SPEAKER_01 0:00

If you read Jim Collins' book, Good to Great, you know, he talks about only doing what you know you can be the best in the world at. And so for us, that was roads. And so we shifted our focus 100% to roads and dropped the wastewater stuff. So that's us being sort of very critical of the products we sell and not overly diversifying in terms of the products and creating confusion and noise within the business.

SPEAKER_00 0:24

Dust control sounds unglamorous until you realized mines spent millions fighting it. Todd Burns, Winnipeg-based CEO of Cipher Environmental, proves you can slash those costs while ditching the corrosive salts that poison groundwater. I'm Nathan Martins, and this is the Building Manitoba Podcast, where we uncover how founders turn principle-driven thinking into durable growth. On this episode, Todd tells us how a cash flow crunch made him stop being a reseller, invent his own dust control formula on a pool table lab, and team up with Red River College to turn that idea into an export-ready product. We also dig into the export tools that helped Cypher break into Chile, South Africa, and beyond, and why Todd still walks away from deals that violate his do what's right rule. Stick around to see how disciplined capital, sharp partnerships, and clear non-negotiables can power global expansion. Todd, thanks for joining me today on the Building Manitoba podcast. Great to have you here.

SPEAKER_01 1:25

Oh, no worries. Nathan, thanks for having me.

SPEAKER_00 1:27

Just wanted to start off for people who've never really thought about road stabilization or dust control before. Can you talk a little bit about what Cypher Environmental does and why people should really care about it?

SPEAKER_01 1:39

Yeah. You know, it's a good question. It's always funny to hear the the businesses people are able to create that you've never thought of or heard of before. When I say dust control, people usually look a little confused. So they wonder if I'm talking about, you know, duct work or ventilation. So I think everyone in in Manitoba here is familiar with the road salts we use for de-icing in the wintertime. They're lesser familiar with the fact that those same road salts are used for dust control in the summer months. You know, we've all been driving down the highway and you know, seen here that grid of agricultural roads that are unpaved and the huge plume of dust that's uh following a vehicle driving down it. And so salts are used to control that dust typically, all with the same negative environmental impact. I mean, everybody knows that it rusts their vehicles, but it's lesser known how damaging it is to groundwater, you know, which gets into eventually, you know, rivers, lakes, streams, etc., and roadside vegetation. And so we produce a higher performing, non-corrosive and environmentally friendly alternative to salt for dust control. And then, you know, another thing that I think we all know here in Manitoba is we're sitting on a huge bed of clay. And so typically you don't want to use clay in road building because it swells when it gets wet and loses all of its strength, and it's just it's it's it's not a very high performance input. And so generally it's it's regarded as waste material. And so we can actually take clay and build a high performance road out of it. So not 100% clay, but uh well, we've done almost 100% in the in the oil sands and some for some of our mining clients. But anyways, take clay and stabilize it at a fraction of the cost of traditional methods and turning it into actually a higher performance engineering input than gravel roads in some cases. And so in both cases, the products are are concentrated and 100% environmentally friendly. Like you could eat them if you wanted to. I don't recommend it. It wouldn't taste so good if you put it into your coffee in the morning or your cereal at breakfast. But in both cases, by by constitution, the products are totally non-toxic, but the long-term implications of using them have huge environmental impact or environmental benefit in terms of reducing carbon and reducing water. You talked about you know how you're reducing carbon. Well, you know, for some of our mining clients, they're driving around all day long in diesel burning trucks, spraying water on the roads to control the dust. So the water is bad for the road itself. A lot of them think the water is cheap, but they're paying a lot of money for diesel and they're burning a lot of diesel and creating a lot of CO2. And so there's been many examples where we've shown to dramatically reduce water consumption, you know, fuel burn, CO2 production, dust, which is an environmental thing, but it's also a safety issue on roads. And so, yeah, long-term operating cost savings all while using environmentally friendly products. So uh win-win.

SPEAKER_00 4:27

Yeah, it's really cool. It kind of hits, you know, both the cost benefits, performance benefits, and environmental benefits, which really kind of tells a good story and gives you know a few angles where it's conveying those benefits to customers. I want to dive into a little bit. Like you first tackled this problem, you know, reselling another product and then kind of looked at it and said we innovated and developed your own product. What did you see in the market that said, you know, there has to be a better way than what's currently being done? And how did you actually turn that insight into a product that worked in the field? Can you kind of walk us through that innovation process a little bit?

SPEAKER_01 5:02

Yeah, no, a good question. I mean, and if I backtrack just for a second to talk about the roots of the business, I mean, I inherited the company from my father actually. And so when I took it over, I was just a one-man operation, so he was he was never really able to grow it. But I always saw the the the huge future. I saw how many roads were out there. So I thought, you know, as a young guy, hey, well, this looks like a good opportunity to sink my teeth into. And so so when I took it over, there was no IP. And so, like you said, we were just you know buying a product off somebody else and having them probably label the product for us. Now we solve the major business issue or hurdle in getting into manufacturing on our own. And so, you know, I think maybe you're referring to the you know, the cash flow issue I maybe mentioned to you before, but you know, as a small company, you know, we were paying uh in US dollars up front for this product. And so when we basically did our own sort of I don't you know, we didn't reverse engineer the product, we needed our own formulation of the product and improved upon it. You know, obviously we took the the the quality control in-house that was uh the of question in the in the previous you know supplier we were working with. But ultimately, I mean we we started working with predominantly Canadian suppliers, you know, getting 30-day terms on on payment and you know, dramatically reducing our our cogs to make the product and supply. So I mean, an impact on our margins, you know, huge impact on cash flow, and and ultimately we were able to improve upon the product to get better results for our clients, and so it was win-win everywhere you looked at it.

