♪ alisa: i'm a alisa parenti in washington. you're watching "bloomberg technology." former national security advisor michael flynn has pleaded guilty to cooperating with russian agents. bloomberg view columnist eli lake has learned jared kushner, the president's senior adviser and son-in-law, is said to have told michael flynn to contact russia. republicans made an of changes to the tax bill to win enough votes to pass the senate. they include allowing bigger local property tax deductions, tax break for so-called pass through businesses is also on cap. a bloomberg count shows 51 senators now favor the legislation. an attorney for one of the women

alleging sexual harassment by congressman john conyers says her client is expected to testify next week before the house ethics committee. house democrats have called on the 88-year-old conyers to step down. 's attorney says he will decide whether to resign within days. in a meeting with libya's prime minister, rex tillerson dismiss reports the white house plans to have him removed. >> is laughable. >> official said the plan is to replace him with cia director mike pompeo. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world.. this is bloomberg. ♪

emily: i am emily chang and this is "bloomberg technology." coming up, bitcoin's have to the mainstream. u.s. regulators have cleared the way to allow future specs on the feature exchange operators. we will discuss legitimacy of cryptocurrency. plus, taking stock of uber. but will put the company's financials under the microscope after it burns through more than $1 billion in the last quarter. hister stands behind decision not to remove anti-muslim retweet. we will examine the sudden backtrack. first, to the lead. if i called a fad, a bubble in a fraud but it was another big week for bitcoin. the cryptocurrency hitting milestones twice, trading past the $10,000 and $11,000 mark, while big point futures are getting the agreement from u.s. regulators. the biggest exchange on a smaller -- are allowed to offer contracts after alleging they comply with the law.

joining us is a lot carlson -- olof carlson. always great to have you here. what a week it was. i imagine it is been a crazy week for you as well. >> it has been a crazy week and year in the cryptocurrency space. emily: what you make about these futures? olaf: a massive wall of institutional money to want access to the price of bitcoin without actually having to hold bitcoin. this is like anyone access to the price of gold, you don't have to buy bars of physical gold. opens up means i it markets. emily: what is coming from regulators on this? olfa: this is a massive breakthrough technology, perhaps larger than anything since the

creation of the internet itself. it is important we are very careful with regulation about this industry and this technology. emily: we've had this conversation earlier, but i think it is important to have it again. especially as the price goes up and up. you don't want to over hype, but there are still a lot skeptics and a lot of uncertainty. olaf: there have always been skeptics in this space since the beginning. i think what we have seen recently is absolutely nothing compared to what we will see over the next five or 10 years this faces growing far beyond bitcoin. many other block chain technologies are growing at a faster clip than bitcoin. ethereum is much more -- how much more on the year. we will see more, many of the things are going to grow even faster than bitcoin has in the past year. emily: let's talk about some of the comments we have heard. a bubble, a fraud. what do you think? olaf: i think people have been

saying that since the beginning. emily: i know you do not think it is a fraud. olaf: i think the folks saying those things do not understand the technology may be as well as they could. i also think that whenever something is this large of a breakthrough, it challenges established world views and ideas about the world, so i think that a lot of folks see their existing worldview challenged about maybe what is possible, and it scares them a little bit. i think oftentimes the response to understanding bitcoin for the first time can be backlash. many of those folks over the last five years were originally skeptical, as they learn more about the technology, they come around and see this is a massive breakthrough. emily: we talked about how you believe the block chain will be revolutionary. what about bitcoin itself? how will it be used? what will it be used for? olaf: i think it is acting as a sort of digital gold. this is a gold you can transmit over the internet instantly.

