TIME Opinion

The Secret to a Viral Ad? Just Make It Really, Really Terrible On Purpose

Latest culprit: A so-bad-it's-good ad for a mall

+ READ ARTICLE

Unless your wifi has been down, chances are high that you’ve already seen a truly awful ad for Missouri’s East Hills Shopping Center — complete with off-pitch singing, singsong chanting about “boots and pants,” fluorescent green wods and clothing so synthetic that it’s one lit match away from bursting into flames.

It’s so bad, it’s good. But… is it too good to be true?

“Please don’t debunk this for me, I need to have faith in something during these trying times,” my friend Jordan wrote on Facebook, voicing the collective prayer of the snark-loving people of the internet as they click the video’s play button over and over and over again. (Actually titled “Terrible Mall Commercial,” the spot has been viewed on YouTube more than 1.5 million times in less than three days.)

While the commercial is, in fact, a real back to school ad for the Missouri mall, the man who made it knew exactly what he was doing.

“The whole time we pitched this idea we said, ‘maybe it will go viral.’ And it did,” Suddenlink Media’s Chris Fleck told a local FOX affiliate. Mr. Fleck said. “If you can entertain and get your message in, you’ve accomplished your goal. I just love that it’s getting this much response. That’s what commercials do, they get response.”

And this isn’t Fleck’s first rodeo. Here’s a spot in which Cecil Myers of Cecil Myers Mitsubishi raps his way into your heart:

“If you talk to [Meyers], he’ll tell you that I made him famous,” Fleck said.

This begs the question, is something that is terrible on purpose still terrible? Has this ad, sparkling as the bedazzled jeans it promotes, lost its luster?

“It makes me feel like throwing my computer out a window, or inventing a time machine and destroying ARPANET,” my friend Jordan said upon finding out.

The Mad Men of the digital era have been creating intentionally bizarre ads, made to go viral, for years. Rhett and Link, the ad duo behind the 2011 hit for Ojai Valley Taxidermy, even got a TV show on IFC entirely about creating strange local commercials for small businesses.

But while ad producers might be calculating, the local businesspeople who actually star in this particular breed of ads maintain a sweet sincerity.

Actual East Hill Mall tenants starred in the back-to-school spot, and they don’t appear to be in on the irony when they’re touting their purchases by chanting “backpacks, backpacks, come get your backpacks.”

“It’s insane — the fact that it was even on YouTube is crazy to me,” Tyson “boots and pants” Huff-Garza told FOX 26. “It’s super funny, very cheesy and gets the point across.”

And that sincerity is just what differentiates the “so bad it’s good enough to Gchat to all of my friends” ads, from the “so bad it’s boring enough to close the YouTube tab after ten seconds” ads.

We might all be pawns, but you have to appreciate that craft.

TIME energy

Germans Happily Pay More for Renewable Energy. But Would Others?

Germany solar power
Germany has become a world leader in solar power Photo by Sean Gallup/Getty Images

Germany has embraced subsidies for renewable energy, but not every country is willing to bear the economic burden

This article originally appeared on OilPrice

While Germany is breaking world records for the amount of sustainable energy it uses every year, German energy customers are breaking European records for the amount they pay in monthly bills. Surprisingly, they don’t seem to mind.

In the first half of 2014, Germany drew 28 percent of its power generation from renewable energy sources. Wind and solar capacity were hugely boosted, now combining to generate 45 terawatt hours (TWh), or 17 percent of national demand, with another 11 percent coming from biomass and hydropower plants.

This proves that Germany’s controversial Energiewendepolicy is on target to meet highly ambitious goals by 2050 — as much as a 95 percent reduction in greenhouse gases, 60 percent of power generation from renewables, and a 50 percent increase in energy efficiency over 2010.

All well and good, but the economics of renewable energy don’t usually allow for such a smooth transition. As part of the Energiewende, the costs of associated subsidies have been passed on to German customers, who pay the highest power bills in Europe.

Fifty-two percent of the power bill for retail businesses in July 2014 is now made up of taxes and fees. The average bill for a household has reached 85 euros a month, 18 euros of which is the renewable energy levy. The reaction to such fees should have been furious.

