Volkswagen's recent emissions scandal highlighted the power that algorithms wield over our everyday lives. As technology advances and more everyday objects are driven almost entirely by software, it's become clear that we need a better way to catch cheating software and keep people safe.
A solution could be to model regulation of the software industry after the US Food and Drug Administration's oversight of the food and drug industry. The parallels are closer than you might think.
The case for tighter regulation
When Volkswagen was exposed for programming its emissions-control software to fool environmental regulators, many people called for more transparency and oversight over the technology.
One option discussed by the software community was to open-source the code behind these testing algorithms. This would be a welcome step forward, as it would let people audit the source code and see how the code is changed over time. But this step alone would not solve the problem of cheating software. After all, there is no guarantee that Volkswagen would actually use the unmodified open-sourced code.
Open-sourcing code would also fail to address other potential dangers. Politico reported earlier this year that Google's algorithms could influence the outcomes of presidential elections, since some candidates could be featured more prominently in its search results.
Research by the American Institute for Behavioral Research and Technology has also shown that Google search results could shift voting preferences by 20% or more (up to 80% in certain demographic groups). This could potentially flip the margins of voting elections worldwide. But since Google's private algorithm is a core part of its competitive advantage, open-sourcing it is not likely to be an option.
The same problem applies to the algorithms used in DNA testing, breathalyzer tests and facial recognition software. Many defense attorneys have requested access to the source code for these tools to verify the algorithms' accuracy. But in many cases, these requests are denied, since the companies that produce the proprietary criminal justice algorithms fear a threat to their businesses' bottom line. Yet clearly we need some way to ensure the accuracy of software that could put people behind bars.
What we can learn from the FDA
So how exactly could software take a regulatory page from the FDA in the United States? Before the 20th century, the government made several attempts to regulate food and medicine, but abuse within the system was still rampant. Food contamination caused widespread illness and death, particularly within the meatpacking industry.
Meanwhile, the rise of new medicines and vaccines promised to eradicate diseases, including smallpox. But for every innovation, there seemed to be an equal amount of extortion by companies making false medical claims or failing to disclose ingredients. The reporting of journalists like Upton Sinclair made it abundantly clear by the early 1900s that the government needed to intervene to protect people and establish quality standards.
In 1906, President Theodore Roosevelt signed the Food and Drug Act into law, which prevented false advertising claims, set sanitation standards, and served as a watchdog for companies that could cause harm to consumers' welfare. These first rules and regulations served as a foundation for our modern-day FDA, which is critical to ensuring that products are safe for consumers.
The FDA could be a good baseline model for software regulation in the US and countries around the world, which have parallel FDA organizations including the European Medicines Agency, Health Canada, and the China Food and Drug Administration.
Just as the FDA ensures that major pharmaceutical companies aren't lying about the claims they make for drugs, there should be a similar regulator for software to ensure that car companies are not cheating customers and destroying the environment in the process. And just as companies need to disclose food ingredients to prevent people from ingesting poison, companies like Google should be required to provide some level of guarantee that they won't intentionally manipulate search results that could shape public opinion.
It's still relatively early days when it comes to discovering the true impact of algorithms in consumers' lives. But we should establish standards to prevent abuse sooner rather than later. With technology already affecting society on a large scale, we need to address emerging ethical issues head-on.
(I originally wrote this blog post as a guest article for Quartz. I'm cross-posting it to my blog.)
The web has done wonders to make government more accessible to its citizens. Take the State of New York; NY.gov is a perfect example of taking a people-centric approach to digital government. The site lets people easily access state government news and services, including real-time public transit updates, employment resources, healthcare information, and more.
One year ago, The State of New York redesigned and relaunched their website on Drupal in partnership with Code and Theory and Acquia. Today, one year later, they’ve nearly tripled the audience to more than 6 million users. The most-visited part of the site is the services section, which aligns well with the governor’s priority to provide better customer service to state residents. Annual pageviews have quadrupled since launch to a record high of more than 17 million and mobile usage has increased 275 percent.
For more details, check out the press release that the State of New York published today.
