Entrepreneurship in Civic Tech

Liveblog of a Code for America event in San Francisco.

The phrase “civic technology” has been claimed by those using technology to advance government, activism, political campaigns, neighborhood involvement, journalism, humanitarian relief, urban planning, and ever more realms. These fields overlap, in many cases. Broadly, we might define ‘civic tech’ as technology deployed on behalf of the common good.

Code for America’s definition is “technology that’s spurring civic engagement, enhancing citizen communications, improving government infrastructure, or generally making government more effective.”


Civic Entrepreneurship

Dharmishta Rood introduces the Code for America Accelerator program, which is open for another week. She points to the success of two Texan police officers who founded Street Cred in the previous cohort. She’s joined by a roster of panelists to discuss the tactical strategies and steps of civic entrepreneurship:

  • Joel Mahoney, former CfA Boston fellow and co-founder of OpenCounter, which exists to streamline the business licensing process.
  • Peter Shanley is Principal at Neo, which does product development. Peter also runs the fledgling Neo for Good program there. Peter’s background also includes managing affordable housing units in the Tenderloin.
  • Marci Harris, CEO and cofounder of Popvox, came to the civic space as a congressional staffer disappointed by how information flows into Congress. She compares it to Lucy on the assembly line at the chocolate factory.

Code for America civic startup panel 1

Dharmishta asks the panelists what originally drew them to civic tech. For Marci, it was the frustration of dealing with bureaucracy after a tornado hit her town. The technology was an obvious tool to apply to problems.

Peter grew up in the inner city in Buffalo, NY and had social justice ingrained in his upbringing. He points to the paper applications required to apply for housing in the Tenderloin, and the hurdles faced by the disabled.

Joel refers to Bill Gates’s leveraging of lessons learned in the technology sector to address major global challenges. He was excited to apply commercially valuable tech skills to common problems.

Challenges faced by civic startups

Joel says governments operate on very slow contracting periods that can be deadly to nimble, resource-hungry startups.

“My Code for America fellowship period was almost like a year abroad: different rules, different procedures, and a deep history there.” The City of Boston employs more people than Google.

There’s also a huge wave of retirements arriving in government. Joel sees this as a tectonic shift, as some roles are replaced by new positions like Chief Data Officer.

Marci points out that civic startups are a unique model. You need to cultivate trust more than your average photo-sharing app. The challenge was in finding their own center, and partners and advisors who understood this unique position between government and tech startup.

Peter introduces a statistic estimating that 40% of IT staff across every layer of government, local, state, and federal, are retiring shortly. This is an opportunity to bring in fresh skills and attitudes.

Success Working with Government & Communities

The flip side of the slow contract cycle is longevity. Civic startups working with government may have to figure out what they’ll charge in the year 2020.

Joel’s had success as a Code for America fellow building DiscoverBPS with the City of Boston. Three years after starting development, the site has won user experience awards and survey results recently found that the site is one of the most used tools used by parents in Boston’s school lottery process.

Marci points to the reward of citizen feedback, of individuals who write to say that they now feel heard. The House Democrats recently told her that PopVox’s database of who is supporting or opposing various pieces of legislation is the most complete available, vindicating Marci’s hunch as a staffer that this sort of information would be insanely useful.

Surprises

Peter has found that people have been more willing to work together than he had anticipated.

When she got out to Silicon Valley, Marci was a bit surprised just how unaware of governmental procedure worked, and how dismissive people were of the need to learn how it worked. She’s been surprised to see in the past four years how the tech community has become far more engaged at the policy level.

Joel was surprised to see a government form that had been mimeographed since 1983. “That stuff is out there.” But more positively, he’s been amazed how quickly change can happen when you get through to people and show them how you can help them with their jobs, and how much better the citizen’s end-user experience can really be.

Advice for New Civic Startup Founders

Peter advises founders not to rely too heavily on the tech, the tool, or the app.

Joel keeps it simple: Get involved with Code for America.

Marci advises you work to understand the root of the problem. As citizens, we all have opinions about how to solve the problem, but we have to be careful not to solve only our piece of the equation.

Where’s it all going?

Marci hopes we’re moving towards a more comprehensive ecosystem where it all fits together well. She sees CfA as a great onramp into the space. We need to fit together the puzzle pieces and prevent duplication so that the few resources in the space are well deployed. That’s how we’ll produce the ripple effects that networks allow.

Peter considers himself a hopeful person, and he hopes that governments will become more transparent, smart, and just. On a historical scale, he says, it makes sense to invest in the disenfranchised.

