technology. Stay with us all week when we break now Big Tech Earnings kicking off with Netflix tomorrow andres Wanston, TransUnion

Senior Vice President will be joining us to discuss. And don't forget to check out our new podcasts. You can find it on the terminal, Apple, Spotify, wherever you get your podcasts. I'm Emily Changing in San Francisco. This is Blueberg