WEBVTT - Surveillance: Dynamic Ownership With RTR's Hyman 0:00:00.080 --> 0:00:12.960 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:30.240 Bloomberg dot Com, and of course on the Bloomberg Let's 0:00:30.240 --> 0:00:32.280 bring in great Dako shown we Oxford it can always 0:00:32.360 --> 0:00:34.640 chief US economist He joins us in the studio in 0:00:34.640 --> 0:00:37.440 our interactive Broacast studios. Great. Great to catch you up. 0:00:37.440 --> 0:00:38.800 But you let's just talk about a shape and at 0:00:38.840 --> 0:00:41.080 yield curve. What's the signal that comes from that for 0:00:41.120 --> 0:00:43.280 you right now? Well, I think what we're seeing is 0:00:43.320 --> 0:00:46.000 that the expectations for growth in the US are of 0:00:46.159 --> 0:00:48.600 more moderate growth going forward, and the ten year yield 0:00:48.680 --> 0:00:52.080 is reflecting both those expectations of more moderate growth as 0:00:52.120 --> 0:00:55.240 well as more moderate inflation going forward. UM, and with 0:00:55.280 --> 0:00:57.400 the fell fedding out on a hold, we believe the 0:00:57.440 --> 0:01:00.560 Fed has actually reached its terminal paul see rate for 0:01:00.560 --> 0:01:04.080 this cycle. UM, we don't really see much momentum upward 0:01:04.120 --> 0:01:06.240 for for yields going forward, So I think we're going 0:01:06.280 --> 0:01:09.880 to see this flatter curve for the foreseeable future. There's 0:01:09.880 --> 0:01:12.760 always that question of does that signal recession. I think 0:01:12.760 --> 0:01:15.880 there's a possibility that that signals a recession. We actually 0:01:15.880 --> 0:01:18.280 think there won't be a recession. But we're seeing more 0:01:18.280 --> 0:01:22.119 and more signals, including from policy makers, that the risks 0:01:22.160 --> 0:01:25.160 are really to to the downside, and everybody's talking about 0:01:25.160 --> 0:01:28.640 those risks, which leads to recession bias. Okay, Normally people 0:01:28.680 --> 0:01:32.760 get more optimistic about inflation and growth when the FED 0:01:33.040 --> 0:01:35.920 is more dubbish, right because basically people say the FED 0:01:36.000 --> 0:01:38.440 is going to allow growth to accelerate, allow inflation to 0:01:38.520 --> 0:01:41.600 run hot. Right now, we are not seeing that based 0:01:41.640 --> 0:01:43.319 on the shape of the yield curve, based in the 0:01:43.440 --> 0:01:46.600 tepid response toward risk acids. Does that mean to you 0:01:47.040 --> 0:01:49.200 the FED is out of ammunition when it comes to 0:01:49.200 --> 0:01:52.880 stimulating the economy during this round, during this credit cycle. Uh? 0:01:52.960 --> 0:01:57.120 And that that really, frankly, they cannot help prolong this cycle. 0:01:57.960 --> 0:02:00.800 I don't necessarily think that they're out of communition. Um. 0:02:00.840 --> 0:02:03.800 I think, by the way, that by not raising rates 0:02:03.840 --> 0:02:07.200 this year, they're actually providing somewhat of a greater growth puffer. 0:02:07.280 --> 0:02:11.920 For we've calculated that the delta between them raising rates 0:02:12.040 --> 0:02:15.280 three times this year or not raising rates at all 0:02:15.320 --> 0:02:18.400 this year is about zero point five percentage points of 0:02:18.400 --> 0:02:21.840 GDP growth, so they're actually providing an ex anti buffer 0:02:21.840 --> 0:02:24.760 in terms of growth. They have the most ammunition amongst 0:02:24.840 --> 0:02:27.639 all central banks around the world, having already raised rates 0:02:27.840 --> 0:02:30.880 and having started although they're going to taper that process, 0:02:30.919 --> 0:02:33.120 but have it started to reduce the size of their 0:02:33.160 --> 0:02:35.359 balance sheets, so they have a little bit more ammunition. 0:02:35.480 --> 0:02:38.359 But really that the game in town in the next recession, 0:02:38.360 --> 0:02:40.760 in the next downturn is not going to be central banks. 