this means lots of people want to use it as a diversified asset class so they can get uncorrelated exposure. a lot of people want to store their money in something other than their regional currency, so i think there's a lot of different reasons why people might use bitcoin but a lot of , it boils down to that digital gold use case. emily: bitcoin job postings have spiked on linkedin. are you guys hiring? olaf: we are definitely part of that. emily: what is the war for bitcoin talent like? there must not be that many people who are experts. olaf: the demand has grown 10 times this year. the number of people in the space that are genuine experts is pretty small. i think now is a good time to be an expert in cryptocurrency technologies. emily: how many people are you hiring? olaf: we are looking to hire about 10 people. cryptocurrency and protocol analysts, and experts with this technology. basically anyone with a deep understanding of cryptography, distributing network game

theory and block chain technology it is not very deep, but part of that reason is because those folks who have the skills have very lucrative other opportunities. i think this is going to only increase the competition these types of folks will only increase for the next five years. emily: there was a lot more optimism around ethereum. even fred wilson told me he thought ethereum would surpass bitcoin, and now it is not even close. what do you think will happen? olaf: i think over time, many other technologies in this area will grow essentially. -- substantially. the reason is they actually name -- enable new behaviors that are not possible with bitcoin. bitcoin is a programming lang which that allows you to interact with the protocol. things like ethereum, the programming language is much more robust. what we have seen happen with ethereum, they build a large ecosystem of developers that are all building applications and

infrastructure on top of the underlying protocol, so this is the type of thing we have seen emerge with things like a theory of the friendly was never possible with bitcoin. emily: do you think other cryptocurrencies will surpass bitcoin? olaf: yes, i do. emily: which ones? olaf: last time i was here, i said it would surpass bitcoin by 2018. i would hold to that. emily? why question mark olaf: the types of things we're seeing built on ethereum, they are almost a bit sci-fi, beyond anything you would reasonably think is possible. to me a lot of what i'm interested in is the applications that will be natively enabled by the technology. not an improvement in payment speed or improvement in growth, where there are many services that offer these things, but like the internet the most breakthrough things are not possible in an analog world. facebook per se. there is not an off-line version

of facebook. what are looking for an excited about our those native uses that are capable. emily: which other cryptocurrencies western mark olaf: i am very excited about . definity, polkadot. i know you're looking at me like you have never heard of these things, but you probably have not heard of ethereum a couple of years ago either. i think many of these things basically enhance what is possible. they had new tools for developers and enabling new behavior by end-users. emily: which ones will fail? olaf: i think easily 99% will a -- will fail but i think that , any new fast-moving start of ecosystem, that is basically what is going to happen. emily great to have you here. : you are charting the bitcoin

history for us. you will be part of it. me.: thanks for having emily a story we are watching -- : red box is being sued by disney for selling digital downloads of the studio's films. they allege copyright infringement. disney said in a statement red box is selling their digital movie codes in blatant disregard of clear prohibitions against doing so. ourr actions violate copyright and we filed action to stop their unauthorized conduct. coming up, with so many scandals, it is easy to lose track of the biggest problems behind the scenes at uber. figuring out how to make money figuring out how to make money or at least lose less of it. we break down uber's financials next. ♪

emily: this week, we learned that uber's losses continue to mount. in the third quarter they lost almost one billion -- $1.5 billion. these figures were disclosed. so what happens next? let's bring in our bloomberg tech executive editor and a bloomberg tech newcomer. eric, lots of back and forth about the softbank deal. it's been going on for months. where do we stand right now? eric: shareholders have to decide whether an implied $48 billion valuation is enough. emily: which is a 30% discount. eric: exactly. but for a lot of people, it is a huge increase over what they got them for. people are deciding if they should offer the shares and by how much, and based on how many people do it, softbank will either accept that, say they

need to up the price to get more people, or walk away from the deal. we are waiting for the clock to run down over the next couple of weeks. emily: and we have new information about their financials as well. >> we always knew they lost a lot of money, but we are seeing on a gaap basis that it's astronomical. they lost about $1.5 billion in three months. besides the accounting information we're getting, their losses have started to grow again. they have been decreasing quarter of a quarter, and now they are going up again. sort of bad on an absolute basis and devastating and a directional basis. emily: tom, you have covered the tech industry for many years. i joined this company and started working with you when uber did not even exist. it was just a black car service. how unusual is the story of this company? tom: it really met a deeply felt need. venture capitalists are looking for -- does this meet the need i

