>> i'm taylor riggs. you are watching "bloomberg west." "bloomberg your first word" news. tactics was combat among the items discovered. the suspect was discovered after an explosion. 10 states in the u.s. government seek to honor -- overrule -- the states include nebraska

where a lawsuit was filed. the state department says the u.s. expelled two russian officials in response to an attack on an american diplomat in moscow last month. the man was attacked by russian policemen outside the u.s. embassy. a state department spokesman says the attack was unprovoked. russians claim the man was a cia agent and refused to provide identification. nato says the deployment of troops in four european countries is an open-ended commitment that will last as long as necessary. nato says it has tripled the size of its response force. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. "bloomberg west" is next.

cory: i am cory johnson. this is "bloomberg west." america reeling from a night of violence in dallas. five police officers dead, seven wounded, and a robot-delivered bomb used to kill a suspect. we will explore the complex role of technology in this tragedy. is there a place for apple in a world of four dollar phones? a body blow for theranos as --ulators strip its labs a peaceful protest in dallas on thursday contorted into a night of violence. five police officers are dead and seven wounded. police officers ultimately using a robot-delivered explosive to kill the suspected gunman. in the aftermath, america grapples with questions about how and when police should be able to use new technology,

previously only used in war zones. on the phone, we have professor seth stotten. an expert on police and technology and the rules that govern these things. selina, let me start with you. you have a terrific story on bloomberg.com saying this is the very first time that law enforcement has ever used something like this domestically, with the exception 1935. move bombing in >> this does set an uncomfortable precedent. this is the first time we know of that a police department has used a robot to kill someone. these robots have been used before, mostly to defuse bombs, never weaponized. does this set a precedent? this does not mean this might not be a sign for something to come in the future. there are a lot of concerns about what if defense manufacturers start to see a

market for weaponized robots. if this does become a common use case, what does that mean? for cases that aren't as cut and dried as this one? cory: if this one is even cut and dried. what is the state of law enforcement agencies buying this military-grade equipment? >> it is a sad day. the world is going to change so much more dramatically in the next five years than the last 50 years combined. these kind of questions are going to continue. that bear in mind, particular robot was human-controlled and was not autonomous. that is a very important distinction in giving law enforcement authority to do what they need to do, but the math is the math. there are 300 million people in the u.s., about 750,000 law

enforcement professionals. every mall, every campus, every school will have to rethink their physical security presence and strategy. the world is unfortunately going to get more volatile. cory: that's disconcerting. >> but then again, we need new technologies and new tools. we cannot continue with the same path. it will not scale. cory: the conversation about the use of technology, military-grade equipment, whether technology or not, for law enforcement came under a lot of scrutiny after what happened in ferguson, missouri. i wonder how that conversation has changed over the last year in the legality of using these things. >> first, it is a conversation that goes back a long way, back to the 1850's when people were debating if officers should carry the pistols of the day. in some ways, the use of the

robot, and the use of explosives raise new issues and new contexts, but the greater conversation about how police adapt to changing technology, and how they use force is a series of questions that goes back that just a couple years, but much further. whether this is primarily a properly considered a militarized piece of equipment is up for debate. when talking about mraps or armored personnel carriers, they may have a role in domestic policing, but they are certainly militarized. police have used bomb disposal robots for a long time and explosives in different ways for an equally long time.

this is very much a new horizon for domestic policing. cory: selina, you write in your piece -- there have been prior uses of using these robots to drop chemicals to disable a suspect or examine a situation. where have we seen this used in the past in less lethal situations? -- t: the two big cases there was one used in a chemical situation in 2014. in another one, police were actually dropping a bomb. but in this case, using the robot as the weapon itself, this is unprecedented. bill brought up a great point. these are not just killing robots, it is someone controlling it. that said, this raises questions about the security of the systems. what controls are there to make sure nobody could hack into these systems? drones have been hacked into.

