Mimecast, a company started by two South Africans, is a global leader in cybersecurity specialising in advanced email and collaboration security. After trading on Nasdaq for six years, the company decided to go private in November 2015 in a $5.8 billion deal with Permira. Co-founder and former CEO Peter Bauer told BizNews about his journey from being a school leaver who opted not to attend university to starting his first business with ‘oceans behind the ears’. Bauer explained how he was “hell-bent on getting into tech” in the early 90s. He recounted how his first company, which he sold to Idion, built the first news factory for what later became News24. After the sale, the tech entrepreneur moved to London where he met fellow South African techie Neil Murray and started Mimecast. According to Bauer, “he fell in love with the process of building a company.” Discussing his decision to step down as Mimecast’s CEO, Bauer emphasised that it was the right time to hand over the reins, with the appointed CEO, Mark van Zadelhoff, being the ideal candidate. However, Bauer remains engaged by staying on the board. He also revealed his shift from technology to eco and social justice projects, expressing a desire to support entrepreneurs. Bauer said he bought a mountain in Cape Town “by accident” and shared how he feels about being labelled a ‘South African billionaire.’ Additionally, he offered valuable insights for new tech entrepreneurs and discussed the increasing challenges that generative AI will have in predominantly digital workplaces.
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Highlights from the interview
Skipping university, his first school supplies company, hell-bent on getting into tech
I didn’t want to go to university and very much wanted to figure out how to start and run a company and you know I thought the best way to do that is to learn a little bit from books and classes but not go sit at Stellenbosch or UCT or something like that, but get out into the real business world and start frankly building a company from scratch, which I had a great privilege to do. I built a little school supplies company in Cape Town in the early 90s. After doing that, I’d learned sort of just enough to be dangerous and I went travelling and I discovered this new fandangled thing called the internet by reading magazines…and I came back to South Africa, hell-bent on getting into tech and did some studies and thought I really wanted to have a tech company. It would be super cool, but I needed to learn that business.
I didn’t want to go to university. Instead, I was very much interested in figuring out how to start and run a company. I believed the best way to do that was to learn from books and classes, rather than attending traditional institutions like Stellenbosch or UCT. I wanted to dive into the real business world and start building a company from scratch, which I had the great privilege to do. I built a little school supplies company in Cape Town in the early 90s. After that experience, I learned just enough to be ‘dangerous’. I then went travelling and discovered this new-fangled thing called the internet by reading magazines. When I returned to South Africa, I was determined to get into tech. I did some studies and realised that I really wanted to have a tech company. It seemed super cool, but I knew I needed to learn the business first.
Building the first news factory for News24.com, initiating Mimecast
So, I started working for a small system integrator, Bheki Sizwe Computer Systems, which was probably one of the first black empowerment system integrators in South Africa. I learned just enough there to feel ready to start my own tech firm. I had an early entrepreneurial experience building a software development company with a friend who had studied computer science at UCT. We built a business and did some amazing work with some of the corporates in South Africa.
We built the very first news factory for what became news24.com. I’m sure they’ve long since replaced our software with something better, but for many years, that was the backend. We did amazing work for Old Mutual, SAFMarine, and other companies. We sold that company and worked for the new owners, a publicly listed South African company, for a few years before moving to the UK. Initially, I wanted to sell South African software in the UK market, but the project wasn’t particularly successful. After a few months, I settled into ideas around Mimecast with my co-founder, Neil Murray, who is also originally from South Africa. We set out on that journey, and it has been the last 21 years of my life, which have been frankly fascinating and a hell of a ride.
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Fell in love with the process of building a company
I think my drive was partly due to a sense of adventure, but also this feeling of not being a great employee in the traditional sense. Don’t get me wrong, I was a dutiful employee, but I didn’t particularly enjoy working on other people’s terms. This might be seen as a shortcoming, but it was enough of a push for me to want to do things my way. If I could shape a company and express myself through building something with my people, my culture, and my values, I wanted to go out and do it. Having learned from the small school supplies company, I understood what was possible. I had a sense of the process, so the idea of starting something really small and fragile was less intimidating to me. You just show up every single day, lay another brick, and figure out another thing. I fell in love with that process. I really wanted to get back into it, especially in tech, which felt like such an exciting industry. Software, as Bill Gates said, is the closest thing we have to magic. It was a fascinating opportunity to start again.
