MessageLab's CEO and co-founder are determined to get a bigger slice of the American pie. Paul Fisher meets two men on a mission.
Sometimes in life you get more than you bargained for. Prior to arriving at MessageLabs' central London office, I had been expecting to meet just chief executive Adrian Chamberlain, but I am told that we are to be joined by co-founder and chief marketing officer Jos White. So I get two MessageLabs executives for the price of one, whether I like it or not. They turn out to present quite an engaging double act.
Chamberlain is the more robust of the two - strongly featured, big-voiced and ever so slightly gung-ho. His tie-less, crumpled white shirt attire seems to suggest some earlier corporate "hardball" rather than an aversion to pressed shirts. This image isn't so far off - later I learn that military history is high on his reading lists, with the Napoleonic wars a favourite period. He likens leading a company to a form of warfare; the ability to develop a strategy and then, as he puts it, "operationalise".
"Understanding a great commander like Napoleon is helpful. It gives you a mindset about what you're up against, and makes you try and think two stages ahead," he will say later.
White is the quieter, smaller and neater one, groomed in chinos and pressed shirt - the uniform of the IT executive. He's more measured in the statements he makes throughout the interview, which he uses to qualify and explain recent events. I look at the pair and can't help wonder: which one is tougher?
MessageLabs was founded in 1999, by White and his brother Ben, to provide web and email anti-virus services. It has since grown into a fully fledged MSSP, with flourishing operations in the UK, the US and Australia.
Chamberlain is one of the growing tribe of experienced executives brought in by ambitious information-security businesses to achieve next-stage growth. With a pedigree that includes Cable & Wireless, BT and, most recently, Australian building giant Lend Lease, he joined MessageLabs as CEO in February 2006. A minnow in comparison to those, but that it seems was part of the attraction.
"I love being here. It's fantastic," he raves. "What I really like doing is managing things and making a difference. I found that I had been doing less managing and more presiding. It was more like being a barrister, mastering briefs to get investments out of the board, rather than actually doing anything."
He adds that he started looking for the right job; preferably back in the technology space. At the same time, MessageLabs was searching for a chief executive that could take the MSSP further. Having reached around £50 million in revenue, the founders felt only an outsider could push it significantly beyond that. "They needed someone who knew how to commercialise technology," Chamberlain explains.
"The business had suddenly become quite complicated: different geographies, different technologies, different segments. I think they felt they needed a CEO who had experience of a bigger company and of the plc market; a background that could blend what was good about the existing company with some new management. A lot of companies at this stage are very strong technologically, but not so good at commercialising that to what the customer wants," he continues.
During this speech, Chamberlain also reveals a more human reason as to why he wanted the job: he was tired of making money for other people, and the chance to get an equity stake in MessageLabs was just too good to pass up.
I look across to White. Why did he hire Chamberlain - was it love at first sight? Not exactly, there was quite a long courtship, it turns out. The company had been looking for a CEO for some 12 months before Chamberlain finally came on board. He says the brothers knew they had to change and that entrepreneurs can stay on for too long and are not necessarily the best people to rescale the business. Hinting at a possible future IPO, he says: "It was a big decision to make. We were fairly terrified of handing over our baby but, in a way, we wish we had done it earlier, because Adrian has brought a huge amount to the business. He changed the team, brought discipline, process, structure - and we needed it."
A statement that seems to suggest that the business has undergone, and needed, a shakeout. Chamberlain wants to dissuade me of any such notion; it's not his style of management, he insists. What he changed was process, not people.
"You often get guys in who think the first thing they should do is get rid of everybody because it shows who's boss," he says. "All you get is massive disruption and short-termism. The challenge for me was to blend what had made this company grow from nothing to £50 million and be a global leader."
Now, he adds, the founders are less frustrated. They can see the results of their ideas, whereas before, it was a struggle to go from the drawing board to operation. "You focus on a few things you really want to do, and you get them done, and you cut out all the noise that looks important but isn't. And for that you need a strategy with a few principles about what you're going to do. It's amazing how it starts to take off. The whole team then moves on to the next level, and moves pretty fast," he boasts.
