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John Corcoran  7:37  

So it was sometime later that you became a bit dismayed. It was a very bureaucratic, large bureaucratic insurance. Or maybe this was another one that you you ended up with later. But at some point, you’re working for a large bureaucratic Insurance Agency, and your brother had gone to work somewhere else, and you decide to start a company together. What I want to know is, was the vision to make it focused on cyber insurance, or did that come later?

Pat Costello  8:04  

We started off the one word that I can give you, when we started our company office, I think we were just a word is frustrated, we’re both frustrated. I was frustrated with the big insurance company I was at because I didn’t see a path where my hard work really led to any results or promotions. And and nobody would have seen me and didn’t have a lot of role models. He was experiencing the, the really the opposite of that, from a company size standpoint, he’s at a very small firm that he’s like, you know, frustrated with the maybe lack of organization. And he thought maybe we could, we can improve upon a lot of that. And so we started because we wanted to control our own destiny. And the hottest topic at the time, was cyber insurance. And it was called, it was really called Cyber Liability at the time, because data breaches are happening left and right. You’ve probably heard of the Target data breach Home Depot, Equifax, but those breaches were kind of sweeping the nation. And the liability around them was a little bit confusing and ambiguous. And the coverage to pay for the costs associated with those breaches was very fresh, very new and being tested really, at that time. So cyber insurance, as a general concept has no pun intended, our company is alled evolve, but has evolved dramatically over the last seven years.

John Corcoran  9:24  

Yeah. And so at this point, you know, you’re out of college for three, four years, something like this when you start your company?

Pat Costello

Yeah, we started. I want to say I was 25 and my brother was 24.

John Corcoran

Wow. So that’s a big, thorny, unresolved morass of of an issue to take on. Did that was that intimidating?

Pat Costello  9:54  

It was intimidating. But it was exciting. The whole concept that it was because you new lines of insurance don’t come around that often. Right? And frankly, when by the time we started our company, I thought it was old news, right?

John Corcoran  10:07  

Yeah, looking back now, it was like seven years ago now, but that’s early days.

Pat Costello  10:11  

Yeah, it was it was early days. And we had some connections with some innovators within the cyber insurance world, that provide us with support, and encouragement, and a backing with Lloyds of London. And at that point, we put ourselves in positions where we really understood the industry, we understood the players, we understood the distribution, we understood it, who had leverage and who didn’t. Our dad has always given us great advice, and has been very straightforward in terms of how he sees the industry. And we thought, yes, we’re younger than most, who would like to strike a strike out on their own and start a business, especially in this new world. But we figured what better time to take a risk?

John Corcoran  10:55  

And I don’t know, I don’t understand the insurance industry. But is is it hard?Is it challenging, just call up Lloyd’s of London and say, I got an idea for a new insurance product that I know hasn’t really been done much before?

Pat Costello  11:09  

You know, it’s not as hard as people think. I think there’s a big benefit to being in the world and spending time in the world and taking time to understand the players in the space. So I do think there is a learning curve, to getting in the insurance world. It frankly, it’s a really a new vocabulary someone has to learn when they’re getting into the insurance world. But once you have that dialed once you understand the major concepts. And once you understand the players in the space, I don’t think it’s overly complicated to dive into. And product creation is a really unique thing that we’re heavily involved in at the moment. But you know, when you talk to a reinsurance broker, the reinsurance broker is the one who’s going to hook up the capacity for you on a given product. In putting a fraud together, there’s a lot of players involved. But at the end of the day, you will never know until you find out, I think, with most entrepreneurial ideas, like you really learn while you’re doing it. And I think most of the time, you will learn that it’s a little bit easier than you expected.

John Corcoran  12:10  

So we started with the story of your idea of being shot down by the entrepreneurship professor, which came up in conversation here, you know, many years later, was that stuck in your head at all, as you started this new business? Like there was there any mental blockages around that? Like, sometimes people when they start a business, they I don’t know, if inferiority complex is the right word, or just some insecurities, or something like that, there’s a lot of that, that kind of internal stuff that can come up and can kind of hold you back. Was that a challenge at all, you know, when you’re getting started?

