Interview: Mimecast CFO Peter Campbell

TECH COMPANIES are famous for their ability to work fast, loose, and leverage their market-disrupting powers to grow at a phenomenal rate.

Mimecast isn’t one of those businesses. At least it doesn’t appear to be.

As its 14th employee, chief financial officer Peter Campbell explains, things were pretty tight – physically and financially. “Cobbling rooms” onto each other – the business was in a rented office – as the email-hosting business required more people and tech hardware was do-able, but cashflow was always an issue.

“That was always tricky because cash was tight and you want to move, you’re growing. You’d buy a server and one chip – because you couldn’t afford to buy the second chip…it was gradual.

“When I started, there were very few customers. There wasn’t a lot of revenue and there was almost no cash. I asked how much cash was in the bank – £7,000.”

He shared an office at the time, in 2006, with co-founder Peter Bauer. Campbell, a Canadian accountant with a mischievous sense of humour, said of contending with his boss’ working habits: “He has a tendency to spread all his paperwork.”

Leaving on a jet plane

Campbell previously served as CFO of NASDAQ-listed SR Telecom – a business that collapsed in 2010. On his departure years earlier, then CEO William Aziz said of the “tireless” Campbell: “He led the complex fresh start accounting initiatives and managed the financial affairs of the company through the difficult restructuring period.”

Campbell describes himself as “a little bit fried” at the time of his imminent departure from SR Telecom. Then without children, the potential for he and his wife to move to London was great. “I wanted an adventure,” he adds.

Several months earlier, he had been in conversations with Mimecast’s sales director Will Zuckerman; a meeting that had arisen from their link as childhood neighbours.

Alongside Bauer and fellow co-founder Neil Murray being “good guys”, Campbell thought the Mimecast business model – an email service offering that carefully balances customer growth with technology investment – was sound.

While Campbell knew the risks of an early stage business, and what he was getting himself into – he hadn’t planned on “opening the mail and calling up customers to get money in”.

“I was the guy who fills things that other people can’t do. I was hired as the CFO at the time, but I was hired a couple of years in advance of when they really needed me,” he admits, “but there were a number of things that we did”.

These ‘things’ included helping re-write its articles of association, overhauling its corporate structure and, most importantly, helping to value the company and manage fundraising.

“I had probably twice the amount of people reporting to me in my previous job as existed in the entire Mimecast when I came on board. It was a bit of a shift, yes.”

But while completely different to dealing with the finances of a listed telecoms giant, there is little sense that Campbell would change anything about his involvement in the formative years of Mimecast.

“Credit control is not my thing but I just sort of dived into it… I enjoyed setting the foundation and the groundwork for a lot of things that made the company what it is now.”

Finance understanding the business

Campbell sees this broader understanding of business drivers as key for the vast majority of modern FD roles, to understand the business’ “trajectory”, to appreciate that the decisions made in finance will influence that trajectory – for better or worse.

As such, Campbell makes sure there is finance involvement throughout the business’ operations.

Financial Director’s earlier reference to Mimecast growing slowly and steadily was a bit facetious. Founded in 2003, its revenues hit £2.8m by 2008 – certainly not insubstantial, but the key was -and has been – maintaining that growth. Funding of £7.5m in 2008 facilitated more capacity to sell more services to more customers. It hit £6.8m revenues in 2009, £13.3m in 2010, and £42.7m in 2013.

But the market is still hungry. So while Mimecast retains 97% of its customer base annually and only needs to allocate 25% of its income as service cost, the business takes the less comfortable route – which means reinvesting and posting losses. “It costs you a pound to get a pound,” explains Campbell. “If I didn’t want to do this we could just forget about new products and just drive profit.”

“The cost to serve…we focus on bringing it down but I’m pretty happy with a 75% margin. I think a lot of the focus is ‘how can I get more new customers cheaper?’ and ‘how can I build more new products to sell even more to my customers if we keep someone for 30 years?’.”

Reporting models

For Campbell, this appears to place him in a perpetual, tiresome, explanatory mode with stakeholders and interested parties. In a corporate reporting sense, he wants to give the statements issued by the business a big shakeup.

“You’re generating losses but you’re doing it on purpose. People don’t always get that and I was talking…about our annual report because I want to change it. I don’t want it to be the straight financial statements. I want to show our business model.

“I want my annual report to show our business model like ‘we’re doing this on purpose folks, it wasn’t a mistake’, particularly in the UK, where…it’s still a little bit more traditional whereas in the US they kind of expect it.”

For all the things that have changed at the business, due to its increased size and scale, it ability to keep apace with growth is still key. But for Campbell, the days of watching over the service delivery teams and asking them about individual customers has long gone. While the job has a more conventional feel, his attitude to ‘what is finance’ is anything but.

“We’re often explaining ‘the business’ to the business – so we’re showing why what every person in the business does matters, how it affects the business model, how it affects our value, how it changes what we’re doing.

“I think people want to make a difference and they want to see that they’re making a difference. What we do is we help show them what they’re doing. Fundamentally we very much understand the levers of this business more than anyone else and we can show how different people pushing on the wheels will affect great change and that they do make a difference, their team does, that as a group does, and the company does.”

 

 

 

 

 

 

 

 

 

 

 

Peter Campbell CV:

2006-Present – Chief Financial Officer – Mimecast
2005-2006 – Chief Financial Officer – SR Telecom
2005 – Group Corporate Controller – LMS
2004-2005 – Group Corporate Controller – SR Telecom
2002-2004 – Assistant Controller – SR Telecom
1998-2002 – Ernst & Young