SPEAKER_00 6:34

When you first start that process of trying to formulate it yourself versus just buying something off the shelf, like was there some versions along the way where you're like, oh, this we really missed the mark here? Or did you have to iterate a few times to really kind of get it right? And how'd you go through that that process of making sure that you were really uh hitting the mark with it?

SPEAKER_01 6:54

Yeah, you know, great question because you know I could I could answer that from two angles, and I guess I could tell you two different stories of of what we learned. And I mean, I mean, I think learning through the school of hard knocks was you know, you can learn a lot doing it yourself in your own garage as an uneducated individual, just you know, playing around with dirt and sand and and pouring things on there and trying to make them hard and stabilize them and see what you can make work, which is sort of the angle we took in the early days when we were developing the dust blocker product. It's called Dust Blocker now, but uh it was called Dust Stop previously. If you want to know, you know, want to talk later about why we got into this whole name change, I can't, because we have another product that's coming into the market soon. You know, that took a lot of different iterations, you know, in the in the scaling up process from going from the basement lab. Actually, I had a lab on my pool table. People would come over and wanted to play pool when I was in my early 20s, and it was full of pie plates and sand, and I was stabilizing with whatever kind of materials I could find. But as much as seeing the applied results, you know, on that sand and scaling it up to on your driveway to then doing a smaller piece of road somewhere without actually having that lab angle is a bit of a challenge. And so that did take us several iterations to find, you know, not only an effective product, but one that we could actually scale up and that we had supply chain available to actually scale up and and you know, not just the singular suppliers, but also you know, secondary and tertiary suppliers to sort of diversify our supply chain. And so that was with the dust stop product. And then you know, we have done an iteration since and the one we're currently selling where we did a proper, like, proper funded project. I think it was like an IRAP contribution we did at Red River College, but really it was it was actually bringing Tegan on board. So Tegan is our executive vice president, but she started as a lab intern. And so she was the one who sort of whose baby was the road stabilizer formulation project, which was really sort of the game changer for us, which really got us into manufacturing our own products. And that was a very like detail-oriented. I'm not a sort of detail-oriented guy myself, and I'm certainly not a scientific guy in any way, shape, or form. But she took it, you know, from the lab, from the contextual sort of you know, starting point of what we need to develop, you know, developed several lab-based barometers that we could actually prove out based on you know actual like scientific research, if you will, and then went out and accomplished them in the lab and then took it from the sort of the life sciences lab, if you will, in the formulation stages to the engineering lab. And so at that stage, we had like engineering technicians on the team and tech support members. And so we were able to wed our sort of life sciences capabilities or chemistry capabilities with the engineering capabilities and understanding what barometers we need to accomplish on the road once the product is applied to the road, and what inputs we needed to provide, what we needed to see on the sort of the chemistry side to get there. And so that was really what created that winning formulation was taking it out of the entrepreneur's backyard, so to speak, and bringing on the proper skill sets that that we needed to really make that innovation happen. And so then when once we did we know the the the winning version of Dust Blocker that we're currently selling today, it was also done actually at Red River College. So both products, Road Stabilizer and Dust Blocker, the two commercialized products that we're selling all over the world now, they were both developed in conjunction with Red River College, leveraging skill sets from Cypher and some in-con contributions from Cypher, and some of the knowledge and lab and students and oversight from the professors at Red River College. So it's kind of a cool, cool and unique uh local success story.

SPEAKER_00 10:32

Yeah, that's great, a great local success story, and the collaboration between you know education and industry there is uh really great example.

SPEAKER_01 10:40

You know, not to interrupt you, but I mean it it dawned on me. I'm also a former grad of of Red River, and I was going there and I guess it was in January to present the first ever, I think it's called uh the Site for Environmental Innovation and Engineering Award, which is a scholarship to a student in the uh engineering technology space. And it dawned on me it was 25 years ago I graduated from there, so we're starting to uh starting to get old. No longer the young entrepreneur I used to be.

SPEAKER_00 11:09

Almost a full circle moment though, where you have an award that your company's uh presenting at you know the institution where you attended and the research and some of the IP for your business came from. So that's that's a really cool.

SPEAKER_01 11:22

Yeah, like the relationship with Red River has been huge for us. I mean, or you know, pre-COVID, there were some professors there that we did a lot of research. We had the formal, you know, IRAP and MyTax and NSERC funded projects, but we had a lot of sort of sort of off the side of our desk research projects we did with them and that that really you know produced great results. Actually, we have a paper published in the Canadian Geotechnical Journal as a result of some of the work we did there. And so love giving back. I mean, I've I've done a lot of talks with international business students, and yeah, it's great to great to give back where it all started.

