Scaling Canadian cybersecurity services globally

Bruce Croxon (00:03): Hi, and welcome back to the Export Impact Podcast, brought to you by Export Development Canada, EDC. My name's Bruce Croxon and I'm the host of the Export Impact Podcast.

In today's episode, we're diving into something that you've all heard about. You might not know a lot about it, but you've heard about it, and that's the world of cybersecurity and exploring why it's essential in every part of our lives.

Today on the show, we're thrilled to be joined by Claudette McGowan, the powerhouse CEO of Protexxa, a cutting edge cybersecurity company based here in Toronto. Claudette's on a mission to tackle one of the most pressing challenges of our time keeping people and businesses safe in the digital world. From leading some of Canada's biggest banks to launching her own startup, her journey is packed with resilience, innovation, and real impact.

I’d like to begin today’s episode by acknowledging that we’re recording from my office in Toronto, which is on the traditional unceded territory of Many Nations, including the Missassaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee, and the Wendat Peoples, and is now home to many diverse First Nations, Inuit and Metis. We value taking this moment to deepen the appreciation of our Indigenous communities, wherever we are, and to remind ourselves of our shared debt to Canada’s First Peoples.

Welcome to the show. Claudette, thanks for joining us today. We're really, really excited to hear about your journey at Protexxa.

Claudette McGowan (01:38): Thanks for having me today, Bruce.  Thrilled to be here.

Bruce Croxon (01:40): Our pleasure. As I was getting ready for this podcast, I'm usually used to asking a lot of questions about the business and obviously linking to your international story, but I gotta confess, I got equally enamored with your story and where you've come from. But if you allow me, let's start with the business first and then I'll circle back and ask you some questions. But on the topic of Protexxa, what sparked the idea for the company? Like I know Cybersecurity's a big deal and we all should be concerned, but speaking for yourself, what gave you the idea and how did you get started?

Claudette McGowan (02:15): Yeah, thanks for the question, Bruce. Like right now, there are 8 billion people on earth; 5 billion of us are using the internet, and surprise, surprise, more than 50% of us have already been hacked or compromised or breached. And so I love looking for problems to solve, right? So find the weakness and be the strength. And I think collectively, globally, this is a weakness for the world. And I want to wrap my arms around this big hairy, audacious problem and say, how can we be the solution? And 90% of the time, and you hear about a cyber-attack, it starts with a human. Like we click a link, we open an attachment, we find a USP in the bathroom, we say, my God, I gotta plug this in and see what's on there. And so from my standpoint, how do we help the humans stay safe in the digital world?

Bruce Croxon (02:58): Yeah, it's interesting. The first thing out of your mouth was that it's a huge problem and it's a great soundbite for entrepreneurs and would-be entrepreneurs because so many times you hear of ideas that aren't addressing a big enough problem and it makes the marketing and the expense of getting the idea out there so much greater. But when you're starting with a problem as big as the one you're tackling, I won't say you're halfway home because it's very difficult as we both know building businesses but at least you're tackling something that that needs a solution.

Tell the audience how your model works. Like for those that might not be as conversant with the difference between business to business and business to consumer, you sell to corporations who in turn make it easy for their employees. Am I oversimplifying? Is that how the model works?

Claudette McGowan (03:48): You got it. And that's how we're starting the journey but it's certainly not how we're gonna end the journey. I envision a day when we're on everybody's smartphone or their tablet, but today our focus is finding that connective tissue between my personal cyber-hygiene and the digital risk to the company. So if I am on LinkedIn or one of these great, you name it, SnapChat, whatever the platform is, and I don't have my privacy settings on and I'm using my favorite password of password 1, 2, 3, and I'm making myself really vulnerable online, well, me being vulnerable online, I bring all that with me to my company. So we do a digital footprint assessment. We look at something called open source intelligence. These are things that exist about you online already. We scan the surface web, the deep web, and the dark web. We give you a score.

So like the credit reporting agencies give you their credit score, we give you your cyber-hygiene score. We tell you how good you're doing online, how protected you are, and then we aggregate all those scores of the individuals and present that to the company. So this is the human risk of all the individuals in your company and and how it impacts, you know, your hardware, your software, your network, all those things make up the human side of risk. And so that's what we're doing. We focus on B2B right now and longer-term, we're gonna go B2C.