It hasn’t been. A 2013 survey revealed that 84 percent of Germans would be happy to pay even more if the country could find a way to go 100 percent renewable.

So how can this model of high targets, high fees and high public support find traction in other countries? The answer is, with difficulty.

Germany’s national engagement toward renewable energy came after a period of prolonged public education, opening up to locally owned wind and solar infrastructure, and investment support. To be sure, other major countries are finding success in the renewable sphere, but not in quite the same way.

While renewable installations in the U.S. may account for 24 percent of the world’s total, they only accounted for 13 percent of the country’s power generation. This compares to Germany, which has more than 12 percent of global installed renewable capacity, but takes 28 percent of its power from it. Spain, China and Brazil trail behind, with 7.8 percent, 7.5 percent and 5 percent of global capacity respectively.

Brazil’s model has similarities to Germany’s, with the government carrying out public auctions for contracts and putting out favorable investment terms for foreign companies looking to set up renewable energy projects. Spain was doing well as wind became its largest source of power generation in April 2013, but economic woes have seen Madrid begin to double back on its commitments.

Political gridlock in Washington, D.C. means renewable energy in the U.S. has been boosted by state and private efforts. Arizona now has the biggest solar power plant in the world, while California has the largest geothermal plant in the country.

In Mexico, the country’s solar potential and the improving cost-effectiveness of PV technology has seen projects like the 30MW Aura Solar I crop up. But the national electricity regulator, CFE, has been slammed for taking up to six months to connect residential PV installations to the grid.

Perhaps the most ambitious plans come from China, which is busy working to transform its reputation from an energy pariah to a respected renewable leader. However, these are being mandated at a central level, with little to no attention being paid to the opinions of the Chinese public.

And there’s the rub. The German public is a willing participant in the government’s efforts, happy to face higher bills in exchange for a cleaner and more energy-efficient future, paying an average of 90 euros a month in 2013. It is true that Germans’ power bills are the highest in Europe, but the trade-off is known, increases are announced and negotiated months in advance, and surprises are few.

In the UK, which was proud of having among the lowest electricity rates in the EU, the government has been hard-pressed to explain to customers just why Scottish Power, Southern Electric, and British Gas have all raised prices, while the Labour Party has promised a 20-month price freeze if it wins 2015 elections.

The UK has left its coal and nuclear infrastructure to stagnate, reversed Blair-era commitments to renewable sources and opened vast swathes of the country to fracking exploration.

Ask them, and Germans might tell you that a pricey electricity bill might actually save everyone from a few headaches down the line.

Read more from OilPrice

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New Study Says U.S. Underestimated Keystone XL Emissions

TIME Earnings

Target Profits Tumble by 62% in Second Quarter

Shoppers At Target Corp. Ahead Of Earnings Report
A young girl pushes a Target Corp. shopping cart inside a Target Store in Torrance, California, U.S., on Tuesday, August 20, 2013. Patrick T. Fallon—Bloomberg / Getty Images

The retailer cut its year end earnings forecast amid slack sales and losses from last year's data breach

Target Corporation lowered its year end earnings forecast on Wednesday as the ailing retailer posted a 62% drop in second quarter profits.

Underwhelming sales and the continuing fallout from last year’s data breach have lowered the company’s year-long earnings forecast to between $3.10 to $3.30 per share from between $3.60 to $3.90. Same-store sales in the U.S. remained flat, despite an aggressive promotional campaign to lure in customers with steep price discounts. Sales in Canada, where the company has launched an ambitious expansion of stores, declined 11.4% in what the company attributed to a drop off from strong grand opening sales.

“While results from the quarter didn’t meet our expectations, we are seeing some early signs of progress as we work to improve results in the U.S. and Canada,” said John Mulligan, executive vice president and chief financial officer of Target Corporation.

Target also incurred losses of $111 million related to last year’s data breach, which compromised the account information of some 40 million customers. The company expects total losses from the breach to climb to $148 million as it continues to work through a backlog of faulty payment claims.