Building a successful company is really hard. It is hard no matter where you are in the world, but the difficulty is magnified in Europe, where people are divided by geography, regulation, language and cultural prejudice. If governments can provide European startups a competitive advantage, that could come a long way in helping to offset some of the disadvantages. In this post, I'm sharing some rough ideas for what governments could do to encourage a thriving startups ecosystem. It's my contribution to the Belgian startup manifesto (#bestartupmanifesto).
- Governments shouldn't obsess too much about making it easier to incorporate a company; while it is certainly nice when governments cut red tape, great entrepreneurs aren't going to be held back by some extra paperwork. Getting a company off the ground is by no means the most difficult part of the journey.
- Governments shouldn't decide what companies deserve funding or don't deserve funding. They will never be the best investors. Governments should play towards their strength, which is creating leverage for all instead for just a few.
- Governments can do quite a bit to extend a startup's runway (to compensate for the lack of funding available in Belgium). Relatively simple tax benefits result in less need for venture capital:
- No corporate income taxes on your company for the first 3 years or until 1 million EUR in annual revenue.
- No employee income tax or social security contributions for the first 3 years or until you hit 10 employees. Make hiring talent as cheap as possible; two employees for the price of one. (The cost of hiring an employee would effectively be the net income for the employee. The employee would still get a regular salary and social benefits.)
- Loosen regulations on hiring and firing employees. Three months notice periods shackle the growth of startups. Governments can provide more flexibility for startups to hire and fire fast; two week notice periods for both incoming and outgoing employees. Employees who join a startup are comfortable with this level of job insecurity.
- Create "innovation hubs" that make neighborhoods more attractive to early-stage technology companies. Concentrate as many technology startups as possible in fun neighborhoods. Provide rent subsidies, free wifi and make sure there are great coffee shops.
- Build a culture of entrepreneurship. The biggest thing holding back a thriving startup community is not regulation, language, or geography, but a cultural prejudice against both failure and success. Governments can play a critical role in shaping the country's culture and creating an entrepreneurial environment where both failures and successes are celebrated, and where people are encouraged to better oneself economically through hard work and risk taking. In the end, entrepreneurship is a state of mind.
If Steve Jobs was adopted by a Belgian family rather than an American family, it's extremely possible he may have ended up working in a bank instead of co-founding Apple. Why? Because starting a company and growing it is hard no matter where you are, but the difficulty is magnified in Europe, where people are divided by geography, regulation, language and cultural prejudice.
While entrepreneurship and startups have spread tremendously in Europe, a lot of aspiring young entrepreneurs leave Europe for the United States. Very little will stop a true entrepreneur from trying to reach his or her goals, including uprooting their entire life and moving it across the ocean to optimize their chances of success. From my interactions with them, the United States' gravitational pull is only getting stronger.
So, what can Europe do about it? Here are my three recommendations.
Focus on creating large companies
Europe produces plenty of small businesses: restaurants, small technology firms, clothing stores, hair salons, and so on. What it doesn't produce enough of are innovative companies that grow quickly and end up big. It's a problem.
Look at the 500 largest companies in the world (Fortune Global 500). According to Bruegel, a European think tank devoted to international economics, Europe created three new, large companies between 1975 and today. The U.S. created 26.
That number is even more incredible when you take into account the fact that Europe has about twice the population of the U.S. The reality is if Europe were to be competitive, it has to produce 25 times more large companies than it does today.
Access to capital continues to be a challenge in Europe. Getting seed capital (1M EUR or less) has become easier, but raising significant money (25M EUR and more) to turn your company in a global business continues to be difficult. Large companies also provide an important 'exit strategy' for startups. Without a vibrant exit market, it's harder to attract both entrepreneurs and investors.
Large companies also play an important role in creating successful innovation centers. They are catalysts for creating angel investors, for providing distribution, and serve as a breeding ground for talent and practiced management.
If you look at Silicon Valley, Hewlett Packard, among others, served that purpose in the early days, and more recently, a number of successful entrepreneurs have emerged from Google.
I recommend that European government stimulus focuses on companies that could become titans, not on small companies that won't move the needle. Too often, there are investments made in companies that have limited or no growth potential.
Level the playing field
Anyone who has built a global organization likely understands that European work regulations can shackle the growth of startups. Taxes are high, it's hard to acquire a European company, severance packages can be outrageous and it's extremely difficult to fire someone.
