He will appear by Video Conference thursday to face parole commissioners. Global news 24 hours a day. I am Alisa Parenti. This is bloomberg. Bloomberg technology is next. I am Caroline Hyde from london in for emily chang. This is Bloomberg Technology. Recordup, netflixs secondquarter. Why content is king as tech earnings get underway. Uber fit for business . The west coast had joins us to discuss the business platform and rebuilding the Company Culture without a c. E. O. At the wheel. The highs and lows and hacks affecting cryptocurrencies. We dig into what is driving volatility and the bitcoin selloff. Netflixs secondquarter has seen the Company Shares climb 30 . The streaming service delivered adding 5. 2 million streaming subscribers with a big portion of that coming from outside the u. S. Shares are rallying in afterhours trading, up 10 . Cory johnson joins us from San Francisco. Completely smashing it on the subscriber side. Now it seems they have 50 50 when it comes to international and u. S. Users. Cory i like the way you say smashing, it sounds very british. Smashing. Now it seems theythe results arn terms of the number of subscribers added. Netflix wants to focus on its profitability. Meager profitability but some profits nonetheless. , i guess at my numbers i am looking at cash flow. The number everyone is focused on now is the subscriber number. Here is why. When investors look at this stock, they do not see the Financial Results needed to grow on this valuation. They see a business that might someday generate those results. How do you have the Free Cash Flow to pay for the cool conflict at netflix . By having subscribers who pay you every month and keep on paying. What they see in these numbers is an accumulation of subscribers who credit card numbers in online and the payments keep flowing, and the geographiesill see that are profitable in the rest of the world for netflix. Caroline 104 million users. They say by 2017, for the First Time International users will bring tons of profit. Im looking at the Financial Analysis for bloomberg. You can see the Revenue Breakdown is substantially in the u. S. You are looking at 2016. 57 of revenue coming from the u. S. They want to get that to 50 50. Do we have any inkling of when revenue will come into line internationally speaking and how they continue to do so well in content . You know me, i am always a pessimist. When i look at these numbers and how little of the u. S. Population netflix has when it looks like that market is pretty full for them, it suggests there may be a lot of growth for them internationally. We will see how the spending patterns are different. They do not give us a lot of country by country detail. That might be too much to ask. They got queried the fcc about aing business with sudan, country u. S. Companies are banned from doing business with. They pointed out there revenues are minimus incident in sud 15 as low as 8,000 for the months that preceded their letter to the fcc. I do think it is kind of important. It tells us not every place is going to run netflix as they do in San Francisco were in london four in london. Different parts of the world are different. It is not just about the way the internet exists in different countries. People are just not going to be able to stream as much in certain places. They will not want to stream the netflix content as much. It is still a hit driven business. They have done a good job with good shows. They have done alright with some of these things. A lot of stuff has missed the boat. That is to deal with tough to deal with dealing with so many different geographies and cultures. Caroline what helped the Second Quarter was the amazing array of content. It was really interesting if you dig into the letter you are getting from the c. E. O. To investors. He seems to be trying to deflect competition saying there is room for everyone. Their words are they make the internet tv market expand. They say hbo has exclusive content. More people are using hbo. We have exclusive content. More people are using us. More people are using you to. Why is he trying to downplay the Competitive Landscape . Cory it is ridiculous. It is great for us as viewers and great for us if we are creating content. Fun if we weree in hollywood doing that. But it is horrible for netflix because the cost of content is going up. The number they do not put on the Balance Sheet is their longterm cost of content. At the end of last quarter, they had over 15 billion in longterm commitments to content. That number is going up. How high is it right now . We do not know. They will not tell us until they release the quarterly finally. What is interesting about todays report is they put a separate presentation on their Investor Relations page explaining the accounting for those longterm commitments in content. I will tell you for a business getting a 50 million profit every quarter with 15 billion 15 billion in longterm content, it is hard to pay for 15 billion in content you have a run rate of content that is about 100 million. They are going to have to jack up profits a lot. The problem with hulu, hbo, and showtime raising the cost of content is there raising it for netflix when netflix does not have cash to burn. Lostis quarter, netflix over half 1 billion in Free Cash Flow. I cannot continue forever. Caroline it certainly cannot. Cory johnson, stay with us because i want to go into another company where profit is keen to the eye. It is a stock we are continuing to watch. Blue apron toppling 12 . Blue apron tried to calm investor fears during the ipo roadshow. Amazon meal kit seriously undermines that pitch. Amazon gets in everyones face. It had already been flagged for blue apron. Now it is clear. Now it is clear