SPEAKER_00 11:55

For a company that is considering you know going down the path of developing a product or engaging with higher education or research institution, are there any lessons or like what's the entrance point for someone to kind of get in with an educational institution like that and start forming those partnerships and testing out their ideas? Like you attended there, but what was kind of your first steps to to really engaging and you know starting that research process and partnering with them?

SPEAKER_01 12:23

Yeah, you know, good question. And it truly was as a as a single introduction that we got from IRAP, actually. You know, when I when I remember when I had just one employee we attended, I don't I don't even remember what it was, but there was a there was a guy from from iRAP there, Joe Cattani. I don't know if you remember Joe, or if you a lot of listeners from the Winnipeg or Manitoba area would remember Joe. And he introduced me to one of the, I don't remember what their their titles would be, but I think it's like the research partnerships, academic partnership or research partnership officers, if you will. I sorry I can't remember I'm butchering the title here, but uh the folks at the college who are responsible to find industry partners to do research with the college. And we started with one project and then it just blossomed from there. And that that that speaks volumes to to the importance of getting out there and networking. You know, if I hadn't met Joe, we wouldn't have made that connection with the college and and look where we are today as a result. And so actually I am I was honored to be invited to be the uh honorary guest alumni speaker at convocation in uh in June. So like super looking forward to that one. I love engaging with youth, and so yeah, so that and once once that happens, it'll become full completely full circle. And and I and I gotta tell you, it's nothing to do with my GPA when I graduated.

SPEAKER_00 13:39

You graduated though. I don't I don't know very many people that actually uh yeah get asked what their GPA is afterwards. So I think I don't know.

SPEAKER_01 13:47

It's something that's that's probably why they put honorary in the in the title there. Yeah. No, I can assure you I did graduate, so I've got the I've got the diploma to bring it.

SPEAKER_00 13:57

So when it came time to scale, like you moved to that manufacturing model, and then you were you know pushing out the product through more of a dealer distribution model. So can you talk a little bit about why you chose that that dealer model as far as distributing your product and kind of what you look for in a strong dealer?

SPEAKER_01 14:14

I mean, first of all, you know, we realized early on that we needed to target sales internationally and outside of Manitoba and Winnipeg. You know, we've had some challenges, which I've been pretty vocal about in terms of getting uptake locally, not just locally here in Manitoba, but in the public sector in general, due to the challenges and getting new products adopted. You know, a lot of our like all the specs, for example, are written specifically for salt, if you talk about dust control specs. And so we we've had to target private industry. And so mining, forestry, oil and gas, aviation is uh is another big one for us. So a lot of those targets become international, you know, in order to expand our reach with the finite resources we had. You know, we looked at the distributor model just because it enables us to leverage their their connectivity, their understanding of the cultural ways of doing business and their experience, et cetera, in the market, you know, to enter new markets with limited investment on our side, which allows us to reinvest in other areas of the business, such as you know, our own business development activities internally or marketing and and you know, etc. Or RD. I mean our RD spend every year is growing, certainly our you know, it which is evident by our our shred claims. So the the distributor model just allowed us to penetrate certain markets with a lot more ease. You know, it's it gives us boots on the ground to make local sales, tend you know, trade shows, conferences on our behalf, do that networking and grow our reach with very limited cost to make the sale on our side. And so I mean our margins are reduced a little bit, but what we give up in margin, we we make up for in the limited cost to make the sale and the ease of doing business based on the understanding of local cultures and et cetera, with the local distributor.

SPEAKER_00 15:56

What'd you have to build operationally before you could really scale the business? What were some of those things that you had to put in place as you started to actually reach some scale or or as you ramped up that process of production and and really starting to push out product through distributors?

SPEAKER_01 16:12

I mean, I think scaling the team was an important one to look at as well, understanding which team members we needed to bring on board and what skill sets we needed for that scaling process and make sure we brought them on sequentially in the right orders. Beyond that, I mean the the production that we we designed was fully automated and quite easily scalable. You know, I think we started with three raw material tanks, now we're up to nine. And so when we started, we started with you know smaller pumps, smaller fittings. And so when we we we designed it, we designed it for scalability within this specific facility we're in now without needing to you know move the whole facility. So larger pumps, larger fittings, extra tanks, and as that's all fully automated. And so as we grow, we can just continue to build automation and scale into the production line. And of course, you know, eventually as we scale in in other markets, we're gonna we're just gonna be replicating this production line elsewhere. So so far we're we're we're servicing all of our clients worldwide from Winnipeg, but as we see significant growth in specifically in some mining-focused markets, specifically I'm talking about in South America and in Africa, you know, we can replicate what we have here in Winnipeg there to reduce the burden on the Winnipeg operation.

SPEAKER_00 17:25

You talked a little bit earlier about cash flow being a constraint when you were buying and reselling another product, but when you were doing growth under your own manufacturing and dealer model, where was cash flow most constrained and did you have to adapt or focus how you scaled in order to manage cash flow properly through that process?

