announcer: from the heart of where our innovation, money, and power collide in silicon valley and beyond, this is bloomberg technology with emily chang. emily: coming up in the next hour, global recession fears ramp up. the federal reserve struggles to tackle widespread inflation. the nasdaq 100 leading the charge and tumbling u.s. stocks.

>> the fed position to boost rates, tech at the heart of it. ed ludlow is here with more. stocks rallied yesterday after the fed boosted the rates and plunged today. what gives? >> this real sense of deja vu. a fed meeting where they take action, stocks rise, less than 24 hours later, lots of red on the screen. the nasdaq 100 very tech heavy. the s&p 500 closing edits lowest level since 2020. the u.s. 10 year yield was almost 3.5%. it has come down to 3.2%. that's a drop of almost 30 basis points since the time i woke up. i have been awake for a long time. it is a serious move in yield that is had an impact on the

equity market. come with me into this chart. yesterday we saw $24 trillion shed from market cap indices all around the world. a large percentage of that comes from the u.s. alone. meta cap stocks have seen huge declines. these were really the on per -- underperformers of the market on thursday. tesla down 8.5%. news that they have raised prices, questions about global demand and recession. another stock i am watching, twitter. the leader talked about the future of the platform. he did not expressly commit to the deal. he talked about charging to verify users. all kinds of stuff, lots to unpack.

it ended up closing down 1.7%. emily: we want to dig into the twitter meeting momentarily. first, i want to dig into the market. how are you reading this? >> part of it reflects investors on a day-to-day basis. yesterday, there was some exuberance particularly over jay powell's conversation after the fed meeting. talking about thinking that the number of 75 basis point increases might be limited. markets got a little bit exuberant about that yesterday and relieved if you will. then today, it sort of like the morning after and people decided instead of focusing on the glass half-full, they focused on half-empty and how much narrower that makes the fed's ability to traverse and trying to stick a

soft landing. emily: are you thinking a recession is in evitable? >> maybe higher likelihood. we weren't going into this necessarily thinking a recession was highly probable. we do think if you see one it will be shorter. there is so much underlying business strength. there are a lot of challenges. everyone is waiting to see if we will have the recession, but we don't think it will be sharpened. emily: how is this affecting your approach to tech ?

how are you evolving your strategy when it comes to big tech names? >> it's not just big tech names, it's thinking through technology in general. typically what we have seen cycle of recycle is that going into a recession is not what leads coming out. a lot of the growth in the new scenario will be re-shoring, building manufacturing, spending some of the aid money that is still in the pipeline for infrastructure spend. that will require a different kind of technology. it's going to require investors to think more carefully about where their technology goes. it's not just consumer-based tech. emily: we've been talking about the fact that cisco hit its high

before the.com bust and has since ever recovered. what do you think are going to be the cisco's of this generation? >> we are not necessarily allowed to talk individual securities, but think looking at industries that will support the re-shoring building and manufacturing and the shifting of certain things like where individual people are at higher risk jobs and you are automating -- what's of things that will play into the new economy. it's not like technology is gushed as an entire industry needs to be written off or pieces of it because much of it will still continue to play, but it's looking at where your with have that investment and what industries are likely to be able to play into the buildup. emily: thank you for sharing your views with us.

meantime, as stocks plunge and inflation rises, some companies are trying to lure customers with new features. t-mobile announced it is expanding its coverage to hundreds of countries around the globe and -- were going to get into that with their representative. tell us about this announcement and why you think now is all of this going on at the right time? >> start with now. consumers are concerned. it's not just the possibility of a recession. consumers are feeling the pinch right now. our view is we can use the size and scale t-mobile to help. summer is here and after two years, while feeling the pinch, customers want to get out and travel. travel is back, spending is up at higher than pre-pandemic levels. you have the dual force.