government-owned drones, cars, computers. we have to make sure that when there is a robot with a bomb strapped to it that nobody can hack into it. cory: no kidding. it seems to me that the increased militarization of police force -- the day started with the debate about police killing an unarmed black man, then began with a peaceful protest, which led to more weaponry and ends with this robot. wonder if the desire is just a purchase stuff to fix problems rather than fix policing, which might be the more appropriate focus. >> that is a tough one. fixed policing is a difficult thing. usually when you are trying to fix something, follow the money. if you look at the department of $600se's budget, it's some

billing, and we give our troops every level of advantage and i am ok with that. but the department of justice has no federal jurisdiction over the 19,000 law enforcement agencies, 18,000 private security firms. when you want a new submarine or jet fighter, you go to the secretary of defense and there is a whole massive establishment and complex to build a new product. in the homeland security space, there isn't. other than a taser, a bullet-proof vest, and a camera, in the last 100 years, name me massive improvements to our -- massive movements in improving the safety of our neighborhoods. there isn't. because there is nobody "in charge." that is where the private sector needs to begin to help innovate and provide new tools and technology. cory: hillary clinton just made some comments that i will echo.

"we must not vilify police officers." certainly not. is this use of technology uncharted territory, or is there long legal history that will ultimately guide us and the legal use when officers decide when to use lethal force? >> in many ways, the legal framework has been eclipsed. we seen that in legal policing, in the first modern use of deadly force case. tennessee v. garner. the supreme court pointed out that the common-law rules about using deadly force against fleeing felons no longer applies in part because technology has changed. the firearm had fundamentally changed the landscape of police use of force. as we get further and further into technological innovation, i -- and autonomous vehicles

delivering weapons systems in various ways, i think that our legal framework will need to catch up. we have solid legal principles now. they are not always the best, but they are relatively clear. they are not well equipped to some of the changes that i will -- that we will see coming. cory: thank you, i really appreciate you coming. thank you very much. coming up, in times of protest and times of crisis. protestors -- people are increasingly turning to live streaming social media. we will talk about the importance of facebook live and snapchat, next. ♪

cory: two years after

widespread calls for police to wear body cameras -- is facebook live a personal body camera? sarah, this is interesting. a year ago we talked about, hey, maybe this is a solution. they start selling these body cameras. we see this total failure of the thing where these cops wearing body cameras in louisiana -- it suddenly didn't work. >> in those cases the police have the videos and can decide not to release them fast enough. cory: at the same time, we have this case in minnesota where you have somebody using facebook live, of all things. facebook live is taking an increased role in providing eyes to the world. >> hours after she used that to broadcast the death of her fiancé on facebook, it was used again in the dallas shootings.

there were several facebook users streaming what was happening on the ground as shots were firing. it is becoming this use case for facebook that is much more serious than we have seen in the past. exploding watermelons and the chewbacca mask video. all these things people know facebook live for. this is more like the equivalent of calling 911 when you're being attacked by the police. cory: and making a public record of it. what strikes you about the technology, the body camera case and the notion of live streaming? >> what is interesting about both cases is that you really see black and brown folks who historically might not have had an easy time of calling 911 when they need assistance. you really see the reliance on emerging technologies to get the word out and get help.

i think, obviously the woman in minneapolis did not feel safe with cops all around her. she thought that facebook live or periscope technology was the only reasonable way she had to get help and get word to her family. what is so heartbreaking is that it was reported that the deceased man's mother was watching the facebook live stream. i can imagine how heartbreaking that must be, but it makes sense that if people don't feel safe, they will use technology to reach communities where they do feel safe. cory: facebook ceo mark zuckerberg took to facebook and posted about this. in a section he said, "i hope we never have to see another video like this, like diamond reynolds'. it reminds us of why coming together to build a more open and connected world is so important and how far we have to go."

