Dear Volkswagen: you are probably doomed (but not because of diesel)

What a week it's been. You've admitted to the world that you have sold 11 million vehicles that are much more polluting than what you advertised them to be. You've admitted that you've installed software in your cars that specifically detects when a car's emissions are being measured (i.e. the engine is running but the car is not moving) in order to fake the measurements. You've set aside 6.5 billion Euros to deal with this scandal, and have replaced your CEO.

This episode will go down in corporate history as a textbook example of large-scale industrial fraud for a number of reasons. First, there is the fact that the mechanism of deception was software-based. Second, you haven't just duped millions of people into buying a product they would never have bought had they known the truth - in the process, you've contributed to massive pollution that's affecting everyone's health, not just that of your customers. Third, the betrayal of trust is at an unparalleled scale - you've sold polluting machines specifically to a group that's sensitive to environmental issues. Many who bought a VW diesel bought it precisely because they assumed it to be less polluting than the competing products. Fourth, we're not just talking about selling candy - we're talking about products that cost tens of thousands of dollars. In other words, we're talking about tens of billions of dollars of products sold under completely false advertising.

Frankly, it's hard to see how you can come out of this alive. The fines you will have to pay will be in the tens of billions of dollars. The class action law suits will be equally high. Many of your top executives will go to jail. You currently have 30 billion euros in cash reservers, which probably won't even begin to cover your liabilities. And all of this is just the tip of the iceberg. Not only are the 11 million people you lied to less likely to buy another VW in the future, but you've probably also lost everyone else who was considering buying one. As someone who just recently bought at VW diesel - my first VW ever, and almost certainly my last - I can of course only speak for myself. But everyone I've talked to feels pretty much exactly as I do. And if after some more independent analysis, the numbers come back and they are even close to what we currently read in the press (10-40x more pollutants than advertised), I will sell the car immediately even if it is at an almost total loss.

Such a shame. You've spent all this energy over the years and decades to make people like me buy your products. And just as you seem to succeed, the world comes crashing down on you. I feel particularly sorry for the vast majority of your employees who are completely innocent, but who will lose their jobs over this. I feel sorry for every world-class German engineer whose reputation you are dragging down with you, and who doesn't deserve any of it. 

Some cynics say that's just the name of the game. In a couple of weeks, no one will talk about it anymore. They couldn't be more wrong. Every time VW diesel owners start their engines, they will think of how you betrayed them. I've noticed it myself - even though there is less press on the scandal with every passing day, I actually get angrier with every passing day. This is not just a temporary thing. For the first time in my life, I am willing to join groups who take legal action against a company.

But there's hope. As the saying goes, a crisis is a terrible opportunity to waste. 

There is one, and only one reason why I would consider buying a VW in the future: massively beat Tesla at their game. Abandon all fuel-powered development today and invest every single cent into long-range electric cars, and build the electric charging infrastructure throughout Europe and the US (and the rest of the world). In addition, the development of the self-driving car has to be your top priority. The car of the future has no human driver in it, and of course you know this (anyone at VW who doesn't, let go of them immediately). Lobby your government and that of the EU to change regulation that allows for safe self-driving vehicles the day they roll out of your factories. Since you are in an existential crisis, and with you the millions of jobs that indirectly depend on you, they'll listen. 

The strategy can be summarized in two words: batteries & software. Everything else is gone. It may be difficult for some of the more traditional, non-software engineers (like your ex-CEO), to embrace the very thing - software - that brought you down to your knees. But there is simply no alternative. Europe is already lagging behind in the software-powered technological revolution. Aggressively start hiring the most brilliant software engineers away from Tesla, Google, Apple, and Uber to make your new strategy come true. If any resources remain, give them to those universities that are building - or expand existing - world-class software engineering curricula.

So why the title of this post? Because all of this is probably not going to happen. The new CEO, Matthias Müller from Porsche, thinks autonomous vehicles are an unjustifiable hype. I wish I was kidding, but I'm not: the VW board thought that the best person to replace the guy who oversaw the cheating software scandal (or was unaware of it) is a guy who seems to have even less appreciation of the ongoing software revolution. As far as I can tell, now VW CEO Matthias Müller is the only CEO of a large car maker who has gone on record saying that autonomous vehicles are a hype. 

Unless Müller makes a 180 degree turn, it's quite obvious to me that VW is doomed. They may survive as the Foxconn of car making - a pure hardware manufacturer with extremely low margins and mostly terrible, low wage jobs. If that's what they want, they are on the right trajectory. But for Europe, this is extremely bad news, as another major economic player will go down the road of Nokia, and the economy will suffer badly.

