It's much like other tech incubators in which select entrepreneurs are recruited, and helped along, so they can develop ideas and the investor can get a piece of the profit. But in this case, there's one major difference in San Francisco's Entrepreneurship-in-Residence program.
The program is run out of City Hall by the Mayor's Office of Civic Innovation as a way to promote technology for uses in the public sector. The first cohort – which was announced in March and comprises six companies paired with six city departments – is currently being given direct access to government needs, staff and expertise in order to “capitalize on the $140-plus billion public sector market,” , according to the program.
Yet unlike private incubators, who get a piece of the pie if a product goes to market, The City will receive nothing tangible out of this deal — not even a free app.
“There's no commercial arrangement during this 16 weeks,” said Jay Nath, who heads the Mayor's Office of Civic Innovation, which recruited and helped select program participants and built the program's website.
If some useful product comes out of the arrangement and a city department wants to use it, San Francisco would have to make a purchase through the normal procurement process. It's written into the program: No deal, no discount, nothing.
“There is no exchange of public resources,” said Christine Falvey, a spokeswoman for Mayor Ed Lee. “These companies are not provided with any kind of access, but an opportunity to learn how government works and what our challenges are. The City already has rigorous purchasing and contracting requirements for any person or company that wants to do business with any city department. This is a voluntary program and there is no payment associated with it.”
But some wonder what The City will get out of the program.
“I'm very skeptical about the arrangement,” said Supervisor John Avalos, adding that he's “not really clear if there's a real benefit to The City.”
If private companies are getting special access to city agencies to perfect their products, and The City receives nothing, the arrangement doesn't sound good for San Francisco, said Avalos.
But the mayor and Nath say the program is the best way to encourage tech innovation in a sector that needs more innovation – government. The program even has a board of advisers, including venture capitalist and Lee backer Ron Conway, to mentor the participants.
“We've got so many bright and smart people tackling the wrong problems,” said Nath. “I think this is a very exciting program and there's a lot of benefit.”
While Nath didn't point to any specific existing examples, he did mention The City's open-data initiative as a model that gives “broad” benefit to society at large.
“Far from gaining 'nothing'… The City in fact gets far more than the participants, directly,” Falvey said. “They apply their proven innovation and skills to public challenges for free, and hopefully that will lead to improved outcomes and more efficient service delivery for the areas of city government where we direct them to focus.”
As for the use of public resources, Nath insists none were used.
“This program is one of many projects that staff work on,” he said.
Still, Avalos likened the program to “corporate welfare” and wondered how it will benefit San Francisco.
“Basically, you're giving a company access to government resources for the company to profit from,” he said, adding that The City then has to pay “for the use of an app that the company made with city resources.”
Two hundred applicants competed to enter the voluntary 16 week program. The six chosen, and the departments they are working with, are:
Birdi: Department of Public Health on health issues.
Indoo.rs: Improving navigation and location-based services at San Francisco International Airport
Synthicity: Planning Department, working on urban development tools and planning
BuildingEye: San Francisco Municipal Transportation Agency to engage the public
ReGroup: Department of Emergency Management to improve services
MobilePD: Police Department on public safety and civic engagement