It only gets worse when you attempt to operate in multiple European countries, as anyone with the ambition to build a large company has to. Each country is different enough that it requires setting up a local legal entity, and having local accountants and local attorneys. Setting up and running these legal entities costs valuable time and money, a huge distraction that gets in the way of actually running and growing your business.
Europe needs to roll out unified labor laws that are competitive globally and unified across Europe. My biggest worry is the branches of government that try to promote entrepreneurship are not powerful enough to address Europe's labour rules.
Change our culture
A small business can be started anywhere in the world, but it takes a different level of ambition to aspire to become the next Apple. The biggest thing entrepreneurs need is the belief that it can be done, that it's worth taking the risk and putting in the hard work. Having the right culture unlocks the passion and dedication necessary to succeed.
Silicon Valley is a state of mind. To recreate Silicon Valley in Europe, Europe must first adopt Silicon Valley's culture. I believe Europe's culture would benefit from adopting part of the American Dream: the egalitarian belief that everyone is able to succeed through hard work, and that it is acceptable and encouraged to better oneself economically through hard work.
It doesn't mean Europe needs to give up its strong communal beliefs and its desire to look out for the greater good. I'm a firm believer that many modern businesses can "do well and do good". Businesses that generate value for their shareholders and that also have a positive impact on the world go beyond generating profits.
Our world does not lack business opportunities; there are plenty of people with needs that aren't met. Enabling entrepreneurship enables innovation, and innovation helps change the world. The entrepreneurs that succeed in building large businesses, especially those that are aligned with fixing the world's problems, will transform the lives of others for the better and introduce more opportunity on a global level.
Entrepreneurs, not the government, will change the world. It's time for Europe to help their companies grow.
Many organizations adopt Open Source for reasons like flexibility and agility. Everyone needs to do more with less. But in government, Open Source drives both civic engagement and government participation like never before. Because of digital, the world feels much smaller and more connected. And Open Source gives people the opportunity to rally around a cause, no matter where they live.
Think about how we petitioned our government before we had the We The People website. I bet you have to think pretty hard about how it was done (I do!). Now, a website has brought to life the First Amendment rights of U.S. citizens. Millions of people's voices are heard. People pull together based on common concerns. The White House built We The People using Drupal and shared the code on GitHub, opening up the opportunity for other governments to easily create their own online petitioning systems.
Now, all kinds of open government data made available through the Data.gov project makes it possible for any developer, anywhere, to create a civic app. These apps have made us see our cities and towns in a different light.
Open City is one example of a group of local volunteers who create Open Source apps using government data. While the group is based in Chicago, the idea is that any city can grab code from an Open City app and make it their own.
Here are a few interesting examples: Clear Streets tracks a city's plows in real time. Living outside of Boston, I know we could use an app like that! Crime in Chicago lets citizens compare crime statistics in certain areas of town, which could be useful for people making decisions about where to move their families.
What is perhaps the most gratifying is that as open-source developers, we can collaborate on projects and help people around the world. It's part of what gets us out of bed in the morning. Earlier this year, participants in DrupalCon Portland launched a website in 24 hours to help people in Moore, Oklahoma, find transportation and housing after the tornado. Two weeks later, the site was discovered on Twitter in Germany and was repurposed to help people affected by the flooding in northern Europe. This type of project inspires us all to see how technology can make an immediate difference.
Other events, such as the National Day for Civic Hacking, encourage developers to use open government data to "collaboratively create, build, and invent". The idea that hackathons can help build and create a healthy, citizen-powered technology ecosystem within government is relatively new, and full of promise. Tim O'Reilly believes that government can escape the "vending machine" mentality (citizens put in tax dollars and get out services) by thinking of "Government as a Platform" for participation. I couldn't agree more.
Open Source ideals are already spreading in governments throughout the world, with good reason. A global network of developers is motivated to help. It's one of the best examples of civic engagement. As digital citizens, we all now have the power to contribute. One person's time and talent can make a huge difference. That is a movement I'm proud to be a part of.
(I originally wrote this blog post as a guest article for VentureBeat. I'm cross-posting it to my blog.)