SPEAKER_01 17:43

Well, I mean, it's still it's still kind of funny that even though I say that we we needed to scale and and develop sales outside of Manitoba because of the lack of market here, we're still seem to be busier in the Canadian summer months. And so one of the challenges with our scalability was was the seasonality of the products. You know, I talked about you know developing a new product, which is why we're, you know, just to let the cat out of the bag a little bit here, which is why one of the reasons why we're getting into de-icing in the near future is to provide us with you know revenue in North America within the uh winter months. So a part of the scaling process was to manage that seasonal cash flow as well as develop those channels to remove the seasonality of that cash flow, meaning develop verticals into markets where we're gonna be selling within the Canadian winter months, you know, into Africa and into South America or the Southern Hemisphere in particular, because they know they have opposite seasons to us. So we're seeing now a nice pickup in sales in those areas during the winter months here that carries us, whereas previously we had to be a little more strategic in terms of how we spent our money based on the knowledge that we were gonna see that seasonality of the ups and downs in terms of the balance sheet.

SPEAKER_00 18:54

As you were growing, was there any opportunities that you had to deliberately say no to, or did you reach any points where you were stretched too thin to take on all of the opportunities that came your way, or how intentional did you have to be about the growth that you had?

SPEAKER_01 19:07

We had to start being a little more realistic about certain markets that we were we were selling into. I'll mention like we used to be in water treatment years ago. It fit with the whole with the whole sort of environmental aspect of what we were doing, and and but a lot of people were doing it. We were selling enzymes and bacteria to like bioremediation of of wastewater essentially. You know, we weren't manufacturing the bacteria, so there was an added margin there. A lot of people were doing it, and so if you read Jim Collins' book, Good to Great, you know, he talks about only doing what you know you can be the best in the world at. And so for us that was roads, and so we shifted our focus 100% to roads and dropped the the wastewater stuff. So that's us being sort of very critical of the products we sell and not overly diversifying in terms of the products and creating confusion and and noise within the business to divert our focus. And then when we looked at certain markets, we had to be a little bit critical of what we've seen in the past in terms of time to make the sale, you know, execution on the on the on the client side, which because we're a manufacturer, we rely on other people to apply our products. And so, you know, it's it's not rocket science, but uh similar to baking a loaf of bread, if you don't do the whole process correctly, even if you have the ingredients right, the bread may not rise or something to that effect. And so similarly with us, you know, we we looked at certain industries and markets where we felt a little bit challenged in terms of slow uptake and just like the amount of noise, the amount of challenge that we had after making the sale and the the size of the sale. So for our for example, like the municipal sector is one that we decided to drop a couple of years ago. I never I never like to say that you know use the word give up. You know, we didn't give up on the municipal sector, but I think it it was just it was too challenging. There still was the mindset of uh not really looking at full life cycle analysis and so looking at what is the cost tomorrow to do something, and you know, let's let's ignore what the the cost savings are going to be in six months or in a year. It was just it was a challenging market, and so I'll just use the municipal sector as one that we decided to drop as well. You know, to answer your question a little more generically, it was nice to get to the stage of growth where you can actually be selective on the clients that you work with, right? Because when you're smaller, you just don't have the option to say no. So you need you need every penny you can get. And so it's nice when you grow to the point where you can be a little more selective and and remove that noise or that scatter for your team so you can focus on the bigger picture uh issues.

SPEAKER_00 21:29

Yeah, no, that's great. And definitely you can be more focused in how you're approaching things and you know, hopefully go further with the effort that you're putting in then too with that focus. Yeah. Wanna talk a little bit about your your international growth and and how you went about that? Like when you're looking at a new country, what tells you that it's a market that you want to enter and worth investing in? And I know you mentioned like you're pulled back from some where you weren't seeing a lot of traction. Like so, how do you look at things now in terms of what country should you be in, if there's a country you're not working? And evaluating whether you should be going into them.