Bruce Croxon (05:07): Yes. Well, so it sounds like the B part of the B2B, and for those that aren't aware, B2B means business to business. It's really a distribution channel for you. It's a way to access employees, which are really your endgame. Is that basically what you're saying?

Claudette McGowan (05:22): You got it. And just think about how much hours you spend online and you think about the benefits that a company provides you with medical and dental, we need digital benefits as well too. We need help to survive and thrive online.

Bruce Croxon (05:36): So listen, just switching gears a bit to your story specifically. I mean, you held senior positions at two banks. I know a lot of bankers and I don't know a lot of them that jump out of the cozy seat in the C-suite pension set for life. You stop thinking about your business on Friday, which I'm sure you haven't done since you went out on your own and you live a pretty balanced life. How did you make the jump, the unusual jump, I would say, from C-Suite to the life of an entrepreneur? What was that like personally?

Claudette McGowan (06:10): Yeah, I think we all get to a stage in the life where we say, you know what, maybe it's time to choose courage over comfort.

Bruce Croxon (06:16): Not everybody, that's why I'm asking but I hear you. You obviously did.

Claudette McGowan (06:22): Yeah, for me, I love what I was able to do and I love the opportunities that I had at the bank, but I always felt there was more out there for me. And when I think about the 5 billion people online and that I believe I had the cheat codes, I know what it would take to protect people online. Why not share that? And thankfully, you know, those banks are very, very supportive of the path that I'm on. But it was really the problem that attracted me more so than anything else.

People were struggling, whether it was the bookstore or the library or the grocery store or the zoo, everybody was being impacted and small mom and pop shops, massive organizations. And I felt, do they have the plans? Do they have the playbooks? Do they have the intel to protect themselves and their customers online? And in many cases I felt there was a gap. Find the weakness, let's be the strength.

Bruce Croxon (07:12): Were you nervous when you took that? Do you remember when you took that big step and did you have any times where you second-guessed yourself during the trials and tribulations of startups and that kind of thing?

Claudette McGowan (07:24): Like every entrepreneur, absolutely. Absolutely. You have deals that they're right at the line and then something goes wrong and you go, oh my gosh, would've been easy just to, you know, clock the day shift and move on. But it comes back to impact. And when people ask me what made you leave, it actually was impact.

Bruce Croxon (07:43): Yeah, that's cool because it's a lot of entrepreneurs that I come across and even myself thinking back on my career, I didn't have a lot to lose when I embarked on trying to make something work. You had a lot riding on it in that you left, you know, very senior positions to tackle this. So commend you and for those listening, it can be done, a little courage.

You're also a champion of diversity. You're a woman of color, which would've made for some interesting times I think, in the world of banking and the C-Suite, I'm sure there's lots of stories you have there, but noticeably as well. I think you still hold the record for the most money raised under your company for a black woman in Canada, $15 million over two rounds. Congratulations. Phenomenal.

By the way, EDC being one of your partners is one of the things that EDC does. We usually just talk about how they help you get international, but they're also there for investment for the right opportunities. First of all, congrats, right? That's massive, massive kudos and achievements. Where do you feel we're at now? Like are we winning this battle on diversity and inclusion? Are you concerned about what's going on south of the border? Are we taking a step back? I guess what I'm asking is are you optimistic as a trailblazer, somebody that's fought the fight? Are we on the right track?

Claudette McGowan (09:03): Yeah, that's a great question, Bruce, because I can tell you no path has been easy for me in anything that I've done. And I think about the climate right now for fundraising. It doesn't matter where the person is from, they tell me they're struggling. And if you're a woman, you have a less than 2% chance of being VC-backed. And if you're a black woman, you have a less than 1% chance of being VC-backed.

So if I told the Bruce, I got this great deal for you, but you have a less than 1% chance of success, are you're coming for the ride with me? And so the numbers are the numbers, but I can tell you that there are remarkable people out there. There are remarkable agencies out there, remarkable VCs out there that they don't care what you look like. They respect the green. They wanna know, is this something that's gonna give us a five x, a 10 x, a 25 x return?

So when I think about the companies that have invested in Protexxa, I think they're looking for something that it looks like it's a winnable race. When it comes to the super angels that have written checks for me or the people who haven't given me a dollar, but they've given me access to their network that's proven like just unbelievably valuable. And then just the advice of other founders, here's what I did.

