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Monday, 27 June 2016

The development of new antibiotics cannot be left to the market and Big Pharma alone, as effective antibiotics are a indispensable, even strategic asset for any country and supranational organization.

This article is dedicated to my friend Jan,
who is very much alive at this moment,
but could have been not anymore.

Jan and I are friends for already quite a long time. We met each other through our wifes, who went to the Dutch civic integration college together, and had a wonderful click since then. We found each other as worthy opponents in political discussions and discussions about a zillion other topics and as people who enjoy life to the fullest, On top of that we both got children at roughly the same time...

Jan and I think differently about a lot of fundamental things and his general position is more right-wing, while mine is more left-wing in the political spectrum. Nevertheless, we appreciate each others opinions and do agree upon a lot of topics, while differing on others. And Jan is a truly honest guy, in the best Dutch tradition of: ‘a man is a man and a promise is a promise’. His word is his guarantee and that is definitely an ironclad one.

Jan is also a person who helped me out in a few awkward situations, that all had to do with me driving or parking at places where I should not have driven or parked. One phone call and Jan was there to tow me loose. With a big, ironic, yet understanding smile on his face and a twinkle in his eyes, softly whispering: ‘You messed up, right?!’

But at this very moment, Jan is not smiling...

Jan lies in a coma in an academic hospital in The Netherlands, after he became critically ill. And even though his prognosis has fortunately improved during the last few days, he is still anticipating a long sickbed and a long, long period of revalidation, in order to be his old friendly, helpful and politically aware self.

Apparently, his illness started relatively harmless with a simple ear inflammation, but after a few days his left hand and arm became heavily infected with an extremely dangerous, flesh-eating bacteria: allegedly a streptococcus bacteria. Then his situation – which had been underestimated by the family doctor in the first place – deteriorated very dramatically and when he was finally brought to the hospital last Tuesday, he was in critical condition.

This morning I visited him in the hospital for a short period. It was heartbreaking to see this gentle giant of a man at the intensive care department, in quite a deep coma; hooked up to a respirator and all kinds of other machines that helped him to stay alive and survive his terrible illness. In the meantime, Jan is making small steps forward, but he is still in a very serious condition and will probably be the next few days.

When Jan survives his illness – I know he will – he will owe his life to extremely strong, broad spectrum antibiotics and to the fact that this miracle medicine is still able to kill even the most dangerous bacteria species present in The Netherlands.

However, that is not so obvious as it sounds anymore...

The global emergence of various kinds of multi-resistent bacteria inside and outside hospitals is an extremely worrisome development: think for instance about the emergence of such bacteria in the open waters, that will be used during the Olympic Games in Rio de Janeiro.  

The fact that doctors and hospitals in many countries still recklessly administer antibiotics to humans in situations when it is absolutely not necessary, or that people still don’t use this drug in accordance with the prescribed way, is very hazardous for the effectivity of these antibiotics: bacteria which receive a less than lethal portion of antibiotics, might grow resistant for it, thus changing in genuine killer bugs.

The fact that live cattle keepers/breeders and fish farms still use shedloads of preventive antibiotics, to protect their live stock against dangerous diseases in their overcrowded stables and fish farms, is even more dangerous.

Five years ago I wrote an article about the need to develop new antibiotics, in order to fight the emergence of multi-resistant bacteria, which cannot be destroyed at all by any of the current kinds of antibiotics; even in combinations. Since that article, it seemed to me that the silence from the pharmaceutical industry has been deafening...

In the meantime Big Pharma kept producing new cardialgia inhibitors, anti-cholesterol drugs, antidepressants, blood thinners, anti-diabetes drugs and other drugs that are there in order to cure, but often especially to contain (!) Western lifestyle diseases. Drugs that – as a matter of fact – I also need on a daily basis to keep my current quality of life; at least some of them: I have to admit that.

Such ‘lifestyle disease containment drugs’ are money makers for the pharmaceutical industry, as the patients in many cases have to use them for a long, long time and quite often even for life. Those pills are like a checkbook that automatically writes a big paycheck every month, for every company that produces them.

Unfortunately, new antibiotics are notoriously hard and extremely expensive to develop, while taking years and years to do so. On top of that they are probably not the real money-makers that these other lifestyle pharmaceuticals are.

The obvious result of this is that the development of new antibiotics still suffers from the stepmotherly treatment that these indispensable, life-saving pharmaceuticals get from the industry.

But the world cannot wait anymore...

In case of large scale local (or global) wars with loads of critically wounded people or large, uncontrollable outbreaks of bacterial diseases, the presence of effective antibiotics can be a matter of life and death for millions and millions of people. And the current types of antibiotics seem to lose their effectiveness at an alarming speed.

This is the reason that international governments and supranational, governmental organizations, like the EU, should run the gauntlett and actively start to push the development of new antibiotics.

Not in ten years, not in five years, but now!

The development of new and effective antibiotics is just too strategically important to leave it to the quirks of the free, international pharmacy markets. Yes, strategically important is the right expression!

This development of antibiotics is so important that governments should invest billions of dollars in it. Not in the form of warrant-free subsidies on behalf of the common pharmacy companies, but directly: in strategic, government-owned research centres, hospitals and laboratories, with the help from the best universities and the brighest scientists.

After development, these new antibiotics should not be used for widespread medication against relatively innocent human diseases, or on behalf of the cattle and fish-farming industry.
No, they should be maintained as anti-bacterial weapons of last resort, in case that all other medicine fails. It is our duty and the duty of our governments to do so and not to wait until it is too late.

Jan’s wife, his children and his next-of-kin, as well as my wife and I, all hope that Jan will open his eyes very soon and soon afterwards is able to pick up his former life again. He will probably be saved by the current generations of antibiotics.

But we must see to it that this privilege is also reserved for our children and grandchildren and their friends, in the remainder of this Century. This is a privilege that we should not abandon lightheartedly.

Think about Jan or about your own children and grandchildren and urge your favorite politicians to come into action! It might save millions of lives!

Sunday, 26 June 2016

What will happen now with Europe and the United Kingdom?!

