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My never-ending war on the Internet parasites

Published 24 November 2022 in Technology • 8 min read • Audio availableAudio available

Peter Bauer, co-founder and CEO of the cybersecurity company Mimecast, reflects on his company’s acquisition by private equity firm Permira for $5.8 billion, what keeps him motivated after two decades, and why his native South Africa is a key market for developing talent 

 

The past year has been an exciting one for Mimecast, the cybersecurity company I founded nearly 20 years ago in London with fellow South African Neil Murray. After more than six exciting years trading on Nasdaq, Mimecast is private again, following its acquisition by Permira  

Entrepreneurs set out to solve problems, and certainly, since founding Mimecast, cybercrime continues to be a large, ever-evolving problem, with growing recognition among business leaders that cyber-based threats are a significant business risk. Five years ago, only 58% of board members considered such threats a risk, according to our latest global report on the state of email security. In 2021 that figure rose to 88%.  

Mimecast was built to help companies reduce the risk of malicious activity, human error and technology failure. It was, and continues to be, our guiding principle to enable organizations and their employees to be protected at work. 

With more people working remotely than ever before, it completely changes an organization’s threat landscape and leaves them vulnerable to attack. Our report also reflected this: eight out of 10 organizations said they were bracing for the fallout from an email-based cyberattack, and three-quarters had been hurt by a ransomware attack in the past year, up from 61% the year before.  

Young woman has a business conference via laptopAccording to (ISC)² there is a global shortfall of 3.12 million cybersecurity professionals

In fact, 2021 appeared to be the worst year on record for cybersecurity, with no signs that the threat is diminishing in 2022. As the head of a cybersecurity business, the point for me is not whether we can ever solve all the risks, but whether we can develop products and services that chip away at those risks in a meaningful way. 

None of us likes criminals. But if you don’t like criminals, you’ve got to dislike cybercriminals even more because they are the hardest to bring to account. Cybercriminals are cowardly and parasitic and feed off the vulnerability of people and technologies. As they say, there is no honor among thieves. Cybercriminals will create a vulnerability and then hand it over to the most horrific state or organization without thinking or caring about the downstream consequences. The truth is that because our work is preventative, we will never truly know the value we create, but knowing the disasters we could be averting is motivation enough.   

Curating the destiny of Mimecast 

One thing I have paid careful attention to over time is the curation of the destiny of this organization. This means carefully considering whom we partner with and when. I believe that great businesses take a long time to develop and grow and need effort over a long period from committed people. This includes shareholders. 

We were fortunate enough to found Mimecast with our own money, given that both Neil and I had already both built and sold technology companies early in our careers. When we ran out of our own money we brought in angel investors, friends, and family. In doing so we built the business to a point where we had a very strong negotiating hand with venture investors that came in between 2008 and 2012. Maintaining a significant amount of control, I believe, was instrumental in ensuring that we kept the business moving in the direction we wanted.  

We grew the company to the point of taking it public in 2015. If you can continue to deliver and perform as a public company, it really puts the board and the management team in a very strong position of control over the destiny of the business. Yes, you are answerable to dozens or even hundreds of shareholders, but in some ways you’re not specifically answerable to any one of them because their individual shareholding is actually very small.  

This next step in our journey is a big one. We are going from a listed company into a position where Permira owns 99% of the company. While it’s been a difficult stage for me, I have had to trust the process with the board responsible for making the decisions and recommendations to shareholders. We met a few different funds that were interested in investing in Mimecast.

Thankfully, with Permira I immediately felt very comfortable that they would be a partner that would be a very good custodian of the next leg of our journey. As CEO of a listed company I couldn’t have forced that outcome, but I feel very fortunate that they did end up with a bid that our board found favorable. 

Avoiding disasters: Internet criminals and cyber threats
“We will never truly know the value we create, but knowing the disasters we could be averting is motivation enough”

Harnessing South Africa’s talent pool 

My career has taken me from South Africa to London, where I founded Mimecast, and now the United States, where I work out of our Massachussetts office. Even though I have been in the US for over a decade, I’m still holding fiercely on to my South African accent and am excited that the country remains an important part of our global business. Today, just under 10% of our global revenues come from South Africa, but about 15% of our global workforce is based there.   The country’s abundant youth population, outstanding work ethic, and digital maturity makes it an ideal location for our Global Service Center, which provides support to Mimecast customers across the globe. We have identified an opportunity to harness South Africa’s talent pool in the service of building more resilient businesses. We have a very successful graduate program in South Africa and a partnership with the government’s Youth Employment Service to enable this.   There is a culture, a vibe and an edginess to the country and its people that everyone at Mimecast loves, and this energy is an important part of what drives the business. The Global Services Center is central to us delivering on our promise of customer success and one of the jewels in our customer support crown. We feel fortunate to have this connection and confidence in South Africa, and we’ll continue to invest in it.
Peter Bauer ID

The next leg of our journey 

So, what’s next for Mimecast? After growing this business for 20 years, and maybe exceeding our early expectations of what’s possible, the question that I ask myself is, how can we use our imagination, creativity and ambition to think about what could be even bigger and broader? 

As we have had more and more exposure to different international markets and gained more visibility on the size and the scale of the opportunity, we have realized that having 40,000 customers and around $700 million of annual recurring revenues is by no means the top end of what’s possible in this market and for this company.  

We have new technologies and deployment options for new customers to adopt our technology that we think can help us to attract the next 20,000 customers much faster than we attracted our last 20,000. Obviously, over time, there will be more new products, both those that we can build organically and products that we can acquire.  

I remain an entrepreneur and an entrepreneurial culture is important to me, but I have also been a CEO for two decades. As the business has grown across geographies and in headcount, we have had to become more corporate and more structured. Thankfully, over time, we have brought in executives who have proved to be excellent at achieving this. That said, I do remain committed to sustaining the entrepreneurial flavor, to keeping the sense of opportunity and to challenging the status quo

My job is to produce results that nobody could predict

This is something that I am looking forward to harnessing as we go private again. In a public company, predictability is at a premium. I remember clearly in around 2010 one of our venture capital board members with listing ambitions saying to me, “Peter, your job is to make this company’s growth as predictable as possible.” I was a little bit huffy in my youth, and a little irreverent.  “I don’t see that as my job at all,” I replied.  “My job is to produce results that nobody could predict.”  

The reality is that we were probably both right. I learned from him in that moment, and we certainly did take his advice on board, and that, in part, enabled our listing and our growth. However, I am sure that no one at that table could have predicted the growth we have achieved in the past 12 years.  

As we move from being a predictable public company to a private one, I am excited about the prospect of being able to think longer term, to being bolder in the way we develop talent and technologies, without having to worry about whether they will pay off quickly enough to satisfy our share price and many shareholders. The reality is that Permira are in in the boat with us, for better or for worse, for probably the next four to eight or so years. Together our ambition is to ultimately build a bigger and better business, and I am excited by the prospect of what the next chapter holds, and to the role that we can continue to play in taking on cybercrime. 

Authors

Peter Bauer

Peter Bauer

Co-founder and Chief Executive of Mimecas

Peter Bauer is co-founder and Chief Executive of Mimecast. He is the visionary behind Mimecast’s product and SaaS platform strategy, which focuses on reducing risk and making email safer for business.

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