MONEY

Why Nobody Calls Target ‘Tarjhay’ Anymore

140820_EM_OneStopShop_2
Getty

After another disappointing earnings report this week for Target, it's time to take stock of what has happened to the cheap-chic retail industry darling that everybody used to call "Tarjhay."

Target cut its profit outlook on Wednesday, while reporting poor earnings and continued sluggish sales in the latest quarter. While the news was more or less expected—Target recently hired a new CEO to address its well-known struggles in the marketplace—things look as grim as ever for the all-purpose retailer that few shoppers refer to as the fancier-sounding “Tarjhay” anymore.

“Target has given investors ZERO reason to be encouraged that a global turnaround is secretly emerging,” Brian Sozzi of Belus Capital Advisors wrote, responding to Target’s latest earnings report—and rating Target stock as a sell. “At the domestic store level, merchandising issues persist, including weak assortments in apparel (notably the hot category of athletic apparel) and the over-buying of seasonal categories in light of persistent negative traffic.”

“You have seen a brand that has lost its way,” Steve Beck, founder of the management consulting firm cg42, said of Target in early August, after it was revealed Target had lost $148 million as a result of last year’s holiday season credit card data breach, according to MarketWatch. “And the end result is poor performance.”

So how exactly did Target lose its way? Why don’t shoppers flock to Target for cheap chic fashion in the numbers they used to? Target itself deserves much of the blame, but the economy and big shifts in the retail landscape also factor in.

Part of the explanation is that one-stop shopping, which not long ago was perhaps the best sales pitch in retail, is not the draw it used to be. The concept of one-stop shopping made sense for retailers on several levels. All-purpose stores like Walmart and Target expanded grocery sections in order to offer more convenience and efficiency to harried, time-crunched consumers. Many dollar store chains followed the same playbook, pumping up selections of groceries and other household staples to give shoppers reason to pop in multiple times a week, rather than every so often when they needed cheap party favors or random craft supplies.

The idea is that shoppers will come in specifically for low prices on certain items, and perhaps—in the case of Target, especially—for exclusive designer goods that can’t be found elsewhere, and that while they’re in the store, they’d also pile up impulse buys and needed household products alike into their shopping carts. This is all possible when almost everything under the sun, from spicy mustard to designer end tables, fishing poles to kids’ winter coats, is available under one store roof.

Yet at Walmart supercenters, which represent the ultimate in one-stop shopping in America, foot traffic and sales are on the decline. Sales and customer visits have likewise been falling at Target, and even smaller, nimbler dollar stores have seen growth go flat, prompting the need for a dollar store merger that’s yet to be determined.

Many factors have affected sales recently at these outlets, notably the decrease in food stamps to America’s poor, who therefore have less money to spend at Walmart and dollar stores, as well as the monumental data breach at Target, which damaged the company’s reputation among shoppers. Stagnant wages among American workers, and general uncertainty in the economy have hurt sales too. But part of the equation is that, in the age of Amazon Prime, one-click buying, and a range of online grocery shopping services that eliminate the need to browse store aisles, the appeal of one-stop shopping has diminished substantially. If saving time is a primary concern for consumers, there are far better, far quicker ways to run errands and gather essentials than hitting a gargantuan Target or Walmart location out at the mall or by the side of the highway.

When Target was the media and shopper darling nicknamed “Tarjhay” for its chic fashions and dependable household staples, the perception was that it truly delivered on its slogan “Expect more, pay less.” Target’s big problem is that the motto has rung hollow for quite some time. “The dimension of ‘expect more’ is gone,” said Amy Koo, a senior analyst at Kantar Retail. “As for ‘pay less,” well, pay less than what? Folks are savvier today. They’ll order at Amazon. It’s easy to find products that are much cheaper online, and it’s much more convenient to a shopper’s needs.”

Similarly, Walmart’s slogan (“Save money, live better”) is less resonant with shoppers today because if they were truly living better, they wouldn’t be shopping at Walmart—at least not in the physical stores themselves. Today’s consumers expect more than ever, and they want to live better by burdening themselves as infrequently as possible with chores such as shopping for groceries and other boring basics. Essentially, they expect more than even the biggest supercenter can provide—which will inevitably pale in comparison to what shoppers can find in terms of pricing and selection online.