in terms of body cameras, i think i mentioned in the last block that there was a notion that the technology would save us. if we put body cameras on the cops, it would govern their behavior in different ways, so the few cops that are bad actors would not be that way. we are seeing that is not the case. >> exactly. i think that body cameras and legislation that makes it possible to wear body cameras at all times is a great first step. but i want to push back on the idea that investing in body cameras will make us safer and fix our broken criminal justice system. it's not body cameras. you cannot just throw money at a new, fancy technology and fix the problem. if it does, it will be a band-aid. if law enforcement agents don't wear the cameras, or they

convenientyly -- conveniently fall of, or there's no transparency in how we use them, it's not going to work. i think it is a great first step, but in no way doesn't fix -- does it fix the problem of the broken system. that temptation to throw new technology at the problem is a bad one. cory: to the point, the other technology that is working seems to be facebook live, snapchat, and periscope. >> and in many ways it is protection. having this moment livestreamed with an officer who acted out of turn, she is protecting herself from future abuses. the guy is being filmed and he knows it. cory: it is interesting that the technology that is really working is a technology that's open, and that the technology is the struggling technology that is closed. thank you very much. we appreciate your time.

coming up, asia's mobile market intensifying, we will dive into it. next. ♪

cory: espn may start selling its own streaming package direct to consumers. it could have niche leagues and some college sports, but not the most popular items like nfl and the nba. espn saw subscriber numbers dip at the end of 2015. the turner cable network looking to buy more sports streaming rights. twitter already has the rights to stream thursday night rights. this week, twitter is on the ground at wimbledon, streaming live interviews and post-match analysis. its a race to the bottom in asia's smartphone wears. we got news that india is introducing a four dollar smartphone. apple is falling to fifth place in china.

joining us, julie ask and john butler join us from new york. julie, we start with you. a four dollar smartphone? >> as you said, it is a race to the bottom. apple doesn't have to win that race to the bottom. there are a number of ways you make money on smartphones. you can sell hardware. you can use it as a distribution platform. if you own the mobile os, you can monetize that data. cory: google certainly has. apple is not going to go there. julie: right. apple is nearly unwilling to use the data even to improve their own products without consumer permission. cory: it seems that what we have seen in technology is the ultimate bifurcation of the market, the top end gets a lot of profit and limited market

share, and the bottom end continues to go to the bottom. prices fall and the margins are garbage. >> the margins may be garbage, but the phones in general aren't. they have got much better over the years. in a way, that is apple's biggest problem. i don't think they need to worry about a four dollar smartphone. they need to worry about xiao me and other vendors who offer phones at low price points, call it $250 or less. cory: i'm going to push back a little bit. do they really have to worry about xiao me, a company selling things at negative margin? how long will that go on and threaten their business? >> actually, they are one example that made a dent in china. they are moving way up that curve in terms of features and processing power.

they are riding on apple's coattails. as they move higher and higher volumes, the component costs are coming down and enabling the smaller vendors to take this in margin, but move some volume by coming out with these feature-rich phones. china is not the same premium market as it is in the u.s. with a low and is not as developed. i would say that the u.s. is less price sensitive because of higher average income. -- as it is in the u.s. where the low end is not as developed. i would say that the u.s. is less price sensitive because of higher average income. xiao me is a bigger problem in china than it would be in the u.s. cory: what do you think about these low-cost providers? >> i do not think they are an -- in apple's target market.

someone who can afford an iphone is typically someone in the middle class. those households in india and china are in the tens of millions. i think apple wins not only when somebody buys an iphone but they are able to perform other products within the ecosystem. cory: and maybe go down -- the iphone looms much larger as an important device when you look at those markets. julie: the other thing you think about, the smartphone is a platform. if apple is not able to sell content and stream video, it limits their upside. and one of the other wildcards is the smartphone as a payment platform. that's going to become a very large source of revenue as we look forward, for someone. cory: that is a place where apple has a device, that have -- they have apple pay, but they don't generate much revenue if any. >> not yet. but apple pay is magical and is -- it is just a matter of time before consumers say, why am i carrying around my wallet? cory: magical.