0:02:40.840 --> 0:02:42.799 It's going to be all on fiscal policy. And will 0:02:42.840 --> 0:02:44.760 they have the capacity to do fiscal policy? In the 0:02:44.840 --> 0:02:47.480 noted States, I think we have the capacity. The capacity 0:02:47.600 --> 0:02:49.520 is not really an issue in the United States, especially 0:02:49.520 --> 0:02:52.480 when you have the dollar as your your main currency reserve. Globally, 0:02:52.680 --> 0:02:55.440 Are you basically supporting mm T here, I don't know 0:02:55.520 --> 0:02:57.919 that we support or or do not support m m T. 0:02:58.040 --> 0:03:01.600 I think it's always what is into m MT. But 0:03:01.720 --> 0:03:04.440 I think we do have some fiscal space um. I 0:03:04.440 --> 0:03:08.600 think Blanchard's argument that interest rates being low is a 0:03:08.639 --> 0:03:12.959 great opportunity for us to increase government spending for productive 0:03:13.000 --> 0:03:17.359 reasons that I think is the main argument. I think 0:03:17.400 --> 0:03:19.480 what I think what he's saying is that the treasury 0:03:19.520 --> 0:03:22.840 market will behave like a developed market sovereign bond market 0:03:22.840 --> 0:03:25.839 in the next downturn, I yield will go lower if 0:03:25.919 --> 0:03:28.880 growth concerns roll off a cliff, I giving you the 0:03:28.880 --> 0:03:31.640 capacity to do some kind of fiscal stimulus. There will 0:03:31.680 --> 0:03:33.960 be some people listening thinking, hang on a minute, this 0:03:34.040 --> 0:03:37.360 economy is still okay. A recession isn't immediately around the corner. 0:03:37.400 --> 0:03:40.080 So let's take stock of where we are in Europe. 0:03:40.080 --> 0:03:42.480 We've just had some ugly p m I data, the 0:03:42.480 --> 0:03:45.680 Eurosie manufacturing number coming in at forty seven point six 0:03:45.760 --> 0:03:48.760 for March. It's terrible. The estimate was fourting nine point five. 0:03:48.840 --> 0:03:52.000 The previous read was forty nine point three. Is there 0:03:52.000 --> 0:03:55.200 any reason to believe this really, really dreadful soft patch 0:03:55.240 --> 0:03:57.720 in Europe over the last six months, called it nine 0:03:57.760 --> 0:03:59.960 months bleeds into the United States in the moment of 0:04:00.000 --> 0:04:02.600 a real Why yeah, I mean, I think external headwinds 0:04:02.600 --> 0:04:05.280 are important, and they are one of the concerns that 0:04:05.320 --> 0:04:08.360 the FED has um. This environment where global growth has 0:04:08.400 --> 0:04:11.440 slowed from three percent to eighteen months ago to about 0:04:11.440 --> 0:04:14.560 two point six percent in our latest forecast, is something 0:04:14.560 --> 0:04:16.840 that the FED is quite concerned about but we have 0:04:16.920 --> 0:04:21.240 to remember that US fundamentals remain quite solid despite all 0:04:21.240 --> 0:04:24.359 this talk of a downturn an imminute recession. The U 0:04:24.480 --> 0:04:27.359 S economy still has solid fundamentals. The labor market is 0:04:27.360 --> 0:04:30.000 the strongest we've ever seen. The economy is about to 0:04:30.000 --> 0:04:33.440 reach the longest expansion it's seen um in in in 0:04:33.640 --> 0:04:37.600 over seventy years. So we are in this very still 0:04:37.680 --> 0:04:42.440 positive market where we still have solid growth, momentum, elevated confidence. 0:04:42.600 --> 0:04:45.520 I think, yes, growth will slow, perhaps very rapidly, from 0:04:45.520 --> 0:04:47.680 three percent to two percent over the course of this year, 0:04:47.920 --> 0:04:50.960 but we shouldn't be necessarily talking about recession in this 0:04:51.000 --> 0:04:53.200 type of environment. There is a big question. It is 0:04:53.200 --> 0:04:56.839 the inflation question, because people really don't understand why inflation 0:04:56.920 --> 0:05:00.599 hasn't picked up more given how long this recovery has been. 0:05:01.040 --> 0:05:03.240 Where do you see that and sort of the pressures 0:05:03.240 --> 0:05:06.159 of rising wages and corporate profitability and their ability to 0:05:06.160 --> 0:05:09.040 pass along costs. What are you expecting in terms of inflation? 