Yesterday, I described how the momentum for the catastrophic referendum in the United Kingdom  could be mounted upon the terrible ‘self promotion’ marketing for the European Union, as committed by the leadership of the EU itself: the European Commission, the European Council and the European Parliament. During the last 20 years, the EU has sold itself as ‘the mother of all lemons’ and a cause absolutely not worth investing and trusting in or fighting for. This way, it lost nearly all the confidence it had among the European population

The leadership of the EU blatantly failed to explain and explain again the reasons for its establishment in the Fifties and Sixties and the still extremely topical ‘raisons d’etre’ of the Union: in fact now more topical than ever before, because of the economic depression that we are in since 2008.

A majority of the population of the United Kingdom – the very unwilling wedding partner in its doomed marriage-out-of-mutual-economic-benefit with the EU – has believed the bedtime stories and (half) lies of a bunch of nitwits, populist squallers and ‘toddlers-playing-with-matches’, who promised gold mountains and eternal benefit when the country would leave the EU. The latter, on the other hand, was only defended by a reckless Prime Minister and a group of bleeding heart politicians without real stature, persuasiveness and influence, inside AND outside the United Kingdom (i.e. the European Union).

And now the deal is done... The UK voted to get out of the EU with a really minute majority of 52%, thus pushing button of the ejection seat while hardly understanding what has happened anyway.

So  now that the Brexit party is over, the hangover has set in within the UK, as well as within the whole EU with brute, nuclear force...:

  • The EU leadership, who thought they could counter the Brexit plans by simply downplaying the phenomenon and throwing in a big portion of fearmongering and ridiculizing of these plans, woke up in cold sweat feeling hit by a hammer multiple times; 
  • The flabbergasted ‘Bremain’ camp is screaming for another referendum, because they can’t believe what hit them and they see now how small the majority for the Brexit vote was; 
  • One prominent member (i.e. Nigel Farage) of the Brexit camp itself started swallowing his easy lies over the economic benefits of a Brexit for the British population, telling “it wasn’t me!”;
  • Another prominent member of the Brexit camp (i.e. Boris Johnson) radically changed his tone of voice regarding the EU (i.e. from ‘the successor of Hitler’s Third Reich’ towards “we will always be Europeans”) and is in no hurry anymore to fill in the Article 50 form, enabling the Brexit;
  • British citizens that were initially very enthusiastic about leaving the EU are now counting their blessings and think whether the choice for Brexit that they made, was a smart one indeed and not based upon lies and unjust hearsay;
  • The neutral part of the population is dismayed and can’t believe the scientific, socionomic experiment that they are watching now within their country;
  • The people in Wales, North-Ireland and Scotland, who were mainly against a Brexit, are now forging plans to plummet the results of the referendum as ‘being illegal’, hoping to counter the now inevitable exit;
  • If that fails these UK-countries perhaps want to get out of the UK, in order to stay within the EU;
  • And the other 27 members of the EU, who are really sick and tired of the whole British conundrum that already wasted 3 valuable years, try to get it over with as soon as possible, in order to get the show on the road again; rather today than tomorrow;
  • They consider October, 2016, which was the designated start date of the exit-criteria negotations – mentioned by David Cameron when he stepped down as Prime Minister – to be a disgrace and an unnecessary hampering of the exit-process;
  • Germany and France – in an obvious panic reaction – are launching plans for a new EU at lightning speed, instead of really asking themselves what hit them over the last few months.

So what will happen now...?

Scenario 1

The UK finds a (legal) way to declare this referendum an ‘invalid’ one (i.e. ‘null and void’) and admits it was a historical mistake. They declare that they want to revoke the plans for a Brexit.

The EU accepts this explanation with a straight face and an iron grin and welcomes the lost sheep back in the flock, while pondering about ways to punish the UK for its stupidity for at least ten years.
The UK bows its head and accepts the humiliation in silence...

Scenario 2

The EU reminds the UK that this referendum was a one-off and that the results and consequences of it are irrevocable. It also tells the new leadership to hurry up with sending their Article 50 request.

At the same time the EU – under influence of Germany and France – speeds up the process of further integration towards the political union, now that ‘jamming station’ the United Kingdom has been lifted out of the equasion.

The leaders of the other European countries and the population all over Europe get more and more alienated by the accelerated progress of the unappointed, but very real Union leadership of France and Germany, but these two countries persist anyway in following their roadmap towards an ever closer union.

In the end the whole EU might implode, because it forgot for which it was established in the first place. This would be the doom scenario...

Scenario 3

The UK is forced to get out of the European Union indeed, but the union itself gets into a serious identity crisis, with impact for years. The Union declares that it cannot longer ignore the dramatic mood changes among the European population or the dramatic events in the United Kingdom.

After a long and extremely painful process that could take a few years, EU 2.0 is invented, in which the neoliberal roadmap of the last 20-odd years is abandoned for good.

Again there emerges more attention for the social needs and labour protection of the lower middle classes and the original and yet very topical raisons d’etre of the EU.

Instead of the EU being an enduring battle between the Calvinist North and the Catholic South or a battle between successful, wealthy citizens at one hand and the backwarded middle and lower classes at the other – people who don’t have a job and/or any form of financial and economic protection anymore – the EU decides to become a union for all citizens again: a union based upon social-democratic foundations, with an emphasis on the soft sides of the union for the total European population.

At the end of this long and painful period, the UK can decide whether it wants to re-enter the EU 2.0 or stay out of it for good.

My heart lies with scenario 3!

The European Union, which I love and admire, has drifted away too far from the reasons for its foundation and sheer existence. In my opinion, this is the reason that so many Europeans feel alienated by the EU and see it as an undemocratic and even dictatorial beast, that stands in the way of their nation states, on which they have more democratic influence

The EU has in fact turned into a monster with the monomanic emphasis upon the open markets and upon lifting the trade barriers, while dramatically neglecting the rights and interests of all the European citizens, in North, South, East and West Europe.

The EU has made life miserable for people in poor states with their dramatic emphasis on austerity and reduction of the balance gaps of the last eight years, instead of on spurring innovation and prosperity in its member states by making investments in necessary developments.

It gathered a reputation of being a spending-happy, undemocratic group of people that was only working on the interests of the ‘big money’ corporations and on the creation of laws and measures that nobody understands anymore.

That is why I have the following pledge:

The EU should return to being an establishment ‘For the European people’, ‘Of the European people’ and ‘With the European people’; not a toy for neo-liberal, well-to-do people and large corporates, who use the EU as a tool to diminish their tax payments. You must diminish the current emphasis on neo-liberal values, in order not to be slaughtered by the common, European people.