when i go for a run, i can have my phone. i don't have to have a card. i can stop for a few beers on the way. julie: when i was in london last week, i paid for 80% of purchases with my watch. cory: did you really? john, apple pay? >> i think it has great potential. there is rumor that the next generation of the watch is going to be free of the smartphone. when you talk to retailers, a lot of them say, when they look at who is using apple pay, it tends to be people who have the apple watch. i don't have the watch but i do use apple pay. i think it is just a matter of time before we see that service start to ramp up much more strongly than there is now. cory: for the record, i do not actually stop for beers when i am out for a run. [laughter] john butler, i will stop for beers with you anytime. thank you very much.

i appreciate it. lyft is getting luxurious. they are announcing a new upscale option. the latest swerves in the ridesharing wars, next. ♪ get ready for the rio olympic games

by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1.

taylor: i'm taylor riggs. you are watching bloomberg news. is mother of alton sterling denouncing the shooting of police officers in violence. alton sterling is the man who was fatally shoot days ago in baton rouge, louisiana, by police. a fatal encounter. a family attorney says that the dallas killings were not caused by castile's death alone and that she wants justice for everyone. the justice department,

including agents with the fbi and atf, are in texas working with local investigators. lynch says this has been a week of profound grief and heartbreaking loss. ag lynch: to all americans, i ask you, i implore you, do not let this week precipitate a new normal in this country. i ask you to turn to each other not against each other as we move forward. let us support one another. let us help heal one another. i urge you to remember today and every day that we are one nation, we are one people, and we stand together. taylor: lynch says her department will help investigators in dallas in any way necessary. meanwhile president obama has lowered tolags be half staff today to honor the fallen officers. mississippi's governor is repealthe state court to a law that would allow some

workers to cite religious beliefs to deny -- to deny service to same-sex couples. the governor filed the appeal yesterday. the move comes after a lower federal court blocked the state law from taking effect july 1. and u.k. applications for irish passports surged almost 20% this year. on worries britain will leave the eu. last month's vote to leave raises concerns that u.k. citizens could lose the right to live and work in europe without restriction. an irish passport is seen as a way to retain access to those rights. and north korea is calling the sanction by the u.s. of its leader a declaration of war. for the first time, the u.s. has imposed sanctions on kim jong-un. and other top officials for widespread human rights abuses. this makes it harder for banks to move or hold his assets. in colombia the output of raw , material for making cocaine has surged to its highest level since 2011. the government says rebels have been encouraging people to plant

coca before a deal is signed. they are said to be telling farmers they will eventually be paid in subsidies. this is bloomberg. you are watching "bloomberg west." cory: this is "bloomberg west." i'm cory johnson, in for emily chang. the ridesharing wars are on and lyft is raising the stakes. especial new service for the ballers out there. a cadillac escalade. it's a lux option taking on uber, a comparable service, called select. why do this? like lyft is the ride for people in the front seat.

you get the fist bump. why this? >> we reached out to passengers and they said that they were not getting what they want. 60% said they desired a higher end ride option. cory: this is existing customers. not the people that won't ride them, but the ones who are alady using lyft. >> it is both. whether they are going out for a nice dinner or have a business trip, they want a higher end service. and for people who have not yet tried lyft, this is a great entryway. cory: talk about recruiting drivers who have such vehicles. i have a friend who has a maserati once in a while, but she is not driving lyft. >> there are people driving great vehicles, whether it is the bmw x5 or the cadillac escalade. last night i got a ride in an x5. they have the opportunity to earn twice that they are o -- tw