Serendipity in the Digital Age

I'm currently attending a meeting in Chamonix, France, and one of the questions that was discussed tonight was, what is going to happen to serendipity in the digital age? Serendipity means fortunate happenstance, and some people seemed concerned that the digital age would reduce serendipity, because in their view, it requires real face to face human interaction. I think this argument is weak and perhaps reflective of a certain generation that feels nostalgic for the olden days. But I do agree that serendipity is a good that needs to be preserved in the digital age, and this is no trivial task.

In evolutionary biology, serendipity is captured by the concept of beneficial mutations. DNA, the underlying chemical basis of all life on earth, mutates all the time. Most of these mutations are bad in that they either render a cell inviable, or cause some type of malfuction. Less often, the mutation is neutral - the encoded protein might not change, or change in a way that has no effect. Rarely, but occasionally, the mutation is beneficial, and the new version of the gene is better in the evolutionary sense, i.e. it directly or indirectly contributes to getting itself more successfully copied into future generations.

I would be surprised if the distribution of outcomes in random human interactions were very different. Most interactions are simply not interesting enough to be even started. Imagine the hundreds of people you bump into every week - even if you started a conversation with each single one of these people, you would readily find that most of them are not your type, boring, or just not interesting enough to talk to, beyond polite chit chat. A few people may be interesting enough for you to keep the conversation going for a while, but the relationships will fizzle out after some time. Rarely, but occasionally, you meet a stranger with whom you connect strongly, and they become colleagues, friends, or even lovers. Many years in the future, we will think of the serendipitous moments when we met those people, while conveniently forgetting about all the other interactions the led nowhere.

Can anything more be said about this somewhat vague comparison between genetic mutations and random human interactions? I think so. The interesting question is, how can we optimize the rate of random interactions in a way that ensures that we get the most out of it? Simply more randomness cannot be the answer, and indeed, that's not what we find in nature. In fact, mutation rates are generally extremely low, as low as only 1 mutation per billions of base pairs. But do not think for a moment that the mutation rates in nature are fixed - like everything else, they are subject to natural selection, and they do vary widely both among and -even more so - between species. Viruses, for example, have some of the highest mutation rates among living things (if you grant them the status of being "alive"). The reason for this high mutation rate is that they are constantly attacked by their hosts' immune system, and they need a way to escape from that threat. If they mutate, then the chance of not being discovered can increase substantially. Not mutating is simply not an option, or else the immune system will bring the infection under control before it had a chance to be passed on - an evolutionary dead end. Indeed, the genetic makeup of a population of viruses within a person infected with HIV can change drastically in just a few days.

To bring this back to human interactions - how much serendipity we want often depends on the circumstances in our lives. In moments of great stability, we may not be all that interested in too many random interactions. When we are alone, or looking to expand into new social circles, we may actively connect with as many new people as possible. Professionally, it's probably best to always maintain a relatively high "mutation rate", especially if you work in a fast moving environments (and don't we all these days?).

In the digital age, many of these random interactions occur online. On one hand, since the online community is global, you can now sample from a vastly larger group of people, which may or may not lead to more serendipity. On the other hand, your sample is increasingly driven by algorithms, and in my experience, these algorithms try to predict what I like based on what I already like, which is a kind of targeted serendipity. But there is also the danger that I am getting too much of what I already like, and the true, random encounter with a new person or a new idea becomes increasingly rare. I would love for these algorithms to allow me to fine-tune the level of random interactions.

Ultimately, it is too early to say what the digital age will do to serendipity. My sense is that it will be a good thing, but I guess that's why my friends call me a tech optimist. 

Europe's Technological Irrelevance: Time To Panic.

A few days ago, I was watching Apple's unveiling of new products in San Francisco. I've used and loved Apple products for a long time, and these events are always very exciting to me personally. I'm also heading a Digital Epidemiology Lab at EPFL, and whatever is happening in Silicon Valley is of great professional interest to me as well. Increasingly however, when Apple announces new products, I'm not just feeling excitement, but also dread. The dread of realizing that the mobile revolution, which dwarfs both the internet revolution and the PC revolution, occurs completely outside of Europe.

In a few days, I will be able to download a new, much improved operating system onto my Apple Watch. I'm essentially getting a completely new watch, with completely new functionality, for free. I was already amazed by Apple Watch 1.0, but the second iteration sounds just spectacular. There is no reason whatsoever for me to ever buy a watch that is not smart for the rest of my life. I see no reason why any of my children would ever even think about buying a watch that is not smart. And since the smartness of a watch is largely driven by its software, and its ecosystem of services it integrates with, Apple is going to dominate this space thoroughly. Perhaps there will be competition from other players that can challenge Apple's dominance. But whoever those players will be, they will be major software companies (such as Google). In other words, they will not be European.