While Walmart has mostly competed on price to keep sales from drifting away to its online and brick-and-mortar rivals, and it’s been extremely difficult to fend off dollar stores, Amazon, and the rest, Target became a phenomenon back in the day by having a pretty good track record at picking styles and designs that suited shoppers’ tastes at the time. Then the Great Recession destroyed household disposable income streams, and even cheap chic wasn’t cheap enough. There were some big mistakes—developing an online presence very late in the game, the epic debacle that was the high-price Target-Neiman Marcus partnership, a largely unsuccessful expansion into Canada—but none has been bigger or more destructive for sales in the post-recession era than Target’s concentrated appeal to a core group of wealthier free-spending shoppers, said Kantar’s Koo.

“Target is saying: We don’t care about the low-income shopper, we’re going to focus on the people who can spend more money,” said Koo. As a result, the styles and prices at Target were “suddenly not in line with many shoppers. It’s no longer tailored to meet the mass audience.”

Lately, Target has been undergoing some soul searching. One Target location in Minnesota was turned into a test store for trying out new products and services to get the reactions of customers. A new CEO, Brian Cornell, was hired, and his first promise was to listen and learn rather than make any sudden dramatic moves. This week, the company announced some stores would stay open until midnight on a trial basis through the holiday season to woo night owls and people working odd hours.

Extending store hours will help Target make the case that it’s more convenient, and more in tune with what shoppers need today. It just appears unlikely that any of Target’s tweaks will prove to be game changers and turn things around quickly for the struggling retailer. It also appears pretty much an impossibility that the “Tarjhay” nickname will resurface anytime soon.

TIME Tablets

This Enormous Tablet Could Replace Your Kid’s TV

Fuhu's Big Tab tablet boasts a screen as large as 24 inches. Fuhu

The Big Tab is aiming to replace video game consoles and TVs for kids' entertainment

Family game night is going digital — a new super-sized tablet for kids is aiming to replace the classic board game, the Xbox and maybe even the television.

The Big Tab, developed by fast-growing startup Fuhu, boasts a massive screen of either 20 or 24 inches, depending on the model. That’s a big jump from the company’s popular Nabi 2 tablet, which has a seven-inch screen. But Fuhu founder Robb Fujioka says the big screen size will encourage children to collaborate and socialize when they use their device, rather than tuning out the rest of the world.

To make the tablet into a social hub, Fuhu has developed a large suite of multiplayer games, from classics like checkers and Candyland to internally developed titles. A feature called “Story Time” offers 35 interactive e-books that utilize animated illustrations. Kids can also utilize video editing software, a Pandora-like radio service and educational software.

There are also tools for adults on the Android-powered device. A separate Parent Mode allows adults to download apps from the Google Play or Amazon stores. Parents can also set limits on which apps their children can access and for how long they can use them. Like Fuhu’s other devices, the Big Tab also boasts a virtual currency system that lets parents pay their kids when they complete chores or use educational apps for a certain amount of time.

The device, which also lets parents track their kids’ usage patterns, could appeal to adults looking to guide their children toward more productive forms of entertainment. Fujioka says he replaced the television in one of his children’s rooms with the Big Tab and uses it to keep track of whether his kid is playing educational games or watching Netflix. “It’s not just a boob tube,” he says. “It’s an interactive device.”

Though the tablet market is only a few years old, the devices have been embraced by parents in a big way. Tablet usage among children between ages two and 12 increased from 38% to 48% over the last year, according to research firm NPD. Juli Lennett, head of the toys division at NPD, said it’s a combination of safety, durability and kid appeal that has led to the quick popularity of children’s tablets. “When the price point is $99, on top of being a real functional tablet, these additional features are tough to beat,” Lennett told TIME via email.

The challenge for Fujioka and Fuhu will be convincing parents to pony up for a high-end tablet. The Big Tab will cost $449 for the 20-inch model and $549 for the 24-inch when it launches this fall, far more than the $180 the Nabi 2 goes for. And while the larger size means the Big Tab can be used by multiple people at once, it also makes the device less portable than its smaller cousins, eliminating one of the original selling points of the tablet form factor. “The beauty of these tablets is you throw them in your bag and you go,” says Gerrick Johnson, an equity research analyst at BMO Capital Markets who follows the toy industry. “A [24-inch] tablet becomes a little more difficult.”