SPEAKER_01 22:03

Yeah, we definitely used to sort of pepper ourselves out there a little too much where we weren't selective. I read a great book called Essentialism a while ago. And it also, you know, it also speaks to what you talked about in terms of terms of the market, I guess, or the focus that we have. And if you say yes to everything or attack every market, you make tiny little progresses. But if you just say yes to or focus on one market or one vertical or one industry, I mean you take all those tiny little advancements, add them all up to very significant advancements. And so we definitely know which industries that we want to target. For us, that's mining and forestry, really. Forestry is really growing fast for us. And actually, forestry is going to become the segue for us to get back into the municipal sector. You know, topic for another conversation, maybe depending on how long we have today. And so we we chose, first of all, markets that are highly mining intensive. So Chile and South Africa, for example, are two that are very significant targets for us. You know, Australia is going to follow soon after that. And I mean, obviously, Canada with a huge, you know, booming mining industry is also a major focus for us these days, which is great. And then we have to look, of course, at the competitive landscape. You know, we're we're never going to market ourselves based on price. We're marketing ourselves based on performance and value and the differentiation from our from our uh our competitors. And so just looking at the competitive landscape, are our clients willing to pay a premium for a higher performance product? Are they of that mindset yet, or are they still of the mindset, well, did they just go whatever the cheapest, you know, lowest bidder solution is, regardless of what the environmental impact is as well. When you look at salts and hydrocarbons and other competitors of ours, you know, so that's usually been a key driver for us. And also understanding like the strength of the Canadian trade team that we have also plays a role. I mean, in Chile, especially because of you know the fact that EDC is so highly leveraged in the market, there's tons of opportunities for really high-value B2B connectivity in in Chile. And so we've leveraged that. We actually have two different distributors in Chile, one for mining and one for all other industries. So I just use Chile as an example. And so if you look at my passport, I've been to over 40 countries in my day. But if you look at my passport over the last three years, it's just like it's Chile and South Africa just over and over again. So I've been to Chile nine times in the last three years. Haven't been yet this year, this calendar year, but I know I'll be there, I'll be going there at least once or twice in the coming months. So I think it's you know, finding those really, really strong partnerships and the the strong industry focus in in certain regions. And now you mentioned what is a strong partner for us, and so I don't I don't want to forget about that question because it it is a critical one. We we we used to do a little bit less due diligence when we were smaller, or maybe we would do the due diligence, but we just had less qualifications that we were looking for. Now, you know, in mentioning backtracking forbidden, talking about us being a clean tech company and a manufacturer, and so even though we employed the skill sets to apply our products, like you know, construction foremen and engineering technicians, et cetera, that have a lot of like road-building experience, we don't own equipment. We don't actually provide the service of applying the product, we just provide training to those who are doing it. So we'll send people to Chile or South Africa if I keep using those two examples, and we have a new project or a new distributor, and we'll provide the training to them so they know how to apply the product and in the future and get the highest level of ROI on their investment and all those environmental benefits I mentioned before. And so we definitely find the most successful ones are the ones who can offer the turnkey solution, you know, so supply and apply the product. They have significant industry knowledge and and the control over the results. And so it's it's definitely a winning formula. So ones that also, you know, actually stock the product too. I mean, a lot of them just use us as a uh as their warehouse, so to speak, and just order on an as needed basis. And so we we we much prefer the ones that actually inventory and carry their own stock as they should be. So and so as we as we continue to grow, we continue to sort of change and morph the qualifications we have for successful distributors.

SPEAKER_00 26:05

Yeah, no, that makes sense. And you can see what's working and where you need to level up and and make those adjustments. You mentioned EDC and can you talk a little bit about the role that the government of Canada and the trade programs have had in terms of connecting you with the right people and you know local markets for like internationally and just making those connections and just thinking about someone else who's maybe a few steps behind you on the journey of expanding internationally. What tools did you find useful and what resources should others be looking to as they're thinking about growing to other international markets?

SPEAKER_01 26:44

Absolutely. Well, I mean, I would definitely encourage anyone, if they haven't already, if they're if they're an exporting Manitoba or Winnipeg-based company, to reach out to the regional office here and introduce themselves to the Trade Commissioner Service and learn more about what services they offer. I mean, I mean, first and foremost, it's free. Yes, so so if you're a small company starting out and looking to stretch your dollar as much as possible, obviously a free service offered by the federal government is a great way to start. I mean, they can offer limited due diligence services, but ultimately they can be their your boots on the ground, your eyes and ears, they can give you some intel into the market, you know, they can tell you about customers, they can do a little bit of fact-finding on new potential distributors, as well as get you connected during conferences and B2B opportunities, et cetera, trade missions. So they're they're a phenomenal asset. The the cool thing I think about the trade commissioner service is when, you know, let's say we're talking to a new distributor and say and then you say, well, well, let me just have uh somebody from the the Canadian embassy give you a call. And and it the positioning is phenomenal. So it's it's it does wonders for your credibility because other people on the other side don't know necessarily it's a free service or that ever everyone gets access to it. So it's phenomenal positioning when you say you're gonna have a representative of the Canadian government call you up to talk about what whatever whatever subject it is uh at hand. And so the trade commissioner service has been a phenomenal asset for us. We we've got a lot of great connections through them, through you know, B2Bs we've done in conferences, et cetera. And then talking about the B2B side and and transitioning to EDC, I mean, they do phenomenal B2Bs with what they call the pull relationships they have. And so EDC is is I mean primarily a bank, but when they loan money to foreign multinational companies, they create incentive for those companies to invest that money back in Canada. So they create what what's called a pull, you know, to reinvest that company's money ideally through purchase of Canadian supplies and goods and services. And so you know, if I talked about Chile before, I'll mention it again. I mean, you know, in just mining alone, I think there's five or six different major Chilean mining companies that have pull relationships with EEC. And so the B2B meetings are super curated. They're you know, quality over quantity, so to speak. So you've already been promoted at a very high level, the client already knows what you're doing, as opposed to just like meet, you know, randomly meeting anyone and hoping for the best. They're very high-level, you know, curated meetings, which is great. And you know, if you're going up against let's say an American competitor, if the client is being incentivized by, let's say, priority terms on their next loan through EDC, they're gonna want to buy Canadian. So they'll even give you like a marketing letter saying like, you know, cipher or whatever your name of your company is, that's well known to us, and et cetera, et cetera. So it's a huge opportunity, not to mention the accounts receivable insurance that you can leverage through EDC. And so we insure virtually all of our receivables. And in fact, if it wasn't for EDC, we had an issue with a client in Morocco almost a decade ago now. And if it wasn't for them, I mean we probably wouldn't still be here today. I mean, they covered 90% of a huge receivable, and uh we were pretty small then, and if if we didn't uh if we didn't have those dollars in the bank, I don't know where we'd be today. So so no, EDC provides uh some phenomenal um services to Canadian exporters.