I'm Swiss, and I have just recently returned to Switzerland after almost a decade in the US. So it's particularly painful to me to see the clear writing on the wall, which is that the watch industry will suffer drastically. Of course, there will always be people who are willing to spend hundreds of thousands of dollars for a beautiful mechanical watch. But this is not a big enough industry to build an economy on. Worse, it's not an exciting industry where innovation will come from. It's not the future.

And the entrance of Apple into the watch business is just one example of a repeating pattern of software companies getting into other markets - markets that were seemingly immune to competition by software - being able to offer a vastly superior product. It's happened before with typewriters and business machines; it's happened before with phones; it's happening now with watches; and it will happen again and again. The phrase "software is eating the world" is now so clichéd, trivial, and true, that you have to wonder why people are still debating it. The question is not if software companies will provide better cars, better drugs, better homes, etc., but when. The only companies that will survive this disruption are the ones that will manage to transform themselves into software companies as well. But time is running out very fast.

What software company is there in Europe to speak of, at the moment (I am not discounting the hopeful possibility that a major one is in the making right now somewhere in a European garage)? Where is Europe's Google, Europe's Apple, Europe's Facebook, Europe's Twitter, Europe's Uber? All we can see are the flames of cars burning in Paris, protesting innovation. All we can read about are Spain's efforts to ban Google News, misunderstanding how the internet works. Remember just a decode ago, when the mobile phone industry was largely a European affair? That's how fast things are moving now, and they will move even faster in the future. The time to feel dread is over. It's time to panic.

There are many smart people in Europe who see this. And they are working like crazy to steer the ship around. Everybody wants to build the next Silicon Valley. Now that it's becoming clear that nobody seems to be able to do that, everybody is trying to build at least some valley (health valley, drone valley, fintech valley, etc.). But how to do that? Marc Andreessen, Netscape founder and tech visionary, argues that de-regulation is a major component. If true, that would be bad news for Europe, which has a hard time with de-regulation. But I'm not entirely sure I'm buying the argument. The US is also a heavily regulated market, and its government is in my experience much more bureaucratic than the Swiss one, for example. In fact, California is probably one of the most regulated, if not the most regulated, of the states in the US. So something else must be going on. That something else is outstanding universities. 

If you look at the distribution of innovation hotspots in the US, there is a very clear correlation with outstanding academic institutions. It turns out that there is more to correlation than just location though. First Round Capital, a leading seed-stage VC firm with investments in Uber, Square, Mint, and others, has recently crunched their data of 10 years of experience. The largest effect of company success was having gone to a top school (Ivy league, Stanford, MIT, Caltech). Even without those data, the connection between innovation and top academic institutions is so obvious that it's completely non-controversial. Indeed, the source of Silicon Valley itself can be found at Stanford University. And this is the area where Europe can move the needle in the right direction relatively quickly.

Europe has a great system of universities, but has in the last century lost its dominance to US institutions. Nevertheless, there are still many European institutions that are at the very top. There should be more. And the way to achieve this is to provide more resources, and to ensure that these resources are allocated smartly (i.e. pick the right leaders who understand the software-driven mobile revolution). The correlation between the ranking and the endowment of a school is striking. Even if you are skeptical about rankings (as you should, since their methodologies are mostly flawed), it's not hard to see that the top schools have huge endowments, and schools with large endowments are more likely to be at the top. While correlation is not causation, recent data from Germany shows that more funds leads to better schools (no one working at a university would object to that - we could all do more and better with more resources).

One very obvious source to obtain more funding is from the wealthy. And by that, I mean pretty much everyone with a university degree in Europe. European Universities are a bargain. You can go to ETH or EPFL, two of the best technical schools in the world, and pay $600 a semester. Yes, you read that correctly. No, there is no zero missing. Other European institutions are even free. And this is as it should be. The one colossally bad idea we should not copy from the US is to raise tuition fees, and to put our students into debt when they want to get an education. The one good idea we absolutely should copy is that once they have received their education, and probably go on to get well-paying jobs, is to ask them to pay it forward to the next generation. Yes, they already pay some of if through taxes, but everyone does. Those of us who have benefited from a virtually free education should, and I think would, pay voluntarily more.