have? for a lot of people, yes. but how do you scale that? how did you go from city to city and region to region and do that in a very silicon valley way? what we saw in early stages was this ability to enter a market and flout the rules. we're going to go in and move into this new territory and ask questions later. as they ask those questions and regulators asked those questions, it just got harder and harder. we have seen them expand and now they have had a really retrench in a lot of areas. you are seeing the cost that that provides to the bottom line. emily: i want to talk about another story we broke last night about a prominent investor who had invested in uber and airbnb, shervin pishevar, has ties to hollywood, being accused of sexual misconduct.

we have documented six cases of unwanted advances or sexual harassment. one of those people is a long time uber executive telling us he groped her at an uber holiday party in 2014. he has denied these allegations via a representative, saying he maintained a friendly relationship with her. the denial was interesting. he referred us to another person who was at the party talked about how he showed up with a live pony on a leash wearing a santa hat and could not have touched anyone because he had the leash in one hand and a drink in the other. similarly, he has denied allegations from five other women who we talked to who did not want to be named that he either sexually assaulted or harassed them. tom this is our opportunity to : ask you questions or a change. -- for a change. put you in the hot seat. you were really the author of this story. you really drove the story.

it took a long time to come together. we've heard a lot of stories about sexual misconduct across silicon valley. and other regions. why does it take so long to pull a story like this together? tell us a little bit about that. emily: eric was involved in reporting the story as well. this is been an incredibly difficult story to do, the stories of sexual misconduct related to men in power have been difficult, but this one in particular was very hard. we started looking for the story back in july when we got a tip about a sexual assault that he was involved in allegedly in london. we know he was arrested but never charged. similarly at about the same time, we started talking to women and started collecting story after story of women who had unwanted advances from him, and we spent a lot of time trying to talk to these women about their experiences and to convince them to come forward, and some of these women had agreed to speak to us on the record -- tom: right. you wrote about this in the story. what changed their mind?

emily: before any stories about this alleged sexual assault in london happened, he sued a london research firm for being part of a broader smear campaign against him, and that very much discouraged more women from coming forward. the women that had agreed to give their names decided not to, and we ultimately told their stories on background, which was incredibly difficult. tom it was also the successful : effort against the son to get an injunction on them to stop them from reporting on the alleged rape in london. it has just been at every turn. this super powerful figure in silicon valley, someone who has donated more than $500,000 to top democrats -- hillary clinton, cory booker, kamala harris, president barack obama. he was a top butler. -- bundler. this super connected figure, and i think it took a lot of courage or you and your sources to get the story out, and it has been a

long time in the works and has been super complicated located because of the situation in london and sort of an effort to muddy the water there, so getting these women who had experiences with him here outside of the legal system was super important. emily: we've been spending a lot of time today calling shepard capital, the venture capital firm he cofounded, calling hyperloop one, calling the politicians he donated money to to ask what kind of action if any they are going to take. i did hear from uber, who told me in a statement today they fully support those who have felt harassed speaking out whenever and however they choose . we commend their bravery. tom: his response is also -- i would like to go back a little to the denial. the denial focused on this idea of "she later maintained contact

with me," "we were on friendly terms." tell me about that one kind of dynamic where your in silicon valley, new employee, new company, outside investor. aily: outside investor with relationship with travis kalanick. you can imagine that she must have felt as if this is a person who had power and influence over her and that perhaps she wanted to maintain the cordiality of that relationship. shervin pishevar taking a different approach than some of these other men who have been accused. he has outright denied some of the allegations. through his attorney he said they are confident the allegations will be shown to be untrue. his lawyer also represents bill o'reilly and the l.a. chargers. we are doing as much is possible to get more statements from the people who are still connected to him. thank you guys so much for joining us. and for a team effort on this story amazing bloomberg tech

, team of reporters. ok, coming up, the largest proposed tech deal ever still has not gone through. we look at the latest delay in broadcom's effort to acquire one of its rival chipmakers next. this is bloomberg. ♪