0:05:09.120 --> 0:05:10.800 I think there there are a few questions in that 0:05:10.880 --> 0:05:14.279 question to unbundle. First, is this relationship, this tradeoff between 0:05:14.400 --> 0:05:16.800 unemployment and wage growth, and we see that trade off 0:05:16.839 --> 0:05:19.320 still happening. The philis curve is still alive. We're still 0:05:19.360 --> 0:05:23.240 seeing wage growth accelerate as labor market slack diminishes. Um 0:05:23.279 --> 0:05:25.920 whether that is passed on to inflation is the big question, 0:05:26.160 --> 0:05:27.960 and I think we're seeing less of that passed through 0:05:28.160 --> 0:05:32.880 to inflation, in large part because of increasingly anchored inflation expectations. 0:05:33.040 --> 0:05:35.920 The tradeoff between the two has essentially had over the 0:05:35.960 --> 0:05:38.280 last twenty years compared to the twenty years prior to that, 0:05:38.440 --> 0:05:40.760 So we're not seeing much passed through. And actually our 0:05:40.839 --> 0:05:43.280 view is that inflation is really not going to break 0:05:43.279 --> 0:05:46.120 to the upside in any significant way. And that's I 0:05:46.160 --> 0:05:48.640 think a big reason why the FED is reconsidering its 0:05:48.640 --> 0:05:52.720 strategic framework and thinking about catch up models, average inflation, 0:05:52.839 --> 0:05:55.160 price level targeting. Those are all things that the FED 0:05:55.279 --> 0:05:57.280 is considering right now, Greg, Greg, to catch you out 0:05:57.279 --> 0:05:59.000 with the really interesting moment. To catch you out with 0:05:59.000 --> 0:06:01.599 you as well, Greg Dak they're the Oxford Economics chief 0:06:02.040 --> 0:06:17.960 US economists. I want to get you up to speed 0:06:18.000 --> 0:06:20.560 on the Brexit news. Two reason. May the Prime Minister 0:06:20.600 --> 0:06:23.000 of the UK planning to hold a third vote on 0:06:23.040 --> 0:06:27.400 her Brexit deal next week after the European Union essentially 0:06:27.440 --> 0:06:29.280 put off the threat of the UK crashing out of 0:06:29.320 --> 0:06:32.920 the block next Friday by giving the British another week 0:06:33.040 --> 0:06:35.839 or two to figure out what exactly to do. Do 0:06:35.920 --> 0:06:38.080 you essentially telling the Prime Minister that if you can't 0:06:38.120 --> 0:06:41.000 get a Brexit deal ratified next week, she'll have until 0:06:41.080 --> 0:06:43.920 April twelve to decide whether to leave without an agreement 0:06:44.279 --> 0:06:48.120 or request a much longer extension. On the phone, I'm 0:06:48.160 --> 0:06:50.039 really pleased to say taking the time out of it. 0:06:50.080 --> 0:06:52.240 What I'm sure is a busy morning to speak to us. 0:06:52.320 --> 0:06:56.080 Is Anthony Phillipson, the British Consul General for the United States, 0:06:56.160 --> 0:06:57.839 and to be always great to get your thoughts on 0:06:57.880 --> 0:07:00.720 this situation. So talk to me about what your message 0:07:00.800 --> 0:07:04.480 is today to anyone who's essentially dealing with the U 0:07:04.600 --> 0:07:07.120 United Kingdom, whether it's from a trade perspective, from a 0:07:07.160 --> 0:07:10.760 business perspective, what's your message for them today? Well, thank 0:07:10.760 --> 0:07:12.560 you very much, Jonathan, it's always great to be on 0:07:12.600 --> 0:07:15.880 your show. Um. I think the key message that came 0:07:15.880 --> 0:07:18.520 out of yesterday is the Prime Ministers and the government's 0:07:18.520 --> 0:07:21.960 commitment to delivering on the result of the referendum and 0:07:22.040 --> 0:07:25.840 doing so in an orderly way that provides both the 0:07:25.880 --> 0:07:28.960 future perspective and future relationship with the EU and the 0:07:29.040 --> 0:07:32.240 time for people to prepare. We are obviously very conscious 0:07:32.240 --> 0:07:34.600 that people, you know, we're very close to the twenty 0:07:34.680 --> 0:07:37.560 ninth of March as as you say, next Friday, um 0:07:37.600 --> 0:07:41.200 and the agreement with the EU last night in Brussels 0:07:41.560 --> 0:07:46.240 provides for either a technical extension if Parliament agrees the 0:07:46.280 --> 0:07:49.760 withdrawal agreement next week, or as you say, there is 0:07:49.760 --> 0:07:52.360 then a new sort of milestone of the twelfth of April, 0:07:52.760 --> 0:07:55.320 by which time we either need to come forward with 0:07:55.360 --> 0:07:58.360 an alternative plan, including the crucial question of whether