I had some folks from Silicon Valley tell me, you know, we tried to do something like what you did and why didn't work was the timing. Cybercrime wasn't anywhere where it is today; since the pandemic, it has quadrupled. So I never remember speaking at my dinner table 10 years ago about cybercrime, but today, no matter where I go, no matter what room I walk in, everybody wants to talk about the latest hack and what happened and how to protect themselves, small, medium enterprise organizations.

So I think the timing is right and I think people who want to bet on someone who has expertise in the corporate world. I used to buy the things that I sell today, that is something that I hear my investors say that is an added bonus.

And lastly, the team, the team people from big companies, you think about the Fang, you know, we've got people who come from some of those organizations, a lot of people from law enforcement, all the three-letter agencies you can imagine. So I think having a great problem to solve, a great team to solve it and the right timing, that is why we've raised $15 million.

Bruce Croxon (11:32): And of the money raised and use of funds in this game that you're playing trying to keep up. I know you rely heavily on AI to help your product offering. Are you still finding because of the rate of innovation that the majority of the investment is going into technology or has the tech come to a place where it's saving the money because of the artificial intelligence capabilities? Like where are your investments going? Is it sales and marketing or is it tech or is it evenly split between the two? Like what is the game to try and stay on top of this market?

Claudette McGowan (12:11): The lion's chair goes into the tech because the criminals are innovating. They've raised more than 15 million, let's just say.

Bruce Croxon (12:18): And they've made a lot more too, right? That just keeps getting funneled back into...exactly.

Claudette McGowan (12:23): That's right, they've made a lot more. Yeah, so we always be innovating. We're always creating, we're looking at how to put more predictive capabilities into our platform. We look at things around the reverse image search, like how quickly can I find your face online, Bruce, wherever it may be, how quickly can I get it removed and taken down? So that's a big piece of what we do. But certainly sales plays a big role too. And how do we not just treat sales like it's not related to AI. Everything we do, whether it's operations, sales, marketing has this underpinning of artificial intelligence as well. So we're finding better ways to get to the answer faster and to provide speed to market, time to value. All those things are things that are top of mind for us and we're using AI to embed into our processes.

Bruce Croxon (13:12): Listen, at what point did you start thinking beyond Canada? I know you're groomed here in the banking system, as you said, you reviewed a lot of software offerings that were trying to address a problem that you knew you had. So I'm assuming that you started here when the company was just kicking off. When did you start looking outside the country? What got you to do that? You know, was there a turning point that made you say, okay, now's the time to go international?

Claudette McGowan (13:38): Yes, I could tell you the first customer was Canadian and the second, third and fourth were not.

Bruce Croxon (13:43): Okay. So it happened relatively quickly.

Claudette McGowan (13:45): Very, very quickly. And it was because of organizations struggling with some of the problems that we know today. And so, we're not chasing ambulances, but I can tell you that whenever something goes wrong, we get the call in the middle of the night saying, Hey, we need some help and we're there for you before the bad day, during the bad day, after the bad day.

So we went outside of Canada pretty quickly. Really happy to say that, you know, sometimes you have to go shine somewhere else to see the love in your own backyard. And we were seeing a nice mix of Canadian customers, new US customers coming on board. And then of course we've now moved into the Middle East with a sizable customer in Qatar. So a lot of growth. Were across many of the islands as well. So whether it's all the warm spots you can think of, we are either got a contract on someone's desk or we're doing work for them today.

Bruce Croxon (14:36): Nice. And I mean is that a conscious strategy on your part, market diversification by geography or is it just the way it kind of happened? And I guess part two to that question is are there some areas of the world that are more prone to threat and therefore you've found those markets over others?

Claudette McGowan (14:54): Yeah, it's a little bit of a where you're celebrated, not where you're tolerated. So there's a little bit of that at play, but certainly we do see some areas where they are more targeted and we have some threat intelligence platforms that show us areas that have things. So usually when we make a call to you, we don't just say, Hey, we're Protexxa and we do all these fabulous things. We give you a little bit of intelligence. Here's something that we found that you should be concerned about and we can help you with this. And sometimes folks say, thank you, we appreciate it. But more times they say, you know what? Come in and talk to us about this. It's a blind spot. Or I'll have leaders say to me, why didn't my team find this for me?