Why Bauer relinquished CEO role at Mimecast
I’ve held the CEO post for 21 years, and I’ve gained so much from playing that leadership role in the company. I’ve enjoyed it greatly and, at the same time, given a lot of myself, sometimes at the expense of other areas of my life. As I’ve reached a certain age, just turned 50, I’ve thought about it for a while and realised I’m not going to be the CEO of Mimecast forever. The question was about the best point to hand over the reins and perhaps contribute in a different way to the future of the company. My agreement with myself was that it’s not so much about when, but about who. Having taken the company private, we had a bit more flexibility and privacy in terms of how we approached this. I had a fantastic partner in Primera, the private equity firm, in terms of collaborating on this process. We were able to be really thoughtful about it, but I was committed to making sure that when we had an outstanding candidate to take over, that would be the time. It wasn’t a case of me running out because there are lots of people arguably capable of the job. But Mimecast is a special company, and we wanted a special leader with just the right attributes. I think we’re really blessed to have Marc van Zadelhoff1. So, Marc’s availability was tick box number one. The second thing that I’ve always believed is that companies go through good times and tough times, and there’s always a bit of both going on, particularly in a company of our size. I felt very strongly that if we were in any sort of crisis, that would not be the time to step away. Our company has had crises and setbacks over the years. You always feel like quitting during those times, but it’s most important that you don’t. When things are going really well, you feel a lot less like stepping away; you want to stay on the ride for a while. But it’s important to recognize that the time to step away is when you’ve got the right person and the company is not dealing with any major setbacks.
Advice to entrepreneurs: Embrace the journey, stop complaining, figure it out
Running a business is a great form of self-expression. It’s like painting a picture, and as the business grows, so does the canvas you have to paint on. An artist might start with a canvas that’s 60 centimetres by 50 centimetres, but as they grow more confident, they might tackle a canvas that’s a kilometre by a kilometre. The canvas of a business grows over time, providing an opportunity to express oneself. However, it’s challenging because your shortcomings get exposed as you paint and create. You can’t cover an enormous canvas on your own; you have to bring a team together and create something collectively. It’s a beautiful thing when you see others able to participate in it, and when you see your leadership and coordination role having a positive impact on other people’s lives. You see the capabilities that they develop in the process as you start co-creating something. It’s great. I would encourage young entrepreneurs to embrace that journey. It will expose you to some incredible learning opportunities, and
probably take you to a point where you’re so fatigued from learning that you almost want to stop.
I remember being at a point in 2014, in New York City with my CFO at the time. We were trying to figure out about taking the company public. As we crossed a busy road, I expressed my exhaustion, saying, ‘I just don’t want to learn anymore. Can’t we just keep running the business the way we have? Why do we have to do this?’ But after expressing that, we got to the other side of the road and I realised, we’re going to do it anyway. So, stop complaining, figure it out. It’s about gathering other folks around you that have expertise. You don’t have to do it all yourself, you don’t have to learn it all yourself, but leading that journey, that’s a great privilege as an entrepreneur.
Shifting focus to philanthropy: Social and environmental justice
As a family, we’re obviously very fortunate due to our business success to be the custodians of some resources. We think about how to apply these resources as a form of self-expression through philanthropy. While it can be self-serving in some senses, I don’t want to aggrandize it. It’s a great opportunity, much like leading a business, to apply resources to projects. We focus on two main areas: social justice and environmental justice. Particularly, we look for projects where these two areas overlap, as this intersection can yield double the impact. We also consider supporting entrepreneurs working in these fields, whether they’re social entrepreneurs or those working in startups that are looking at things that can have a positive environmental impact. This includes replacements for single-use plastic, road-building materials that are carbon-neutral or not fossil fuel-based, innovations in the wind energy industry, and innovations around agriculture to help with things like first-mile traceability in the cocoa industry. We have several really interesting projects that are probably for-profit organisations, perhaps B Corps, but these are investments that yield returns in multiple directions.
Buying a Cape mountain ‘by accident,’ clearing alien vegetation
When it comes to the environment and social justice, I believe South Africa has many opportunities, and we’ve been able to scratch the surface on some. Almost by accident, we ended up owning a mountain. The previous owner, who had inherited it, had neglected to remove alien invasive species, presenting a major fire hazard. This property came up for auction, and we were the only bidders. In dollar terms, we ended up with a very small investment, owning this mountain in South Africa. We were like the dog that caught the speeding car, wondering what to do next. However, we had a process in the background with the Cape Kids Foundation, a significant part of our
philanthropy. My wife’s team in Cape Town works on a trauma-aware education program for kids in the Cape. We thought there might be some good overlaps in terms of these kids being involved and gaining awareness of what it takes to take care of a part of nature. So, that opportunity exists. The first step was to clear all the alien vegetation, which cost an extraordinary amount of money that wasn’t entirely planned, but it’s our duty to do so. We’ve had to deal with interesting challenges like fires in the area. Thankfully, we cleared the alien vegetation, which I believe significantly contributed to a large-scale fire break. We’re interested in that. We’re involved in a few other conservation-related efforts and are looking at opportunities to expand this. it’s an important connection for us.