Still, Fuhu is well positioned to prove skeptics wrong. The company sold 1.5 million of its normal-sized kids’ tablets in 2013, says Fujioka. This year, Fuhu is leading the children’s tablet market in the U.S., according to NPD, beating out competitors like Samsung and KD interactive. The question now is whether others will follow their lead in developing kids’ devices that cost as much as an iPad or a video game console.

“We think there’s a big market out there,” Fujioka says. “We believe we’re defining a new category of tablet products for the family.”

TIME europe

Europe’s Economic Woes Require a Japanese Solution

Rome As Italy Returns To Recession In Second-Quarter
A pedestrian carries a plastic shopping bag as she passes a closed-down temporary outlet store in Rome, Italy, on Tuesday, Aug. 12, 2014. Italy's economy shrank 0.2 percent in the second quarter after contracting 0.1 percent in the previous three months. Bloomberg—Bloomberg via Getty Images

The region’s economy is starting to resemble Japan’s, and that threatens to condemn Europe to its own lost decades

No policymaker, anywhere in the world, wants his or her national economy to be compared to Japan’s. That’s because the Japanese economy, though still the world’s third-largest, has become a sad case-study in the long-term damage that can be inflicted by a financial crisis. It’s more than two decades since Japan’s financial sector melted down in a gargantuan property and stock market crash, but the economy has never fully recovered. Growth remains sluggish, the corporate sector struggles to compete, and the welfare of the average Japanese household has stagnated.

The stark reality facing Europe right now is that its post-crisis economy is looking more and more like Japan’s. And if I was Mario Draghi, Angela Merkel or Francois Hollande, that would have me very, very nervous that Europe is facing a Japanese future — a painful, multi-decade decline.

The anemic growth figures in post-crisis Europe suggest that the region is in the middle of a long-term slump much like post-crisis Japan. Euro zone GDP has contracted in three of the five years from 2009 and 2013, and the International Monetary Fund is forecasting growth of about 1.5% a year through 2019. Compare that to Japan. Between 1992 and 2002, Japan’s GDP grew more than 2% only twice, and contracted in two years. What Europe has to avoid is what happened next in Japan: There, the “lost decade” of slow growth turned into “lost decades.” A self-reinforcing cycle of low growth and meager demand became entrenched, leaving Japan almost entirely dependent on exports — in other words, on external demand — for even its modest rates of expansion.

It is easy to see Europe falling into the same trap. Low growth gives European consumers little incentive to spend, banks to lend, or companies to invest at home. Europe, in fact, has it worse than Japan in certain respects. High unemployment, never much of an issue in Japan, could suppress the spending power of the European middle class for years to come. Europe also can’t afford to rely on fiscal spending to pump up growth, as Japan has done. Pressure from bond markets and the euro zone’s leaders have forced European governments to scale back fiscal spending even as growth has stumbled. It is hard to see where Europe’s growth will come from – except for increasing exports, which, in a still-wobbly global economy, is far from a sure thing.

This slow-growth trap is showing up in Europe today as low inflation – something else that has plagued Japan for years on end. Deflation in Japan acted as a further brake on growth by constraining both consumption and investment. Now there are widespread worries that the euro zone is heading in a similar pattern. Inflation in the euro zone sunk to a mere 0.4% in July, the lowest since the depths of the Great Recession in October 2009.

Sadly, Europe and Japan also have something else in common. Their leaders have been far too complacent in tackling these problems. What really killed Japan was a diehard resistance to implementing the reforms that might spur new sources of growth. The economy has remained too tied up in the red tape and protection that stifles innovation and entrepreneurship. And aside from a burst of liberalization under Prime Minister Junichiro Koizumi in the early 2000s, Japan’s policymakers and politicians generally avoided the politically sensitive reforms that might have fixed the economy.

