Y Combinator is looking for a team of people to lead research on how to make cities better, and will use the findings to help determine how to invest in future ventures.
High-level issues the team will address include:
What should a city optimize for?
How should we measure the effectiveness of a city (what are its KPIs)?
What values should (or should not) be embedded in a city’s culture?
How can cities help more of their residents be happy and reach their potential?
How can we encourage a diverse range of people to live and work in the city?
How should citizens guide and participate in government?
How can we make sure a city is constantly evolving and always open to change?
“The world is full of people who aren’t realizing their potential in large part because their cities don’t provide the opportunities and living conditions necessary for success,” writes Y Combinator’s Adora Cheung announcing the effort. “A high leverage way to improve our world is to unleash this massive potential by making better cities.”
We’ve recently seen an uptick in venture capital interest around government and civic technology startups, but before we enthusiastically celebrate these investments, we must ask ourselves whether this potential bubble will truly reshape government IT or simply leave us five years from now in the same place we are today.
During the Code for America Summit in September, Govtech Fund’s Ron Bouganim and Code for America Director of Products & Startups Lane Becker had a great “Emerging Startup Ecosystem” discussion about the the difference between civic and government technology, and the latter’s focus on solving inherent bureaucratic problems.
Bouganim’s closing comments have stuck with me since watching the interview, and they’re important for us all to think about as we commit to building technology solutions, whether it’s for internal government operations or public-facing citizen engagement applications:
“It is tough because it’s early. Clearly everybody in this room is transformers. These are the folks … that are at the front of this, so it’s tough, because you often at times feel alone, but I think there’s a growing community, and it’s only going to get better. So, I guess my fundamental advice is that if you’re really passionate about this space, and you really identify a big problem, you have to kind of double down on being an entrepreneur. It’s hard enough being an entrepreneur and, in an emerging space like gov tech, you have to double down on that, and I would just encourage you to stick with it.”
Announced in September, Govtech Fund will invest $23 million into government-focused technology ventures. Recently, Y Combinator also expressed an interest in the industry when it issued a request for startups that included those focused on the public sector. Andreessen Horowitz has already invested $15 million in OpenGov, focused on bringing visualizations to government budgets. Other startups such as Socrata and MindMixer have also received multi-million dollar infusions to build the future of public sector IT.
Given the consistent inability for government projects to deliver on time or on budget, especially in the light of recent, major IT failures, we’ve collectively identified the problem. While much of this is due to culture, bureaucratic procurement processes and waterfall project management practices, the fundamental issue with failed government IT is that it is built on proprietary solutions.
Because of this, not only do we not have access to code, more importantly, we lose an opportunity to create an ecosystem of community and collaboration that sustains itself. To put it in context of the latest civic meme, today’s government technology is built for, not with.
The early trend we’re seeing in government technology venture investments is that the focus is still on the proprietary. While this will have incremental benefits and provide short-term excitement with each new launch, they don’t address the bigger issue every government faces in harnessing control over their IT systems.
They’re locked down and locked in.
The argument you often hear when discussing open source with proprietary government technology startup entrepreneurs is that businesses need some form of competitive advantage to build a product and develop a customer base with enough runway to sustain itself longer term. While this makes sense in a commercial market, it addresses the needs not of government, but that of the entrepreneur. The technology may provide a cutting-edge, cloud-based, big data, mobile or social solution worthy of a press release or mention in the trades, but what is it doing to really change the IT conundrum we can’t seem to procure our way out of?
This isn’t to say these new technologies don’t have merit or their builders don’t have good intention. Indeed, some do, however, there’s a classic innovation wall proprietary government IT software hits when it has reached a certain level of customer acquisition and no longer needs to compete. Oakland’s recent insistence that Granicus open up its application programming interface is exhibit A on what happens when a vendor corners a government market: technology stagnation trumps innovation. Without open systems or modularity, government is safely locked in.
We frequently hear the vending machine analogy applied to government. Today, the vending machine is the proprietary vendor machine, and government is the one doing the shaking.
If we’re going to double down and truly build a civic operating system anyone can plug into, and be proud of, we must invest in a strategy that sustains beyond one software solution.
We need to double down on a philosophical approach to government technology.
There’s not an overnight solution and the problem won’t be solved tomorrow, but if you’re really in this business to transform government, whether you’re an entrepreneur or investor, it’s time to double down on open.