Therefore I ask the representatives of all (remaining) EU member states to really think about what has gone wrong during the last eight years!

Think about why you have alienated so many European citizens and why it is nearly impossible to explain your policy and future plans to the common citizens in the poor rural areas of the United Kingdom... and as a matter of fact of all Europe!

A mindless pursuit for an ever-closer union is not the solution at this very moment. Neither is an EU Light, in which the ‘nation states’ make all the decisions again; this would be the end of the United Europe and would turn the EU even more in ‘27 frogs in a wheel-barrow’, in which no political decision is ever made. This is the recipe for even more stress and more inequality than now already: a selfish Europe without a mutual future!

Take your time after this dramatic referendum and think about the consequences that this referendum should have for your policy and your political future!

Build the EU 2.0 of which the people are proud to be a member!!!

Saturday, 25 June 2016

The day after the Brexit before.

“Alea iacta est” – ‘The die has been cast’
Julius Caesar, when crossing the Rubicon (49 B.C.)

Even in hindsight, June 24th, 2016 will turn out to be a historical day for the European Union as well as the United Kingdom.

At least it will be remembered as the day that the unthinkable happened: the EU referendum – the ‘political-firework-toy-to-buy-time-from-his-fellow-Tories-and-remain-in-charge’ of the reckless and weak Prime Minister of the United Kingdom David Cameron – blew up in PM Cameron’s face with an enormous bang that could be heard at the far outskirts of the European Union.

With almost the closest of majorities (roughly 52% against 48%), the British population decided to vote in favour of a Brexit, thus leaving the whole European Union, the international stock exchanges and most journalists of the main stream European media, in shock & awe frantically asking themselves “where did that came from?!”.

This total bewilderdness was not restricted to the 27 remaining countries of the European Union.

Also the 48% within the United Kingdom itself, that wanted to remain in the EU, could not believe their eyes.

The final result of the Brexit:
not exactly a landslide victory, but still a definitive one
Picture courtesy of:
Click to enlarge

The final result of the Brexit:
Parts of the UK that wanted in or out the EU (blue = out)
Picture courtesy of:
Click to enlarge
The final result of the Brexit:
Division of the Brexit vs Bremain votes per region
Picture courtesy of:
Click to enlarge
Yesterday was judgment day (see this link for a series of fantastic infographics on top of the aforementioned ones):
  • for England against Wales, the Catholic part of Northern Island, almost whole Scotland and especially Gibraltar;
  • for the older generation (above 49) within England itself, against the youngsters and the career-starters;
  • for the rural areas of England, against the major cities of England and especially London (see for this especially the blue card with the division of the votes in favour and against the Brexit);
  • for the (often empoverished) working classes of England, against the better educated and well to do people that cloud the successful cities and international companies;
  • for the streetfighters Nigel Farage and Boris Johnsson, against the timid and gentleman-’ish’ PM David Cameron.

As I predicted on a number of occasions, the referendum meant indeed the immediate end for the political career of David Cameron, as he stepped down within hours after suffering this devastating loss on this ‘beast that he could not control anymore’.

Where everywhere the populists celebrated this event as the ‘first domino in a row of 28 to tumble’, the more moderate politicians licked their wounds and asked themselves where it all did go wrong.

The simplest answer to this question is probably that the EU lost sight on its main goals and ‘raisons d’etre’: maintaining stability, peace, security and justice for all people living within Europe, through mutual understanding, cooperation, friendship, free trade and open borders.

During the last thirty years the EU had slowly morphed into a toy for neoliberal politicians and free market addicts, who declared one of the goals – free trade on an open, borderless market – to be the single goal that counted for the European Union, thus dearly neglecting the other, more political goals.

From a political achievement ‘second to none in the world’, which required the most attention and the best leadership available, the EU turned into a ‘dairy cow’ (for high profile jobs, agricultural subsidies, structure funds and other mutual investment funds), as well as the perfect ‘scapegoat’ for the dissemblement of errors and misjudgments that national leaders and politicians made.

It was always ‘we did’ in case of political successes for the national leaders and ‘the EU did’ in case of the political failures that had to be sold to the national grassroots. In the latter case, the losing politicians always seemed to ignore that they had been an integral part of the decision-making process; as if they were just innocent bystanders, who had nothing to do with the whole conundrum.

And let’s be honest...

The European Council had often a nasty habit of appointing ‘grey mice’, technocrats and apparatchiks’ for the leading functions within the European Union: these seemingly interchangeable technocrats did not distract any attention from the ‘more glamourous’ national leaders, who were always in the forefront when the real decisions had to be made. Or in fact finished, as the vast majority of the work already had been done by countless civil servants, who ironed away all the initial folds between the EU countries.

This was all probably out of self-defence for the national leaders in Europe, who did not want to stand in the shadow of their European peers.

The European Commission, the President of the European Council, the High Representative for Foreign Relations and the leader of the European Parliament all became harmless, unconspicuous people who looked at things in a distant, technocrat and unpoliticized way and did not offend anyone else in the various forums, by expressing overly strong opinions or by attracting too much attention.

The biggest drawback of these very useful, but unconspicuous ‘paper soldiers’ in the European Commission was that they failed to prompt sympathy, compassion and understanding among the populations in the various European countries. And – perhaps even worse – a mutually shared feeling that they were busy in Brussels on OUR behalf, defending OUR mutual interests as European citizens, against the rest of the world.

The European Commission became the commission of the ‘curved cucumbers’, the prohibited plastic bags and the stockpiles of technocratic legislation that nobody understood. In other words: while their unconspicuousness was perhaps a recipe for better cooperation within the offices in Brussels, it proved to be a disaster for emphasizing the importance of the European Union itself.
It left the latter as a source of vast financial spillage, useless legislation and annoyance for the Europeans: the fall guy for all poor political outcomes and failed negotiations.

Take for instance the European Parliament: this parliament has been the playing ground for many ‘second grade politicians’ who were side-tracked on their own home turf, calculating job-hunters and money-collectors and (more recently) European Union-haters, who wanted to make their point while screaming it out to their fellow MEP’s.

Although there are many, many compassionate and very good politicians from all European countries in the European Parliament, everybody unfortunately remembers the poor ones. The European Parliament almost never made a lasting impression on the European citizens, even though the parliament took many important decisions. This fact can be simply checked by looking at the number of people in all European countries, who casted their vote in the last European elections.