♪ ne emily: "the new york times" is revamping its pay wall access. the paper has scaled back the number of free articles you can read. those not subscribe will be able to read five free articles per month. that is down from 10. reading more will require a pay subscription. they are hoping headlines from the trump administration will bank more readers. the publication added 154,000 digital-only subscribers to the publication, a 14% jump from a year earlier. now to a story we continue to watch, broadcom's pursuit to

acquire rival chipmaker qualcomm. they are not planning to up their offer. and upped bid may not come until closer to march, when broadcom's -- qualcomm's board meeting takes place. so, why are they doing that? >> that's a very good question. we think it is tactical. there has been consideration of a couple of options whether you put the directors forward first tour of the money and show good faith first. they have decided to keep the powder dry for the time shareholders will have to think about it. emily: we understand qualcomm is also in the middle of its own by -- to make a huge acquisition. what is the status of that? >> shareholders do not like the price and qualcomm needs 80% of them to agree. one tickets regulatory approval,

so it will probably not happen at $110. they are most likely going to have to up that amount. emily: and toshiba's attempt to rescue itself. ian: it has devolved into a very bitter legal fight. with their joint venture partner western digital. it looks like they are getting close to resolving that, which means the deal goes ahead and western digital has a future in the chip business. emily if the broadcom/qualcomm : deal happens, it would be the biggest ever in the tech industry. how do you expect this to play out? ian: it is difficult to say. if all content get that nxp deal done, that would put them into position to argue they should be worth much more. and possibly take them out of broadcom's price range. if that does not happen, then maybe broadcom's offer to qualcomm shareholders looks attractive. looks like they could get almost $80 and be happy.

and close their books this year and look good. emily: how long could this dragged on? ian: if it goes all the way into a hostile takeover, we're looking at quite a long time. emily: years? ian: i don't know about years, but we know the meeting coming up next year will be the main indicator of what will happen. emily: ian king covers the chip industry for bloomberg technology. as always, great to have you here on the show. coming up, vmware has been diversifying to keep up with enterprise demand for cloud services. we will talk to the ceo about managing gets positive performance, next. this is bloomberg. ♪

>> let's start with a check of your first word news. the white house lawyer says former trump national security adviser michael flynn is the only one implicated by his guilty plea. he admitted to making false statements to the fbi, a move that sent shockwaves through congress. >> this is epic. this is seismic in proportion. what it means is that director mueller is getting very high up in the food chain. the reality is there are very few people left for him to get to between former general flynn and president trump. it is all closing in on the president. >> bloomberg view: this eli lake says president trump's

son-in-law and white house special advisor jared kushner directed flynn to contact moscow. as senators prepare to vote on a republican tax reform plan, tennessee's bob corker announced you not vote for the tax overhaul. a whip count shows 51 senators in favor of the legislation. that includes maine senator susan collins who says today she will vote yes. european council president donald tusk says u.k. prime minister theresa may has until monday to present her final offer on brexit divorce terms. a major impasse has been the issue in northern ireland. the irish prime minister, who spoke alongside task in dublin, to the u.k. must keep the irish border open. >> on the question of the border, as i have said many times, the best and most obvious solution would be for the united kingdom to remain in the customs union and the single market.

the british government has ruled that option out. andust offer credible workable solutions they guarantee there will be no hard quarter, no matter what the negotiation. >> tusk said the eu is behind ireland on the need for a border plan. argentina has called up the rescue mission for its missing submarine and 44 crew members. the san juan disappeared more than two weeks ago and the atlantic ocean off the coast of patagonia. officials said the search to recover the vessel will continue, but without international assistance and only in waters of up to 500 meters deep. welcome to the world cup draw ceremony today at the state kremlin palace. officials from the qualifying teams gathered in moscow for the big draw. the teams will be split into eight groups with 14 each. crushable play saudi arabia -- russia will play saudi arabia. the u.s. failed to qualify. as it italy. global news 24 hours a day,

powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ ♪ "big technology." you are -- i'm emily chang. provider beat analyst estimates for earnings per share and revenue. the company has been embracing a more hybrid cloud driven focus that includes working with amazon web services and it is paying off. the company's stock to shut up or than 50% over the last year. vmware.me is the ceo of what you think is driving results right now. >> always great to have the chance to be with you. overall we say three things are really driving our good performance.

