The most convenient smart city solutions

Krzysztof Całka - the company's originator, co-founder and manager - talks about the challenges of GoPay, whose history shows that startups are really a road full of twists and turns, constant searching and precise fitting into market niches.

Krzysztof Całka: The history of our company is of great importance in the context of where we are now, what partners we have and who we work with. GoPay was created in 2014 from the idea of creating a simple system for the sale of season tickets for public transport, which did not have budgets for the transport card systems that were developing at that time. It is worth remembering that this was a different reality, the fledgling world of applications in which we live today, imperfect smartphones and few of their users, and the lack of trust in this type of solutions. Tickets were bought at kiosks or from drivers, and the great revolution in large cities at that time was the possibility of buying such a prepaid ticket. 

Our idea was to create a system that would be based on a relatively secure security system that can be easily controlled - without investing in hardware, it will allow you to quickly enter cities with the service and make it available. I emphasize that at that time applications were a very fledgling idea, it was the time of the Internet and tickets were also bought online at most - that's why we aimed at this sales channel. 

And so, in 2014/2015, we started to develop an online system for selling season tickets. Koszalin was the first city with which we entered into cooperation, the next was Grudziądz, and this is how we directed our offer to medium and small towns. At the beginning, our sales consisted mainly of recommendations from existing customers, although the system left much to be desired. 

The time when we could use references was about a year. As I have already mentioned, the topic of ticket brokerage was not so obvious at that time. We had to reach out to budget companies related to city offices, and this is still an analogous way. Talking to them really wasn't easy. These institutions were concerned about security issues or generally entering into cooperation with a company that is at the beginning of its path. Currently, we encounter a much more open approach and trust in technology, but it is still not at the same level as typical B2B.

How did you overcome these objections and what can you recommend to other startup founders who face a similar challenge?

KC: We reached out to the presidents of public transport companies. The first "entries" to 3-4 companies in cities were definitely the result of the fact that we convinced them to us as people. It was a matter of gaining trust, who we were, how and what we were telling, what we showed, and not necessarily someone checking the operation of our solution or its security.  It was about building a relationship and the resulting trust. We did not give up, we constantly made new attempts at contact - this is very important at such a moment. 

In general, we followed a typical startup path, we did not wait to improve the product, but entered new markets. If there were system errors or other unexpected situations, we corrected them on an ongoing basis. Of course, it was not a large scale of activity, so there was no great threat, but at that time we were operating "on an open heart". Today I have to admit that it was a full improvisation, there was no time for many things. But also from today's perspective, I think that it was a good way and in no way hindered the development of the company. 

What were the capital issues in the company? 

KC: When the company started its operations, it was based only on its own funds, we did not have external financing. We also did not know anything about the possibilities of external recapitalization. 

Very quickly, we no longer had enough capital. We used solutions such as the promotion of Mastercard, which at that time was starting to promote masterpass payments or card payments in general. 

We had projections that sales would be much higher and money for development would appear faster. Unfortunately, it was completely different. Our first shareholder was Verestro - then Upaid. This company created parts of our system, we had a purely technological relationship at the time, and at some point we did not have the funds to pay them the invoice for the service. Then the idea of converting into shares so that we could continue to operate appeared, and the company also declared its help in refining the product. This is how our story with Verestro began. 

At that time, we had no knowledge of how to attract an investor, what the relationship with the fund might look like, etc. At first, we were looking for government subsidies, unfortunately it took a very long time, and we simply did not have time. 

In 2015/16, we went through the path of talks with investors and we did not manage to obtain any. Despite the fact that we had a well-prepared project of creating mobile resident cards, dedicated applications to which we wanted to add parking lots and railways, no one wanted to believe that such intermediation in ticket sales would be able to reach scale. 

Investors expected quick, tangible revenues, and this is a business that is growing calmly, that scales over time. It was really difficult for us to convince anyone to our solutions at the time. 

