In 2007, the Los Angeles city government realized that though the city graduated the most engineers in the country, the majority left to go north to San Francisco or Seattle after school. The city knew it needed to create an innovation hub so that talented engineers would be incentivized to stay in Los Angeles. "We realized that we needed to rebrand LA from a city of smog, sprawl, and movie stars to a city that would also appeal to startups," says Romel Pascual, who was LA’s deputy mayor during former Mayor Villaraigosa’s administration and is now executive director of CicLAvia, a nonprofit that hosts car free days throughout LA.
To do that, the city has created tech mentorship programs and pushed to open its data to entrepreneurs. Perhaps the city’s most ambitious initiative has been building the LA cleantech business incubator (LACI), a $47 million, state-of-the art facility funded through a public private partnership. Unlike many cities, LA owns and operates all its key utilities—including the department of power and water, the ports, and airports—and so can make changes to them more easily than other cities, where they’re controlled regionally. "We realized that we could make a dent on the smog that choked our city along with tackling climate change by making investments in a whole range of cleantech solutions that did not yet exist." says Sean Arian, who served as the Director of Economic Development in the Villaraigosa administration and is currently VP of Innovation at LA’s Chamber of Commerce.
Launched in 2011, LACI has become the nation’s largest incubator for clean technologies—50 so far—including Pick My Solar, which provides a one-stop, cost-effective online solution for homeowners looking to install solar panels and Repurpose Compostables developing the first fully compostable dinnerware sold in retail stores throughout the U.S. It offers a co-working space, mentoring, and coaching by a network entrepreneurs-in-residence, access to a large network of VCs and a community of likeminded peers for the startups working on clean energy solutions like water conservation, sustainable agriculture, and battery storage. Perhaps most importantly, it offers access to the city’s Department of Power and Water, so that its startups can test out ideas in real-world scenarios.
Max Aram, the founder and CEO of Pick My Solar, which has been housed at LACI from its early days, says the offerings are what convinced him to move his company from San Francisco to LA. "Being surrounded by fellow entrepreneurs, folks from the city and the most influential nonprofit organization of Los Angeles, has created an amazing environment for our growth here at LACI," he says. "Also, knowing that we have a direct line to Mayor Garcetti’s office, who has been very supportive, gave us a big confidence boost."
For San Francisco, the challenge of innovating government has been of a different sort. Back in 2012, when the city first started looking into this, they were keenly aware that while Silicon Valley companies were disrupting entrenched businesses with new technologies, none of this innovation had trickled into city hall—to how the city delivers its services to its residents. So how do you tap into the world-renowned startup culture that's already there?
Around the same time, healthcare.gov launched to massive site failures and nationwide criticism. "This was a wakeup call to the cities. We realized we needed to make structural changes to inject a startup culture in how we work and, that we could only bring this about by working with startups," says Jay Nath, San Francisco’s Chief Innovation Officer, in the Mayor’s office of Civic Innovation.
One of SF’s signature programs, launched in 2014, for tackling the innovation gap is STIR (Startup in Residence), which connects the city’s government agencies with startups to develop new technology products designed to meet the city’s needs. The idea is to work with a startup to rapidly develop and test a prototype of the solution in a 16-week challenge. This speed forces city officials to work differently from their usual processes: "[There are] benefits of city staff approaching challenges in new ways, and STIR provides the creative space to make it happen," says Jeremy M. Goldberg, SF’s director of civic innovation partnerships and the startup in residence program.
Though the startups are not compensated for their participation in the program, the city has a strong incentive to deploy the ideas that emerge. And the first solutions point to the program’s potential: a new system to help guide visually impaired travelers through SFO, designed by Indoo.rs, a startup based in Vienna; and an early warning system for tracking earthquakes, linked to USGS data, that notifies the city’s emergency response infrastructure (including hospitals, 911, the fire dept) and the public before an earthquake strikes, developed by Regroup, a San Francisco based startup.
Although both products have been successfully tested, it’s concerning that, nearly three years after they were approved by the city, we are still waiting for them to be deployed. STIR officials see the bottleneck as a procurement issue due to the fact that multiple city agencies have a role in purchase of goods and services, making the process of winning a contract with the city a slow and bewildering experience.
It underscores that if city governments are serious about working with startups, they can’t afford the long sales cycles that make the technologies they are trying to implement obsolete before they have a chance to adopt them. City officials in SF seem to have taken this lesson to heart. This year, in offering the second iteration of STIR, they say a key goal has been to drastically streamline the procurement process.
Although LA and SF differ in the kinds of civic innovation initiatives they have prioritized—from LA's model of incubating cleantech innovation as the way to growing sustainably to SF's approach that focuses on series of small innovations (or little bets) made by working with startups—there are a few common takeaways from their experiences that any city can learn from:
Open your doors to tech sector talent, be it startups, entrepreneurs in residence, or innovation fellows.
Actively create opportunities for tech talent to collaborate with you. Whether it is by inviting startups to compete on government projects, and streamlining processes that give startups a real incentive to do so, as San Francisco is doing. Or, by building a tech incubator, as LA has done.
Democratize your innovation strategy by offering open innovation prizes.
From backyard tinkerers to ordinary citizens, new technologies make it easier for cities to identify and gather new ideas from entrepreneurs wherever they are. In a recent open call for new solutions LA’s Mayor Eric Garcetti announced, in a YouTube video, the offer of a $25,000 prize for the most innovative idea from university students.
Be transparent and open up your data but also figure out how it can be used to solve social problems.
Although opening up data is a valuable first step, cities need to move beyond this to make a real impact on the ground. As Lilian Coral, Chief Data officer for LA points out, "Previously, we were focusing on just opening up our data, using what I would call "a fire hose approach" to open up everything. Now we are focusing on how the data is going to used. For instance, if we were to look at pockets of homeless density across the city, we could identify patterns, and ask ourselves how can we target services to these parts of the city."
Build an innovation ecosystem.
Just as startups need a whole host of partners from VCs to incubators, accelerators and tech companies to prosper, cities should also look to cultivate an innovation ecosystem within city hall. As LA’s example shows, cities have public service assets that lend themselves to innovations, which means cities can play a perfect role as the laboratory for innovation.
LA and San Francisco's experiences underscore that cities need to innovate how they function internally even as they forge external partnerships with startups, tech companies, and private sector professionals, who are bringing in valuable, new ideas to innovate public services. Cities that are able to do both will be the new innovation hubs, attracting the best jobs as well as talented millennial workers. Our ability to solve our most critical challenges—from providing affordable housing to tackling the effects of extreme weather patterns induced by climate change—will depend on how such experiments fare.
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