Pat Costello  12:47  

I didn’t hold any grudges, I was just more excited to be off on my own, controlling my own destiny, seeing the impact of my results. And, you know, taking it one step at a time from, you know, we got to set up this LLC, to we got to set up the website to, we get to figure out how we’re going to distribute this thing and who our brokers are that we work with, and that going to sell them, you know, I gotta go from graphic design, to, you know, setting up the systems to, you know, getting the initial brokers then clients in the door, and so it was kind of just one foot after the other. So, I didn’t hold any grudges, but it’s just like, I don’t know, I just look back on the experience I had, and then entrepreneurship class, like, there’s just a lot of ways it could have been better. And I think pushing entrepreneurship, encouraging entrepreneurshipm and also, like, I think some of the best teachers at Stanford Business School, who I’ve actually been able to interview a lot of on my podcast, for example, Joe Peterson, who was the former chairman of JetBlue. He thought the idea for Bonobos, was Bonobos men’s clothing, he thought it was a bad idea. But he believes so much in the entrepreneur who started it up that he was the initial angel investor. And so I think, fostering and protecting entrepreneurial spirit. Yes, I think real life feedback is totally valuable. Like, I think that’s completely necessary. But, you know, providing that real life feedback, and then also, of course, correcting for, you know, how to get back on track or the path to success, the path to successful entrepreneurship is key. So I’m disappointed by that class. But at the same time, you know, it was a learning lesson and you know, it is what it is at the end of the day.

John Corcoran  14:37  

So you mentioned real life feedback. What was it like as you started to roll it out, try to explain it to people, educate people on what cyber insurance is and what types of companies needed? What was it like, what kind of feedback did you get?

Pat Costello  14:51  

It was really tough back in the day because I would walk into a broker’s office in Houston, for example. And I’d say guys, we have Tthe best cyber policy that you can currently buy right now, hacking attacks are dramatically increasing. I’m showing like an FBI, CIA statistic, that’s just showing like I’m giving real life examples. And at that point, people still didn’t buy that it was a real concept, that cyber exposure existed. A lot of times in the insurance world, people don’t buy coverage or or feel like it’s real, unless they’ve either experienced a hacking attack, or there’s someone that they know, that’s experienced a hacking attack. And now, like, it’s so interesting, at this point in time now, with how many hacks are attacking in the fact that how many hacking attacks are happening all the time, in the hard market cycle that we’re in, versus when we started, it was a very soft market. Right. So now a lot of people were buying claims were kind of random. But with the onset of ransomware, and wire transfer fraud, things have just morphed and developed to where this is something that every business needs to buy.

John Corcoran  16:08  

Yeah. And so a big part of what you’ve had to do has been to educate your your brokers, and kind of educate them on how then they can educate the the end user, customer client. So talk a little bit about how you’ve felt that built education.

Pat Costello  16:26  

Yeah, so for those listening, we underwrite one of the most comprehensive cyber insurance products that exists, and we distribute that product through insurance brokers across the country. So those insurance brokers, in turn, go to their clients and say, “Hey, guys, you guys should consider cyber insurance because you have a huge cyber exposure.” So our issue was the insurance broker in the middle didn’t necessarily understand cyber exposure, or cyber insurance, or the coverage or claims that were involved. So we felt it was our mission to go and make sure that those brokers knew exactly how to explain cyber insurance in the most simplistic ways possible. So to date, like in the last seven years, I want to say we’ve done over 15,000, face to face, educational presentations to our brokers, where we usually typically, like if you work with us, we will have been in your office, and we will have given some sort of Lunch and Learn presentation, we’ll bring in lunch. And we will break down cyber exposure, cyber coverage, common claims, capabilities, everything you need to know to be able to have these conversations with your clients. Because a lot of times like if you if you’re an account manager or a producer at an insurance agency, insurance brokers across the country, you have to know 20 other lines, and you have to know every market associated with each line. So it’s likely you’re not that confident, with a brand new one, like cyber. So that was a really big way for us to provide value to our brokers, while also getting our name out there.