Europe, arguably, has been only slightly more active. Though some individual governments have made honorable efforts – such as Spain’s with its labor-law liberalization – for the most part reform has come slowly (as in Italy), or has barely begun (France). Nor have European leaders continued to pursue the euro zone-wide integration, such as removing remaining barriers to a common market, that could also help spur growth.

What all this adds up to is simple: If Europe wants to avoid becoming Japan, Europe’s leaders will have to avoid the mistakes Japan has made over the past 20 years. That requires a dramatic shift in the current direction of European economy policy.

First of all, the European Central Bank (ECB) has to take a page out of the Bank of Japan’s (BOJ) recent playbook and become much more aggressive in combating deflation. We can debate whether the BOJ’s massive and unorthodox stimulus policies are good or bad, but what is beyond argument at this point is that ECB president Draghi is not taking the threat of deflation seriously enough. Inflation is nowhere near the ECB’s preferred 2% and Draghi has run monetary policy much too tight. He should consider bringing down interest rates further, if necessary employing the “quantitative easing” used by the U.S. Federal Reserve.

But Japan’s case also shows that monetary policy alone can’t raise growth. The BOJ is currently injecting a torrent of cash into the Japanese economy, but still the economic recovery is weak. Prime Minister Shinzo Abe finally seems to have digested that fact and in recent months has announced some measures aimed at overhauling the structure of the Japanese economy, by, for instance, loosening labor markets, slicing through excessive regulation, and encouraging more women to join the workforce. Abe’s efforts may prove too little, too late, but European leaders must still follow in his footsteps by taking on unions, opening protected sectors and dropping barriers to trade and investment in order to enhance competitiveness and create jobs.

If Europe fails to act, it is not hard to foresee the region slipping hopelessly into a Japan-like downward spiral. This would prove disastrous for Europe’s young people — already suffering from incomprehensible levels of youth unemployment — and it would deny the world economy yet another pillar of growth.

TIME real estate

This Could Be the World’s Most Expensive Apartment

Courtesy of NBCNews.com

Behold: A 3,300-square-meter, quintuplex "Sky Penthouse"

The tiny principality of Monaco, nestled on the French Riviera, is best known as a playground of the rich and famous. But it could soon garner a reputation for more than its glamourous Grand Prix and numerous casinos. It’s now home to what could become the world’s most expensive apartment: the 3,300-square-meter, quintuplex “Sky Penthouse” in the soon-to-be-completed Odeon Tower. Developed by Groupe Marzocco – a luxury real estate company – the double skyscraper of 70 apartments will tower over the principality at 170 meters high…

Read the rest of this story at NBC News.

TIME technology

Taxi Drivers Are Using Apps to Disrupt the Disruptors

Essdras M Suarez—The Boston Globe/Getty Images; Justin Sullivan—Getty Images; Gamma Nine Photography/Uber

Taxis in San Francisco are fighting back through apps, with the city's blessing

Flywheel ScreenshotStanding on the corner of California and Polk in San Francisco, I took out my phone and ordered a ride from Flywheel, an app that’s competing with rival transportation services like Uber and Lyft by leveraging the thousands of taxis already on the road. Like with those services, once I order a Flywheel ride, a map pops up with a car icon, showing me where my ride is in relation to me and allowing me to monitor the driver as he or she gets closer.

Or at least that’s how it’s supposed to work.

On this particular morning, as I watched multiple Lyfts go by (unmissable with their trademark giant pink mustaches attached to the cars’ grilles), and a couple Ubers (the black cars now identifiable by small logos that must be placed on their windows), my driver’s icon drifted away from me. After some minutes passed, I called the driver, who assured me he was on his way. When he continued to travel not towards me, I canceled the order and got a new Flywheel, which picked me up and promptly delivered me to the company’s San Francisco office, with my bill and a 20% tip paid automatically through the credit card I stored on the app.

Once at Flywheel, Chief Product Officer Sachin Kansal explained what had likely happened with my misguided driver. “He may have been ride-stacking,” Kansal explained, meaning that the driver accepted my order on the app and then took a street hail, thinking he could deliver the latter before I ever knew the difference. But the moment I canceled my ride, the driver’s plan was foiled. He would be blocked from the system until Flywheel investigated the case, and these did not appear to be circumstances that would yield quick forgiveness from administrators. Kansal made sure I knew how swiftly justice would be dealt, because this is not the kind of mistake companies can afford to treat lightly in the midst of the Great Ride App Wars.