it will eat blue aprons lunch. Cory i think the market has this one wrong. Amazon is not even in this business yet. If you know anything about the restaurant business, you know food offerings fail all the time. Just announcing you will get into a business does not mean you will do it well. Blue apron is failing on its own in terms of its marketing expenses spending 25 of revenues on its marketing costs. The cost of adding new subscribers is hundreds of dollars and going way up. They cannot keep the subscribers they have got. They are spending more to acquire new subscribers. That is the problem with blue aprons business. If you get the blend right, if you have the right recipes, the right costs, if you give people what they want, a real quick to cook that tastes good enough and delivered the way they like it, i think these businesses can be very successful. We see in blue apron they are not able to get to the scale they want affordably. I think it is ultimately about the recipes. Can get to that, they will have a struggle whether amazon is competing or not. Amazon will have to solve the same problem. Caroline all eyes on hello fresh in europe, owned in large part by rocket internet. Thank you, cory johnson. Leaderup, tesla as newutives adds two executives to its board. This is bloomberg. Caroline tesla shares falling as much as 4 in mondays session after a man initially claimed his vehicle suddenly accelerated after he engaged the driver assistant system and it crashed. Ispite the days decline, anticipation of starting production. Elon began to query if it had gone too far over the weekend. Get added two new executives today. Fox ando. 21st century the chair of Johnson Publishing will join teslas board. Joining us is david welch from detroit. Plenty to digest. Lets do the new Board Members first. This comes after plenty of pressure from investors. I think we are having technical difficulties with david. Can you hear me . I can hear you now. Caroline lets talk about the Board Members first. Investor pressure to do this . Yes, there was. In april, there was tension to add people to the board because he has a sevenperson board, one of whom is him. Five of the others have connection to him, spacex, or solarcity which has been merged into tesla. They are mostly insiders helping him to run the board. In the solarcity merger last summer, there was a lot of dissension among investors who said that company was run by his cousins and he had two boards of people knowing each other agreeing to get together. You had all this pressure coming up. Elon said in april we will add two more members. A lot of shareholders wanted him to have a different board. You have a couple of new people coming on. They are both media executives. I am not sure this will keep everybody happy because you still have a large number of insiders or friends alongside him. Caroline talking of how investors might not always like what elon musk has to say, we have seen c. E. O. Elon musk saying over the weekend the companys current share price perhaps have a listen. I have gone on record several times saying the stock price is higher than we have any right to deserve. That is based on where we are today and have been in the past. The stock price reflects a lot of optimism about where tesla will be in the future. Caroline he cleared up those comments on twitter today writing i should clarify teslas stock is high based on past and present but low if you believe in teslas future. Place bets accordingly. What do you make of this backtracking and what it meant for the share price . It is just another day in the life of a tesla investor. He says over the weekend, they are overvalued. Theres a car accident involving autopilot and the shares go down more. It turns out it did not really involved autopilot according to the owner and the shares come back up. It bounces around in just one day of trading. That is kind of how these people live. He has said before the shares are overvalued. I think he is trying to take pressure off of himself because they have a very big year. This year and next, they have got to launch the model 3. It has to be pretty flawless and they have to show profit eventually to deliver on the expectations he is talking about. I think that is driving a lot of what he is saying right now. Caroline fascinating stuff. The autopilot issue up rally was not an autopilot issue. Great coverage of that. Thank you for joining us from detroit. We bring you a sit down with an uber executive on the prospect of growth for the embattled startup after a tumultuous few months. Caroline there is a mass exodus at hampton creek. The entire board has reportedly abandoned ship according to people familiar with the matter who say the only board member left is the c. E. O. Joshua tetrick. At least five directors have quit over the past month. Others were fired or have worked out since april. The news comes after a string of controversies last year, including a bloomberg report showing have to creek quietly bought back its own products from supermarkets. The Global Business travel Association Convention has kicked off in boston. The annual event is the Worlds LargestBusiness Travel event hosting over 7000 professionals from around the world. One name in attendance is ridehailing giant uber. Eric trasker caught up with and askedoast head how it differed from the traditional offering. Is a tech layer, a platform we put on top of the existing application. In the early days of uber, we saw a ton of momentum coming from the Business Traveler community. As a result, we realized there was a lot of friction for Business Travelers we could remove. Uber for business was initially intended to remove that friction. We are continuing to extend the reach of