John Corcoran  17:56  

Yeah, yeah. Now, I don’t know how it works. But you have, you know, you work with like, 3000 Insurance Brokers across the country now. You got to start somewhere. But do you, is there like a network where you get plugged in and you add 1000 at a time? Or is that one at a time and eventually builds a reputation? How do you get to having 3000 brokers around the country that are all advocating selling your product?

Pat Costello  18:20  

It was a lot of one offs in from my job that I initially started out in insurance will and a few agents need connections, my brother had a similar situation. So a lot of times, it was just Google searching insurance agencies in the area and setting up a meeting, we did get hooked up with a couple of networks, but it was still a lot of one off marking. So Marshall Berry, for examples were our first networks. That was like cyberinsurance a big topic, we want you guys to come speak on it. And you guys can network at our conference with all the agency owners. And so a lot of my brother’s early days was going to a lot of these networking events, meeting these agency owners at the bar, letting them know cyber insurance was a real thing. And we created this marketing video that was kind of Dollar Shave Club, ask you to you know, make make cyber insurance memorable and funny and get it on the radar. So it was but still, I mean, the deal needed to be massaged and close. So a lot of times, for example, we meet a broker at one of these events in Arkansas, and then we fly to Arkansas, and then meet with them in their office, break down everything that we can do. And then begin working with them. So it was a lot of knocking on doors. And the good thing about the US is there’s usually insurance agencies in pretty much every major city. So that basically turned into every single time I was on vacation, it became a work trip. I guess you could also look at that and vice versa, where I got to see a lot of the US and some of the really interesting areas but it was it was definitely a grind the first two to three years setting up that network of insurance agencies to work with. So that was probably the toughest part.

John Corcoran  19:56  

Yeah, and pre-COVID you’re on the road. Oh to live I mean, that must have been expensive expensive first, as far as startup costs go. How did you fund those early days?

Pat Costello  20:06  

That’s actually really funny that you bring that up because we had one of the coolest ways of doing it that I’ve ever heard of that no longer exists. You may have heard of a company called Jetsmarter. Back in the day.

John Corcoran  20:19  

Oh, yeah. It was it. Was it a private jet? Like?

Pat Costello


John Corcoran

Okay. Okay. So they sold excess inventory, something like that?

Pat Costello  20:30  

Yeah, I think so. I think so. But it was for pennies on the dollar of whatever. They were a unicorn. And my brother and I were at a Tony Robbins business mastery conference. And one of the vendors, there was this company called JetSmarter and they were offering for a fee of about $9,000. You can fly anytime. They had routes across the US where you could fly. You know, I guess I’m serious to go to LA. I knew when the route was going to be LA to Chicago, Chicago, New York, New York to Florida. They were headquartered in Florida. So they had that option. So that’s built in. And then they also have these last minute 24 hour legs. Because a lot of times in the private jet world uou have a wealthy person positioning and stuff.

Like, I’m in Montana. And so the jet has to come from, you know, San Francisco to Montana. There’s nobody on that flight. And so they were, they were giving us these empty legs, they would just only know 24 hours in advance. Got it. But the thing is, you might be fine at flying on like a g4.

John Corcoran  21:34  

Yeah. And you’re young gonna have kids, like, you’re you can whatever.

Pat Costello  21:37  

I’m telling you. We’ve we maximize that, and might be one of the reasons that they’re no longer in business.

John Corcoran

But sounds amazing.

Pat Costello

Oh, yeah. Yeah, it was. It was very ironic. It’s like you’d be flying on a private jet to a city and then staying on our college buddy’s couch. No, we did. That was a very cool we did, we did it so much to the point that we’re like, we need to hire someone in their headquarters area in Florida. And so that this person can then do what we’re doing, and go set up relationships. And that’s why like, we had a bunch of our first few employees were from Florida Atlantic University. So that that was a real highlight of the early days of distribution. A lot of travel.