Joel says that police reassess speed limits based on how many people are speeding in the area, and we could see this as a proxy for voting. Planners now have to confront actual data. Cities’ and governments’ static tools are gradually being replaced by networked tools that are responsive to actual conditions.


Civic Technology: the funding opportunity

Lane Becker, most recently of Code for America, introduces the second panel.

  • Christie George, Director of New Media Ventures, a startup network of angel investors and philanthropists investing in media and tech startups working on progressive change (e.g. Upworthy, Sum of Us, ActBlue).
  • Ken Norton is a Partner at Google Ventures, and was previously a Product Manager at Google.
  • Tim O’Reilly, Founder and CEO of O’Reilly Media, is also on the board of Code for America. He draws a line between politics and civic startups. He quotes Jen Pahlka’s argument that while government is a vast ocean, politics is just a six-inch layer at the top. Tim has long argued that the government should be seen as a platform, not an app developer.

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What’s the state of the venture investment ecosystem?

Tim jumps right in: “Venture capitalists are herd animals…or perhaps more accurately, they’re predators who follow herds.” They follow success, and in this space, that’s Palantir. Palantir and a collection of smaller civic startup successes have drawn the attention of VCs. Tim compares this space to the maker community, where VCs started paying attention only after Makerbot had a 8-figure exit.

Christie references the Knight Foundation’s recent civic tech report, with the caveat that they were broad in their inclusion of peer economy investments like Airbnb. Christie sees New Media Ventures as patient capital, willing to invest in things that matter even if the investments don’t move as quickly as a traditional VC round.

Ken says Google Ventures looks for impact across a very wide range of businesses, including the life sciences. He mentions their investment in Inventure, which looks to serve billions of unbanked people across the globe with financial products and credit-building.

Code for America tries to get government data into the hands of those who need it, as they did when they got city restaurant health inspection data embedded in Yelp. Tim says that there are many startups we might not consider “civic startups”, but still tackle collective problems. He cites Uber, and the problem of heavily regulated marketplaces.

Christie loops back to Marci’s point that it’s important for founders to be well-informed about existing regulations.

Effective Strategies for Civic Startups

Tim says it’s the same for civic startups as it is any other startup: find a meaningful problem whose solution is a market of reasonable size. Startups addressing the government market are operating in a fairly opaque environment. Government procurement hasn’t received much fresh air until recently.

Christie asks that founders actually talk to the people who supposedly suffer the problem they’re looking to solve. And look into what’s already been done; many, many civic hackathons produce polling place locators.

Ken points out that there are lots and lots of problems in government to solve. He doesn’t see a slow sales cycle as a barrier to major profitability — that’s just an enterprise model. Ken sees the partnership-building Code for America does with connections on the inside as a critical component.

Tim brings up ClimateCorp, which used government weather data as the foundation of improved predictive models, and was recently acquired by Monsanto for lots of money. There are lots of opportunities that may not fit the classic venture investment use case. He grew O’Reilly Media for decades without taking any money, and thinks it’s important that there are companies in the civic space that build slowly and profitably over time.

Christie says that the beauty of creating cohorts (the Code for America model) is that you’re able to share resources across companies selling to the same market and leverage that small initial investment.

Challenges

Christie says that early seed funding is a tough section of the pipeline.

Tim brings up that procurement is a barrier, because selling to government is “enterprise sales++”. He sees room for interesting, successful companies that don’t sell directly to government. The government’s a huge provider of data and a huge procurer of services. Startups are nipping at government’s roles, like the Center for Disease Control, figuring out how to do things better, and then turning around and selling those services back to the government.

Ken mentions Premise, which tracks global macroeconomic trends, as another example of a company that didn’t explicitly set out to sell to government.

What You’d Like to See

Christie would love to see a more comprehensive ecosystem, where it’s clear where founders go at various stages of the process.

Ken considers himself an optimist by virtue of working in venture investment (the alternative being a pessimist working at a hedge fund). He sees the technology trends driving the industry, like smartphone penetration and developing nations gaining technology, as fundamental forces for making this stuff happen.

Tim’s channels the founder of Perl, and says his vision for government is a world where government makes easy things easy, and hard things possible.

Q: What are the biggest untapped pools of government data?

  • Healthcare data
  • Internet of things
  • Economic data
  • Think ahead to data that will be made available as technology opens up new possibilities in the future

Q: What about business models? Government tax incentives vs. direct financing

  • Models are not the secret sauce: execution is
  • As cities get more cash-strapped, more interesting arbitrage models will arise
  • Someone from the City of San Francisco points out the Small Business Association’s existing tax incentives

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