a desire to travel combined with pinched pockets. we are here to help. today's announcement are all about making travel easier for t-mobile customers everywhere. emily: i have to ask your thoughts on the macroeconomic environment. what are you seeing over the next six to 12 months? you have world bank/. >> we're in touch with our customers and they are concerned. our view is our job will we have concerned customers about the economic situation is to be ready to help. that's why we are doing the things we are doing. it's no different than the rest of the industry. -- it is so different than the rest of the industry. our competitors have done $2 billion of price increases between them. it showcases how different our strategy is. ours is to look forward at what

is unfolding, understand the concern consumers have and poor value to our plans so we can help them. this isn't just altruistic. it makes our most popular plan more popular. if that gains popularity, that helps our revenue and everyone wins. emily: you did raise some fees earlier this year and i wonder about how your plan to navigate inflation is evolving. >> one of the things that makes us different is we have price lock. what we don't do is take the fee that you signed up for and during the term of an agreement change your price. your ongoing price per month. that's important to people right now. our business as an industry and a sector is a little different than some. we are probably more insulated from inflationary pressures as a company van more businesses and

sectors. we have long-term conductivity and technology contract. those things insulate us somewhat and allow us to do things like today's news. we are pouring hundreds of millions of dollars of increment of value into magenta max and making travel easier for customers by doing something nobody has ever done before which is put locally high-speed data right into our most popular plan at no electric charge plus connect you on all of your flights on the most popular airlines for free. no one has ever done anything like this before. it's about making travel easier. emily: we are staying a number of different companies with hiring freezes and layoffs. are you having to make any cost-cutting measures? do you have any plans like that? >> we are executing our postmerger playbook.

2021 was the biggest growth year in our history. 2022 was the biggest growth q1 in our history in new accounts. we are executing our successful business plan. over time, we have to be really smart about how we manage our company and we will do that. this is a model that is unfolding exactly like we told investors it would. we laid out our five-year plan last spring. emily: good to have you back with us. thank you for sharing the news with us and hearing your views on the macroenvironment ahead. meantime, the world's largest theater chain is once again branching out. amc will create a $100 million fund to invest in other businesses. the board approved the plan, but the leader did not say where the cash would come from. in march, amc bought 22% of gold and silver mining stock.

coming up, elon musk stands his ground and tells twitter employees the shift will include outrageous things. that's next. this is bloomberg. ♪

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emily: elon musk took questions from twitter employees. he didn't address whether he was

committed to a deal to buy twitter. we are now joined by a former twitter employee. ed ludlow is here as well. you were covering the meeting in real time. we had the contents leaked to us in real time. what happened? >> your right to phrase it in the it is what he did not say. it was billed that he was going to outline his interest in buying the company. emily: he wasn't explicitly asked. >> basically how this works is twitter staff were invited to ask questions through an entire -- internal/channel. those questions were aggregated then asked to elon musk. he offered interesting insight into how he would change the platform. he talked about the advertising model which is interesting

because many people thought that it wasn't good in his mind. one that jumped out at me was the idea that he would charge users for verification to verify that you are human. emily: what do you make of let's start with the business plan. >> some of these ideas are great . the verification program if you can call it that has been broken since it was created. it would be fantastic if someone comes in with an idea to fix that. i think the larger question is all of this is windowdressing. i don't think he wants to buy twitter anymore. >> his idea was that if you charge people and you didn't put a price on it to verify, if you run a scam or bought organization where you have lots of accounts, he talked about dis-incentivizing bots that if

you have a lot of accounts, it wouldn't be worth it. >> maybe that will work. is this relevant? is this dumpster fire just extending on and on? what do you think? i don't think he wants it. you have kids, i have kids. they want a cookie, they start throwing a tantrum than eventually they don't want the cookie anymore but they are still throwing a tantrum. i don't think he wants it. emily: you wrote a book. >> it was not ironic when i wrote it. emily: how do you think elon musk's version of twitter would impact the world? for the better or worse? >> i don't think it would be for the better. trump -- [laughter] i think elon musk has a very limited understanding of what is

-- emily: today, he says you should be able to say outrageous things on twitter short of anything the brecksville law. is that good enough? >> that's not good enough at all. we talked to one of my favorite bosses when i worked there and he said it best when he said if you take the guardrails off of the platform, that is anti-free speech because you are preventing a lot of people from being able to say anything so they don't feel safe on it. emily: how to the employees feel? >> how do i feel for them? these are very smart wise people, i feel sad and they are stuck in the middle. everyone makes jokes on twitter all the time because it so ridiculous and it doesn't seem to end. these are real people. >> pointing out what elon musk said as her -- as a relates to the staff, working from home, he made the point that if you do excellent work you may have an

exception to being a remote worker but he seemed to suggest that it's not going to happen. emily: this after jack dorsey said they could work from home forever. >> saying excellent work, that's silicon valley code. >> what's interesting to me and i love your take on this is he talked about what chitter -- what twitter is like as a private company. he said it would be like spacex where you have stocks and options awards and liquidity events. twitter is like a san francisco silicon valley maine state. how does that culture change? >> i think it will change dramatically, but employees are stupid. at the beginning of this -- employees are not stupid.

