OpenGov: A Changing Guard; A Continuing Mission

Today, OpenGov announced its acquisition by Cox Enterprises for $1.8 billion USD. 

This was not an easy thing to build. We made a lot of mistakes, but ultimately we created a valuable, enduring company primed for sustained growth and mission success. OpenGov serves thousands of governments, and has proved a magnet for inspiring talent who share our commitment to help cities, counties, states, special districts, and school districts work better and smarter.

I founded OpenGov with Zac Bookman, Dakin Sloss, and Nate Levine, and have chaired its Board of Directors since the beginning. As OpenGov begins a new chapter, I’d like to share a few reflections on the journey - and more than a few thank yous. 

Beginnings:

OpenGov’s idealistic roots began with California Common Sense (CACS), a nonprofit I launched in 2010 alongside a remarkable cohort of Stanford students and alumni, including Dakin Sloss and Nathan Mintz. Our purpose was to bring transparency to state government by revealing waste, comparing performance, and spotlighting the most and least efficient areas. We created the first online portal for state government data, filed slews of FOIA requests, and attracted both outsized media attention and the wrath of special interest groups. 

We found that the California state budget was predictable in some areas, while others were prone to much more variance than our model suggested was sensible, versus other states. Coincidentally, these bloated areas housed powerful government unions that donate heavily to the legislature. They did not appreciate our data-driven reports.

While the early momentum of CACS was beyond anything we anticipated, it became clear that transparency was necessary, not sufficient. Increasingly, municipalities were coming to us for new data and help conducting analyses. In the process, we discovered that many were reliant on antiquated, green screen software, often administered by corrupt IT companies who charged them $50,000 just to see their own data. 

Becoming OpenGov:

As a founder of Palantir, I’d seen how the federal government had been grossly underserved by technology, but we’d stumbled on a different kind of gap here, compounded by much smaller budgets, minimal technical investment, and a fragmented market of tens of thousands of municipalities, which none of us really understood. It was a classic Smart Enterprise opportunity, before the name or the playbook (and Zac had a large hand in formalizing this thesis with me). There was so much that needed to be built, but CACS was not a technology company, and could not attract the talent or funding top engineering and sales teams require. 

We became convinced that a new, for-profit, mission-focused entity was needed to get government onto the cloud and start fixing things. How to get there was another story!

I knew Zac Bookman initially as one of my smartest friends’ smartest friends - he’d clerked with my Stanford classmate Alex Robbins. A litigator by training, Zac had focused on issues of transparency and corruption as a Fulbright fellow in Mexico and advisor to General McMaster in Afghanistan. As we started OpenGov, he was closely involved as a full founder, all while fighting corruption in Kabul. I’ll never forget Zac recruiting candidates on his cell phone from NATO HQ, complete with helicopter blades whirring overhead.  

Meanwhile, Dakin Sloss served as our first CEO right out of Stanford, and he and Nate Levine helped to hire a talented, hard-working team and establish a mission-driven culture. At the time, I had shifted my role at Palantir to founder and advisor, and was CEO of a nascent Addepar. OpenGov was not a simple undertaking, and we all had a lot to learn. I remember those early recruiting calls vividly. I also remember buying thick government accounting books to learn about government financial workflows. In retrospect, I was never very helpful in that area, but I am glad others studied them! We’d share notes late into the evening, and I hosted many weekend BBQs and events to help OpenGov’s young team bond outside of the office. 

Initially we focused on the transparency and reporting workflows we’d discovered at CACS, which required integrating with cities’ ERPs and enabling a variety of capability requests. We got some early traction in dozens of cities, and a lot of attention - apparently, this market wasn’t known for attracting top young technologists. The work was intense, there were immense challenges and long sales cycles, and as happens with many first-time CEOs, Dakin and his team decided he wasn’t the right long-term fit.

To grow up fast, we needed a CEO. We bet on Zac’s brilliance, zeal, and ability to learn on the job. We liked to tease Zac that it was good that he’d finally solved corruption in Afghanistan, allowing him to focus on OpenGov.