to 0:07:58.520 --> 0:08:01.440 run and candidates in European elections in May, and the 0:08:01.440 --> 0:08:04.360 Prime Minister has made clear that she thinks that would 0:08:04.400 --> 0:08:06.160 be the wrong thing to do, given that the British 0:08:06.160 --> 0:08:09.200 people voted almost three years ago to leave the EU. 0:08:09.400 --> 0:08:12.880 So I think the key messages that we're still determined 0:08:12.880 --> 0:08:14.440 to deliver on the result of the referenced and to 0:08:14.440 --> 0:08:16.440 do so in a smooth and orderly way, and to 0:08:16.520 --> 0:08:19.640 give business time to prepare as necessary. And so will 0:08:19.680 --> 0:08:22.600 Parliament hold a third vote next week? Is that clear 0:08:22.600 --> 0:08:25.200 to you whether that will actually happen. So the Prime 0:08:25.240 --> 0:08:28.200 Minister will be talking to colleagues today. I'm sure she 0:08:28.280 --> 0:08:31.000 said in her statement in Brussels last night that she 0:08:31.080 --> 0:08:34.240 was committed to bringing this back to the Commons next week. 0:08:34.840 --> 0:08:36.920 I think, you know, it's it's a fast moving issue. 0:08:36.960 --> 0:08:38.360 I think we need to wait and see exactly how 0:08:38.400 --> 0:08:42.199 she plans to do that. What gives you confidence that 0:08:42.320 --> 0:08:45.520 a third vote will actually get some consensus given some 0:08:45.600 --> 0:08:49.320 of the turmoil that we've seen in Parliament. I think 0:08:49.520 --> 0:08:51.839 the key point the Prime Minister keeps making is that 0:08:51.880 --> 0:08:54.400 Parliament needs to agree what it wants to do. It 0:08:54.640 --> 0:08:57.400 has had a series of votes that have obviously been 0:08:57.480 --> 0:09:00.440 very significant in terms of expressing the will of the 0:09:00.440 --> 0:09:05.600 House on various issues. But at the minute, the important 0:09:05.600 --> 0:09:07.640 thing is to pass this agreement or to decide to 0:09:07.640 --> 0:09:11.240 do something else. So the key debate I think next 0:09:11.280 --> 0:09:14.520 week will focus on that, the agreement that the Prime 0:09:14.520 --> 0:09:17.240 Minister has done with the eu UM and that's her 0:09:17.240 --> 0:09:20.400 primary that's her primary focus for now. If they don't 0:09:20.440 --> 0:09:22.800 agree that, then that the Commons we need to agree 0:09:22.840 --> 0:09:25.040 something else. We can't just keep letting it slip down 0:09:25.040 --> 0:09:27.719 the road. And so can you guarantee the trade community 0:09:27.880 --> 0:09:32.520 that the one be a hard breaxit um? No I 0:09:32.559 --> 0:09:34.400 don't think I can. If I can, to be very honest, 0:09:35.000 --> 0:09:37.840 I can certainly guarantee that the Prime Minister's determination is 0:09:37.880 --> 0:09:41.280 not to to to carry out this process in a 0:09:41.280 --> 0:09:45.000 way that creates needless uncertainty. And that's why the focus 0:09:45.040 --> 0:09:47.559 is still on the withdrawal agreement, the implementation period that's 0:09:47.559 --> 0:09:52.239 built into that, that gives a period of transition and continuity, 0:09:53.200 --> 0:09:55.800 or within a context of agreeing a new future relationship 0:09:55.840 --> 0:09:58.960 with the EU that allows us to continue a close 0:09:59.000 --> 0:10:02.000 economic relationship with them at the same time as developing 0:10:02.040 --> 0:10:03.800 our our trade policy with the rest of the world. 0:10:04.520 --> 0:10:07.600 That remains her her view about the best way forward 0:10:07.600 --> 0:10:09.439 and the best way to deliver on the referendum result. 0:10:10.000 --> 0:10:12.360 It must be a tough job to speak with with 0:10:12.400 --> 0:10:16.560 trade partners and try to massage the situation at a 0:10:16.640 --> 0:10:18.960 time of great and certainty. How do you do it? 0:10:21.200 --> 0:10:24.079 I think we focus on two things. One is trying 0:10:24.120 --> 0:10:27.480 to explain to them what is happening and what the 0:10:27.480 --> 0:10:31.600 implications are. We also do try to keep our eyes 0:10:31.679 --> 0:10:35.559 on a slightly broader perspective about the continuing opportunities of 0:10:35.600 --> 0:10:38.960 an economic partnership with the UK, the continuing investment opportunities 0:10:39.640 --> 0:10:43.600 that the UK economy offers in a whole host of sectors. 