John Corcoran  22:22  

Wow, that’s really cool. That’s memorable. And then how much fun that is? Well, that’ll keep your startup cost down. If you’re just limited to that.

Pat Costello  22:29  

Yeah, yeah, it was cheaper than the economy.

John Corcoran  22:37  

Yeah. Yeah, for sure. So who is a company that needs cyber insurance today? Break it down for me? Like, what is? What’s an ideal company that should have cyber insurance? And what does it entail?

Pat Costello  22:49  

John, every business in the United States, small or large needs cyber insurance. If you have a bank account, or an email address, that’s that’s literally all, that somebody needs to be able to look at you as a target. Cyber insurance, if I were to break down one sentence is, cyber insurance is coverage for the cost associated with hacking attacks, data breaches, and system failures, right. So the fact that everything is becoming more and more connected to the internet just means everything has more and more potential to be hacked. So the world that we live in with things like ransomware, or funds, transfer fraud, those two, like if you’re using any sort of technology to run your business, if you’re transferring money to anybody, if you do literally just have a bank account, if you have, you know, you’re a C level person, and you have a personal bank account, those bank accounts are covered within the policy. If you’re collecting any sort of information on any individuals, whether it’s partners, clients, employees, etc, all that information is sensitive. And there’s regulation around what happens when it gets breached. And then if you have like, system failures are huge, and business interruption is huge. So you can imagine if you’re a restaurant and your point of sale system goes down, and you can’t I’ve been in a restaurant when this happened, who’s been uninsured, which is very ironic is in Austin, Texas, this is insured and they went down for like four hours. And so you can calculate how much loss there was in that downtime. So anyways, it’s something that is becoming more well known, but, frankly, small to midsize businesses are larger targets than the bigger companies just because they generally have less cybersecurity place to be able to protect against those hacking attacks. And nobody wants to promote they’ve been hacked. So a lot more businesses are getting hacked and paying ransoms for ransomware than are actually reported.

John Corcoran  24:59  

Wow. Interesting. We’re almost out of time here. I know you are new to EO, Entrepreneurs Organization, but what brought you to EO? How’d you hear about it? And, you know, why did you would decide to join?

Pat Costello  25:14  

I’ve heard about it multiple times, from two different people, we had an executive coach for a while, that highly recommended it to us. We had, I had what one of the things that really sold me was we had a partner of ours, that helps us with claims that I really looked up to as a role model that was recommending it more than anything else. So just the amount of recommendations that came through. And then my experience in the test drive was like, there’s so many challenges that business owners face, and most times, they’re facing them alone. And so it’s just so cool to know that there’s an organization that exists where you can share feedback, and share perspective, you can lean on each other, to go through some of those experiences. Because, you know, a lot of times there’s just conversations you can have with employees, with other owners with, you know, whoever else it is, and the experiences are pretty unique. Right? There’s not a lot of, it’s not likely I’m walking down the street and meet another entrepreneur, you know, so it’s, it’s very cool that it exists. And it’s very cool. It’s International. And like we were talking about before we started recording, I’m still getting my feet wet. And I haven’t been placed in a forum yet. And so I’m excited to see how I can get the most out of it.

John Corcoran  26:35  

Yeah this has been great Pat. I know is one of your websites, where can people go to check out the podcast and to learn more about your company?

Pat Costello  26:45 is our website for our cyber insurance firm. We created a podcast called The Evolved Broker Podcast just purely to add, excuse me, purely to add value for the insurance brokers that we work with. So anybody that’s on that podcast, is going to be someone that is going to be really interesting to interesting to you if you’re in the insurance world, whether it’s a leader of a massive organization like HUB International, Mark Cohen, the CEO, or Inga Beale was the first female CEO of Lloyds of London 330 years down to you know, how can we optimize sales like, you know, the author of the Challenger sale, hostage negotiators, to you know, really hone our negotiation tactics. So, we’re just looking to provide value to insurance brokers there. So two different websites in that second one is

John Corcoran  27:41  

Excellent, Pat. Thanks so much.

Pat Costello

Cool. Thanks, John.

Outro 27:44  

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