One of the misconceptions I had about this market was that you could create “cool” new workflows that seemed valuable in theory, and use them as a wedge, or convince governments to utilize them. Trying to get cities to compare their budget data and learn from one another was one workflow that did not catch on. Zac took the vision into his own hands, and had to inform me that as much as we liked the idea of comparative benchmarks, we couldn’t work on that feature anymore. He was 100% right, and we refocused on core software needs.

Through trial and error, we learned that most governments can pay for things that are already in their budget, for critical workflows they are already doing - such as permitting, licensing, budgeting, procurement, etc. Of course, there’s no rule that you can’t enable these functions in 10X better ways. This led us to identify existing processes we could translate to novel, cloud-based workflows. We found over 90 functional areas for which local governments buy software, and OpenGov covers nearly half of them today. 

Through constant iteration, and the input of our pioneering customers, we started getting a glimpse of the path from a collection of discrete tools to a true platform serving the core processes of state and local government - including budgeting & planning, permitting & licensing, procurement, asset management, financial management, open data and resident communication.

OpenGov Today:

Over the last decade, OpenGov has developed into the category leader it is today. The company doesn’t disclose all of its metrics, but it blew through the $100 million annual revenue milestone, was significantly cashflow positive last quarter despite massive technical investments, and continues to expand TAM and accelerate product development, including the OpenGov ERP product - a hugely valuable addition. 

There were a few major financing rounds that required great people who cared about our work to affirm their belief in us. There were some scary times over the years as well - there’s no room for all the stories here, but I’m proud to say we didn’t let them down. Multiple investors and advisors, noted below, were critical to our success, far beyond financing. At every turn, Zac validated our optimism, growing into a hardened, inspirational leader of the highest caliber.

It turned out that many local governments prefer to buy lots of things at once from a few trusted vendors, and offering many capabilities to the same clients is a notable characteristic of this market. This fit well with our strategy, since the data and knowhow that power one government workflow can often benefit numerous others. OpenGov’s culture of building meticulously for the long haul also proved to be the right approach for government software, where sales cycles are long, there are thousands of details to get right, and complex new functionality must be carefully and cohesively incorporated. At the same time, it often makes sense to acquire smaller companies that have done a great job iterating on a specific product. Or, as Zac likes to say, “find companies we admire, and combine forces.” 

I’ve been deeply impressed by many small govtech companies we’ve seen, some operating in only a few dozen cities for a decade or more, acing very particular workflows that fit in well with OpenGov’s broader work. Our head of corporate development, Marc Gottessman, has worked closely with Zac on many of these acquisitions over the years, including some tiny companies with a single point solution to be integrated, and in a couple of cases, larger, cloud-based solutions that are complementary to OpenGov’s capabilities and focus. Whereas some legacy players seem to have bought dozens of separate companies and mashed them together incoherently, OpenGov’s orientation has always been to carefully integrate software and workflows into the cloud platform, often re-writing them to create a single, elegant solution. Zac, Marc, and the executive team, including longtime CTO Ammiel Kamon, made this “inorganic growth” a key element of OpenGov’s success.  

Given this momentum, it’s worth exploring what Cox Enterprises now brings to the equation. Every successful company has to balance ownership and impact, and Cox, simply put, supercharges OpenGov’s ability to build faster, integrate more great technology, and better serve its customers. While we weren’t in a rush, at some point, venture-backed companies have to offer liquidity to their investors. Cox has the right long-term orientation to maximize OpenGov’s potential - along with the cashflow to integrate whatever makes sense, and the reputation, network, vision, values, and boldness to bring OpenGov where it’s most needed, over a horizon of decades. 

When we started OpenGov, I took less equity than normal for a senior founder, and never took a salary or even an expense budget - for years, we were focused on making sure it could survive and deliver on its commitments. It is imperative for this great nation to help our governments fulfill their charters in smarter and more efficient ways. As we’ve unfortunately seen, when core functions break, cynical radicals on both sides will convince people to vote against our essential values and enshrine crazy and destructive ideologies. Ultimately, we concluded that making the deal with Cox happen was a matter of duty, both fiduciary and to the mission. 