at the beginning of this journey, we thought this would be an interesting but crazy idea. twitter stock has historically underperformed. the stock has been performing really badly so i think there was some sort of a hope that maybe this crazy idea could do something good. at this point, it has just derailed. emily: where does this leave twitter? he has these lofty goals, we don't know if he's really committed to buying the platform but he has a deal, assigned deal that -- a signed deal. we should acknowledge there's a contingent of people that are super excited about elon musk buying twitter including people at the company. >> i think the best thing that could happen in the situation is like i act with my toddlers when they are out of control, i think we can convince elon musk that he has one by giving him

something but by making this all go away in some legal matter. emily: something like what? >> he said he was more focused on product development than a title. emily: from what you know about twitter, is the bot thing is big of a deal as he thinks it is? >> we think it's cover printed. this is his out. >> talk to us about timeframe. >> the board has given its unanimous approval. as far as twitter is concerned, my understanding is they want to hold him to the terms of the deal that was signed. emily: basic indeed or not basic at all. thank you for sharing your unvarnished view. coming up, more elon musk as

tesla hikes prices for the third time this year. that story is next. this is a bloomberg. ♪

emily: now to a few other stories. tesla has hiked prices by as much as $6,000 across the lineup. elon musk said earlier this week the car company has weathered a tough patch the last three months facing a month-long lockdown in shanghai and supply chain sorrels that have

challenged production. elon musk and his company were sued over claims that they are part of a racketeering scheme to back dogecoin. he is asking for $86 billion in damages plus triple damages of $172 billion and an order blocking elon musk and his companies from promoting dogecoi n. he says trading it constitutes gambling under u.s. law. coming up, one startup had this advice. the frugal and drink cosco coffee. more on that startup coming up. this is bloomberg. ♪

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emily: welcome back. inflation market turmoil investors pulling back has many startups tightening their belts and cutting costs. there is one unicorn that did not wait for the downturn to be thrifty. van to helps businesses protect against data breaches. thank you for joining us. you started out in venture capital. then you left to form vanta. what are you trying to solve? >> we're trying to help software companies be more trustworthy with their customers and the trust. the way we do that is to help the software companies improve their security then go off and prove it. often through something like a

compliance audit. showing their taking the regulations seriously and using them as opportunity to build trust with their customers and ultimately grow their revenue in businesses. emily: a lot of investors are being careful about where they put their money. what attracted you to this company? >> vanta is a company we have been interested in for a long time. we started to notice that many of our portfolio companies were using vanta. we saw it becoming a critical enabler for sas companies. if you want to sell enterprise deals, you have to get certification. you have to comply with regulations. when we saw the market was shifting from slow consultants to using a software platform like vanta. when the opportunity came up

despite there being a downturn, we jumped at the opportunity. emily: talk to us about the costco coffee only approach. i love food at costco but you guys have been very conscious about keeping costs down. even before we found ourselves in this macroenvironment. >> i was fortunate to start might career at an early stage vc firm. one thing in particular was that investors perform funding -- preferred funding that doesn't need funding. weight wanted to grow and be aggressive but also at -- with and i have controlling our destiny. there are a lot of things like the costco coffee that help cut

some costs that we would be spending otherwise and also helpful cultural signal to folks that we are here to build a business that's what's most important. emily: what is your advice to startups in this macroenvironment? all of this uncertainty ahead, people comparing this to the.com bust. >> this is clearly one of the three worst downturns silicon valley has seen in the last 20 years. i think this one is on track to be worse than 2008. i don't think it will be as bad as 2000. people need to be aware that we are probably heading into a recession. the capital raising environment is different than last year. we are advising portfolio companies to try to have at least 2.5 years runway because you can't wait until the end to raise. we are advising our founders to

do everything you can to survive the downturn. vanta one of the reasons why we wanted to invest is because they have been so capital efficient. what christina did in terms of setting a frugal tone worked. the company has one of the best burn multiples we have seen which is our metric for measuring the capital efficiency of a startup. vcs, we're still looking to invest in high-growth companies, but we also want to see capital efficiency. the trick for founders right now is they can't just grow, have to grow in a capital efficient way. emily: tell us about your fundraising journey. your own background as a vc, what was it like being on the other side of the table? did you have moments of panic where you are worried? >> what i will say is that 2022 was different than 2021.