For the European Commission, the situation is even worse. The European Commission is undemocratic to the eyes of many and is blamed for almost everything that is wrong about Europe. Hardly anybody can name more than one or two commissioners and tell what their function is. This turns these commissioners in nameless, faceless threateners of the European democracy, as represented by the nation states.

But please think about this: who put these people in charge there? Was it all a French-German conspiracy? Was it maybe Saddam Hussein? Were it creepy representatives of one of the American secret services? Were it perhaps the Borg from the Star Trek series?!

Of were it our own national leaders...?!

Président François Hollande, Chancellor Angela Merkel, but also PM David Cameron, PM Mark Rutte (Netherlands), PM Matteo Renzi (Italy), PM Marian Rajoy (Spain), PM Alex Tsipras (Greece), President Andrzej Duda (Poland) and 19 other presidents and prime ministers of European countries.

That is exactly the point: these Euro-commissioners have all been put in charge by our own leaders, for exactly their unconspicuousness and their substitutability and their ability to keep a relatively low political profile.  

Europe can’t be sold to its citizens anymore, because our own national leaders made it as unattractive as possible over the last thirty years. And now it is falling apart on us, with the United Kingdom as the first domino to tumble...

Tomorrow: what can be the remedy for the current political conundrum with respect to the UK and the remaining members of the EU?

Tuesday, 21 June 2016

Will applied robotics turn middle and lower class workers into ‘the firemen on electric trains’ of the 21st Century and eventually lead to a new era of joblessness?

we are programmed just to do
anything you want us to
we are the robots

On steamtrains, firemen did traditionally one of the most important jobs: they had to keep the fire under the steam boilers burning fiercely at all time, in order to generate enough steam for the steam train to reach its destination. It was tough and dirty work, only suitable for the strongest and toughest of men. 

However, this came all to an end with the invention of the (diesel-)electric train, for which no firemen were needed anymore to run the steam engine and operate the train.

Or didn’t it?!

As the legend tells, there have been firemen on electric and diesel trains in the Anglo-Saxon world (i.e. the United Kingdom and the United States) until well in the last quarter of the 20th Century... 

Not because these firemen held indispensable positions on these types of trains and were really necessary to operate the engine or the valves and switches on these trains. No, reputedly they kept their position, because the then-powerful labour unions demanded from the railroad companies that their jobs would be maintained until the last fireman would retire. A job out of pity; not out of necessity.

I had to think about these ‘firemen on electric trains’ when I visited a conference about applied robotics, organized by the Dutch accountancy firm KPMG and hosted by Joris Juttmann of KPMG and René de Monchy of BNR News radio. Joris Juttmann is the Director Finance Management Advisory of KPMG and involved in Finance Robotics. René is a very intelligent, curious and learned journalist with a big interest in the future of labour, with whom I brainstormed on a few occasions about the Dutch banking industry. 

The conference existed of two keynote speeches and two break-out sessions with suppliers of robotics software, like IBM’s Watson, IPSoft’s Amelia and a few suppliers of RPA (i.e. robotic process automation) tools. These suppliers all covered different areas of the development ladder of applied robotics, with an automated (i.e. robotized) invoice processing tool as relatively simple tool and IBM’s Watson as the epitome of robotic tools today. At the end there was a panel discussion between the suppliers of these tools and guests of the conference. 

Picture of the Applied Robotics conference hosted by KPMG on June 15th, 2016
Most right: René de Monchy, directly next to him: Joris Juttmann of KPMG
Picture by: Ernst Labruyère
Click to enlarge
The conference was organized to: 
  • a. show what is already possible with the current generation of applied robotics in today’s office and boardroom environments and
  • b. shed a light on the coming ten years, in which the development of applied robotics will undoubtedly cause a dramatic paradigm shift for many, many low AND high educated office and blue collar workers and will lead to really new and sophisticated, strategic decision-making tools for the executive boards of tomorrow’s companies.
To be fair: I am definitely from the robot, android and cyborg generation that emerged in the 2nd half of the 20th Century. Therefore I can draw a Cylon (from Battlestar Galactica), Star Wars’ R2D2 and C3PO or Twiki from the Buck Rogers’ series with my eyes closed. Not even to mention Arnold Schwarzenegger as the legendary Terminator.

This meant that I had to switch off my fantasy and I had to understand that applied robotics has less to do with autonomous and hostile (or friendly) steel humanoids, than with robotized and computerized processes that can run nearly unattended 24 x 7 and execute a shedload of administrative work at times when normal workers sleep. Robots and robotized tools that can understand and communicate with human beings in ‘natural language’ too: currently mostly in English, but with many more languages underway.

While the demonstration of programmable toy robots (see the aforementioned picture) in the beginning of the conference was a little bit too ‘toy-ish’ and childish for my personal taste, the program as a whole was a very good and interesting listen.

As I had to make a choice, which suppliers and products I would visit during those two break-out sessions, I chose for IPSoft’s Amelia (i.e. a robotized, context-sensitive call centre clerk) and IBM’s Watson.

Picture of  Amelia, the robotized call centre clerk by IPSoft
Picture courtesy of: IPSoft
Click to enlarge
Amelia, a robotized and animated helpdesk/callcenter clerk looked in the demonstrated version perhaps too much like an archetypical, somewhat restrained blond girl from Sweden, but her capabilities seemed quite impressive.

"She" was not only capable of speaking and understanding natural language in voice and writing (i.e. not just collecting keyword-driven snippets of information, but literally understanding whole phrases and sentences), but her sophisticated software enabled her to fully understand the contents, context and emotional tone-of-voice of the caller’s message and adjust her own tone of voice and cartoonized expression to the mood and words of the caller.

Amelia demonstrated – as a call centre (sales) clerk for a health insurance company – that she could understand inquiries in natural language (both in speech and written) about new/additional insurance products and administer an exact answer about how much these would cost for the customer. She also changed her tone of voice and looks when a customer called with a serious illness or complaint.

During this whole demonstration IPSoft showed the trees of changing, context-driven and topical answers, as well as her full range of robotized emotions and her language understanding and answering capabilities with respect to the subject, from which Amelia could pick her pronounced or textual answers and cartoonized and verbally expressed emotions. 