uber business into other avenues as well. Youre trying to appeal to corporate customers. What services do you feel you need to add . Is this tech layer fully baked already . Uber moves people and things. Sense,most fundamental we are putting people and things in cars. For businesses, this is about your employees, your customers, moving your customers to bring them to an event like this or send them home from the auto dealership when they drop off their car for repair. And finally, there is the movement of goods. You want to get goods to customers or pull things from customers. As we start to build this business and platform further, we focused on the low hanging fruit which is Business Travel where we know the most because there are so many people are already using it. It is a 250 billion Market Opportunity globally. Uber has been prospecting for growth on a lot of fronts. Food, logistics, freight, selfdriving cars, flying cars for example. How fast the super for business need to be growing to remain a strategic priority . We focus primarily on the customer experience. Are we solving big enough experiences for our customers . The answer is yes. The roadmap we have is going to continue to have us solving more and more interesting problems as we evolve the business. Do you see growth accelerating . We see growth accelerating. A lot of ubers success was the product of deals a meal michael did. He was instrumental in the early days of uber for business. Now that he has left the company, where does that leave uber . We are set up for success. The work done by the team over the last five or six years has set us up in many ways strategically, domestically, internationally for success. We are in a great place. What about travis . How have things changed since he left sco . As c. E. O. . It has been a short time. The company is incredibly focused on solving the issues in front of us. We are focused on solving the cultural issues. The leadership aspect we are focused on. Finally from a driver perspective, you have probably seen the recent releases around tipping, wait time pay, all these sorts of things are actions to start to solve some of the things that have been exposed over the last few months as issues. You came in only a few short months ago from facebook. Given the culture they are, did you see those as deficiencies at uber when you arrived . Did you see a need for them to be changed in the way they are being changed now . I will tell you this. Facebook has an amazing culture. That is something that has been cultivated over the years. Uber has all of the nuggets that you need to build a great culture. It is just a matter of maturity and the leadership structure, the organizational structure continuing to evolve which we are heavily invested in now. Here is what outsiders wonder and perhaps insiders as well. Whether it is uber for business, the uber app, how does a company make big and important decisions without a c. E. O. . I dont know i have the right person to answer that question. But you have to live with the consequences of that situation. Yes. Who is calling the shots for you right now . There are a myriad of different people who were already in place when the , and theyteam left are incredibly competent leaders. They understand the business and have taken the reins. Do you think morale is a risk given the fact something so many theoyees are looking for, ipo, is on hold until Management Issues are resolved . We are focused on resolving any sort of morale issue. I think as we start to have things like what you saw from as we startollout, to put people and pieces in place for an evolved culture, i think that will be solved. Having spent seven years at facebook, you know what Sheryl Sandberg can do and has done for that company. Her comingike to see around uber . I cannot comment on that. I think any opening would be happy to have someone like Sheryl Sandberg. Caroline that was ubers west coast head, peter jonas. Coming up, we bring you the global head of Business Travel to get his take on the next year of growth. Bloomberg, you can listen on the radio. This is bloomberg. Alisa i am Alisa Parenti in washington and you are watching Bloomberg Technology. Afghanistan killed a Record Number of civilians during the First Six Months of this year according to a u. N. Report released today which blamed the majority of 1600 deaths on bombings by insurgents. The u. N. Report did commend afghanistans Security Forces saying fewer civilians were caught in the crossfire compared to last year. British Prime Minister theresa may is expected to remind her cabinet tomorrow about the need for privacy after several weeks leaks. Philip hammond described the book Sector Workers as overpaid and allegedly made offensive comments. South koreas president is following through on a Campaign Promise to pursue dialogue with north korea. Moons government has proposed resuming talks on military and humanitarian issues with kim jonguns regime. They have agreed to consider further measures against north korea after it conducted its first icbm test. The bloc stressed tensions on the peninsula had to be resolved peacefully. Thailands new king has tightened control over what is reputed to be the worlds richest royal fortune. It is estimated at more than 30 billion. The king succeeded his father last year. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. I am Alisa Parenti. This is bloomberg. It is just after 5 30 p. M. In washington. 7 30 Tuesday Morning in sydney. We are joined by paul allen. He has a look at the markets. Good morning to you. Good morning. It looks like it could be quiet around the asiapacific today. Nikkei futures are flat. Similar story for the asx. Futures down by just four points. We will be k