there's more scrutiny across the board this year. then a different set of metrics. in 2021, it was all about revenue growth and how much are you growing how quickly. this year, burn multiple. it's a big deal. for every dollar of revenue you're bringing in, how much did you spend to do that? growth margin, burn rate. all of these questions were not new for us because we had been thinking about these things for the last couple of years and trying to manage them internally and keep an eye on them, but it is certainly different than what we raised last year. >> you have been building and investing since before the.com bust. i'm curious about if you think a recession is inevitable. if so, how bad does it get?

>> i do, i think i have been saying there are possible -- there are signs of a recession and now the fed is raising rates aggressively. i think they waited one year to long. now as a result, they have to overcompensate by raising rates very quickly. that is basically causing the economy to do somersaults. i think we are heading into a recession, there is a slowdown. i think everyone should be expecting a recession and if it doesn't materialize -- a serious recession, if it doesn't materialize that's great news but that's what investors should be expecting at this point. emily: we heard -- we remember cisco hitting its peak and it still hasn't recovered.

you think any of these tech companies could become the next cisco? >> the big public companies are in an much better shape than during the crash. in the days of the dot com crash, they didn't have real customers or revenue. that's not the case today. what's happening is that value multiples are changing. saas is not going away. software software businesses are still incredible. they're becoming a larger category of spend enterprises on software. i don't make this is existential. i think this is simply a big rerate in terms of valuation multiples driven mainly by interest rates. i think what founders need to do is make sure they have given themselves the runway to persevere through a recession or downturn. emily: how do you think this is

going to impact the war for talent? you have employees probably thinking twice about whether they want to make the jump. do workers want to work at startups right now given the uncertainty? >> there's a lot of newman gloom -- doom and gloom. i don't think it is all bad news. downturns are when some rate businesses have been built. it's good to be easier to recruit for companies that correctly manage their burn and stick around and not just persist but accelerate through the downturn. >> i would agree with that. paypal was largely built in the wake of the dot com crash. downturns can be a great time to

build. the war for talent gets easier. there are fewer copycats getting funded so the competition is easier. the only thing that gets harder is fundraising. if you make sure you raise money at the right time to make that funding last, building during the downturn can be a great time to build a great company. emily: i have to ask you about your former paypal friend elon musk. he spoke to twitter employees at a meeting. he proposed an idea that all users get verified -- that have to pay to get verified. do you think -- i know you have been supportive of him buying the company. supportive of his ideas. what do you think is going to be most impactful about elon musk

essentially taking over? >> i already see outrageous things on twitter. he thinks free speech needs to be applied in an evenhanded way. we need rules that aren't just made up as we go along. they need to be an honest open marketplace of ideas rated the other part that i hear is it needs to be a real business. the cost of now exceed the revenues and that's not sustainable. he is saying we need to cut costs and grow revenue. it sounds to me like he wants to apply some business rigor to the company. i would expect if he takes over, there will be some cost-cutting. it sounds like he believes in in person work. that would prefer people would be in the office although exceptions would be made for truly exceptional cases. i think he will apply business rigor and create some rules

around speech. emily: there are some doubts about whether he is committed to doing this deal. we had a former employee on earlier thinking that he is using the bot issue to get out of it. is he committed? >> the fact that he did the town hall with employees today is assigned to me that the deal is likely to happen. i agree there was some question a few weeks ago about whether it was actually going to happen, but the fact that he did this meeting with employees leads me to believe is more likely than not that it is going to happen. i don't know anything that he hasn't said publicly, but i would take that as a signal. >> thank you both, we appreciate you covering a wide range of issues today. coming up, we will hear about crypto's fall from grace and the