Government can, literally, no longer afford to operate business as usual when it comes to technology. If ‘Vendor 2.0’ is simply a new class of fresh faces operating no differently than its predecessor, let’s prepare our kids for disappointment.
You’re either investing in or building tomorrow’s problem today, or you’re co-creating the future of government.
The latter might be a longer, lonelier road, but we have to stick with it because, as Bouganim says, it’s only going to get better.
Let’s double down.
Watch the full video of Becker and Bouganim’s discussion:
Leading Silicon Valley accelerator Y Combinator posted a list of sectors it’s interested in hearing pitches from in a “request for startups” that includes government-focused technology ventures.
“Very few startups write software for government,” the post states. “But the government is a very large customer with very bad software. In addition to better software for existing processes, we’re also interested in how the Internet can enable new categories, like crowdfunding for social services.”
Granted, it’s a pretty comprehensive list of sectors, but still good to see government in the mix, especially given the perception that Silicon Valley is aloof when it comes to building technology targeted specifically to the public sector.
“Our hope is that someone already working on a company in one of these areas will consider applying to YC,” says Y Combinator.
Application deadline for the Winter 2015 funding cycle is October 18.
Lately, what’s happening between both ends of Pennsylvania Avenue is starting to catch the ire of some venture capitalists who, like many Americans already, are starting to publicly vent their frustrations.
As a fellow citizen, I couldn’t agree more with their sentiments, however, I’m equally embarrassed by the VC community’s inability to focus its attention on entrepreneurial ventures that matter and could play a vital role in changing all of this.
Y Combinator, Silicon Valley’s darling startup incubator, has a long list of funded companies, none of which have a significant pitch on democratizing the political process or offering much-needed technology solutions to the bureaucracy.
Likewise, TechStars’ portfolio of funded ventures has not one civic-focused startup. According to its own official stats, the average company funding amount is $1.5 million. With 28 companies having failed, that’s a good $30 million dollars that could have easily gone into worthwhile, perhaps less-risky, civic ventures.
From grassroots campaign tools to fixing the bureaucratic minutiae of government procurement and everything in between, there are civic entrepreneurs chomping at the bit to get a fraction of funding in the range of just those losses.
If you’re a VC frustrated with the federal government shutdown, here’s my advice:
Fund 10 percent of your portfolio to civic-focused ventures aimed at solving bureaucratic technology issues or the campaigns and elections process.
Pivot your expectations for these ventures. The civic vendor market has a much longer sales cycle than those in the private sector. You’ll need patience, but estimates place the government IT market at $140 billion.
Unlike your average citizen (or furloughed public servant), VCs like Feld and Graham can have a huge impact beyond voting or voicing concerns to elected officials. They can play a major role in disrupting markets and if there’s one industry that could use some disruption, it’s the government services industry.
Pundit (amongst many other other notable accomplishments) Vivek Wadhwa effectively summarizes Silicon Valley’s sentiment in a recent Washington Post column “Silicon Valley shrugs off Washington shutdown“:
Perhaps it is best this way. Rather than fighting unproductive and destructive battles about budgets and health insurance, our innovators are chugging along inventing technologies that will make industries more productive and reduce the cost of healthcare. They are doing what they do best—looking forward, competing, and collaborating. Someone has to save the economy after all. Our politicians certainly won’t.
While I couldn’t agree more with Wadhwa on the “chugging along” part, more entrepreneurial and VC energy needs to focus on problems that will solve the state of our civic affairs. Saving the economy is important, but if all we’re left with is another mobile advertising platform or photo sharing social network, are we really better off as a country?
The good news is, appropriately, Democracy.com, a “global social platform for participatory democracy and political engagement,” launched this week with $2 million in seed funding. Other companies, too, have found funding to make a go at it, such as NationBuilder and SeeClickFix.
My intention isn’t to single out Feld or Graham. I have much respect for both of them. They have created amazing communities of innovators and inspire and mentor entrepreneurs everywhere beyond just their work with Y Combinator and TechStars.
I’d just love to see them and their peers take a meaningful lead on leveraging their influence and capital to change the entrepreneurial focus of the startup community. The best way they can do that is to start funding ventures that directly impact foundational aspects to a stronger civil society.
Yes, it will take some serious VC pivoting, but if you care about your country, it’s worth the investment.