IPSoft also showed that Amelia could connect to all required systems in the backoffice to offer product calculations and other answers to customer’s inquiries. In a certain way, this robotized call centre clerk was akin to the early expert systems, that were already under development in the Nineties, but it was all way more sophisticated, intelligent and topical than in those years.

I still have some serious doubts whether today’s pampered, well-informed and assertive customers want to be helped by a robotized and cartoonized ‘girl’ with a peculiar voice, that tries to understand the customer. 

Yet, I had to admit that a patient, 24 x 7 available customer call centre clerk, always offering immediate and on-the-spot service, sounds like a good deal for online shoppers. Especially when her language, emotional and context-sensitive capabilities are indeed as good as promised during the demo. 

Besides that, the fact that tough and complicated questions or uncomfortable conversations with angry customers will immediately lead to human intervention by real employees, might be a critical success factor for Amelia.

Nevertheless, when Amelia represented the Junior League of Baseball for robotized tools, IBM’s Watson was definitely representing the World Series in this category.

Picture of  IBM's Watson, the robotized information cruncher 
and expert system during its winning game of Jeopardy
Picture courtesy of: IBM
Click to enlarge
According to IBM, this tool – that won a game of Jeopardy against the best and most seasoned human players ever, at the expense of a ‘token’ $10 billion in initial investments – is reputedly able to ‘crunch’ 300,000 documents per second(!) in human language. 

Its artificial intelligence and machine-learning capabilities enable Watson to improve itself dramatically in proportion as it gets more (useful) information from various different sources. The possibilities to 

  • a. feed Watson with almost unlimited amounts of structured, as well as unstructured information (i.e. pictures, videos, human speech fragments and other soft information) and
  • b. administer a weight to the quality of the entered information in accordance with its scientific or business standards, 
makes Watson probably the boardroom tool of the future.

One of the most promising examples of Watson being able to wrangle unstructured data, is the fact that it is used by medical doctors and institutions to find cancer forms and assess their gravity on x-ray pictures and CT scans.

Of course it is quite hard for an unexperienced listener to distinguish between sheer ‘marketing babble’ and genuine, truthful information about Watson's real achievements. Yet – with IBM’s reputation and future at stake – I do believe that Watson is a future factor to reckon with, even though it is yet extremely expensive to purchase, load and operate. Therefore the tool has still a very high threshold for ‘common’ companies, but that threshold will probably diminish when prices drop and loading of information will become easier and quicker.

Amelia and especially Watson might sound like science fiction to the ears of many people, but the developments in applied robotization currently go at lightning speed...

Nowadays tools are emerging that can check the whole administration of large companies, instead of doing ad random checks on a limited set of corporate information like human auditors do. This means that these tools are able to check every transaction, general ledger entry and manual correction, being made by every department of the company during the business year. 

On top of that these tools are also able to write the mandatory auditors’ statements about the quality and reliability of the business administration of the company, which are part of quarterly and annual reports and other mandatory information to shareholders.

There are also tools that can book, distribute and process all invoices, purchase orders and sales orders without any human intervention at all. Or robotized distribution systems that can pick millions of sales orders in huge warehouses around the clock and make them shippable for the distribution trucks, without one single human being around and within minutes after the order came in from the customer.

Will this all go at the expense of numerous lower AND middle class jobs?! You bet!

While I was already worried about the relatively simple, lower class jobs in distribution centres, warehouses and supermarkets, I was actually quite surprised to learn last Wednesday that even complex and intelligence-requiring, higher middle-class jobs like auditor, accountant, notary, legal counsellor and fiscal specialist are now on the line, due to these financial and business robots.

And even though IPSoft’s Amelia still looks quite grotesk and clumsy and has a clearly non-human, robotized voice that probably few people will appreciate, I definitely see the potential in this tool for large online shops and worldwide operating companies. This all happens at the expense of large and independent, humanly operated, around-the-clock call centres positioned all over the globe.

As that was the message of this conference: almost ALL repetitive, routinely labour and activities can already be executed by robotized processes today and the development still goes on and on. 

These unstoppable developments might turn the people, who are currently working in such jobs, into the ‘firemen-on-electric-trains of the 21st Century’: tolerated for what they were and could do in the past, but not really useful anymore in the light of the latest developments.

In my humble opinion, it is without a question mark that the robotization of the workplace will lead to massive loss of routinely and repetitive labour, as maybe tens of thousands of jobs are on the line in The Netherlands alone and millions of jobs globally. 

Think about millions and millions of accountants, auditors, lawyers, call centre clerks, distribution centre and supermarket employees who can be dismissed and replaced by machines, which can do their jobs 24x7x52 each year. Without hesitation and without ever getting tired or bored.

It is nearly impossible that all these dismissed people will find a different job very soon. 

Many of them might become unemployed for quite a long time. Therefore many (or all) humans have to focus on what makes them special and different from these (administrative) robots and computerized processes. They have to develop their creativity, their improvisational capabilities and their unaddressed talents in order to become indispensable again in the 21st Century.

This is a grim outlook, but it can also be an opportunity to change one’s life for the better. For the simple reason that routinely and repetitive labour is seldomly the most interesting job for creative and intelligent people, looking for challenges.

Saturday, 18 June 2016

I was wrong five years ago! LinkedIn became indeed a $25 billion company within five years! Microsoft paid exactly $26.2 billion for the company, during what could be its version of the ‘kiss of death’ for the ‘Resumee Network’

Five years ago, in May, 2011, I had a written discussion with Conor Sen (@conorsen on Twitter), a very savvy trader / investor from Atlanta (USA) and – at the time – a prominent member of the Minyanville investment blogging community, of which I was a member too in those days.

Conor Sen declared – in an article on Minyanville – why LinkedIn would be worth $25 billion in five years (i.e. 2016). 

Although I understood his vision in that article, I did not fully buy it. As a response to his article, I declared why LinkedIn would NOT be worth $25 billion in 2016; also on Minyanville and on this very blogsite. 

At the time, the IPO of LinkedIn was an exciting event, taking place amidst the (partially successful) IPO’s of other social networks, like Facebook, Groupon and Twitter. 

Conon Sen was an investor, who especially saw the future value and yet unfulfilled promises of these social networks. He was especially enthusiastic about the future possibilities of LinkedIn (snippets from Connor's article):

So anyway, I like the data economy as an investment theme, I like LinkedIn's place in it (nobody other than Google (GOOG) or Facebook is better positioned), and I like LinkedIn's team, starting with Hoffman. What about the stock?