Bruce Croxon (15:28): Yeah, I hear you. As you've expanded into new markets, what are some of the surprises or challenges you face that Canadians might not necessarily face when they're dealing in their own backyard?

Claudette McGowan (15:42): Yeah, I think there's always cultural challenges, like just understanding how things work, understanding the regulatory environment of the different spaces that you're in, the cultural differences as well. Things that EDC is great with helping with is like payment terms and just making sure that you've got the right person to speak to in those areas. You know, insurance when it comes to some things to make sure that you're gonna get your payments that the cadence that you're expecting.

But I think the biggest piece for us has been around some of the cultural differences and making sure that we're not going there thinking we have all the answers. Partnering with local talent, partnering with local experts and saying, how do we do this together? And a little bit more listening than speaking has proven very helpful, but it's collaborative when we go to these markets and we wanna go places, like I said, where we're welcome and they appreciate it and then that turns into repeat business and referrals.

Bruce Croxon (16:38): Yeah, I know the guaranteeing of receivables is one of the sort of pillars of the EDC offering. Have they helped in any other way? Have you worked together with them as you've ventured new markets?

Claudette McGowan (16:48): Yeah, absolutely. And anywhere from, you know, coming on a stage and being able to speak about the partnership or referrals, co-investment, that's really big and I think the people that we work with EDC are quite remarkable. They roll up their sleeves, they get involved. I don't think there's a week that goes by that I'm not speaking to someone where they're just kind of either checking in or validating. So that's been a really big thing for us is I didn't know there was an equity arm of EDC and I learned about it and then going through the process, you know, the diligence, it's not a fast path, it's not easy. They're dotting the I's crossing the T's, but once they understand, they met the team, they saw the tech, and they understand what we were trying to do and they spoke to a customers and that was big. I tell people probably very rigorous on the diligence, but certainly worth it on the relationship as well.

Bruce Croxon (17:45): You've got a soft spot for the seniors as well. So tell us about the seniors' market and why they might be a little bit more prone in what you're doing to try and help that demographic out.

Claudette McGowan (17:56): Yeah, we're seeing seniors are being targeted at alarming rates and sometimes it's online and sometimes it's offline. It could be someone coming and saying, I'm here to fix your roof. You give them the down-payment, they never come again. Or you have things like the digital, the call lots on the grandparent scam where little Billy's calling saying he needs something wired transferred or he's been arrested or in an accident. So all these different ways, romance scams targeting the senior citizens as well too, or older adults.

And so we created something called Silver Shield. We're in pilot with this right now. We're working with some specific long-term care facilities, nursing homes if you will, and going in and educating the seniors but also learning, as I mentioned, hearing the things that they're grappling with. If I told you I walk into a senior's facility to talk to them about technology, what do you think the number one thing they wanted to know?

Bruce Croxon (18:49): How does it work? I mean where my head goes is I know your artificial intelligence is high in your offering, but not too many seniors I know understand what the capabilities of AI are. So I would imagine you have to find a way to serve it up in a digestible form that somebody with not as much technical literacy may be able to understand. That's not the sell short the seniors. So don't get me wrong.

Claudette McGowan (19:14): I hear you. 85% of the questions were about artificial intelligence. Even if they're calling it Chat PPT.

Bruce Croxon (19:21): Exactly.

Claudette McGowan (19:22): They wanted to understand how does it work? Should I be concerned? They're interested about phone calls, emails, text messages. And so we spent the lion share of the time educating what it is, what it isn't, dispelling the myths, and then talking about how AI and cybersecurity works for good or for evil.

And so this viewpoint that seniors aren't online, they're online. This viewpoint that they're not asking sophisticated questions, it was very eye-opening for me to see the types of questions and the fact that they have been dealing with things. Everybody had a story to the point where at one facility there was somebody waiting outside. So as they went and took a walk, somebody was out there trying to social engineer the senior citizen.

Bruce Croxon (20:10): Amazing because it's got to be a very vulnerable and topical topic, if you will, in that community. Just to circle it back to the business model, I'm assuming what you're doing is you're packaging up a product that they can easily digest and that will serve to protect them. That's the Silver Shield?