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Supporting South African political leaders who can be ambassadors for South Africa
I can barely spell the word ‘politics’, so I’m not particularly inclined that way. However, two things stand out. Firstly, I’ve learned that lawmakers and those who control expenditure decisions on behalf of countries can have an outsized impact on outcomes. Having grown up pretty much as a private sector enthusiast, I’ve come to learn, especially spending time in Massachusetts with both public and private sector leaders, that the public sector has an enormous impact on outcomes through policy and budget decisions. It dwarfs what the private sector can provide in terms of innovation, but the direction of travel is set by policymakers. So it does matter, a lot more than I think many business people, including myself, had historically appreciated.
Secondly, in terms of people like Mmusi Maimane, I’m always interested in people who can be great ambassadors for South Africa. We have an incredible country with some incredible talents, and people who are willing to be ambassadors for the country in a positive sense and build bridges and relationships. I’d love to be as supportive as possible. When I heard Mmusi was visiting DC, I asked him if he would come to Boston and spend a little time with some friends and connections over here. He agreed to do it, and we were very fortunate to have him meet with quite a few people across the public and private sector, including some very prominent African-American leaders in this area. I think he found the experience inspiring for his own leadership journey. He was such a remarkable ambassador for the country, delivering a message of hope and a rejuvenation of Nelson Mandela’s vision for the country. That was powerful. Frankly, I’d love to have other leaders from South Africa who are interested in the deep connections between Boston and South Africa that go back to the dismantling of apartheid and some central characters. In fact, Boston was the first city Nelson Mandela visited internationally. He danced here at the Charles River with 250,000 Bostonians who were out to see him.
I know Donald Trump likes to boast about the size of his crowds, but I think Nelson Mandela may have outdone him. At least, that’s what some people have said.
On that label: South African billionaire
It is mainly for mathematical reasons because there’s no justification for our exchange rate being where it is. I would love for the maths not to spit out that number, frankly. South Africa has such an opportunity in terms of its people, natural resources, and infrastructure. This was one of Mmusi’s key messages to folks over here, which was that it doesn’t take a lot to ignite great progress. But one has to have leadership that’s committed to that and committed to service. Leadership is best thought of as a service industry.
I think there’s a way to make the South African economy magnificent with tremendous growth, but good growth. Inclusive growth, that brings vibrancy and prosperity to many people, and growth that’s environmentally responsible and well thought out. South Africa was really on the cusp of being an incredible example to the world 20 years ago, and that can be reclaimed. I think a lot of people remember that. Many people are not necessarily aware of some of the challenges. We may be able to leapfrog over international people’s expectations because they’re not as aware as some South Africans. I think many South Africans in the country are frustrated and want to know why we’re struggling to figure out how we can realise our potential. But this is not a political statement. I think many people are willing to contribute. It’s just that I think some people have become confused as to what the order of priorities is. And it’s others first.
Increasing challenges in cyber security with the arrival of AI
Cybersecurity attacks on businesses are increasing, and the whole market is going through a pretty dramatic change. For those who are closely following the web, you just have to look at what’s going on with Nvidia’s stock price and even Microsoft’s, frankly. Just like the arrival of the internet, the arrival of AI is going to be disruptive.
Ultimately, I think it will be positive and yield great results, but it’s another form of change that businesses and society will have to grapple with as machines take a big leap up in terms of capability to perform cognitive activities. With that comes potentially tremendous productivity advantages for adversaries.
These adversaries will be pioneering just as much as those looking to use this technology for good, to cure diseases and solve resource allocation and other problems. There will also be people who are looking to derive ill-gotten gains from this
technology. Therefore, the cybersecurity sector remains vitally important as innovators work out how to head these things off.
How do we work in a safer way? Because we have to be able to trust our digital infrastructure. We have to be able to trust our digital applications. And we have to be able to trust these digital representations of everything. We don’t sign contracts on paper anymore. We sign digital representations. It’s fantastic. It’s very efficient. You and I have never met in person. I’m relating here, and you’re relating there to a digital representation. And we’re very confident we’re actually talking to each other and that you exist. But there’s no particular reason why that is true in the age of generative AI. So, establishing trust, which I know is a huge part of Mimecast’s work, is about how to retain trust in the digital representation of things in a predominantly digital workplace and it’s going to be an increasing challenge.
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