San Francisco has been transformed into a city full of smartphone-wielding guinea pigs, willing beta testers who try out new services and shovel feedback to engineers. But while many transportation startups are busy dreaming up new and unfamiliar offerings, Flywheel and similar companies like Curb and Hailo are trying to breathe high-tech life into the old taxis that have been around for decades. That business model comes with limitations as well as certain advantages—the biggest of which may be that the city of San Francisco is proving a willing ally, and that could in turn prove a model for other metros. (Lyft did not respond to an interview request for this article, and Uber declined.)

San Francisco’s Municipal Transportation Agency’s “position is that there is a public good to having a regulated taxi industry,” city spokesperson Kristen Holland said in an email. “We want to encourage the public to take San Francisco taxicabs by making them aware of the e-hail option and letting them know the benefits of taking a San Francisco taxicab.”

Earlier this summer, the city and Flywheel teamed up to get their pro-taxi message across by putting cheeky ads like this on the sides of city buses:

Screen Shot 2014-08-15 at 1.35.15 PM

And this:

Screen Shot 2014-08-15 at 1.35.05 PM

By getting its app adopted a whole fleet at a time, Flywheel now has its system in 80% of San Francisco’s approximately 1,800 cabs and is aiming for 100%. Both the city and companies like Flywheel have a financial interest in cabs doing well—Flywheel through the 10% cut it takes off the base fare and the city through its medallion system, which will yield an anticipated $10 million in fiscal year 2015. Holland says that the city also supports cabs because they’re a known quantity. The city regulates them and decides exactly how the drivers are trained. Questions about insurance and liability, which have plagued startups innovating new transportation systems, have long been answered when it comes to cabs.

Taxi drivers, many bitter that they have to deal with more onerous regulations than drivers for companies like Lyft, have taken to writing down license plate numbers of cars with pink mustaches and reporting them to insurance companies. While cabs are clearly commercial vehicles, Lyft drivers are often using their personal cars to make money, and some insurers have canceled Lyft drivers’ policies after finding out they had only forked out for non-commercial plans.

Using apps like Flywheel is a way for taxis to fight fire with fire instead of tattling, however justified it might seem. Flywheel’s Kansal says that drivers may double the amount of rides they get in a shift through the efficiency that the system provides, matching people who need rides with nearby drivers. “There are weaknesses that others have. There are regulations that they may be breaking,” he says. “But 90% of our energy is spent on making sure this experience always stays top notch. That the experience that you had this morning never happens again.”

While Flywheel can’t turn cabs into fancy black cars or Lyft Plus SUVs, customers who order a taxi never have to worry about surge pricing, premiums that other companies charge in times of high demand. And while Flywheel can’t innovate at the speed of the other companies, given the limitations of what a fleet cab can be, it did just roll out service to airports in San Francisco, Seattle and L.A—something less established fleets still can’t legally do in many cities due to long-standing airport regulations. The California commission regulating the new services like Uber and Lyft has threatened to shut them down if drivers keep showing up at arrival and departure areas without proper permits.

Kansal believes his company can outfit cabs in a way that allows them to disrupt the companies that disrupted cabs in the first place. The fleet model is “very scalable,” he says, though the app is now densely present only in San Francisco and available in just a handful of other cities, most on the West Coast. (Competitor Hailo is the leader among taxi apps on the East Coast and in Europe.)

But the equation isn’t so simple as making lists of pros and cons for new ride-providing companies and app-enabled taxis. After my interview with Kansal, I tried to hail a car through Curb, a rival app that just rebranded itself after previously operating as Taxi Magic. After failing to get a taxi assigned to me before five minutes passed by I went back to Flywheel. A taxi arrived, and I asked my driver Casey Callahan what he thought of using the platform.