SPEAKER_00 30:06

Wow, yeah, that's a great story too of the impact that's had and just the protection from that coverage. And uh when you're looking at expanding too, there's two sides of it, and one is you're trying to evaluate your partners overseas, and the other is they're evaluating you, and uh so having that uh tool in terms of uh you know reinforcing your credibility and the stability of uh their relationship with you, if you want to proceed with that, that sounds like that can be quite impactful with really building that trust more quickly without the involvement of those programs. Yeah, for sure. How do you think about the order of operations when you're expanding internationally? Like do you start off with validating the market demand or finding the local partners or looking at the regulatory environment or what's kind of the the sequencing of how you think about expanding to new markets?

SPEAKER_01 30:52

Yeah, absolutely. We we definitely look at what the market demand would be. We do a little bit of evaluation of the market to see what the possible projections would be in the market. And once we see there's a viable opportunity there in terms of the scalability and the size of the market, then we look for a a partner. And I and I should mention when we go direct in some cases, I mean we love going direct because I mean our margins are higher and and we have more control over direct access to the client and the communication to the client. But ultimately, if we don't go direct and and if we see a huge opportunity within a market, then we look for distribution partners. Then we look within a distribution partner, we look for the correct experience, industry contacts, resources, obviously financial resources and human resources. And and really just the right fit. I mean, the culture needs to be there. I mean, that's something I haven't even touched on yet at all. But we've broken relationships in the past because of cultural issues. And so not cultural issues like the subtle nuances of doing business from in Canada to Chile, for example, or wherever, but a clash in terms of the the culture of the actual business itself and the core values within the business.

SPEAKER_00 31:59

Do you have an example of that or what that's looked like?

SPEAKER_01 32:02

Yeah, like well, like we're on our we're on distributor three, actually, in Chile. If I use that as like a perseverance story of like knowing a market is going to be a substantial market or is a substantial market. Like our previous distributors there, we knew that they were selling salt and oil, actually. And we had an agreement that they were going to be phasing out the sale of salt and oil, and any new clients, they're going to be promoting only Cypher, and the existing ones, they were given the option to still use the salt and oil within a designated time period, in which case I think it was three years, they're supposed to be 100% off selling those products, and they were going to go green 100%. And we found out during COVID that they were they were actually ceasing to promote Cypher's clean tech solutions because it was just easier for them to sell the salt and the oil. And so, I mean, we're we're the anti-salt company.

SPEAKER_00 32:51

Those two don't go together, yeah.

SPEAKER_01 32:53

It doesn't fit with us. And so, and beyond that, they went into a market that we were already selling into. They they entered a new market to essentially compete with us to sell salt and oil. And so when you have such defined core values, things become immediate yeses or no's. And so when I heard about that, you know, that my you know, I just picked up the phone and and called up the owner of the company and just told him this an immediate no, and we're ending the relationship. And and that was that. Also, you know, when you're dealing in international markets, you have to understand that there's been times where we've been asked to do some, let's say, lesser moral things with with invoices and pricing and payments under the table, and so that's the media no for us as well. So if you're gonna be dealing with us, I mean you're dealing with a company that that is it's above above the boards and all ground. I mean, our pricing is the same to everyone. You want to buy our product, it's gotta have a cipher label on it. You're only buying it either from us or from an authorized distributor. You know, that's one of the major challenges we have in our in our markets that everyone just white labels each other's products. And I guess we were part of the problem all those years ago, because no one knows who's the actual manufacturer and you're just competing with everybody else on price with like three or four products. I won't get it, I won't get into that, but I mean we're the only ones who actually engineers one of the only ones who actually engineers a product to do what it's designed to do, as opposed to just a waste product or a byproduct or something that that someone spilled on the ground one day and it got hard and they called it a dust suppressant or a stabilizer. Yeah, so we we prefer to take the high the high ground, you know, always do what's right as our as our tagline, and it refers to not only the products that we produce, but how we conduct ourselves in in the in the community, whether it's here in Winnipeg and Manitoba or other communities that we're selling into around the world. And that's sort of a no-nonsense approach to the environment, to how we treat people, and to the sort of the economic fairness, so to speak, of the process, so we don't, you know, money under the table, discounts here, discounts there for whatever reasons. It's just not uh it doesn't fly with us. So everything that we do is is based on consistency.