one is the strategy we have laid out. as you said the cloud strategy, , partnerships with amazon, ibm, they have really resonated with customers. second we just executed really well. the dell partnership, all the things that come together really well for the company. as i describe it, tech is breaking out. it is a good market for technology companies as it is moving into every business and every aspect of every business. so those three together, good results and the market responded favorably and we are quite excited about the benefits we are bringing to our customers. emily: what is in the concrete financial impact of the aws deal so far? >> the implicit benefit has been realized almost today we announced it. the exposed of benefit really does not materialize in any substantive way this year or next year. the implicit benefit was on the announced a customer says i get

it, and understand how my vmware franchise will move into a hybrid cloud world, i'm able to take advantage of cloud without re-platforming my applications. the benefit of that is enormous for customers and they said now i know why i can continue to invest in vmware and had you will give me the seamless ability to go to the cloud and take advantage of it in ways nobody else can, so we have seen that benefit, be a driver or business since the end of last year. customers are really getting excited about it. we just announced the second version, ga-2, general availability's number two. we will be expanding internationally next year. the customers say this is something i can take advantage of for my business-critical applications. let's go. emily: pat, we talked over the last several months about the

-- being under the dell umbrella and whether figure is really better. do you believe that is paying off for vmware? pat: we described this synergy that dell vmware would bring to vmware. i upgraded our guidance because we are seeing that acceleration. is happening faster than our business plan was. we are seeing that in a variety of ways. one is dell be bigger. they can reach markets that we are not penetrated into. they are big and local, so they are taking us into spaces we don't have the reach for. secondly, we are building solutions that bring customers more value. what is our hyper convergence solution we go together with no is having great success accelerating our storage-

storage-defined search products. very tangible results and benefits as part of the bigger dell technology family and michael and i are getting along very well well as we dream of the future together, so overall dell and vmware working extremely well together. emily: at the same time we have seen an opposite approach from hp, which has gotten split up, slimmer, leaner. meg whitman who engineered the split is now leaving hpe in february. do you think they took the wrong direction, or do think that approach can work as well? pat: they have a very different business profile of where they are, and clearly michael has said bigger is better and meg said we have to get smaller and more focused. they have taken different strategies, but they started with different assets and different position in the industry, and obviously michael's strategy is working

and he is having great success with that. from a shareholder perspective, hp shareholders have been favorably benefited by the different moves they have made, and obviously we have a good partnership with hp as well. antonio taking over there, we have a great working relationship with him and look forward to continue to expand our relationship with hp and work with them and other oem partners as we have a broad and multifaceted ecosystem. vmware's ability to work across the industry with dell and others is a very important of that's part of our overall strategy. emily: thank you so much for joining us. in other news, twitter said it allowed anti-muslim videos that were retweeted by president trump because they did not break rules on forbidden content. that statement is a backtrack from an earlier rationale that said they were newsworthy.

joining us now is alex webb. remind us what happened here. alex: wednesday, president trump retweeted three videos posted by an activist group called britain a far right party on the fringes first, of british politics. they purported to show three egregious acts by what it said were muslims. there is no evidence this is the case. they say it is dubious to say the least. they issued a statement where because of the response of the videos people have been very upset and theresa may condemned trump for retweeted them. twitter was ask why they are not taking these videos down. aren't they to offensive? twitter's rationale is that this is newsworthy, which led people to think they were giving the president a free pass. he is the president and can say what he wants because he generates -- defines news by being president himself. what they have done now is look at it more closely and said it