In 2010 it took in $243 million in revenues. In the first quarter of 2011 it took in $94 million, up 110% from $44.7 million a year ago. That makes trailing 12-month revenues $292 million. What sort of multiple does that deserve? For comparison, recent high-flyer Internet stocks like OpenTable (OPEN) SINA Corp (SINA), and Baidu (BIDU) trade at 18.9x, 17.0x, and 25.4x, respectively. Facebook 2010 revenues were roughly $2 billion, and with some estimating a current value of $70 billion, that'd put Facebook around 35x sales. LinkedIn going public at $4.5 billion, or 15.4x trailing 12-month revenues, seems entirely reasonable by comparison.

I expect this strong growth for LinkedIn to continue for years. Hoffman believes there's room for more than one online profile, with room for at least a social profile (Facebook) and a professional profile (LinkedIn). I agree, and actually believe LinkedIn's barriers to entry are higher than Facebook's. When it comes down to it, how valuable is that marginal high school friend posting Mafia Wars updates vs a marginal professional contact on LinkedIn who could one day lead to another job or professional opportunity? Hoffman envisions a world where LinkedIn, for example, would monitor analytics about trending skills and types of companies in a particular city, allowing users to see what skills are in demand and find resources to attain those skills to become more valuable in the marketplace.

At the time I – as a 'renowned' non-investor – was especially anxious about the enormous amount of ‘future growth potential’ that was priced in in stock like LinkedIn, Groupon and Facebook. To these eyes it would be nearly impossible to meet this growth potential in reality, so I reckoned that the IPO-prices were 'over the top'.

Instead of taking f.i. 15 times the annual profit, which was a usual price goal for most stocks, these tech-stocks yielded about 20-25 times the annual revenues at the time of their IPO, which seemed to be outrageous to these eyes. That was the reason that I responded to Conor in my article:

In my forecast, I take LinkedIn’s statement about future declining profitability into account, by letting it rise initially from 2012 - 2013 and letting it decline again in 2014. In 2011 the company doesn’t expect any profit at all:

2011        -/- 1% to +1% of revenue
2012        + 7%
2013        + 9%
2014        + 8%
2015        + 7%

Revenue growth and profit prognosis of LinkedIn,
estimated by Conor Sen and Ernst Labruyère
Printed first in 2011
Click to enlarge
I think that only a stock price vs. profit ratio of 15-20 times is healthy and thus a stock price vs. revenue ratio of 10 is not healthy. If you agree with this concept and with my forecast of future profits, than a market capitalization of $3.6 bln in 2015 would be more appropriate, instead of $26 bln. If you divide this through 94.5 mln shares (the total amount), the future stockprice in 2015 would be $38.5, instead of $275.

LinkedIn itself is afraid its costs may increase strongly in the coming years and its profitability may decline. Besides that, LinkedIn might not be as strong in recruitment (yet) as its most important competition: the real recruiters. And as the number of profiles in LinkedIn remains increasing, the number of unused, poorly updated and/or unusable profiles will increase to. This might turn searching for good candidates via LinkedIn into searching a needle in an enormous heystack.

And remember: the only true assets of LinkedIn are those profiles. And please remember too that Microsoft, Yahoo and Google needed desperately to diversify itself to maintain their revenue growth and profitability at the current levels. For LinkedIn that will be quite hard, as their only assets are those profiles. I’m afraid that LinkedIn might turn into a dog, instead of a cash cow. $45 per share was in my opinion already very high, but $90-$100 is ridiculous.

Suffice it to say that I have been wrong, very wrong! And the worst thing is: it is officially on record that I made a fool of myself five years ago!

No other party than Microsoft is offering $26.2 billion(!) in order to take over LinkedIn and try to integrate it in its Office Suite, for the benefit of both companies. With that $26.2 billion of Microsoft's money, Conor was right with his estimate and I was wrong. 

Here are the pertinent snippets from the Wall Street Journal:

Microsoft to Acquire LinkedIn for $26.2 Billion

Deal is for $196 per LinkedIn share, a 50% premium to Friday’s close
Microsoft has agreed to buy professional social network LinkedIn for $26.2 billion. The software giant hopes to jump-start its software packages by connecting them with LinkedIn's vast network.

Microsoft Corp. snapped up LinkedIn Corp. for $26.2 billion in the largest acquisition in its history, betting the professional social network can rev up the tech titan’s software offerings despite recent struggles by both companies.

The deal is Chief Executive Satya Nadella’s latest effort to revitalize Microsoft, which was viewed not long ago as left behind by shifts in technology. Mr. Nadella hopes the deal will open new horizons for Microsoft’s Office suite as well as LinkedIn, both of which have saturated their markets, and generally bolster Microsoft’s revenue and competitive position.

Mr. Nadella said today’s work is split between tools workers use to get their jobs done, such as Microsoft’s Office programs, and professional networks that connect workers. The deal, he said, aims to weave those two pieces together.

As for LinkedIn, the deal offers hope to renew decelerating growth as well as an exit for shareholders after the stock tumbled from a peak of $269 in February 2015 to as low as $101.11 last February.

Microsoft will pay $196 per LinkedIn share, a 50% premium to the social network’s closing price on Friday.

Of course the fact is now proven beyond a reasonable doubt that LinkedIn is worth $26.2 billion, otherwise Microsoft would not have paid that amount for it, wouldn’t it?!

Yet, I have to say that this friendly takeover of LinkedIn to Microsoft rather resembles a firesale of one desperate company to another desperate company, than a healthy merger between two strong parties.

The two snippets in red are tell-tale signals by themselves. 

Let’s be perfectly clear about it: snippets like “Both of which have saturated their markets...”, “offers hope to renew decelerating growth...” are not the remarks that you want to hear as an investor, after arguably one of the bigger friendly takeovers in history. 

In The Netherlands, this is called a situation in which “the lame person is helping the blind one”. That is seemingly an act of despair, not a case of sound judgment.

Roughly two years ago – when LinkedIn was in its heyday – I already reminded Conor of our little bet, ending in 2016. His brief, but crystalclear response was then: ‘What are you talking about, LinkedIn is already much more worth than $25 billion’. 

Of course he was right then: as a trader/ investor he already could have made a bedazzling profit in 2014 or earlier, on his initial investment from the days of LinkedIn's IPO.