SPEAKER_00 34:55

Yeah, that's self-reinforcing then too. You've you've got those principles and those values, and that really is scalable then in terms of how you're applying those those values to the business, and then you're more aligned and focused and able to go further in the direction that you want to go further. If you're thinking about like another a company that's looking to move internationally and and expand or begin exporting or expand in terms of how they're exporting, can you talk about what the hardest parts are of selling internationally from what you found? And the parts maybe that people on the outside usually underestimate.

SPEAKER_01 35:32

Well, finding the right partner is definitely helpful because they can help you navigate like even the subtle nuances of like the customs clearance process and the shipping process, right? Whether that there's a free trade agreement or not. And so that first and foremost, I think that's an that's an issue these days with the tariffs and everything happening with in the US and with Trump. Obviously, understanding if there's any any hurdles to shipping, whether it's uh an unknown tariff or what duties may exist. Because I mean the the pricing always has to be consistent, but you have to understand that the landed cost in certain markets is going to change based on subtle things like shipping costs, especially these days with fuel surcharges and fuel costs going the way they're gonna be, it's gonna be more expensive to get anything anywhere in the world. But yeah, I mean, uh understanding the landed cost of your product somewhere is pretty important to see if it's actually gonna be cost effective in that market because just because it's cost effective here in in Canada doesn't mean it's gonna be cost effective when you ship it all the way to Australia or Africa or South America. Not only in the freight cost, but also in any any customs or duties to get it across the border and then the land cost to transport it from the port to wherever the customer site is going to be. Yeah, and understanding that there's a market. I mean, and I mean I mean, I I would say, you know, tread slowly. You don't want to put all your eggs in one basket. I mean, trade diversification is pretty, pretty critical these days as well. If you see you see a market, I mean, attack it feverishly like we talked about doing in in Chile. You know, you can't have all of your eggs in one basket because if you look at if you look at the cipher over the last five years, I mean, things were going great for us in Russia, and then the the the war happened in Ukraine, and so our sales in Russia became zero. I can't remember if it was just before that or just after when Canada extradited the CFO of Huawei back to the US, and then there was the whole Canada-China trade dispute, and so China was our one of our largest growing markets, especially in the mining industry. But sadly, most of those mines are owned by their state-owned companies, so they no longer were allowed to buy Canadian. So the Chinese market basically evaporated for us overnight. Then you look, if you look at West Africa with the three countries, Mali, Niger, and Burkina Faso, exiting ECOWAS and having all those. I don't know if you saw the news, like some some mining executives were being held, I think it was in in Mali, by the government due to what they were claiming as back taxes. And so they were their their mining permits were getting lifted. And so some of our big West African mining clients also evaporated overnight. They're still our clients, and now they're they're mining again, but they're still using up inventory they bought from us a year or two ago while they when they when they thought they could mine and then they couldn't for a while. And so, I mean, I think just like you know, having a really strong trade diversification strategy is important as opposed to just investing all your eggs into one basket.

SPEAKER_00 38:18

Yeah, and that seems like such good advice now, like you said, with the all of the geopolitical impacts and volatility where you you never know where the next landmines gonna be hidden as far as what country you're dealing with, and and if you've got your eggs all in one basket, then you're a little more vulnerable versus if you're in multiple parts of the world and and have that demand that you can fall back on or kind of lean into more when something else doesn't pan out.

SPEAKER_01 38:43

Yeah, yeah. Well, and even this day and age with with with climate change and and all these, you know, with flooding here and droughts there, and I mean all this stuff is impacting trade. And when you're when you're dealing with a product, for example, ours, which is applied out in the outdoor environment. I mean, if if it never stops raining somewhere or if winters stretch on or what have you, I mean, that's you know, that you can't build a road or no one's worried about dust when it's when it's raining out. So little a little, I mean, there's little all these little things play a factor into it. So yeah, it's really important to have a really solid trade diversification strategy this day and age. And supply and supply chain diversification too, with what when you see what happened in COVID. And also that's why, you know, during COVID, we also really sort of solidify our our work at our trade in Canada. Because when you see a global pandemic happening and and and borders closing, you better have also a strong market within your own country, right?

SPEAKER_00 39:37

Yeah, no, it makes sense. Great points. What are you building towards now that is different from what you thought the company could become in the in the early years of starting out?