does not contravene the policies at all. emily: the statement came from jack dorsey himself, quite significant. alex the twitter account tweeted : and dorsey retweeted it with a comment on top here at it shows the levels to which executives are getting involved with it and is something considered at the c-suite level, not middle managers for example. emily: what are the implications of this? the criticism of twitter has always been the rules and -- are inconsistent, the enforcement of the rules has been inconsistent, but clearly they are trying to work on what the rules are and how they enforce them. alex they are trying to create : some elements of consistency and treading a difficult path because they don't want to see as having political leanings either way. what is interesting is at the top of the page where they stipulate policy of things like videos, they have a comment that

says the policy will be updated later this year to include hateful symbols and hateful imagery, which suggests it might include this kind of thing going forward. emily: which would mean they will be deleted? alex: it seems to be a possibility. it seems to be a tacit admission that they don't have the greatest rules right now and they need to change them but we don't quite know what will be defined in this new policy. emily: it is a fascinating story watching this all play out on twitter. alex, thank you. appreciate it. coming up, reports that two music streaming giants are swapping space in each other's company ahead of their ipos. this is bloomberg. ♪

♪ emily: tencent posted its biggest weekly loss amid concern a recent rally was excessive. the company retreated 3% friday, taking it's a decline this week to 7.5%. shares have more than doubled this year, adding $274 billion in value through last week. last month, the market value topped facebook. staying with tencent, talks to swap stakes with spotify as much as 10%. this is according to the wall street journal. this report comes as investors anticipate both to ipo next year. both firms will own an equal stake in each other's businesses. bloomberg news reached out for comment. joining us now is lucas shaw, our entertainment reporter. lucas how will this work?

,lucas: to be honest i do not know. we have heard reports of tencent interest in spotify for some time. there was a story they had reached out to spotify about acquiring the whole company. there are often rumors about companies, whether tencent or a u.s. tech giant wanting to buy spotify. is the fastest-growing music service in the world. it is a very appealing asset. yet it is hard to make money doing that. in this case it sounds like tencent is interested in buying a piece of spotify, and this would be an opportunity to get a piece of the china market it will not be able to enter on its own. you have seen u.s. jim services unable to enter the market, or services across different businesses. we saw something similar with uber, so if you are spotify you a 10% inet's take tencent music, the only dominant player on the music scene. emily: what information do we have or don't we have about

these two companies and their potential ipos, both spotify and tencent music? lucas spotify will go public : next year. as far as they have indicated, it will not be an ipo. they are trying to go the unconventional path of direct listing. you show up one day and all of a sudden you can trade in spotify shares. this is being reviewed by the securities exchange commission. they are having to negotiate with major stakeholders because it is not clear how that would affect some of the existing deals, like with tpg. tencent is not trying this direct listing route, but tencent music is supposed to go public sometime next year. emily: what sort of optimism is there around both of these ipos? lucas: there is optimism in come -- in the music sector than

there has been for some time because you are seeing real growth. you are seeing consumers pick up. in china for example, revenue from digital music has quadrupled over the past four years. overall revenue has passed $200 million. it is a small figure but it's a country where piracy dominated. for the first time in a long time you are seeing music companies excited about the music market in china and seeing similar optimism in the u.s. it is cautious because the growth comes after two decades of decline, but these streaming services have driven a recovery of the global music market, so some investors would be excited about the prospect of investing in one of the companies. the reason it is not a slamdunk is because no music service seems to make money on its own, which is why tencent music has been part of broader tencent, shielding it from some problems there. there has been some speculation about a larger tech company

buying spotify so that he to be profitable is not as great. emily: last quick question. spotify increasing time spent there, whereas pandora decreasing time spent. tell us about it. lucas pandora is exhibit a of : why it is dangerous to be an independent music company. they came on the scene and where the first real online music streaming company. got a lot of users, and then spotify, youtube, and other started chipping away at it and it never became this profitable self-sustaining business because so much of the money goes out the door to the rights holders, so how do you stand on your own? emily: lucas shaw in hollywood for us. always great to have you here on the show. thank you. coming up, just in time for holiday shopping season. online luxury shoe startup is pushing into brick-and-mortar we speak with the ceo next. this is bloomberg. ♪

