How SeeClickFix Built Revenue Streams From Potholes
SeeClickFix started humbly in 2008 — from potholes in New Haven, Conn. But it grew quickly as it mobilized citizens in thousands of communities around the U.S. to flag irritating and sometimes serious 311-type problems in their neighborhoods. To encourage citizens to do more than grumble, SeeClickFix awards “civic points” for getting engaged — and helping bring complaints to closure. Yet for all its social purpose, SeeClickFix is a for-profit company. Co-founder Ben Berkowitz talks about how SeeClickFix developed revenue from multiple sources.
In the original plan you took to investors, how did you address revenue to achieve sustainability?
We felt we could certainly sustain the business with fees from media partners, but high growth would only be possible through sales to municipalities, managing their 311-type customer-response services. Media growth looked pretty linear, but government growth looked exponential.
Did you have to draw that picture for investors?
Investors were interested in SeeClickFix early on, so they understood that. [The company received $1.5 million in equity funding from Omidyar Network and O’Reilly AlphaTech Ventures in January 2011.]
Talk about your revenue streams.
First, there are our media partners. We have 800 local news sites that are partners. The basic SeeClickFix widget is free. The partner gets the content and we get 100% of remnant advertising that appears on the widget. About 85% of our media partners have the free widget. We also sell an ad-free widget, which about 15% of our media partners buy. Our second revenue stream is non-remnant advertising—on both the website and the widgets. Our third source of revenue is the software dashboard we sell to municipalities and community associations for managing their 311-type customer-response services, like fixing potholes. We have about 60 clients. The biggest ones are Philadelphia and Washington, D.C. Medium-size cities include New Haven and Hartford in Connecticut, Richmond, Va., Raleigh, N.C., and Corona, Calif.
What do you charge local governments for this dashboard service?
It mostly ranges from $1,200 to $20,000 a year. For early adopters, we gave some discounts.
There are 20,000 municipalities in the U.S. and 300,000-plus community associations that have government-like functions. If you signed up as few as 2%, you could conceivably generate eight-figure revenue annually. Is that blue sky?
No, that’s not unrealistic. But besides expanding our client base we’ll have to enlarge our suite of services.
How aggressive is your sales operation?
We started out more “pull”—making news media and governments aware of our services and benefiting from word of mouth. But now we’re moving into “push”—like cold-calling. We have a partnership director who leads the sales effort. His pay is salary plus commissions.
Everything you offer citizens is free. Might you develop a premium service tailored for them?
Citizens—the community—are our No. 1 customer, but they don’t pay. If we came up with a feature that benefited individual citizens and not the entire community, we might offer it as a premium. I don’t know what it might be, but I don’t want to say no.
Hyperlocal sites are proliferating across the U.S. Most of them are struggling to sign up advertisers, their main and often only source of revenue. Should they too be looking at diverse revenue streams — or do they need a unique service to charge a premium?
I think they’d need a unique service. Maybe being really local and target is enough, but I’m not sure. It’s definitely a challenge. Regarding other kinds of revenue, a hyperlocal could partner with us and sign up a sponsor for SeeClickFix content, and receive a share of that revenue.
What’s your time target for profitability?
We are making money now — not a lot. We’re not ruling out another round of financing with investors, but right now we’ve got a long runway.
Tom Grubisich authors The New News column, which appears Thursdays on Street Fight. He is editorial director of LocalAmerica, which is developing a Web site to rank communities on their livability across 20-plus categories. The rankings will be dynamic, going up and down daily as they are updated through a combination of open data, journalism and feedback from local experts and users of the site.