SPEAKER_01 39:48

Yeah, well, I mean, I I mean one thing that uh we're working on, and we're still in our in our infancy, but it's actually getting into B2B to C division, which is going to be the D Icer I mentioned before. And so never really saw ourselves selling to consumers, but and talking about scaling, and you know you you you asked a lot of really good questions about scaling up previously. We're just waiting for results from some to the peer review process from some research we did at Western on our new D Icer and comparing the DICER to several you know salt-based deicers on the market right now in terms of how corrosive they are to standard metals as well as the impact they have on the environment and their ability, of course, to melt ice. Uh it's it's great. Really excited to see the results be published and become public knowledge. And then we'll be off to the races. Another thing that I learned as well, you know, in terms of scaling the business, which is when you're selling to a highly academic uh audience, so m mostly engineers when you're talking about roads or in a lot of cases, you want to have your back, your homework done first. And so getting like a very, very credible third-party academic institution like Western to back, not to back us, but to like validate how the product works, the claims that we're making, I think is gonna go a long way to more quickly commercializing this product and getting acceptance in the market. But to scale it, like when you see the huge volumes, and I I I should know the stats not off the top of my head are all in front of me, but the hundreds of thousands of of tons of salt already used every year in Canada, it's just a daunting task. And so we're actually gonna go the B2B to C route and actually sell you know 20-pound bags of of this stuff for consumers to put on their driveway and sidewalks at, you know, hopefully at you know, Rona and Home Depot and Canadian Tire and Costco and those those types of places. And so that's something that I never thought that we would get into. It's it's because we we quickly got got out of you know, you you see you won't see a ton of signage, for example, outside here because we don't want a lot of walking traffic of people asking to like buy our product to treat their driveway right now, because that's just not the form of business we're interested in. That's just not scaled uh large enough for us. But I think it'll give us a really good opportunity to supply to scale the supply chain and the logistical requirements to actually scale it to the point where we can start supplying manitobe infrastructure and you know, Department of Highways of Ontario, et cetera, when we're to the point where we can actually start supplying it to the public sector and and the heavy industry that we're supplying to now.

SPEAKER_00 42:15

No, it's really exciting. And yeah, what can people look forward to then? Is there a brand that's already kind of established for that or a timeline as far as when that consumer product will be available?

SPEAKER_01 42:27

Yeah, so there is. So the c the product is called Ice Blocker. So going back to the, you know, I sort of primed uh this little nugget here earlier in the conversation, but the road stabilizer used to be called Earthsime, and now it's called road stabilizer. That's the one that stabilizes the clay and dust blocker, which is the environmentally friendly alternative to chlorides for dust control, used to be called dust stop. So we wanted some consistency in the naming. So when we looked at a trademarking and name for the de-icer, we wanted to use ice stop, but the name was already taken and they weren't willing to play ball with us. So uh so we did a complete name change. So Ursine became road stabilizer, dust blocker became uh sorry, dust stop became dust blocker, and and the new de-icer will be called ice blocker. So it's called Ice Blocker, and we're hoping to have sort of prime the market a bit this year. Like I don't think we're gonna market it full scale to all those major retailers I mentioned before, but more just you know, target a few local stores, get some consumer feedback. We know how well the product works. I've used it on my own driveway. I've I've got this great video. I've got this great video where I throw a whole bunch of the ice blocker up into the air and it lands on my driveway and it's so effective. You can hear it's kind of like snap, crackle, and pop. Kind of kind of sounds like when you're pouring milk onto rice crispy. So works great, but we still want to we want to get some consumer feedback and and make sure. That uh you know everyone's happy with the product. I can't see why they wouldn't be. And then once we get that, I don't think that we'll really scale it up. So for this coming winter, come you know, November, December, January next year, we'll be selling it at some smaller local retailers with a full scale, like scale up and supply nationwide uh in, I guess that would be in 2028.

SPEAKER_00 44:20

Oh, that's awesome. It kind of brings us full circle here on the conversation a little bit too, where we talked about kind of your journey scaling up the B2B products, and now you're kind of at the start of that journey with the B2C or B2B to C in terms of you know reaching the consumer market as well, too. So you're kind of at the start of the next journey while still uh scaling the B2B side as well, too.

SPEAKER_01 44:42

Yeah, exactly. You know, we've created a really strong brand, which is well known across the you know multiple industries like forestry and mining, for example. I think pre-COVID, we were a little ahead of our game in in talking about you know clean tech. And uh and I think what we really learned the hard way and and kind of the the sad way, if you will, or it's kind of sad what we learned is that even with everyone talking about you know CSR and ESG and a lot of CEOs getting up and and telling a big story about what they're what they're we're gonna work on and what their goals are, nobody seems to care still about the environment. And when it when it comes to the procurement people or the decision makers, we we have to be able to prove how we can save money. At the end of the day, like just saying that we're environmentally friendly isn't enough. And so we we sort of learned that the hard way as we are scaling, and so we shifted a little bit the the vernacular that we're using when we're talking to clients about all it's all about saving money. Of course, we talk a lot about the environment still, and that will be something we're never willing to compromise, but the pitch has to change and the value proposition has to change a little bit. And so, you know, so we've learned that, and so now we're finally starting to see those revenues and the adoption of the technologies grow with the brand, which is great. And so with all that learned uh success will hopefully translate into a bit of an easier process as we scale up to de Icer.

SPEAKER_00 46:02

Oh, it's exciting. Well, thanks, Todd, for being on the podcast today. Really appreciate the conversation here and the insights that you were able to share with us today.

SPEAKER_01 46:10

Yeah, no worries, Nathan. Thanks for having me.

SPEAKER_00 46:14

Thanks for listening to the Building Manitoba podcast. If you enjoyed this episode, follow the show and send it to someone you think would get value from it. And if there's a leader you think I should talk to next, reach out to me on LinkedIn. I'll see you in the next episode.