ice the fare on each ride. they have a different clientele, business person tell -- pers onnel. cory: do your relationships with automakers have a role to play in terms of providing the cars? >> currently, all the cars are independently owned. cory: surely, you have a plan to leverage those relationships. >> it is an option in the future. as you mentioned, we do have a program -- cory: what is an option in the future? >> if the driver wanted to rent a vehicle and use that on the lyft platform, whether it is higher end or for lyft classic, they could do that. we have two programs. you can rent a vehicle. those two programs are separate. you can rent a car and drive on lyft classic. with lyft premier launching -- lyft premiere launching, those

are all independently-owned c ars. cory: maybe at some point there will be a natural connection of the dots. talk about what this means in terms of your new expansion into geographies. where would this work well? >> it is a huge market growth opportunity. corporate travel is a $28 billion market. 21% of that is spent on ground transportation. we have seen over the past two 700%w years, lyft has had year-over-year growth without this type of ride offering. by introducing this, we now can tap into many more business travelers. we already have business profiles. cory: business travel is a big part of this? >> it's a big part of this. we have expense integration. this is an additional option. cory: as you look at this, are the demographics substantially different? you are just starting out, but it sounds like you have done a lot of work to understand. >> what we've seen is a huge use case is airport rides or getting to a business meeting. anybody who has that business ase --

cory: first dates but not third dates? [laughter] >> every date. -- i went on a date last night with my girlfriend. ride.d a premiere in and outd out -- burger? i will not divulge where i was -- >> i will not divulge where i was eating but it was a great experience. cory: in terms of cadillac, this a great one. the cadillac brand within gm. >> it is a possibility in the future and makes a lot of sense, but as of today these are all driver-owned cars. cory: in terms of deciding when to launch this in different markets, what is the timing? >> i mentioned that we have a -- we launched business profiles , so you can have a business profile and a personal profile. you can add expense integration to get reimbursed and paid by your company. those are launches that have

been recent. as we push into that, having a high end ride service was critical. cory: i mentioned catalyst. that's the name of an investment bank. you have taken on them. to do what? >> i don't personally focus on that. i can speak to premiere. i don't know too much about catalyst. cory: i will let you dodge that one. he is a really nice guy. we like him a lot. iswe look at this launch, this a way to reach different drivers, maybe take drivers away from uber, work with lyft instead? >> we heard from a lot of drivers who said i am interested in driving for lyft but i would not do it until you have a higher ride option. if you're driving a bmw x5, you want to earn higher end fares for that. now we are seeing lots of driver sign up. cory: already? >> already seeing that. cory: what do you mean by "lots"? >> the service launched in the bay area.

silicon valley, san jose, san francisco, also available in los angeles and new york. now, youen the app will see lots of drivers just minutes from you who are available on premiere. cory: what do you do to market to those drivers from a not -- drivers who do not consider this an employment opportunity? >> there are a lot of drivers already on the platform with high-end cars, but you just happen to get them in the classic service. they are now available in premiere and you can specifically request them. in addition to that, word-of-mouth is an incredible way that this spreads. somebody hears about it. we have a landing page were -- where drivers can learn what it is like to be a premiere driver and the incremental fares they can earn. once they sign up and tell friends, it quickly starts spreading. cory: interesting stuff. the network effect in effect. thank you very much, david. what are you taking out of here

tonight? >> i will request a premiere. bmw or an cmw -- audi. we'll see. cory: coming up, the cyber security war. the net was developed to disrupt iran's nuclear war efforts and now it will be part of a documentary. we will talk to the man behind a really interesting film. this is bloomberg. ♪

cory: theranos, another body blow. regulators take on theranos. yank regulatory approval, tell the ceo she cannot operate any lab for two years. caroline chen joins us. i read this news and thought, this is it. there is no way that they come back from this. >> pretty much. cory: i cannot ask you to predict the future. i know tha'ts be -- that's

beyond our capabilities. >> we knew the appeals were coming down the line. they can appeal the sanctions. that have 60 days to put in an appeal and it would go through a complicated process. we know that walgreens has ended the relationship with theranos. they don't have 40 out of 45 partnerships anymore. that is where the revenue was coming. now they cannot operate a lab. cory: they are facing lawsuits from users giving incorrect data, knowing it was incorrect when they gave it out. the tests weren't being conducted the way they said they were being conducted. the fact that they went personally to the ceo, and they said you cannot operate any lab for two years. >> that is tied to them losing their clia certificate. cory: clia? >> it is the certificate that means you can run a lab. that is tied to the owners. if you get your certificate taken out, you cannot run a lab for two years. cory: almost like a liquor license?

