BY DANIELLE BRAFF
Interacting with local government can often feel like a chore: getting a vehicle registration, dealing with tickets, paying taxes, renewing a license . . . the list goes on. For most of us, checking items off of that list means taking time off from work to travel to various government offices, or dealing with several different (and often antiquated) payment systems. But what if residents could instead navigate and pay for government services on their schedule, in one user-friendly digital platform? That’s the question that has obsessed Mike Duffy, ’12.
Mike Duffy is the founder and CEO of Chicago-based govtech startup CityBase.
Duffy is the CEO of CityBase, a Chicago-based tech startup founded in 2013 that aims to do just that: streamline government and utility services and payments. Duffy brought aboard two fellow Booth alumni—chief customer officer Liz Fischer, ’15, and chief technology officer Alex Pedenko, ’13—to automate government service payments ranging from tickets to license renewals. CityBase works with more than 100 government agencies and utilities, and the company was acquired in 2019 by GTY Technology Holdings, a Las Vegas–based firm, for $160 million.
Duffy, Fischer, and Pedenko joined in a conversation with Chicago Booth Magazine to discuss why digitizing the government will help underserved communities, how their entrepreneurial journey has unfolded, and why Booth is in CityBase’s DNA.
CBM: What initially motivated you to start CityBase?
Duffy: We’re here to make government more personalized and responsive. When we first entered this space, we observed that our own city of Chicago consisted of four dozen autonomous business units, each with their own databases, their own software, and a proprietary way of interacting with constituents. That’s a pattern that exists in towns and cities virtually everywhere in the country. In response we tried to create a single user experience. All local governments have similar needs and challenges, and there’s an opportunity to create a common technology language.
We’re here to make government more personalized and responsive.
Pedenko: What’s important to me is that CityBase makes it easier for citizens to interact with their government. The reality of government interaction for underserved communities is that people often have to take time off work to get downtown. We can decrease that burden by digitizing much of the government experience, and by making automated cash payment available. You could interact with the government from home or from work, after hours and at night. Being able to offer that to the entire constituency is a big part of why I’m here.
CBM: How can private-sector innovation in the civic space help average citizens?
Liz Fischer is the chief customer officer of CityBase.
Fischer: As consumers, we know what the current state of government technology and payment feels like, and we know firsthand that it’s broken. A permit application fee, a tax, an obligation such as a citation or a water bill—all of those require a different process and a different way of paying. You might have to go to City Hall to do one thing, and mail in a check for something else. The result is a really fragmented customer experience that should instead have continuity.
What draws all of us to this business is improving this customer experience and making it more accessible for people who are heavily burdened by these manual processes. A lot of us don’t think about our customer experience with the government because it’s nominal or a one-time thing, but for people who are low income, a utility bill is a large part of their monthly income. There are a lot of costs associated with paying it on time. Or, think of small business owners and the obstacles that we put in front of them: renewing a license, etc. It slows down economic activity. By helping both residents and businesses, CityBase is making cities more equitable and prosperous.
Duffy: The govtech industry—by productizing the things that we are bringing to government—is also informing best practices, which is creating much more incentive in the market to create improvements, as opposed to a single consulting firm in a single market.
Pedenko: I don’t think that the idea of unifying is itself new. Anyone who has been shopping online has been asking that question. But we’ve been finding a way to execute on it in an economically viable way.
[That class] fueled my interest in going from working in huge organizations to doing something scrappy, where you can have a true impact on the outcome.
CBM: What was your personal journey as a startup founder like?
Duffy: The first 18 months were challenging, and I didn’t have Alex and Liz here yet. Entrepreneurs are forced to deal with uncertainty. Often, we’re pursuing something that may seem obvious but that to the surrounding world seems impossible. Everyone is telling you that you’re an idiot, your dad is telling you to go back and work in a bank, you have three, maybe four kids, and your wife’s debit card is getting denied at a parking meter. And then, someone, somewhere in your market agrees with you on the story you’re telling and gives you a shot. How you execute in that moment, that’s the breaking point that brings momentum. That buy-in lets other people see that it’s possible, and it de-risks the concept for everyone. Then, investors start coming to the table, and you can recruit more.
Fischer: When Alex and I joined, Mike had been underway for a while. I can only admire the sacrifices that Mike made. Over the course of a few years, it felt like we had a lot of “live or die” situations. We had our fair share of 2 a.m. or 4 a.m. nights, and times when we pulled things off by a hair. I remember that when I started, we were—and still are—squarely focused on payment. But shortly after I started, Mike said, “I’m ready to talk about the vision.” That was the beginning of the bigger phase that we were all part of.
Alex Pedenko is the chief technology officer of CityBase.
Pedenko: I was rolling off my own misadventures in startups, and the fact that I was able to convince my wife that I should go to another startup is a testament to Mike’s salesmanship.
Duffy: It’s so stressful. You have to pull back on your lifestyle: entrepreneurship is a “get out of lifestyle free” card. Be mindful of your finances because of the impact of the startup. It’s impossible to fully set expectations with the people in your life.
Fischer: I took the least conventional approach to my career, and the decision was to go on gut and go on the people. You spend so much of your time working, you spend so much of your time with your colleagues, and you have to make a bet on the people you’re working with. I love what we are doing, and that it has a big impact, but I would still work with them if we were making hats.
I came in with entrepreneurship as a focus. I thought of it in terms of wanting to do my own thing. But the value of Booth was the people.
CBM: What influence has Booth had on CityBase as the company has grown?
Duffy: I spent 12 years in capital markets, and had gone to Booth to pursue a career on the back end. I was focused on the macroinvestment phase, and halfway through the curriculum, I took a class called New Venture Strategy with [adjunct professor of entrepreneurship] Greg Bunch. During the second lecture we were going through 10 common business models for new ventures. I understood this intuitively, and it really connected with me. After that course, midway through the quarter, I changed my career plan and took as many entrepreneurial classes as I could.
Fischer: Booth was exceptional. That’s where I got interested in entrepreneurship. I took a class called Building the New Venture with [clinical professor and academic director of university-wide entrepreneurship content] Waverly Deutsch. It was compelling, practical, and exciting. Being someone who didn’t come from a business background, I found it to be a way to encapsulate all the parts of the business and put the building blocks together. It fueled my interest in going from working in huge organizations to doing something scrappy, where you can have a true impact on the outcome.
Duffy: One lecture from Building the New Venture was the concept of unit modeling, and that concept comes up a lot, so much so that you often forget about the origin of it. But it manifested, and we now quantify a lot of local governments along those principals.
Pedenko: I came in with entrepreneur-ship as a focus. I thought of it in terms of wanting to do my own thing. But the value of Booth was the people. Invariably, working with these two is a result of Booth. The other part was the language: my background was math, and being able to discuss and understand a balance sheet and economics, that was the value.
Fischer: We have a shared language, and I haven’t really thought about that before. I met Mike through Booth. When I was introduced to Alex, I came to the office that first day to meet him and I didn’t know he had gone to Booth. But I said to myself, “That’s not your typical CTO.” He had a very holistic understanding. Shortly after, I learned that he had been to Booth.