♪ emily: a big takeover in the movie theater business could be agreed on by monday. cineworld a world -- is looking to acquire regal entertainment group allowing it $3.6 billion. to expand beyond its home market. m.gemi is expanding its brick-and-mortar reach in time for the holiday season. the direct to consumer retailer of traditionally crafted italian she is recently opened its third store in new york city. ann say down with the founder of the company's headquarters in boston to talk about strategy. >> we identified a market that seemingly had no huge opportunities. we identified this shoe business as a great market to innovate

and disrupt. many people with that issue business, that's been around forever and there are a lot of people doing it. that is why we thought the opportunity was unique. at the same time, we look at luxury industry, an industry that is the love and has seen years and years of great success from a business model perspective, but has the animated very much here it we look at the opportunity to innovate luxury through the leverage of shoes and mixing great products, great tech -- technology, great supply chain in a very theatrical retail experience. do you consider yourself a retailer worst tech startup? >> we are a consumer facing business that it is leveraging the best and most emerging technologies and supply chain innovations to drive a whole new consumer experience. it is the marriage of those two things that make this expense unique. we are a retailer because we want to sell things to the

customer in incredibly innovative ways. we are a technology company because you want to do it in incredibly innovative ways. so it really is the best of both worlds. if you are introducing new shoes -- ann: let's talk about inventory. if you are introducing new shoes every week, how do you afford success? ben: in the eye of the consumer, this is a fun, new, sexy retail brand you have to have. truth be told if you pull back , the curtain, we are much more of a data-driven supply chain business than anything else. we use real-time data to help us understand what inventory will sell and will not sell. the only reason we are able to do that is because our supply chain is so tight. we are manufacturing products four to six weeks before it hit the shelves of our store, versus the historical model where a brand 18 months out will start the design process and by the time it hits the stores, that

data they may have captured is irrelevant. ann: online returns are more common than in-store returns, how do combat that? ben: it is going to happen. we can run a profitable business with return rates at the level they are. the trick is how do you make sure a return always equals a repurchase? so what we have invested in the most is, yes, you want to mitigate returns, but you want make sure returns equal retries, and that is where the team has excelled the most. anne: you raised $47.2 million from investors, what have you done with the latest round? any plans for expansion? ben: we will expand in the physical retail world and open up a bunch of locations next year. we have three stores, boston at the prudential center, soho, and now we have this store in columbus circle.

anne: why open retail stores? ben: the physical world was important for two reasons. one, the brand we created is rich and full of content, and we want to have places where the customer can tangibly feel it and interact with it, our people, with the expression, the material. and second, it is sometimes nice to try shoes on. our stores are not normal retail stores. we call them fit shops and we all of our shoes and sizes of shoes in these stores and incredible client services people that help you find the right shoe perfect for your foot and that you fall in love with, but you do not walk out with issue. -- with the shoe. but we ship that to you two days later. the purpose for that is we don't want inventory across the country in all different locations because we don't think that allows for efficiency, and it turns out the customer loves the idea of not caring the stuff home with him. -- with them. anne: how do produce controlled growth?

ben: there is good revenue and bad revenue. bad revenue was expensive to get customers and those customers did not repeat. anne: any plans for acquisitions or being acquired? ben: not today. we are focused on building. anne: any thoughts on an ipo? ben: not today. we are focused on building. we are in a good place financially, growth rates are good, and now we are obsessed with the lighting the customer. ting theighting -- deli customer. the business is more than doubling and all of the metrics are headed in a really exciting direction. our average customer it she repeats, she buys over four times a year, so fascination and excitement and up session the -- of session the client has for -- the obsession the client has for the brand is real. emily: that was bloomberg with

the ceo of m.gemi ben fishman. that does it for this edition of "bloomberg technology." next week, brian armstrong and the latest in the cryptocurrency craze. this is bloomberg. ♪

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