My point in 2011 was, however, that having five years of solid revenue and profit growth is a helluva promise to fulfil for a quoted company. Especially when this company has little more on offer than one product (i.e. information  about worker’s resumees and companies looking for people) and a lot of future growth has already been priced in in the stock rate. 

And while Facebook and Google had ample opportunities to diversify their business during those years, I happened to see few opportunities for LinkedIn to do the same. I dare to state that I was right then. This becomes very clear when we a. look at LinkedIn’s main product and b. look at the revenue and profit development for LinkedIn.

LinkedIn still offers the same resumees for companies and the same information about vacant positions for workers and freelancers. There have been no mindboggling new inventions and groundbreaking new technologies, emerging from LinkedIn during that period. 

It is still quite the same ol’, same ol’ as five years ago... And although LinkedIn has become a little bit more exiting to use over the years, it is little more than just ‘a little bit’.

And for the revenue and profit development, let’s look at the annual data for the last five years:

Profits and Loss statement from 2016
for the period 2011-2015
Data courtesy of LinkedIn
Click to enlarge

Balance Sheet from 2016
for the period 2011-2015
Data courtesy of LinkedIn
Click to enlarge

Comparison between LinkedIn prognosis by Conor Sen and Ernst in 2011 
and the realized revenues and profits of LinkedIn during period 2011-2015
Chart created by: Ernst Labruyère
Click to enlarge
If regarding the revenue growth we compare the real P&L data with the prognosis, offered by Conor Sen in 2011 (see the first chart in this article), LinkedIn has done a fantastic job. The company outnumbered the already quite optimistic revenue growth prognosis by an average 15%.

However, when we compare my (already cautious) profit estimate (see also the first chart in this article) with the actual profit realized by LinkedIn, the company failed seriously during these last five years in turning its growing revenues into healthy profits.  

Last year the company already presented a small loss of $15 million for the year 2014, but for 2015 the company presented a quite massive loss of $166 million, or 5.5% of its revenues. 

And to keep up with the competition, the company needs to invest much money in new and improved infrastructure and technologies on a nearly daily basis; this is good for high expense levels during 2016 and far beyond. 

Then the simple question remains: when will this company finally fulfil its promise with respect to yielding a flow of healthy profits?! You perhaps will guess my answer: probably never!

And it seems that the traders and investors have also become aware of the fact that the star of LinkedIn has started to fade, as you see the plummeting of the stock rate in recent months.

All in all it was a blessing in disguise for the investors in LinkedIn that Microsoft came along with a big bag full of money last week. And perhaps Microsoft is indeed able to revive both companies, with the purchase and subsequent incorporation of LinkedIn in its Office suite. However, Microsoft’s track record with takeovers and mergers (think about Nokia) is not very promising. 

Therefore – and for other reasons - such a successful merger between LinkedIn and the Office Suite would not be my personal investor’s bet when my own money would be involved, to be honest. Microsoft’s takeover could very well be its version of the kiss of death for LinkedIn. 

But don’t trust me on this... 

A few days ago I have been proven very wrong with my 5 year old bet with Conor Sen, even though I still stand very firmly behind my reasons for making it in 2011!  

Tuesday, 14 June 2016

The coming referendum will become Cameron’s swan song – one way or the other. But who will gain from the emerging, political chaos in Britain?!

You had no more volunteers
So you got profiteers for to help you out
With friends like that babe
Good friends you had to do without

To these eyes PM David Cameron of the United Kingdom is what you could call a ‘just not’-politician:
  • Just not tough enough as a politician;
  • Just not convincing enough as the leader of his country and his Tory party;
  • Just not statesman-like enough to get his fellow European Council-members at his side in the negotiations about the British conditions for EU membership;
  • Just not elevated enough as a person to be freed from gossip and hearsay about small malversations and questionable tax tricks;
  • Just not honest enough to be totally trusted upon by the British population or by the European citizens;
  • Just not loyal and reliable enough to stand above the parties and keep the country together in these tough times of economic heartship and utter dividedness.

Nevertheless, since David Cameron became the prime minister of the United Kingdom in 2010, he ‘has managed to hang in there’. During his time at 10 Downing Street, he kept his nose clean enough to keep his job, in spite of a few minor incidents and scandals that really did not seem to hurt him much.

On top of that, there are few signals that the country could become subject to violent protests, on a scale that was normal in the turbulent years of his formidable predecessor, ‘Iron Lady’ Margaret Thatcher.

And during last year’s election [2015], Cameron even managed to get rid of his former coalition partner Nick Clegg of the Liberal Party. Since then the Tories have governed the country as a one party-government again, after having five coalition years with the Liberals. 

So all in all the current political situation for David Cameron seems not too bad to the uninformed eye.

Yet, there is only one circumstance that may and probably will end his political career at a blistering speed. That is the Brexit referendum, to be held in roughly one week on the 23rd of June, 2016. But why this referendum has become such a gamechanger?!  

As we all know, during his first stint as a Prime Minister Cameron felt a mounting pressure from his fellow Tories, as some of them were adamantly opposed against the European Union and they had the idea that the terms for the membership of the United Kingdom were unfair.

The pressure coming from these maverick Tory members slowly, but surely forced Cameron to organize a ‘plebiscite’ on the future of the United Kingdom, in its relation with the European Union. In 2013, roughly one-and-a-half year after the word ‘referendum’ had been mentioned first, it was a done deal. From that moment on, the rudder for Cameron's political career and – as a matter of fact – the future of his country was smashed out of his hands.

At first, the referendum – which would be organized in 2017 initially – seemed nothing more than a distant spot on the political horizon: nothing to worry about, as the moment of it was still far, far away in 2013. 

At that time, the promise of a referendum seemed first and foremost a warning signal aimed at the EU and an attempt to buy time and renegotiate the UK’s position in the European Union.

But the years passed by and Cameron’s attempts to renegotiate the position of his country turned into desperate longshots, instead of being realistic visions on a mutual, slightly altered future for the EU and the UK.

It was an impossible task: his demands and conditions for renegotiating the EU membership were simply too little for the Tories and the many disappointed citizens within the UK, but much too much for the European Council and the European Commission as a whole.

Under the pressure of the mounting immigration crisis and the enduring economic crisis in the Southern European Eurozone countries, Cameron demanded things from the EU that were violating the sheer foundations of the EU in some cases; foundations that the other EU members like France and Germany would never water down. From this situation the perfect stalemate emerged, in which the UK could not act anymore and the other EU members would not act either.

