The Fifth Risk(40)
In the end, even DJ Patil was shocked by the possibilities that lurked in the raw piles of information the government had acquired. “I didn’t grasp the scope at first,” he said. And if you wanted to see the possibilities—the value that the entire society might reap from letting smart people loose on the data—you needed to look no further than David Friedberg.
In 2006 Friedberg was driving home in the rain to San Francisco from his job in Mountain View when he noticed how differently people behaved when it rained. The weather affected all sorts of businesses, though not so much Google, where Friedberg worked. The specific business that had caught Friedberg’s eye was a bike rental company near Bayside Village on the Embarcadero. When it rained, no one rented bikes.
Obviously.
Friedberg had graduated from the University of California–Berkeley five years earlier, with a degree in astrophysics. He was twenty-seven years old but could pass for sixteen. Because of where he lived and who he worked for, it was second nature for him to think, If I can get my hands on data and quantify weather risk, I can sell weather insurance to the businesses that need it. Ski resorts, airlines, utility companies, golf courses, packagers of beach vacations—there was really no end of industries, or even governments, that he might serve. Every inch of snow cost the City of New York $1.8 million dollars.
He found a few friends and angel investors to back him and hired a group of mathematicians to collect and analyze weather data. “Math people figure shit out,” he said. His math people soon discovered the rich haul of weather data inside the Department of Commerce. They asked for and received the historical rainfall and temperature data from the National Weather Service’s two hundred weather stations. They discovered that NOAA had collected, for the previous forty years, rainfall and temperature at every American airport, however small. They learned that NOAA maintained 158 radar installations, and that these recorded a big percentage of the rain that had fallen in America during the past fifty years—along with anything else that happened to be in the air. That’s how the United States government had found the pieces of the Columbia after the space shuttle exploded in midair: using NOAA’s radar.
The federal government has the sort of data on the weather that the Boston Red Sox has on Major League Baseball players. But unlike the Red Sox, it had made little effort to exploit the value in it. The images from the radar stations, for instance. They were on tapes in a basement of a NOAA office in Asheville, North Carolina. To get the data into a form he could use, Friedberg paid NOAA to put it on hard drives and ship them to him. He then moved the data, for free, to the cloud. “That was the first data set we were able to get onto the cloud,” said Ed Kearns, chief data officer at NOAA. “David showed Google and Amazon and Microsoft that there was a business case for taking it. Until we got it up, no one was able to reprocess the data.”
Of course, without cloud computing there would have been no place to put the radar data. But once it was on the cloud it was generally accessible and could be used for any purpose. (Ornithologists at Cornell University would soon be using it to study bird migrations.) The math team at Friedberg’s new company, which he called WeatherBill, used it to calculate the weather odds for some very specific situations. “What is risk?” asked Friedberg. “Risk is uncertainty about the outcome. The less data you have, the more uncertainty you have about the outcome.” If you are the first person to cross the ocean on a ship, you are going to have trouble insuring yourself. If you are the thousandth ship, there is now data that certain kinds of ships do better than others, certain times of year are more treacherous than others, certain kinds of hulls are more durable, and so forth. “The more data we captured, the more we were able to determine the probabilities of some unfortunate event occurring,” said Friedberg. “But there were private companies, like AccuWeather and the Weather Company, that had issues with us getting access to weather data. In the end we agreed [with NOAA] we would not have access to the weather data today. We’d just get the historical data.”
It took eighteen months before WeatherBill had a website on which anyone could come and insure himself against the weather. And people did turn up, in fits and spurts. The U.S. Open tennis tournament bought rain insurance, for example, as did the broadcaster that aired the matches. “Anything more than 0.01 inches of rain per hour means they can’t play that hour,” said Friedberg. Other interested parties included an Arizona ski resort, a pair of golf courses, a beach resort in Barbados, a car wash, and a hummus shop called Hummus Brothers. Friedberg hadn’t known that people bought less hummus when it rained but, then, he was learning all sorts of odd stuff about people’s exposure to the weather. Salad places did much better on sunny days; coffee shops did not.
But Friedberg also learned that it was harder to sell weather insurance than he had supposed. “He had this quaint supposition that there were all of these people looking for this online,” says one of his former business partners. “And they weren’t.”
By 2008 Friedberg realized that if he wanted to meet the people who needed weather insurance, he’d have to hit the road and find them. That’s when he stumbled on the California citrus packers. The year before, in 2007, there’d been a bad freeze. The citrus farmers were able to obtain some insurance through the federal government, but the companies that packed and shipped the fruit were not. “If the temperature goes below 28 degrees for four hours or more, they have no business,” said Friedberg. The California citrus packers had learned that the hard way. “Then we started talking to the growers,” said Friedberg, “and they weren’t fully covered, either. And we thought: if this is just citrus, agriculture must be big.”