Stick­ing to SA roots

Financial Mail - - PROFILE -

Once a quar­ter, when Nas­daq-listed Mime­cast fields ques­tions from in­vestors about its re­sults, co-founder and CEO Peter Bauer finds him­self hav­ing to ex­plain the e-mail and data se­cu­rity com­pany’s strong pres­ence in SA.

Those who don’t recog­nise his Eastern Cape ac­cent tend to be the most puz­zled.

“In­vestors nor­mally raise their eye­brows when they see how sig­nif­i­cant [SA] is — they’ve never re­ally seen a public com­pany in the US with such a sig­nif­i­cant SA busi­ness; it’s about 15% of our rev­enues to­day,” Bauer says by phone from Mime­cast’s North Amer­i­can head­quar­ters in Bos­ton.

“Ob­vi­ously, the cur­rency fluc­tu­a­tions are nor­mally what need ex­plain­ing — the pound and the rand have moved around a lot rel­a­tive to the dol­lar, so each quar­ter we do have to ex­plain.” For­tu­nately, it’s easy to un­ravel. Bauer and co-founder Neil Mur­ray (also a South African) have used the coun­try as a gate­way into the rest of Africa and the Mid­dle East.

In any case, in­vestors don’t seem too per­turbed. Since list­ing in late 2015, Mime­cast’s share price has nearly quadru­pled to about $40, valu­ing the firm at about $2.3bn.

The com­pany has come a long way since Bauer and Mur­ray, its chief tech­nol­ogy of­fi­cer, founded it in Lon­don in 2003. Bauer was 29 at the time.

The duo met soon af­ter Bauer, who grew up in But­ter­worth and Port El­iz­a­beth, moved to the UK to set up sales chan­nels for SA soft­ware prod­ucts. “Within a few months, we re­alised that by sell­ing other peo­ple’s stuff, we’d have less con­trol over our destiny than if we set up shop our­selves.” They’d al­ready had some suc­cess in the start-up scene, hav­ing built and sold tech com­pa­nies in SA in the 1990s — sales that gave them seed cap­i­tal for their new, more am­bi­tious ven­ture.

In Bauer’s case, he and an­other friend had started a busi­ness in Cape Town called Fab Tech­nolo­gies, which they sold to the then Jse-listed Idion Group for about R20m in 1998. “That gave me a taste of blood, of what could be achieved.”

He and Mur­ray de­cided to bet on the in­ter­net go­ing main­stream, and launched a com­pany aimed at help­ing firms man­age e-mail and data se­cu­rity. This was at a time when many doubted whether e-mails would stick around.

“Neil’s a fan­tas­tic soft­ware ar­chi­tect, and I scrub up rea­son­ably well in a suit and can ram­ble on end­lessly be­fore you buy some­thing,” says Bauer, who re­calls be­ing both mes­merised and scep­ti­cal about the world wide web when he first came across it.

Like most en­trepreneurs with grand plans, Bauer ad­mits that “you have to be slightly delu­sional to start out some­thing like this”.

“Nor­mally, be­ing delu­sional is a bad thing, un­less you per­sist with it long enough for you to find your path … and we did be­lieve what we were try­ing to do was worth­while.”

A decade and a half later, and Mime­cast is be­ing hand­somely re­warded for be­ing an early mover in the se­cu­rity space. E-mails are clearly here to stay and, with that, phish­ing at­tacks are pro­lif­er­at­ing.

“For the most part, Mime­cast has grown or­gan­i­cally, we’ve not done much by way of ac­qui­si­tion. But we re­cently an­nounced two ac­qui­si­tions, and we also launched a whole new prod­uct mod­ule around web se­cu­rity, us­ing the plat­form we built for e-mail.

“That’s in a public beta, or “beyta”, as I have to say in Amer­ica. We’re re­ally ex­cited about that — we have tons of cus­tomers in­ter­ested and try­ing out that prod­uct, and we’re hop­ing to start sell­ing it later this year. We’ve had some real in­ter­est from SA com­pa­nies.”

Un­like Elon Musk, an­other Sa-born CEO in the US, Bauer’s com­pany has mostly flown un­der the radar of short sell­ers, the ex­pand­ing group of in­vestors who aim to profit from de­clines in com­pa­nies’ share prices.

“But I think this is a reg­u­la­tory thing that has to be ad­dressed — they get to take short po­si­tions and then they can gen­er­ate ‘fake news’ to sup­press the share price of the com­pany and then col­lect on the way out … It’s sort of the re­verse of the pump-and-dump scams, which are ob­vi­ously highly il­le­gal.”

Where fake news is de­lib­er­ately spread to gen­er­ate prof­its, “peo­ple should go to jail”, Bauer says. “It’s not just rip­ping off in­vestors and steal­ing peo­ple’s money, but it re­ally dam­ages com­pa­nies and has a real im­pact on peo­ple’s lives — on em­ploy­ees, on rep­u­ta­tions, on cus­tomers’ per­cep­tions of brands.”

Bauer and his wife would be keen to spend more time in SA, the trans­for­ma­tion of which has been “fun to see”.

“Maybe in time we’ll spend sev­eral months a year in SA,” he says, “that’s def­i­nitely some­thing we as­pire to.”

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