Kevin Merritt never intended to become a government contractor when he launched Socrata, an online service making it easy to share data—anything from crime statistics to football schedules. But early last year he noticed that federal agencies were the site's biggest users. "It became clear that a really good place for our technology was helping government organizations share data in the interest of transparency," says Merritt, a Microsoft veteran who lives near Seattle. Today the 14-employee startup has 20 government clients, including Medicare and the City of Seattle, some paying more than $5,000 a month.
Merritt is at the forefront of an emerging field that some entrepreneurs call Government 2.0. With the White House urging federal agencies to make statistical data and other information available to the public, the Internet's next big opportunity may be tapping that information to boost government transparency, efficiency, and responsiveness. Much as blogs and YouTube (GOOG) democratized media and eBay (EBAY) let anyone become a retailer, these entrepreneurs want to help citizens participate more directly in governing.
Tim O'Reilly, founder of technology publisher O'Reilly Media, likens the effort to Interstate highways, the global positioning system, and the Internet. Those public investments all unleashed private-sector innovation. Similarly, by giving everyone access to government data, "you don't have to do all the innovating yourself," says O'Reilly, who hosted a Gov 2.0 Expo in Washington, D.C., on
May 25, one of at least 10 similar events held across the U.S. over the past year.
One way governments encourage innovation from entrepreneurs is through apps contests. These offer prize money to developers who build software applications using public data. New York, Washington, and Portland, Ore., have all started competitions. Federal agencies have sponsored efforts aimed at expanding broadband access and reducing childhood obesity. Even the Pentagon has gotten on board with an "Apps for the Army" challenge for soldiers. All told, more than 350 apps that tap into public data have been submitted to such contests, some of which are ongoing.
Lawrence Lenihan, managing director of New York venture firm FirstMark Capital, helped judge the New York apps competition—and then invested in one of the winners, a startup called My City Way. The company makes a smartphone app that helps users find restrooms, Wi-Fi hotspots, subway stations, and more, all based on city data first made available in October. "The types of applications that were created were far better than anything the city could have offered," Lenihan says.
Some entrepreneurs aren't waiting for government to open up. Instead, they're creating Web apps that help push officials and agencies to be more transparent and responsive. Ben Berkowitz and three co-founders created SeeClickFix as a way to report problems such as potholes and graffiti to the city government in New Haven, where Berkowitz lives. The site uses Google Maps to let people flag issues in their neighborhood and send notices to their local officials.
The company has licensed the tool to newspapers, TV stations, and other local news Web sites. So far, more than 400 have signed up. New Haven, Tucson, Washington, and other cities also pay to plug SeeClickFix into their own response systems, so complaints get routed directly to the appropriate agency. A total of more than 36,000 problems from cities and towns nationwide have been reported on the site, and 40 percent have been resolved, Berkowitz says. He calls Gov 2.0 a way of "redistributing governance to the hands of citizens."
Of course, plenty of public agencies resist openness, and startups that want to sell to or partner with the government often face frustrating bureaucracies. Yet even small steps by government, such as releasing public data, can create new business opportunities for entrepreneurs. Says O'Reilly: "This is one of those amazing outcomes where the government does something small that has a huge impact on the economy."
The bottom line: Entrepreneurs are creating online businesses that make the government more transparent, efficient, and responsive.