0:10:43.640 --> 0:10:46.080 And obviously I continue to feel there is no more 0:10:46.120 --> 0:10:50.559 important partnership than we have with North America and with 0:10:50.280 --> 0:10:53.839 the with the U S and Canada. We do try, 0:10:53.840 --> 0:10:55.480 as to say and keep our eyes focused on that 0:10:55.520 --> 0:10:58.000 forward agenda with for example, in a couple of weeks 0:10:58.000 --> 0:11:00.640 here in New York, we're doing a big event around 0:11:00.640 --> 0:11:02.959 that we call designing our Future. That is trying to 0:11:03.000 --> 0:11:05.880 build the partnerships with the business community, of the academic community, 0:11:06.320 --> 0:11:08.600 building on our industrial strategy, but also a lot of 0:11:08.600 --> 0:11:11.000 what's going on here. So we try to offer assurance 0:11:11.000 --> 0:11:13.320 an explanation where we can at the same time as 0:11:13.320 --> 0:11:15.760 talking about future opportunity and something always great to get 0:11:15.760 --> 0:11:18.439 your insight. I know this morning will be incredibly busy 0:11:18.480 --> 0:11:20.480 for you, so we appreciate your time here on Bloomberg 0:11:20.559 --> 0:11:23.560 Radio and Anthony Phillips and there the British Consul General 0:11:23.880 --> 0:11:40.040 for the United States. We have a unicorn in studio 0:11:40.200 --> 0:11:42.760 right now, a unicorn who also happens to be eight 0:11:42.800 --> 0:11:46.480 months pregnant with her second child. We're talking with Rent 0:11:46.559 --> 0:11:50.200 the Runaway co founder and chief executive officer. Jennifer Hyman 0:11:50.520 --> 0:11:53.600 joining us here in our bloom Bloomberg Interactive Broker studios. 0:11:53.800 --> 0:11:56.319 I want to just first start by congratulating you because 0:11:56.640 --> 0:12:00.000 you did just reach this one billion dollar valuation. Staff 0:12:00.160 --> 0:12:03.559 is making you a unicorn. Congratulations, Thank you. We are 0:12:03.600 --> 0:12:07.319 so proud and it's been a huge amount of teamwork 0:12:07.400 --> 0:12:09.920 over the last ten years to get us here. So 0:12:09.960 --> 0:12:12.360 can you give us a sense of where the biggest 0:12:12.360 --> 0:12:15.400 businesses that you do and how you've expanded, in other words, 0:12:15.400 --> 0:12:18.880 which locations around the world that really are driving the 0:12:18.960 --> 0:12:22.440 growth here. Well, our business is primarily well, our business 0:12:22.559 --> 0:12:25.240 is based in the United States right now, the majority 0:12:25.280 --> 0:12:29.880 of our revenue comes from a subscription to fashion called 0:12:29.920 --> 0:12:33.959 Rent the Runway Unlimited that women are using to get 0:12:34.040 --> 0:12:36.360 dressed in their daily lives. In fact, they're using it 0:12:36.400 --> 0:12:39.679 a hundred twenty days of the year as a substitution 0:12:39.800 --> 0:12:42.520 for the closet that's in their bedroom. So they're renting 0:12:42.679 --> 0:12:46.800 all forms of apparel from us, everything from a pair 0:12:46.880 --> 0:12:52.920 of pants, jeans, coats, blouses, dresses, vacation where, maternity where 0:12:53.040 --> 0:12:56.560 literally everything that you can think of on rotation. How 0:12:56.600 --> 0:12:59.360 long do they usually borrow each item of clothing for? 0:13:00.080 --> 0:13:03.040 So you pay a monthly fee and receive four items 0:13:03.040 --> 0:13:08.839 and you can swap them at your leisure, at your discretions. So, um, 0:13:08.920 --> 0:13:12.120 the customer is really in control. It's this new form 0:13:12.160 --> 0:13:16.320 of dynamic ownership where she's able to decide how long 0:13:16.360 --> 0:13:19.240 she actually needs each item for. Can you talk about 0:13:19.240 --> 0:13:22.200 the value proposition from your perspective, right, because the fixed 0:13:22.240 --> 0:13:25.760 costs have to do with cleaning. Uh, what happens if 0:13:25.800 --> 0:13:28.600 somebody does a little too much wear and tear on 0:13:28.679 --> 0:13:31.360 something or there's a stain or something like that, right 0:13:31.440 --> 0:13:33.959 in acquiring the clothes. Well, let's actually talk about the 0:13:34.040 --> 0:13:38.319 value proposition first to the customer, because the customer in 0:13:38.360 --> 0:13:42.079 America right now, on average is spending thirty three d 0:13:42.160 --> 0:13:45.240 dollars a year on apparel and five to seven hundred 0:13:45.280 --> 0:13:48.280 dollars a year on dry cleaning, whether they care about 0:13:48.320 --> 0:13:51.440 fashion or not. You are down four thousand dollars a year. 0:13:51.720 --> 0:13:55.120 And that doesn't actually vary that much based on household income. 