We did not give up - we were searching all the time, Mastercard helped us a lot along the way, then we signed a contract with a large company in the area of incentive programs. Initially, we were supposed to make an application for them, but they ended up giving us a loan that was convertible into shares. And it was a very important moment when we received an inflow of capital for development. Unfortunately, this coincided with an unpleasant personnel situation in the company and the then CEO, we even thought about closing it. And then, together with the aforementioned our main shareholder, Krzysztof Drzyzga, who is behind Verestro, we decided to save and maintain the company. Krzysiek was able to build me up and motivate me to work in GoPay. I value him as a mentor and the support I receive from him. 

Would I make such a decision today to save the company? Knowing what awaited me on the way - I don't know (laughs), it was the beginning of really difficult moments, a constant fight for survival and corpses falling out of the closet, cleaning up after mistakes, etc. 

You could say that this is a totally non-startup story, in which you create a startup project, and after a few years you sell the company with a huge profit. Even then I knew what I really wanted - to do something constructive with cool people, of course remembering that money is next, but it is important and the business is ultimately supposed to bring profits to employees and owners. 

After those experiences, I also know that I focus primarily on who I work with, what kind of people I choose to work with, what kind of business partners I am looking for. By hiring, today I am able to decide on someone with worse competences, but this person must fit into our organization. Today I am satisfied not only with what we do, but also with the kind of co-workers and partners we have. 

What is the current structure of investors in your company? 

The first investor of GoPay 2015 was Verestro, initially as a technology partner, now also as an active partner supporting the company's development and majority shareholder. 

In 2021, GoPay was joined by WP 2 Investments - a strategic investment that allowed the company to work on the project of a smart-city application in the white label model. WP2 has also become our driving force in the field of gaining knowledge in the area of marketing, sales and fundraising. 

In addition, at the turn of 2023-2024, 11 individual investors joined the company, most of them people associated with GoPay or Verestro who knew our business well. Joining such a large group of people from the environment is a great credit of trust for me and a motivation to work hard not to disappoint them. 

At GoPay, we are very lucky with our investors, we have direct contact and active support with each of them. 

At what point in the development of GoPay is it now? 

KC: Since 2020, we have started rebranding and repaying the technical debt. We want to make the system, once developed, easily scalable and cheap to maintain. Previously, all our applications were written by different people, from different places, so maintaining the code was very expensive. 

For example, today we are already at a stage where practically our systems do not register failures. This year we had literally one, which was caused by the operation of the servers and lasted a few minutes, we are able to take care of it in no time. Back in 2022, we counted several failures occurring in one month on our systems. 

We used to make an application dedicated to the city for 7 months, today we do it in a month. By this I mean creating an application with visualization, with services that a given city or management of the transport department expects. We have everything systematized and automated. Therefore, by adding another application, we do not add to the maintenance work. 

We can say that 2023 has completed our work related to the optimization of systems, 

The effect of rebranding is the fact that now our systems are of quality, we are able to quickly develop new services or retain existing customers. 

What does GoPay's product offer look like as a whole? 

KC: From the perspective of the product itself, GoPay is developing along two paths. The first one is applications dedicated to cities. We create mobile smart city platforms that integrate various types of solutions. What is important, we do not want to reinvent the wheel today, because in many cities there are a number of systems - e.g. resident cards, ticket systems, etc. and it is quite diversified. This is not quite the place for us to propose our own, comprehensive solutions. Although, of course, this can also be done as part of a large tender for a comprehensive solution.  

On the other hand, our idea, our goal and distinguishing feature in smart city solutions is that we can integrate many existing applications and make them available in the city on one platform. Thanks to this, individual suppliers do not lose customers, provide their services, and can develop in what they are really best at. On the other hand, we, as GoPay, integrate it into one platform, maximize the number of users who can use a given service. Thanks to this, we can continue to implement further solutions that will guarantee that the number of people who will benefit from it will be relatively large.  

And that's our goal! The platform is supposed to integrate, not create new solutions, because there are already a lot of them. For example, in Szczecin there is a Family Card system. As GoPay, we plan to integrate it so that users learn about it (relatively few residents know about it or use it at all), and after adding it to the system, they will find out what benefits they have in this respect. 

