When it comes to making sense of the open data economy, tracking cents is valuable. In San Francisco, where Mayor Ed Lee’s administration has reinvigorated city efforts to release open data for economic benefits, entrepreneur Yo Yoshida has made the City by the Bay’s government data central to his mobile ecommerce startup, Appallicious.
Appallicious is positioning its Skipitt mobile platform as a way for cities to easily process mobile transactions for their residents. The startup is generating revenue from each transaction the city takes with its platform using micropayments, a strategy that’s novel in the world of open data but has enabled Appallicious to make enough money to hire more employees and look to expand to other municipalities. I spoke to Yoshida last fall about his startup, what it’s like to go through city procurement, and whether he sees a market opportunity in more open government data.
Where did the idea for Appallicious come from?
Yo Yoshida: About three years ago, I was working on another platform with a friend that I met years ago, working on a company called Beaker. We discovered a number of problems. One of them was being able to find our way around San Francisco and not only get information, but be able to transact with different services and facilities, including going to a football game at the 49ers stadium. Why couldn’t we order a beer to our seats or order merchandise? Or find the food trucks that were sitting in some of the parks and then place an order from that?
So we were looking at what solutions were out there via mobile. We started exploring how to go about doing this. We looked first at the vendors and approaching them. That’s been done with a lot of other specific verticals. We started talking to the city a little bit. We looked at the open data legislation that was coming out at that time and said, “This is the information we need, but now we also need to be able to figure out how to monetize and populate that.”
We set about starting to build a platform that could not only support one type of transaction — ordering merchandise or something like that — but provide what I needed as a citizen to fulfill my needs and solve problems. We approached San Francisco Recreations and Parks because we had heard, through a third party, that they had been looking for a solution like this for two years. We showed them what we were doing. They asked us to come back with a demonstration of a product in a few weeks. We came back and showed them the first iteration of a mobile app.
Essentially, what we built was a mobile commerce platform that supports multiple tenants of financial transactions using open data. We enable the government — or whoever we’re working with — to be able to manage it from a multi-tiered, hierarchical structure.
We’ve built this platform to enable government to manage all of their mobile technology and transactions through software as a service.
What’s your business model?
Yo Yoshida: San Francisco Recreations and Parks has 1,200 facilities in San Francisco. The parks are free. The museums, obviously, are not, but they all sit on park land. You’re talking about permits, reservations for picnic tables. You have all of these different facilities, and all sorts of different ways to transact at each of these facilities. What we’ve done is create an informational piece for the public, which gives them the ability to find all sorts of facilities.
There’s two different models for the financial piece. One is subscription-based.
However, with San Francisco Recreations and Parks, we saw a bigger and a more sustainable proposition in taking micropayments on transactions. There’s tons of transactions going on every day, from permitting to making reservations to scheduling classes to ticketing for events. Golden Gate Park gets 15 million visitors a year, including those visiting the Botanical Gardens, the Japanese Tea Gardens, and the California Academy of Science. Essentially, what we’re setting up is a micropayment or a convenience fee on each of those transactions.
San Francisco’s Recreations and Parks annual revenue alone is $35 million. That’s a percentage of ticket sales and lease prices for everything that all of these different properties sit on. Their extended reach is $200 million plus. So if we were to tap into that marketplace and take micropayments on them, we’re looking at a couple million dollars a year for us.
How big is your company now?
Yo Yoshida: We started with two people. We are now about to hire a total of 12. We expect to grow to maybe 30 by next summer, all depending on our funding rounds as they come through. We have interest from other cities, like San Diego, Denver and Los Angeles. We’re basically a plug-and-play solution for government or cities to be able to take open data, plug it in and then start creating financial pools out of it for the consumers to be able to have easy transactions.
Can other cities “plug and play” open data into your system?
Yo Yoshida: The biggest pain for me, obviously, is the transactions. Some cities have to pass legislation. If they have open data, plugging in and getting the informational piece out first, which is what Recreations and Parks is doing, essentially, is a no-brainer.
If someone has good open datasets, it would take maybe a month to implement this for an entire large city, depending on the departments. You first would have the tools for everyone to be able to find their way around. For instance, there’s always been pain points with Muni, like finding the three-day passes. There’s no reason why you shouldn’t have that built into your map and into your directions if you’re going to one of those facilities, and then be able to use that to actually go to the museums as well.
Entrepreneurs trying to use government data sometimes describe challenges around its quality. Is that true here?
Yo Yoshida: We had to work with San Francisco on that, but each of the departments that we’re working with has assigned someone to clean up the data. You can’t have bad data in there. We’ve had that pain point in our past conversations. Frequently, it is a three-month wait time for them to clean up their data.
The Department of Public Health is doing it now. Their GIS person usually is the person that gets assigned to making sure all of the data that’s opened up to the public is cleaned up. He’s done an amazing job cleaning up all of the data points. It’s been a win-win situation because they all want this technology. They know they have to have clean data to get it, so they’re cleaning up their data.
Do you think more startups will target government as a customer?
Yo Yoshida: The procurement process was a long and grueling process. A lot of it came from the City Attorney’s office not understanding what this was, what this technology is like and that they can’t own everything. We did struggle a little bit there. We were very patient. We educated them as we went along. Most small startups can’t get to that place yet.
I think having someone sitting above that who actually understands software as a service and drives these things through a few times so they can get used to this process is going to make a huge difference for entrepreneurs.
We see this type of development and drive from the Mayor’s office as a huge opportunity to get the process streamlined and more efficient, so that entrepreneurs can actually come up and create technology. I mean, we suffered for a year, but we got it through. Hopefully, that will pave the way for others. With the new legislation, we’re hoping that they’re going to make it a much more efficient process and have someone there that actually understands this process.
The barriers to entry were so high before. If they streamline the process for entrepreneurs, there’s an incredible ability to access extreme amounts of revenue.
Is there a market opportunity in the open data San Francisco is releasing?
Yo Yoshida: There’s a small market play selling apps. I think you’re going to see, with companies like ours, that there truly is an ability to innovate on top of open data.
There absolutely is opportunity. It’s created us. We know that there’s going to be competitors coming along behind us, filling some needs that we can’t. The subscription-based model is going to probably work for several departments, like the Department of Public Health.
As far as hackathons and stuff like that, personally, I think they’re very innovative, but they’re not sustainable. There are definitely companies that are sustainable moving forward.
As far as I can tell, we are pretty much the first sustainable one on the scene. Our projected numbers, just off of micropayments, are going to not only generate revenue for us, but generate revenue for the city. I am looking at this as a sustainable company that can move forward and scale through and accommodate every type of city.
I see lots of new apps and lots of great informational apps, but they don’t make money. You have to sustain the technology. As you know, every version needs a new update. Who’s going to be maintaining that? How are you going to pay for the maintenance and how are you going to pay for the staff to do it? You have to create the real company. Our infrastructure is created to be a sustainable solution for cities moving forward.
This interview has been edited and condensed for clarity. This post is part of our ongoing investigation into the open data economy.