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emily: it is time for our crypto report. bitcoin is now down for 10 consecutive sessions. galaxy digital's founder spoke with us earlier today about the hedge wins -- headwinds. >> we talked about there were

going to be headwinds this year because the fed was going to have to withdraw liquidity. assets that went up based on cheap money forever if they are or expensive watches crypto were under pressure all year long. what's exacerbated this move in crypto is a bunch of leveraged players that have far more leverage than people thought so you talk about celsius or others, that is caused something similar to what happened in 1998 with long-term capital management. market neutral players with monster players and that is being unwound. that has created a ton of fear in the space. you've seen lots of credit being withdrawn from the space and when credit is withdrawn, you see prices collapsed. i had hoped this year was 30,000

or 50,000 bitcoin and once we took out we cascaded. 20,000 is a pretty good target with 1000 in you theory him -- in ethereum. it looks like it has 4% more to go to 3500. i think you are seeing this liquidation of risk. crypto has gotten caught up in it. >> do you have any exposure to the counterparts you mentioned? or is it more third order effects to gain the exposure question mark parks you get exposure indirectly. when you have really big players that have borrowed money from all over the place, it creates a daisychain effect. that is burning through the system right now.

my sense is is mostly burned out, but these fires go until they run out of oxygen. you would have to be one heck of a dime and handed player to sustain all of this if you have to much leverage. my guess is leverage has been knocked out of the system. it doesn't get put together right away. while we should bounce off of 20000 and 1000, it will take a while for crypto to regain confidence. emily: you can catch that full interview at bloomberg.com. coming up, inflation hitting investors hard. is it changing and their habits and buying clothing? we will talk about the fashion evolution coming up next. this is bloomberg. ♪

emily: rising inflation and a looming recession have hit all sectors hard but especially retail. rent the runway was one of few companies to beat estimates and raise guidance. joining us now is the ceo and cofounder. how are you bucking the trend? >> it's about delivering enormous financial value to the customer. if you rent address for a special occasion, you are paying 90% off the retail price. if you have a subscription, each item is $18 to $20. it's cheaper than a fast fashion and it's the real thing. in an environment where we have

been cooped up for the last two years, you are seeing in the earnings calls that people are going out. they want ways to wear something new. they just want to do it affordably. rent the runway is an experience that goes along with events and travel and going out to restaurants and concerts. that's why we have been able to perform. emily: there's no question that inflation is going to hit folks harder as people are paying more for gas, groceries. what is your forecast on how customer spending habits are granted change? how much will they be willing to spend on apparel versus essential items? how do they think about apparel? is it more of an essential because we have been cooped up for so long? >> i think that first of all, rent the runway has a customer base that is slightly different. it is more of a higher income customer base.

everyone is impacted by inflation and an upcoming recession. people are going to think about smarter ways to spend in the category. the only data we really have is what happened in 2008. it's fascinating. americans continue to buy 65 articles of apparel per year which is the exact same amount they bought into thousand five, 2006, 2007. they went into -- they flipped into lower price per unit retailers. i think e-commerce in general can be part of that low-cost strategy. how does covid factor into this? this recession might feel different and look different than the last one. i think we may end up spending more on experiences in this recessionary time than we did in

the last one because we didn't travel over the last two years. we didn't go out to eat or see friends. rent the runway is spend that tracks with experiences. you might travel, you have inflation, maybe you don't travel to italy but you travel to florida instead and you book a cheaper hotel. you are still going to go out and as long as we can market value, we will be able to be more part of the consideration set. emily: we are seeing a lot of tech companies have to make hard decision layoffs, downsizing. you've had to make hard decisions during the pandemic and you have been open about that. do you have any reflections on that now and potentially input for the founders that are having to make tough decisions now? >> we cut over 50% of our expenses in three weeks in march 2020. it was a dramatic situation in

that one weekend of march 2020, over 50% of our subscribers paused or canceled. we had to act extreme he quickly. we had to change the way we acquired inventory from buying inventory outright to revenue-sharing and receiving inventory on consignment. i would say to other ceos that there is not a moment to lose. cash is king. you had to think about all of your investments and be more conservative. the great thing about this environment is it's not happening overnight. there will never be another experience where like the pandemic we are all locked inside from march 8 to march 9 we were living different lives. we are constantly looking at the data internally and thus far, we feel positively we gave great items for q2. whew we reaffirmed our guidance for the year.

every business has to be smart right now because no business is inflation proof. emily: if you beat estimates and raise your guidance, does that mean the pandemic era of sweatpants is over? >> people are dressing up in a way that i have never seen before. they are bolder, brighter than before and this is just the example. they are dating again. they are going to parties again. people aren't going to stop doing that now. i do believe this recession might be different for service-based companies. emily: always good to have you. thank you for stopping by. that does it for this edition of the show. we will be right back here tomorrow. this is bloomberg. ♪

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you your wire return. more all well go you know you know