Claudette McGowan (20:28): You got it. It's a 24/7 helpline. It's a place that you can call at two in the morning. It is a place that you can send a note to at three in the afternoon. And we're just thrilled to be in this piloting phase and learning from the seniors what is adding value, when do they call? And of course using AI, we're taking all those calls and building a model around them so we can get to the answers faster for the seniors and put things out proactively; like this is the scam of the week, this is the scam of the hour. So that they're on top of things as well too. Because nothing's worse than saving and working hard for your entire life and in 20 minutes somebody finding a way to just shatter your dreams, shatter your life.

Bruce Croxon (21:13): So for the seniors and for the caregivers of seniors that are listening online, aside from like, you know, come talk to us about Silver Shield, which would be a great piece of advice, what would be like one or two things you'd tell a senior in an elevator to watch out for when they're dealing with technology?

Claudette McGowan (21:32): The number one thing is for most phones you can actually put a setting in that your phone won't ring unless the person's in your contact book. So there is pressure for some reason as humans, our phone rings, we think, I gotta answer it, you don't have to answer it, let it go to voicemail, listen to it after. So you don't have the high pressure situation.

The other thing is if you're online, the number one thing, don't click links, don't open attachments, hover over the name. I know it says it's your son-in-law's name, but when you hover over it, is it your son-in-law's email or someone just using that screen name.

And the third thing I would say is when you're online use multifactor authentication, it's like having two locks on the door. So even if they get through the first door, there's some preventative mechanism so they will get through the second door.

So there's so many things we can do to prepare them, but I spent more time showing people how to turn on multifactor authentication than anything else because they really wanted to know about that deadbolt, that second lock and put it in language that they can understand so that it makes sense for my children. It's the same way you have to make sure that it is relatable and package. It's not that you're simplifying it, you're making it relatable so that they'll say, oh, I get that it's not too complex. I can thrive online too.

Bruce Croxon (22:44): It's kind of a wild world a when you've grown up, you know, trusting and then all of a sudden you have to be on sort of hyper-alert for the last years of your life. It's unfortunate, but good thing they've got people like you that have their back. Protexxa's mission goes beyond software, you're working to raise awareness and promote cyber education. Can you tell us a bit about the partnerships and initiatives the company's involved in?

Claudette McGowan (23:08): Yeah, so right now there are 3.5 million unfilled cyber jobs worldwide. So we're working with different organizations to train people on cybersecurity so they can get access to those entry-level jobs. So we're really excited about being able to connect the dots between somebody who has the aspiration and they just don't know the path of how to get there. I've got a lot of people who have IT skills, but IT skills and cyber skills are not the same. So we need to make sure that yes, you can fix the the laptop or the desktop, but then how do you protect and make sure there's a firewall and make sure that you've got some kind of endpoint protection software and you've got the network cover. There's different ways to train people so that's a big piece of what we do.

And then process, we have small companies that say, I can't afford a cyber professional or a chief information security officer. Well, you can afford to put a banner on your email so that anytime something external you get a little banner saying this is an external email. So if you're a Protexxa and it says the note is from Claudette, but that banner comes in, well then, you know, hold on. It might say Claudette on the name on the screen, but underneath that's not her email. So there's some low cost ways to help out smaller organizations, not-for-profits, mom and pop shops.

So we spend a lot of time doing workshops and webinars to help people find quick ways, inexpensive ways to protect the organization. Don't ever say I have to get to a certain point and then be cyber-secure. It shouldn't be a bolt-on. It should be a built-in.

Bruce Croxon (24:38): Yes, I'm starting to understand that whole, you know, when we talked off the top about, yeah, yes, B2B is our platform now, but you know, our ultimate vision is to be everywhere, which is amazing.

Listen, I wish we had more time because like I've got a lot of questions that I'd even get a chance to get to, but the journey's a fascinating one to me, both personally and professionally. Congratulations on on all your success. It's been a pleasure hearing your insights and experiences and on behalf of not only myself but my mom, I'm glad you're out there doing your thing. Thanks for taking the time with us today, Claudette, it was a pleasure.

Claudette McGowan (25:16): Thanks so much Bruce. And anytime you're ready to do your defender assessment, we'll check you out for you.

Bruce Croxon (25:21): Please do. I'm ready now. After today, I'm ready now.

Claudette McGowan (25:26): Awesome. I'm on it. I'm on it.

Bruce Croxon (25:27): All right. Appreciate it. Thanks for joining us today on the Export Impact Podcast. If you enjoyed today's episode, we'd love for you to subscribe, rate, leave us a review on your favorite streaming platform. Until next time.