0:13:55.679 --> 0:13:59.200 So even at lower household incomes, this is still this 0:13:59.360 --> 0:14:02.560 fixed six spence that people have because they work and 0:14:02.600 --> 0:14:05.439 they need to show up at work looking professional. So 0:14:05.520 --> 0:14:08.760 now for a hundred sixty dollars a month, so less 0:14:08.760 --> 0:14:11.559 than fifty of what you would have spent on fashion 0:14:11.600 --> 0:14:16.480 for the year. You're getting unlimited choice of millions of items. 0:14:16.880 --> 0:14:21.200 You're getting forty thousand dollars worth of value in terms 0:14:21.240 --> 0:14:24.280 of the cost of the product that you're getting free 0:14:24.320 --> 0:14:28.240 dry cleaning. You're saving time and it's much more sustainable, 0:14:28.560 --> 0:14:32.640 so you don't have that waste of the of your 0:14:32.680 --> 0:14:37.880 closet that's not regularly used. From our standpoint um in 0:14:38.000 --> 0:14:41.800 terms of how we optimize our own costs and profitability, 0:14:42.480 --> 0:14:46.880 we have known that this company is primarily about logistics 0:14:46.880 --> 0:14:50.840 and technology from the very beginning, so we vertically integrated 0:14:51.280 --> 0:14:57.000 the company ten years ago. We've built out proprietary reverse 0:14:57.040 --> 0:15:01.520 logistics technology, including the largest dry cleaning operation in the world, 0:15:02.000 --> 0:15:05.040 so we are real experts and how to restore clothing 0:15:05.040 --> 0:15:09.960 to perfect condition and utilize it multiple times throughout its life. 0:15:10.720 --> 0:15:13.280 So when you're raising money, which you just did. You 0:15:13.360 --> 0:15:17.440 just had a fresh capital raise million dollars from investors 0:15:17.680 --> 0:15:22.040 collored by Franklin, Templeton and Bane Capital. UH. Other investors 0:15:22.080 --> 0:15:25.640 have included tro Price, Hamilton Lane Advisors. What are their 0:15:25.680 --> 0:15:31.520 main concerns at a time in investing in retail in 0:15:31.520 --> 0:15:36.120 in an era of Amazon and a steeply competitive environment. Yeah, 0:15:36.160 --> 0:15:40.400 I think the investors set thinks more um towards the 0:15:40.440 --> 0:15:43.840 sharing economy as it relates to around the runway camps, 0:15:43.880 --> 0:15:46.920 and they think about retail where if it's really interesting, 0:15:47.120 --> 0:15:52.160 look at millennials and Generation Z, dynamic ownership has already 0:15:52.320 --> 0:15:55.640 overtaken our lives when it comes to our digital our 0:15:55.720 --> 0:16:00.240 digital footprint, music, entertainment, books, everything that we want is 0:16:00.280 --> 0:16:03.560 in the cloud, and Rent the Runway is providing those 0:16:03.560 --> 0:16:06.480 same options for the physical world. You know, our goal 0:16:06.520 --> 0:16:09.080 is to become the Amazon Prime of rental and make 0:16:09.120 --> 0:16:12.760 it fiscally irresponsible for anyone to not have a subscription 0:16:12.960 --> 0:16:15.680 to Rent the Runway. What kind of bargaining power do 0:16:15.760 --> 0:16:19.280 you have when it comes to purchasing the clothes. So, 0:16:20.200 --> 0:16:24.000 of course the company is growing rapidly, so the amount 0:16:24.040 --> 0:16:27.600 that we purchased from designers has gone up UM a 0:16:27.680 --> 0:16:30.560 lot every year, and that gives us increased purchasing power. 