it applies to an individual or a corporation. >> exactly. theranos has put out a statement saying we have other parts of the business. we have proprietary software. cory: they have a really great parking lot if someone would like to rent it. >> they could try to sell other -- the machines to other companies. cory: machines that don't work? >> nobody has seen data. nobody trusts that this technology really works. it feels like options are running out for theranos at this point. cory: there is a search for the next theranos. i've talked to executives and vc's. everybody says, i think my company will be the next theranos. it's interesting that this story has planted suspicion back in the minds of investors and journalists. people who should always be suspicious. >> absolutely. the other thing it's highlighted for me, health is

not the same as software. if you are a software's company, you can put out an app and if it is buggy, you can keep making updates. you can make it better along the way. you cannot do that in health. that is a warning for a lot of tech companies in silicon valley who have wanted to go into health. you cannot move fast and break -- cory: you cannot fake it until you make it. thank you very much. appreciate it. coming up next, we will look at what is going on with the stuxnet virus. the documentary made about the stuxnet virus. fascinating stuff. this is bloomberg. so, let's get to the interview right now. really interesting stuff. this new documentary about the virus and the story behind it. we talked to the makers of "zero days." >> it seems to me that there was a detective story element. this was something that set a new precedent. it was a new kind of weapon that could take over machines.

there is a science-fiction vibe that i thought would be worth investigating. cory: it took you to figure out who was behind it and how it grew? >> that's right. when we first got this thing, we did not know what it was. it is obvious that it was not like anything we had seen before. when we got to the end, we discovered it was trying to attack iran's nuclear centrifuges. cory: talk about how this looked different than other things you had seen. >> every time we look at it, we found things that were not just evolutionary, but revolutionary. with most code, when you get infected, you click on an e-mail or a website. spreads autonomously. all by itself. you don't have to click on anything. this is extremely unusual in today's landscape.

we discovered in the end that stuxnet was conducting cyber sabotage, affecting the real world. that is the stuff that movies were made out of. typically the stuff we would see is people doing espionage or stealing your credit card number and now we had soomething that could literally blow things up. cory: is there a computer narrative cliche that you try to avoid in making this film? >> one of the things we tried to avoid, we got a lot of help from eric and his partner at symantec, was slap up shots of computer code. we really wanted the code to be a living, breathing character. so, we have the stuxnet code at our office, but we wanted to make sure when we showed various aspects, the control mechanisms, that we were in the right part of the code and that it moved and operated much the same as the code did. we wanted it to be real, not some phony backdrop. cory: how ubiquitous was this code? where did it spread to?

how far afield? it was targeted on iran, but where did it spread to? >> it spread around the world. most of the sections we saw were in iran but ultimately it began to spread anywhere and everywhere. if you had a windows machine connected to the internet, you could be infected by stuxnet. it's still out there today, spreading. cory: is there further functionality? is there unknown functionality? >> we believe that we have analyzed it quite in depth. gone through it with a fine-tooth comb. what we do know is, there have been multiple versions of stuxnet. we believe there are other versions out there that we have never recovered. cory: what surprised you about this story as you started to unpack it? >> there is a computer story on the one hand, but also espionage and a spy story. that was one thing that surprised me, how big it was. the other thing that surprised he was how quickly the technology moved. we were exploring an origin story from the first time that a piece of malware jumped from the