What is the benefit for the city from this process? They get a tool with tens of thousands of users, in which they can inform, for example, that there are changes in such a card, new promotions or new services. 

To sum up - we are creating a smart city platform that benefits both the user - the resident, but also becomes a tool for the city, because it accumulates a relatively large group of people.  

The second large product that we are creating and developing in parallel is the construction of a multi-city application.  

What is it about? We choose the city, as a customer we are not interested in anything other than buying a ticket or paying for parking, and only for this we need an application. 

The operation of this application generates almost half of our revenues today. However, there is no building of a community around it that is related to a given region. 

We have plans for changes and international development for this product, although we will first want to add the functionality of fees in paid parking zones. 

What does the key, most up-to-date implementation look like now? 

KC: We are at the end of replacing all dedicated applications in cities. At the beginning of June, we launched the largest application so far and it is the mobile city card of Szczecin, for residents and tourists visiting Szczecin and the surrounding area. https://wiadomosci.szczecin.eu/rtykul/mieszkancy/nowa-odslona-mobilnej-karty-miejskiej-szczecin 

Within the first three days of the launch of the application, nearly 1000 participants registered. 

This application has interesting information functions - related to tourism, important local events or news from the life of the city. 

At the same time, you can buy public transport tickets, bathing areas, car park entrances or the Szczecin Tourist Card in this application. 

What are GoPay's plans for the near future? 

KC: Another challenge that we are facing this year is  the implementation of the payment system in paid parking zones. At the moment, we don't have this functionality in the apps at all, so it will definitely be a game changer for us. Certainly, the recipient of this service will be a completely different group of users than the current ones. Of course, I am talking about the largest share of the user, which we are not able to acquire with the existing products. And I mean a user who uses a car and will need to use parking fees in the city.  

For us, the implementation of another service will result in the fact that the user who appears in the application is someone who will potentially use other services in our applications in the future. 

As far as the range of our offer is concerned, as of today we also offer large cities, such as Warsaw, Poznań, Tri-City, we will add Krakow in a moment, and in these cities there is already sales to users who alternate between public transport and their own car. For them, an application in which they can park and buy a ticket for public transport at the same time is important. Therefore, the key goal for us this year is to implement a system of fees in paid parking zones. We want to start with dedicated applications, and then implement the system into a multi-city, nationwide application. 

What is the biggest challenge here? What are you emphasizing now? 

KC: The IT work that needs to be financed for this purpose is crucial, and it is certainly a challenge.  

In the past, compared to the business costs associated with sales, we had very high IT maintenance costs. At the same time, incurring these costs did not directly generate sales of a new product, but still the same, although of much better quality. It has also always been quite a difficult issue from the perspective of talks with investors - the lack of new services, seemingly lack of development, while raising the costs of a key department in the company. 

Today, this is changing and making things easier. Thanks to the optimization of our code, we are now on the path of reducing IT costs on the maintenance side, in favor of the production of services, thanks to which we increase the implementation of new products. We also plan to allocate more funds to the development of sales and marketing areas in the near future. 

How do you manage the company? How do you influence the motivation of a team working in a highly dispersed way? 

KC: Part of our general approach to work organization is a daily relationship, although maintained online, the right to a "worse moment" and, above all, responsibility for one's own areas.  

Our company has 3 branches - so the team is scattered around Poland. Some of us work in Poznań, the IT department is in Lublin, and the sales part of the team permanently works from Warsaw - communication and maintaining proper relationships are therefore a challenge. I try to make people feel responsible for what they do, and that this factor motivates them to act and drive. I trust our crew, we are not afraid to say uncomfortable things to each other if the situation requires it, we monitor our work together every week, everyone has a chance to ask questions and make comments - there is full transparency. I focus on the independence and proactivity of my colleagues. 

Thank you for the interview. 

Interviewd by Ewa Pysiewicz, June 2024