0:16:30.680 --> 0:16:33.480 But I think what's more exciting to the designer brands 0:16:33.480 --> 0:16:36.000 that we work with is the data that we're providing 0:16:36.040 --> 0:16:39.560 them and the millions of new customers that we're able 0:16:39.760 --> 0:16:42.440 to introduce to their brands for the very first time. 0:16:42.840 --> 0:16:47.160 Remember that for these designers, their primary distribution channels in 0:16:47.200 --> 0:16:50.280 the past have been via department stores, and those department 0:16:50.320 --> 0:16:53.080 stores are catering to a woman who is above the 0:16:53.120 --> 0:16:56.080 age of fifty, whereas most of the rent the runway 0:16:56.120 --> 0:17:00.080 customers rent the runway customers are below the age of 0:17:00.120 --> 0:17:05.080 fifty in fact, our media ages. So we're introducing thirty 0:17:05.160 --> 0:17:08.119 years worth of women to these brands for the first 0:17:08.119 --> 0:17:11.159 time and developing that brand affinity early in their lives. 0:17:11.640 --> 0:17:14.679 What kind of data is helpful in determining this mean? 0:17:14.760 --> 0:17:17.800 Is it basically what kinds of clothes? Uh, somebody has 0:17:17.880 --> 0:17:20.600 liked in the past. You know, that's data that almost 0:17:20.640 --> 0:17:22.880 everyone can get, Like you can look at cell through rate, 0:17:22.960 --> 0:17:25.400 you can look at preferences online and figure out what 0:17:25.440 --> 0:17:29.280 people like. But what was missing from the retail industry 0:17:29.520 --> 0:17:33.600 is what happens after someone purchases the product. What happens 0:17:33.680 --> 0:17:36.439 Do they actually wear it? How often do they wear it, 0:17:36.760 --> 0:17:39.000 do they like how it looks on them? How often? 0:17:40.320 --> 0:17:43.400 What quality is that item in and how many times 0:17:43.440 --> 0:17:46.399 can it be used over its lifetime before it falls apart. 0:17:46.800 --> 0:17:48.960 So we have this precious source of data that we 0:17:49.000 --> 0:17:53.119 call our post order data of what happens once it 0:17:53.240 --> 0:17:56.000 is at home in a customers closet, because a lot 0:17:56.080 --> 0:18:00.600 of brands have um high cell through rates, very low 0:18:00.640 --> 0:18:04.000 loyalty rates, and they have no idea why the customer 0:18:04.119 --> 0:18:06.040 is not coming back to them, and we're able to 0:18:06.119 --> 0:18:09.040 solve that for them and let them know. Is it 0:18:09.080 --> 0:18:11.320 because of the item quality, is it because of fit? 0:18:11.520 --> 0:18:14.560 Is it because you know it just went out of style, etcetera. 0:18:14.800 --> 0:18:19.000 So you know, if somebody basically, uh for all inends 0:18:19.000 --> 0:18:21.080 of purposes, buy something and stick it on the shelf 0:18:21.080 --> 0:18:22.480 of the tag to a lot it not, don't never 0:18:22.520 --> 0:18:26.040 wear it again versus in order to receive the next 0:18:26.160 --> 0:18:29.520 items in our unlimited subscription, you have to tell us 0:18:30.040 --> 0:18:34.120 about the items you just wore, so real quick. I'm 0:18:34.160 --> 0:18:37.520 just wondering, where do you see the biggest expansion opportunities 0:18:37.560 --> 0:18:41.760 going forward. I think that we've just scratched the surface 0:18:42.200 --> 0:18:46.080 of women putting their closets in the cloud in the 0:18:46.160 --> 0:18:49.480 United States. You know, we really think the total addressable 0:18:49.520 --> 0:18:53.320 market here is every woman we've already seen in the subscribers. 0:18:53.320 --> 0:18:58.400 We have incredible diversity both in household income geography. Our 0:18:58.480 --> 0:19:01.920 subscribers already comprised seventy six percent of all zip codes 0:19:01.960 --> 0:19:06.480 across the US. We have um of our subscribers have 0:19:06.520 --> 0:19:11.240 household incomes below sixty five dollars a year of household 0:19:11.280 --> 0:19:15.160 incomes above two dollars a year, so very diverse group 0:19:15.200 --> 0:19:18.440 of people. We really want to proliferate this behavior of 0:19:18.520 --> 0:19:21.439 dynamic ownership because we think that the customer gets a 0:19:21.520 --> 0:19:25.159 lot more value, saves time, feels incredible every day, and 0:19:25.200 --> 0:19:28.520 it is far more sustainable. Jennifer Hyman, thank you so 0:19:28.640 --> 0:19:31.600 much for joining us here in congratulations