How Government Data Is Fueling a New Economy

Nextgov is launching a new project today to profile the growing crowd of companies and nonprofits that are building their businesses with government data and helping to build the new data economy.

This project was born out of a basic disconnect.

Analysts predict that open data from the government and private sector could add trillions of dollars to the global economy over the next decade and launch hundreds of businesses. Already more than 500 companies are using open data to inform part or all of their operations, ranging from small startups to giants like Google and Citigroup. Opening up data in just seven sectors -- including healthcare, transportation, energy and education -- could generate more than $3 trillion annually, according to an October, 2013 report by the consulting firm McKinsey & Company.

Yet, despite this opportunity and a strong open data push from the White House, agencies have had mixed success opening up their data in a timely, efficient manner that makes sense for data consumers. Industry pleas for better, faster and cleaner data have often fallen on deaf ears.

Our goal with this project is to answer four questions. How are these companies using government data to serve consumers and the broader public? What has the government done to make data available to them? What could it do better? And what advice do these companies have for entrepreneurs looking to use open data to launch their own startups aimed at turning a profit, making the world a better place or both?

For our first entry, we’re profiling two companies at both ends of the open government data spectrum -- from data that's readily available and mostly reliable to data that's hard to get and requires substantial cleanup. On one end there’s Panjiva, which crunches import and export data to help companies spot the most popular global suppliers of a given product. Panjiva relies heavily on U.S. customs data that doesn’t go online in a timely fashion, so the company pays to have it overnighted on CD-ROMs.

Much of Panjiva’s strategic advantage, co-founder Josh Green says, lies in the long hours it’s willing to put in to acquire and parse through this far-from-fully open data, an effort its competitors aren’t willing to undertake.

One sign of their success: The U.S. Customs and Border Protection bureau is now a Panjiva customer, essentially buying back its own data in a cleaned up form.

On the other end of the spectrum is WeMakeItSafer, which creates tailored data feeds about product recalls for individuals and for companies that want to ensure they aren’t passing along recalled products or including them in their supply chains.

When Jennifer Toney founded WeMakeItSafer in 2006, most of the government’s product recall alerts came out only in press releases. So Toney and her team had to build software tools that turned those press releases, which were designed for humans to read, into something computers could make sense of.

The agencies that handle recalls have come a long way since then. Now Toney’s team is able to cull most of the data that powers WeMakeItSafer directly from websites at the Consumer Product Safety Commission, the Food and Drug Administration, the Agriculture Department and the National Highway Transportation Safety Administration.

That doesn’t mean the team can rest, she said. They still spend a lot of time ensuring data is accurate and timely and that it means what it seems to. But the technical side is much easier.

The most important advice Toney and Green offered to people interested in building companies off government data is to start with a problem you want to solve rather than the data itself and working backward.

“You need to articulate the business problem you’re solving and go hunt down the data from there,” Green said. “If you just start with the data and hope there’s a problem that can be solved with it you’re likely to spend a whole lot of time floundering.”

You can read the Panjiva and We Make it Safer profiles below. Nextgov will be following up with more stories about companies using government data as this project continues.

Graphic by Chanin Knight.