“I have mixed feelings,” he says. “You get a lot of business you wouldn’t normally get, and it gives us an edge against Uber, but they take a kind of big cut.” Ten percent seemed too high to Callahan, and that’s the kind of resentment that can fester. UberX drivers protested angrily outside Uber’s HQ in San Francisco earlier this year when the company started taking a bigger cut of the fare, many drivers threatening to go work for someone else. Callahan said the Flywheel app can also have technical kinks, and it remains painful to pass up a willing street hail once he’s agreed to pick up a Flywheel customer, the temptation to which my driver succumbed.

Callahan described all the driver-luring and price-cutting companies are doing to one-up each other in the Bay Area as “cutthroat capitalism at it worst.” But he said that if cab drivers don’t use technology and whatever else they can to fight back, they’re going to go the way of the dodo and the stagecoach. “This is going to be one more thing that’s gone from the American way of life,” he says.

He says he chose driving for a cab company over the new services partly because he doesn’t own his own car and feels that buying one through a company, as some Lyft Plus drivers do, is the equivalent of being an “indentured servant.” Myriad factors could send a driver one way or the other. Long-time cabbies know how much they can make in a shift, while newer companies continue to play with prices and what cuts they take. There’s also the ethos of the job, like Lyft’s requirement that a driver fist-bump each passenger, while a cool distance in taxis is the norm and Uber black car drivers will open your door. There are hours, incentives, pride, rules about where certain companies can go and who they can pick up. And so on.

For those championing taxis, the question is whether cab drivers who long roamed without competition, facing no penalty if they ditched one fare for another, can give their industry the kind of customer-service makeover it takes to convince a San Franciscan to order a Flywheel instead of something from the long menu of other options.

TIME Basketball

Watch Steve Ballmer’s Volcanic Enthusiasm Erupt at Clippers Conference

The explosion actually ranks pretty low on the richter scale of Ballmer blow-ups

+ READ ARTICLE

The Los Angeles Clippers’ cheerleaders better watch their backs, because the team’s new owner, Steve Ballmer, has enough pep to rival the squad.

Ballmer took the stage screaming during a Monday night press conference at the Staples Center, unleashing just a taste of what Microsoft employees have known for years: That this guy is a walking pom pom. On the scale of Ballmer blow-ups that periodically crop up on YouTube, his Monday night performance was relatively restrained.Ballmer in all of his glory is a sight to behold:

 

TIME Management

Steve Ballmer Steps Down From Microsoft Board

Steve Ballmer Steps Down From Microsoft Board
Owner of the Los Angeles Clippers Steve Ballmer looks on after being introduced for the first time during the Los Angeles Clippers Fan Festival at Staples Center on August 18, 2014. Jeff Gross—Getty Images

Ballmer said his new commitments, like owning the Clippers, make it "impractical" to continue serving on board

Former Microsoft CEO Steve Ballmer said Tuesday he has stepped down from the company’s board. Ballmer’s announcement came in a public letter addressed to the company’s current CEO, Satya Nadella.

Ballmer, who retired from the company’s helm in February but kept a seat on the board, cited the time commitments of his existing responsibilities—like owning the Los Angeles Clippers—as his primary reason for departure, which is effective immediately.

“In the six months since leaving, I have become very busy. I see a combination of the Clippers, civic contribution, teaching and study taking a lot of time,” Ballmer wrote. “Given my confidence and the multitude of new commitments I am taking on now, I think it would be impractical for me to continue to serve on the board, and it is best for me to move off.”

Ballmer said he will remain Microsoft’s biggest individual shareholder, and encouraged his workplace of 34 years to move boldly “to monetization through enterprise subscriptions, hardware gross margins, and advertising revenues” while also continuing to manage Microsoft’s software business.

“I promise to support and encourage boldness by management in my role as a shareholder in any way I can,” Ballmer added.

Nadella penned a public response to Ballmer’s letter, thanking Ballmer for his support and wishing him well.

“As you embark on your new journey, I am sure that you will bring the same boldness, passion and impact to your new endeavors that you brought to Microsoft, and we wish you incredible success. I also look forward to partnering with you as a shareholder,” Nadella wrote. “On behalf of all of Microsoft and the Board of Directors, thank you.”

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