on reaching a 0:19:31.720 --> 0:19:35.199 unicorn status. And you're impending a delivery, Jennifer than Jennifer 0:19:36.240 --> 0:19:40.120 Rent the Runway, chief executive officer and co founder. Really 0:19:40.160 --> 0:19:43.480 interesting to think about these sharing economy. Uh. Putting your 0:19:43.640 --> 0:19:46.000 closet in the cloud certainly would be much more space 0:19:46.000 --> 0:20:02.760 efficient in a place like New York City. Uh. The 0:20:02.760 --> 0:20:06.360 news out of Washington continues unabated, as it has been 0:20:06.400 --> 0:20:09.280 for some time, and at this time on Fridays of 0:20:09.359 --> 0:20:12.159 every week, we have our friend Margaret Brennan help us 0:20:12.200 --> 0:20:14.120 break it down. Margaret Brennan, of course, as a host 0:20:14.119 --> 0:20:16.800 of CBS has faced the nation, which you can see 0:20:16.920 --> 0:20:20.240 every Sunday on CBS and on Bloomber. Uh, Margaret, thank 0:20:20.280 --> 0:20:21.919 you so much for joining us. I just wanted to 0:20:21.920 --> 0:20:24.919 start off by giving us a sense of where you 0:20:25.000 --> 0:20:27.840 think the Mueller investigation is. We've been waiting for the 0:20:27.880 --> 0:20:30.440 report for uh seems like several weeks. Now, can you 0:20:30.440 --> 0:20:34.840 give us the latest? Well, you know, every Friday, I 0:20:34.880 --> 0:20:38.520 think all reporters across the country hold their breath and wait. Uh. 0:20:38.760 --> 0:20:42.119 We don't necessarily have any um indication it will be 0:20:42.280 --> 0:20:46.320 this Friday, but we do know that the Special Counsel's 0:20:46.400 --> 0:20:49.040 Office has been shrinking. A number of the investigators who 0:20:49.040 --> 0:20:52.760 have been on staff are slowly leaving as their portions 0:20:52.960 --> 0:20:56.520 of this probe wrap up, So that indicates they are 0:20:56.560 --> 0:20:59.960 getting closer to the end. But as to the official 0:21:00.160 --> 0:21:03.880 day that the report will be finalized and quietly transmitted 0:21:03.920 --> 0:21:08.000 to the Department of Justice, we are just waiting to see. Um. 0:21:08.080 --> 0:21:10.960 Of course, the bigger question then is what happened next. 0:21:11.040 --> 0:21:13.120 It will be up to the Attorney General to make 0:21:13.119 --> 0:21:16.600 a decision to act on the Mueller report if there's 0:21:16.640 --> 0:21:19.800 anything in it that warrants action, um, and it will 0:21:19.840 --> 0:21:21.720 also be up to him in many ways to decide 0:21:21.760 --> 0:21:25.840 what becomes public. The President just yesterday, UM, said that 0:21:25.880 --> 0:21:28.120 he does think proportions of it should be public, which 0:21:28.160 --> 0:21:30.800 is a reversal from his prior position, which is that 0:21:30.840 --> 0:21:33.680 it would be a call for the Attorney General. Margaret 0:21:33.720 --> 0:21:37.440 I am interested in how the economic backdrop fits into 0:21:37.720 --> 0:21:42.720 the ongoing political drama, in particular the US China trade discussions, 0:21:42.720 --> 0:21:45.479 because President Trump has come out recently and cast a 0:21:45.600 --> 0:21:48.080 little bit of cold water on expectations that a deal 0:21:48.080 --> 0:21:50.960 will go through easily ahead of the meeting with Jimpeng. 0:21:51.200 --> 0:21:52.680 Can you give us a sense of what you're looking 0:21:52.680 --> 0:21:57.359 for there? Well, we know us negotiators it was very 0:21:57.440 --> 0:22:00.760 deliberately leaked. UM are headed to big Ing in the 0:22:00.800 --> 0:22:04.960 following days. That includes the Secretary of the Treasury and 0:22:05.400 --> 0:22:08.600 the U s trade negotiator, Robert Lightheizer. So there is 0:22:08.840 --> 0:22:11.800 um a desire for the Trump administration to continue to 0:22:12.600 --> 0:22:14.720 hold up hopes that they get to the point that 0:22:14.800 --> 0:22:17.679 there is a deal broker between the US and China 0:22:17.800 --> 0:22:20.920 in the near term. The President continues speaking as if 0:22:20.960 --> 0:22:25.159 it is very much within grasps. But of course what 0:22:25.280 --> 0:22:28.040 we hear details about are the things that have to 0:22:28.080 --> 0:22:31.720