The
Wall Street Journal
Government
Data Creating Business Opportunities for Tech-Savvy Entrepreneurs
By ANGUS LOTEN
Jan. 8, 2014 5:22 p.m.
ET
Matt Ehrlichman, a
Seattle entrepreneur who developed Porch.com, used publicly available
government data to create his business. Seattle has put more than 200 data sets
online. Mike Kane for The Wall Street
Journal
More cities are
putting information on everything from street-cleaning schedules to
police-response times and restaurant inspection reports in the public domain,
in the hope that people will find a way to make money off the data.
Supporters of such
programs often see them as a local economic stimulus plan, allowing software
developers and entrepreneurs in cities ranging from San Francisco to South
Bend, Ind., to New York, to build new businesses based on the information they
get from government websites.
When Los Angeles Mayor
Eric Garcetti issued an executive directive last month to launch the city's
open-data program, he cited entrepreneurs and businesses as important
beneficiaries. Open-data promotes innovation and "gives companies,
individuals, and nonprofit organizations the opportunity to leverage one of
government's greatest assets: public information," according to the Dec.
18 directive.
A poster child for the
movement might be 34-year-old Matt Ehrlichman of Seattle, who last year built
an online business in part using Seattle work permits, professional licenses
and other home-construction information gathered up by the city's Department of
Planning and Development.
While his website is
free, his business, called Porch.com, has more than 80 employees and charges a
$35 monthly fee to industry professionals who want to boost the visibility of
their projects on the site.
The site gathers raw
public data—such as addresses for homes under renovation, what they are doing,
who is doing the work and how much they are charging—and combines it with
photos and other information from industry professionals and homeowners. It
then creates a searchable database for users to compare ideas and costs for
projects near their own neighborhood.
Mr. Ehrlichman raised
$6.25 million from angel investors in October 2012, and expects to hire nearly
80 more workers by the end of 2014, as he continues to expand the online
service nationally.
The origins of city
open-data programs can be traced back to a December 2009 Obama administration
directive to federal agencies to post more public information online. Since
then, some 175 federal agencies—including the Defense and Justice
departments—have posted more than 88,000 data sets on data.gov, the federal government's
open-data site. And more than 43 cities have followed suit.
Some city agencies
remain reluctant to turn over data, concerned about competition from the
private sector, among other issues, says Bruce Blood, the city of Seattle's Web
team manager, who oversees its open-data website. "It's really a cultural
change for these agencies, so you have to do some arm-twisting," he says.
Since 2010, the city
has put more than 200 data sets online, including crime rates, 911 calls and
the precise locations of bicycle racks. Mr. Blood says he hopes to post at
least 75 more data sets on Seattle's website this year.
Natalia Carrizosa, a
legislative analyst at Montgomery County's Office of Legislative Oversight in
Maryland, says another issue is the lack of standards for storing digital
records, which can make it difficult for smaller tech firms to expand from city
to city.
Ian Kalin, director of
open-data services at Socrata, a Seattle-based software firm that makes the
back-end applications for many of these government open-data sites, says he's
worked with hundreds of companies that were formed around open data.
Among them is Climate
Corp., a San Francisco-based firm that collects weather and yield-forecasting
data to help farmers decide when and where to plant crops. Launched in 2006,
the firm was acquired in October by Monsanto Co. MON -2.93% , the seed-company giant, for $930
million.
Overall, the rate of
new business formation declined nationally between 2006 and 2010. But according
to the latest data from the Ewing Marion Kauffman Foundation, an
entrepreneurship advocacy group in Kansas City, Mo., the rate of new business
formation in Seattle in 2011 rose 9.41% in 2011, compared with the national
average of 3.9%.
Other cities where new
business formation was ahead of the national average include Chicago, Austin,
Texas, Baltimore, and South Bend, Ind.—all cities that also have open-data
programs. Still, how effective the ventures are in creating jobs is difficult
to gauge.
One wrinkle: privacy
concerns about the potential for information—such as property tax and
foreclosure data—to be misused.
Some privacy advocates
fear that government data that include names, addresses and other sensitive
information could be used by fraudsters to target victims.
Jerry Paffendorf,
chief executive of Detroit-based Loveland Technologies, says concerns about
privacy and fraud dog his online service, Why Don't We Own This?, or WDWOT?, a
website that tracks the city's home foreclosure auctions, among other data.
The firm, which has
six employees, uses government data to create and sell custom applications for
clients, ranging from nonprofit groups to land banks and real-estate
developers, charging upward of $10,000 a year. It is currently working on a
contract with the Michigan housing authority to track property data for 380,000
Detroit residences.
A free site, WDWOT?
makes some of these data sets available to the public, including the locations
of distressed properties and it charges a $25 annual fee for membership for
those seeking custom tools. But last year a local housing group complained that
the data could be used by scammers to target vulnerable homeowners seeking
emergency cash.
Mr. Paffendorf says
there is no indication that the data is being misused, but he adds: "I get
their concern. You don't know how people are going to use any
information."
Write
to Angus Loten at angus.loten@wsj.com
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