Acknowledgments:

One of the “secrets” of our work at 8VC is that the greatest mechanism of incentive is not just equity upside, but the ability to make a meaningful impact in the world. There is no way this small company could have attracted so many amazing people without an inspiring mission, and we were blessed with the support of many giants of the technology world.

Our board member John Chambers, who built Cisco into an industry-defining company, has been a consummate coach and motivator. John used to make bets with our sales executives in board meetings, one crisp $100 at a time, to see where their convictions were strongest, and helped to mentor some of our key leaders, in particular Zac. In a dramatic nod to John’s methods, OpenGov’s sales team recently beat their quarterly goals so resoundingly they got to shave Zac’s head - a loss for aesthetics but a win for effective and accountable government!  We learned so much from John, who is not only a renowned global leader, but also one of the nicest guys in business.  Special thanks to John for bringing in Pankaj Patel, his former CTO and CPO at Cisco, as an instrumental technical advisor at a critical time.

Our board member Katherine August-Wilde is one of the most knowledgeable and respected leaders I’ve had the privilege to know and work alongside. Drawing on four decades of service to First Republic, as CFO, COO, President, and Vice Chairman, she taught Zac (and me) more about management, compensation, and operations than can be described here. And Katherine and John did the essential, serious board work to get the deal done.

Our board member Marc Andreessen is one of the legends of Silicon Valley, and his name alone lent OpenGov considerable credibility and helped to attract seasoned executive talent. Fortunately, his involvement has gone much deeper, and his strategic insights, no-nonsense frameworks, and constant push to reach higher have been formative influences. I am also grateful to our friend Balaji Srinivasan, who originally led a16z’s investment in OpenGov. Special thanks to many of Marc’s partners for their help as well, including Ben Horowitz, Martin Casado, Marc Cranney, Lars Daalgard, and others. And thanks to Marc for sticking with us through the difficult periods over the years, despite so many demands on his time.

Ambition and talent prosper from proper guidance and wisdom, and OpenGov has enjoyed the counsel of some exceptionally wise individuals. Friends like Karen White and Bhaskar “BG” Ghosh became trusted advisors to Zac and the company. My late mentor, Secretary George Schultz, was an advisor to OpenGov, and I fondly recall early discussions at Hoover with Zac and George, and a fireside chat between George and Zac at the OpenGov office.  Condi Rice also joined Zac for a company-wide fireside chat later on. Many other luminaries got excited by the mission and paid visits, including Tony Blair and Madeleine Albright. Scott Cook was a great investor and has been a mentor to many of us, and Laurene Powell Jobs and her team at Emerson backed OpenGov at a critical time, bolstering our reputation considerably. I am sure there are some I am forgetting, and can only say “thank you” to so many across our community who contributed to OpenGov’s journey.

It feels far too late to be coming back to the real people who did the work. OpenGov succeeded thanks to numerous visionaries, first and foremost its employees. They could hardly have chosen a less glamorous or more difficult market, but it turns out that sometimes it is worthwhile to do hard things that matter! I am especially impressed by the current executive team, some of whom are newer, and longer-tenured leaders such as Ammiel, with whom I was lucky to work in past years.

And not least, we salute our customers, many of whom put their reputations on the line and spent countless hours on top of their official duties to make the software work in the wild. Thank you for betting on us, for caring enough about functional government to do what’s best, and for sticking with us! We sometimes give government a hard time in this country - okay, I sometimes give government a very hard time - but there are many amazingly dedicated individuals who choose to work in government and fight to make things better. Our customers have been a central part of our story, and OpenGov only works thanks to them.

I’m writing for the first time as OpenGov’s chairman emeritus. However bittersweet that might feel, I’m overwhelmingly excited for OpenGov’s future, and grateful to participate in the great, intertwined American traditions of entrepreneurship and public service.