I graduated from the University of Basel in 2002. Since then, I have never been asked to contribute even a single dollar (or rather, Swiss Franc). This is insane. I would very gladly pay a decent amount of money to support my alma mater in its quest to become a world-leading institution. I would love the swag, and I would love to go to events, concerts, soccer games, and network with my peers. What a colossal non-use of potential resources! And it's also the fairest system: it asks us for our contributions at a time in our lives when we can actually afford to make them, unlike the system that asks us to pay tuition fees when we are essentially broke teenagers.

So please, European universities, stop playing in the second league when it comes to fundraising. Go out and ask your alumni for resources to help you build the next Stanford. Because the next Stanford will give rise to the next Google, the next Apple, and the next Uber, ensuring that we are the ones who are doing the eating, rather than being eaten. 


Starting on August 1, 2015, I will begin my new position as Associate Professor at EPFL in Switzerland. This post is a reflection of this transition.

I'm incredibly excited about the opportunity at EPFL, for a number of reasons. First, it is an excellent research university (don't take it from me). Second, unlike many other european institutions, they are very enthusiastic about the potential of online education, as evidenced by their Center for Digital Education, dozens of MOOCs, and close to a million online students. They were also the first European partner of Coursera, pretty much immediately after it launched. Since I share the enthusiasm about the potential of online education, this is a very exciting environment for me. Third, they have created a great environment for startups over the years, and the Lausanne / Geneva area, where EPFL is located, now takes in the majority of VC funding in Switzerland

In addition to many other reasons, I'm also really excited to be back in the Swiss research environment. The Swiss, a small population in a landlocked nation without any natural resources to speak of, are well aware that education is their best bet to compete in a global economy, and correspondingly invest heavily on research and development (about 2.3% of GDP per capita, which is the 12th highest percentage internationally). In return, the results are impressive: output it terms of papers per capita is off the charts, and they win more scientific prizes per capita than most anyone else. These may not be most useful metrics, but they are at least to some extent indicative of a productive scientific environment. In addition, it's very exciting for me to be closer to some institutions that I've enjoyed visiting in the past few years, most notably the Institute for Scientific Interchange in Turin, Italy, where I will be a fellow next year. 

But before you get the wrong impression: I'm very sad to leave the US. I have had a wonderful time here, first as a postdoc at Stanford, and later as a faculty member at the Center for Infectious Disease Dynamics at Penn State. The "can do" attitude at these places is just phenomenal. It's no wonder that US institutions so thoroughly dominate the scientific enterprise. Professionally, I will try to be as American as I possibly can, by which I mean maintaining the fast-moving, risk-taking, stand-up-and-try-again, pioneering attitude that is so pervasive here. 

As much as I hope to bring that American spirit to my new European home, I am equally hopeful - but somewhat pessimistic - that US institutions will adopt a more European approach about access to higher education. I have never felt comfortable working at an institution that charges hundreds of thousands of dollars for an education. It's impossible to blame a single factor here, and there is obviously huge variance on both sides of the pond. But it's a relatively new phenomenon in the US, which is why I will observe the developments in Europe with heightened sensitivity. What's remarkable about the situation is that I haven't met a single person at any US institution who has individually thought that this is a good development. Everyone agrees that it's bad, and yet the ball keeps rolling in the wrong direction. The reason why I remain hopeful is that the US is highly adaptable, and those years that I've spent here are strong evidence of that (a black president, the health insurance reform, the gay marriage decision, etc.). 

Personally, I have had an absolutely fantastic time, and I will always remember it fondly. Actually, I can't quite believe I'm leaving. I'll miss the people, I'll miss the landscapes, I'll miss the open space (sooooooo much space), and I'll miss the attitude. But then again, I have much to look forward to. 

So long!

A new digital home

This is my attempt to make a final attempt at blogging.

I've blogged on and off since around the year 2000, but have never managed to stick with one platform. For the past few years, I've greatly enjoyed Twitter as a micro-blogging outlet, but for some longer thoughts, it doesn't fit well.

After many attempts with different platforms, this is my attempt to make it final. Posthaven seems like a perfect solution for what I'm looking for. It's a simple platform, and promises to stick around for ever. It's not made by people who want to get rich(er), and you pay for it, ensuring long-term financial stability without ads. And the only reason why I believe all of this is because it has been created by Garry Tan. Of all the partners at Y Combinator that I had the chance to meet during my time there in 2014, he was by far the smartest, most creative, and most relaxed (a rare combination anywhere). If he puts his name on the pledge, then I'm buying.

I'll transfer this to as soon as possible. (done)