cyber world to the physical world and started blowing things up in real time. we discovered, in the process of doing this story, another operation launched by the nsa and cyber command called nitro zeus, previously classified. it had a much bigger attack lector. -- vector. it was targeting the ability to shut down the entire iranian grid. to shut down a country, basically. cory: was stuxnet a good thing? >> it was a very smart and savvy tool for a particular operation, which is to say to slow down the development of the iranian centrifuge program. it was a bad thing in a sense that it launched a new arms race for cyber weapons. offensive cyber weapons about which we still know very little because the government is keeping them secret. that is a bad thing because we, the united states, are more vulnerable than any other

country because of the way we're so intensely interconnected. cory: coming up, the all you can fly subscription service coming to an airport near you. surfair's european ambitions, next. ♪

cory: surf air has an all you can fly subscription service that is now expanding to europe. they call it the netflix of private jets. adding seven european destinations. the european membership is $3000 per month and lets them jet to any of surf air's destinations. glad to have you on. talk to me about europe and how it changes your business model. >> thanks for having me here. europe is a great opportunity for us because our model is around short-haul flying, and

europe has the highest concentration of short-haul destinations. it represents a great opportunity for business travelers. cory: the destinations themselves. for $3000 per month if i want to fly from san francisco to paris, you are cool with that at $3000 per month? >> what we are doing is launching operations within europe so within european cities. london-cannes, etc. the price is going to be 2500 pounds per month. cory: priced in pounds. does brexit -- cory: it is an interesting time to start to expand in london. imagining those locations in a pre-brexit world is different. and the fact that you're charging in pounds means that your big plans went on sale by about 15%. >> the good news is our cost base also got si -- discounted about 15% when pegged to the

dollar. we do not believe that travel will slow down. if anything, commercial air travel could get more difficult as this happens with more immigration rules. we also see the potential of more commuters commuting in and out of the u.k. cory: how is that market different for private jets than the u.s. market? >> there are differences in the infrastructure. what we do is geared toward the customer that takes commercial flights. when we peg the market, we look at the frequency of business atss penetration and traffic commercial destinations. the number of destinations in europe have higher business class penetration than some of the destinations we fly here. cory: higher? i don't understand why that would be the case. >> for example, the amount of traffic between london and geneva. london and nice. they are extremely high-traffic business markets.

percentagewise more people fly business class than from l.a. to san francisco in business class. cory: that's a fundamental point about your business model. a lot of private jet travel is to go to out of the way places that are more difficult to get by commercial, not so much san francisco or l.a. or new york-boston, or new york-l.a., for that matter. with your model, i suspect that is a bit different. it's more about the luxury aspect because it is all that you can eat. >> that is exactly right. the big difference is we do not go after the private jet customer, per se. our customer is a frequent business traveler. it's a utilitarian, time-saving service. it is a premium service, but not very high-endy or luxury. people now pay $1950 in california or 2500 pounds in

europe. they do it because they have an office in two cities. the real reason they use it is to save time at the airport. cory: it is an interesting model. i expect in europe that it will have a decent shot. are you profitable yet? >> we are close to profitable. we are about a quarter away here in california. as we expand, we actually have founding memberships that come in early which gives us a sense of where to fly and how many people will be on a route and how to adjust hours for routes before we launch a route. we have a lot of unique models. cory: it sounds like you have done a lot of learning along the way. >> certainly. we learn every day. cory: thank you very much. out of this world -- virgin galactic is set to resume test flights next month. richard branson founded the company, has a new spaceship

called unity. it will be the first to ferry private adventurers to the end -- edge of space in a reusable spacecraft. virgin galactic has yet to set a date for this exciting adventure. this is bloomberg. ♪

announcer: the following is a paid advertisement for time life's music collection. mark: it's the attitude. >> ♪ it's all right now, baby, it's all right now ♪ mark: the killer guitars. >> ♪ american woman, stay away from me. american woman, mama, let me be ♪