And so the referendum – to which Cameron fully owed his unexpectedly big victory after his re-election campaign in 2015 IMHO – turned into Damocles’ Sword for him. And now Cameron feels like a rabbit in the headlights of an approaching car: fascinated by what he sees, but totally clueless about what to do next.

From a non-event for anybody else than hardened political junkies and professional bawlers, the referendum has recently changed into the biggest political happening in decades for the United Kingdom and far beyond. And an event for which the outcome is utterly unpredictable.

While the referendum at first seemed to become a landslide victory for the ‘Bremainers’, the tides seem to be turning for those who advocate a Brexit. 

The latter group was in the beginning a mixture of UKIP populists, rightwing Tories, small-town nationalists and other eccentric people, but now the Brexit is becoming in fashion among a broader and more prominent group of normal citizens, politicians and renowned journalists.

Where the arguments of the Brexiteers and Bremainers inside and outside the UK (i.e. within the EU and the other European countries) were earlier a mixture of fearmongering, hyperboles and demonizing of the adversaries, the recent arguments seem to become more deliberate and more based on solid judgment of the situation at both ends. This turned the referendum into the 'talk of the town': not only for people at the far ends of the political spectrum, but also for the moderate people in the centre.

Currently the outcome is everybody’s guess... 

The bookies did not give one penny for the chances of the Brexit camp, only a few months ago, but now both sides become more and more balanced out and the momentum seems to be in the Brexit camp currently. Self-confident statements from renowned journalists in The Netherlands that the referendum would prove to be ‘little more than a storm in a teacup’ seem more and more implausible by the day. 

And PM David Cameron? The situation already went out of hand for him and is currently beyond his control. 

The reasons for this can be found in an earlier blog of mine about Cameron's ‘mega gamble’:

And so David Cameron – who is allegedly an advocate of the EU membership – is playing a massive gamble with the membership of the European Union. As that is how it will turn out for him: 
  • Gamble 1: Cameron gets what he wants from the EU and advices his citizens to stay in the EU. The Brittons follow his lead.
  • Gamble 2: Cameron does not get what he wants from the EU, but the British population wants to stay in the EU anyway.
  • Gamble 3: Cameron gets what he wants from the EU, but the population does not listen to him and votes in favour of a Brexit anyway.
  • Gamble 4: Cameron does not get what he wants from the EU and he successfully endorses a Brexit towards his population. 
This would lead to the following results:

In case of gamble 1: Cameron is the glorious winner of the gamble and he wins a set of privileges and concessions from the EU that is truly unprecedented, while maintaining the unity in the British Union.

This is the win-win situation for the United Kingdom, but an enormous loss of face for the EU and a definitive proof that the floodgates for political blackmail by other member states are wide open.

However, all other possibilities pose a losing situation for both PM David Cameron and the European Union as a whole.

Gamble 2: Britain votes against a Brexit, which would be ‘good’ for the EU, but Cameron has lost the last bit of credibility within and outside his country and the European Union as a whole. The only thing that he can do in this situation is resign, as nobody will take him seriously anymore. 

Gamble 3: In this case both Cameron and the EU suffer from severe loss of face. Cameron clearly loses his credibility and influence, as the Brittons blatantly do not listen to him and his advices anymore. He also can’t do anything else than resign, in this case. 
The EU on their end shows that political blackmail is a winning option and loses its face too in a very harmful way. 

Gamble 4: The EU does not lose face and so doesn’t Cameron. For the rest everybody is a loser in this situation, as a Brexit is then inevitable.

In other words: both gamble 3 and 4 have a Brexit as ultimate result. And please be aware of the following: the consequences might be severe for the UK!

Suffice it to say that gamble 1 has not played out at all. Even the most battle-hardened politician would not state that PM Cameron has returned home with ‘a winning list of priviliges and concessions’ from the EU. Camerons pathetic attempts to convince the English population and his peers in the Commons of this view anyway, were doomed to fail.

Even though Cameron still pleads for a ‘Bremain’, his words sound very hollow in the wake of his failure on accomplishing gamble 1.

Gamble 2 seemed like a dead-cert only a few months ago, but is turning into a long-shot with the Brexit and Bremain camp balancing out. For Cameron’s credibility it probably does not matter anymore.

Gamble 3 was just as dead as gamble 1 for the same reasons: Cameron did not get what he wanted at all, as the EU did not want to be blackmailed to the extent that Cameron desired.

Gamble 4 is the one that seems very plausible to play out, even if Cameron is not endorsing this gamble in the current situation.

This means that only gamble 2 and gamble 4 [actually a mixture between gamble 3 and gamble 4 – EL ] are remaining in play currently.

When gamble 2 does play out, this will still become the end of Cameron’s political career.

This is due to Cameron's lackluster defence of: 
  • at one hand the values of the EU against his fellow-MP’s;
  • and on the other hand the British values and convictions against the European Council members. 
Cameron will become a sitting duck for his adversaries all over Europe and in the UK, as he failed dramatically on both ends. Consequently, he will be gladly sacrificed by all politicians involved, even though the sigh of relief among the EU members can probably be heard on Waterloo Bridge, when this becomes the winning scenario indeed.

And this scenario will also become the end of Boris Johnson’s [the former mayor of London and the currently greatest political adversary of David Cameron – EL] political ambitions. As a matter of fact, it could lead to an implosion of the whole Tory party, as the raison d’etre of many members will have been blown to smithereens in a democratic referendum.

This might lead to new elections and a soaring popularity of UKIP, the Liberal Party and Labour, when disappointed Tories give up their membership and vote for other parties.

However, when gamble 4 plays out, Boris Johnson and Nigel Farage will be ready to collect the sweet fruits of their moral victory over Cameron. 

In this case Cameron will also be a sitting duck without any political credibility left. And Britain will be drawn into a (probably bitter) divorce from the EU after a quite long, but not very happy marriage.

So one way or the other, this period will probably become the swan song for David Cameron. And in my humble opinion, this is an appropriate fate for a politician who was simply ‘just not good, strong and honest enough’.  

Or in the words of Mark Knopfler of Dire Straits: ‘With friends like that babe... Good friends you had to do without. Oh and it never rains around here. It just comes pouring down’.