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The story of BrightScope: Data drives the innovation economy

BrightScope uses government data to clarify 401(k) plans, and it's making money along the way.

What’s the best story in Gov 2.0, when it comes to entrepreneurs using government data? Given the spotlight that deputy White House CTO Beth Noveck and US CTO Aneesh Chopra shone this week on San Diego-based startup BrightScope at the first International Open Government Data Conference and Politico’s “Next in Tech” events, it looks like the Obama administration thinks it just might be the Alfred brothers.

Form 5500 has sat in Washington,” said Chopra at Politico’s Next in Tech event Mike and Ryan Alfred, former financial advisors in California, looked for a way to liberate that data. To what end? “The American people spend at least $4 billion in excess fees on 401(k) plans,” said Chopra.

Given what BrightScope has been working on since 2008, there’s a strong case to make that their government data story is compelling. As Vivek Wadwha noted in his TechCrunch piece on the goldmine of opportunities in Gov 2.0, BrightScope has made a profitable business of using government data about 401(k) plans. In the process, they’ve helped the American people to understand the fees associated with these plans, which is an area of cost that’s frankly unknown to the vast majority of people saving for retirement.

“When we originally founded the business we didn’t even know what government data was or wasn’t going to be available,” said Mike Alfred in an email interview this week. “We just knew that more data was needed and that in an industry of this size and importance had to be available somewhere. We never intended on being ‘Gov 2.0′ in any way and only after the fact realized that we were connected to that storyline.”

Below, Mike Alfred tells BrightScope’s story at this year’s Gov 2.0 Summit:

Here’s the key point about the founders’ fascinating story of extracting public data from the Department of Labor (DOL): it came from more than 50 Freedom of Information Act requests, made at significant cost over many months. They extracted boxes and boxes of paper records. Finally, after a lobbying campaign that took months, they were able to get the data in digitized form.

“When you say digitized, that is not the same as being in a database or in a usable format,” cautioned Alfred. “The big jump was when we received the PDF audit reports on a disk rather than printed out and sent in boxes. It’s still not really ‘digital’ in the usable way that a technologist would expect.”

While the BrightScope story is a terrific case study in putting government data to work, it’s misleading to count them as an open government success quite yet. “Ryan has looked at Data.gov but we’ve never published data there and we’ve never sourced data there,” said Alfred. “The Department of Labor is, for the first time ever, starting to put much of the 5500 and audit report data online. Right now, only the 2009 data is up and they have not loaded any prior years as far as I know.”

That may change. This morning, Data.gov evangelist Jeanne Holm asked BrightScope a simple question: “Can I help DOL getting data on Data.gov?”

That’s another story that’s worth watching. “The single best thing we could do in open government is to get the American people engaged in the question of what high value data is,” said Chopra today. To put it another way, who will be the next Alfred brothers? Will it be someone who uses health data from the Department of Health and Human Services? One of the many location-based startups who provision their mobile apps with the new trove of geospatial data coming online? Or will it be an entrepreneur who knows that the government data they need to be the “Morningstar of X industry” is on a government spreadsheet and works to liberate it? The open question then is if United States open government data policy then supports that effort. In service of economic growth and job creation, it’s probably the right one to be asking.

“We have to talk about varied uses” for open government data, said Noveck at the data conference. “Not everyone will be interested in fraud or abuse. Others will be interested in citizen empowerment, or job creation.”

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  • http://govinthelab.com John F Moore

    Alex, great story that demonstrates the power of open government data and the fact that it can be made more powerful by releasing it in developer friendly formats.

    As we discussed on Twitter, however, we disagree on the definition of open government data. My article:

    http://govinthelab.com/need-more-proof-that-open-government-data-is-creating-jobs-look-at-brightscope/

    John

  • AmuseD

    “Makes money along the way?” How deeply have you explored the Brightscope business model and revenue streams? As is my understanding, under BrightScope’s current business model, the sole revenue stream comes from consulting to companies about their 401K plan – a rather biased revenue stream since BrightScope cannot be both objective third party oversight board and compensated consultative adviser.Has BrightScope even had a paid client yet? A business is but a hobby until you sell something. Furthermore, the BrightScope platform is built on dubious, rapidly changing, aged public data and data from the 2000 Census. They sure have paid for a lot of PR though.

  • Ryan Alfred

    The first big problem with the above comment is the assumption that we offer consulting to plan sponsors. We do not do ANY consulting. We offer data and analytics software but do not offer advice.

    Second problem is that we have millions of dollars of sales and hundreds of clients including Lockheed Martin and MFS, the company that invented the mutual fund.

    The third problem is the critique of the data. The majority of our data is now from 12/31/2009 which is a huge step forward for an industry that historically didn’t have access to any data like this.

    As for the comment about the 2000 census, I have no idea what the commenter is talking about. Sounds like he is just making that part up.

    You can’t pay for PR. Only a great product garners attention.

  • WhatAboutFranklin

    If their info and methodology were accurate they would not have compared Frankin’s $750MM plan to a $20MM plumbing company plan as they did for the USAToday story…why is it that many of their “peer group” companies are not each other’s peers? Why do they make such eggregious “assumptions” about the data they do not have? Use their info at your own risk.

    But PR is PR…even better when you can get gov’t flacks to shill for you….