"I think the most satisfying thing is seeing an awful lot of what we presented to the board last April come through in the next year, in delivery, and I can see that accelerating. Although there may be some bumps in the road."
The mention of bumps in the road slightly deflates the hard sell at the end, but it prompts me to ask about a potential bump that appeared in a story in the Financial Times' Mergermarket section in July. It suggested Chamberlain and his team were merely fattening the beast, ready for a lucrative takeover by a larger concern. The report claimed that MessageLabs had approached Google about a potential merger around the time the search giant eventually acquired Postini, one of MessageLabs rivals. It also made great play of the fact that UBS bank was acting as MessageLabs' adviser. The story further suggested that MessageLabs' overvaluation of itself put off Google in preference for Postini. In truth, there was a lot of supposition.
I get two responses, both wholly characteristic of the men sitting across the MessageLabs boardroom table. From Chamberlain, it's guns blazing again: "We're not positioning for anything consciously, except to make the company successful, and I don't just mean technologically. I mean commercially, as measured by growth, cash flow and profits," he says. "That gives you a whole load of options, and if you can do them well, it does make you attractive for a potential IPO at some stage, or for a trade sale. My focus is to do that, and then that opens up possibilities that we may or may not realise in the next few years." Combative yet ambiguous, but this is the second time that IPO has been mentioned this morning.
White takes over, concerned that I fully understand the background to that particular story. His answer is considered and forensic, much less to do with corporate muscle-flexing than about what he considers actually happened. "I wrote a response to that article, but that got completely buried," he complains.
"We brought in UBS for a very specific project last year, which was to raise money for us. So, in order to do that, the bank spoke to financial and strategic investors, one of which was Google. We weren't putting ourselves on the block. UBS successfully raised $60 million, which we announced in October last year, and then we ended that contract and we no longer have a bank engaged. We're not up for sale. We never were. And we don't have any plans to change that," he insists.
At the end of this, all that's clear is that MessageLabs is determined to grow and grow fast, which may or may not involve an IPO and, as everyone who keeps an eye on this sector knows, arranged marriages are not uncommon. For now, White assures me, "it's business as usual".
And business is good, according to the marketing man. Client retention is at 98 per cent and, as customers add more protocols, they are also buying more. "We do have certain imitators who say: 'We are like MessageLabs, but only half the price,' and so obviously there's going to be an element of our customer base that is attracted by that; but for the most part our client retention is something we're very proud of," White says.
If there is to be growth, there has to be investment in new products and awareness of changing threat types, for example the growth of image spam and PDF-borne malware - a trend that some MSSPs are struggling to cope with. How is MessageLabs doing?
Chamberlain is keen to pick up the reins again: "Our technology works very effectively in identifying and stopping image-based spam, we've been one of the innovators in that space. We were seeing evidence of image-based spam up to a year ago, so we've got a bird's eye view of what's really going on out there.
"I think with spam it was slightly different, because our service-level agreements will stop 99 per cent of spam, but that one per cent can still be fairly visible if you're a big company," he admits. "So it's true, we don't provide absolute protection for spam in the same way we do for viruses and malware, but 99 per cent is still market-leading." White turns the conversation to targeted attacks, something MessageLabs feels more qualified than most to catch before they can do damage. "When attacks are more targeted, that really supports the managed-services model," he says.
"We're able to protect different segments in different ways, whereas software really is an all-or-nothing approach. I think the vendors would admit themselves that anti-virus software was designed in a pre-internet age, and they've been trying to catch up and re-engineer it ever since. That's what's enabled us to do things in a more dynamic way, to provide better protection."
But are targeted attacks really on the rise? After all, it's something a lot of people talk about, but few have experienced. "We observe it in the customers we have at the moment," White claims. "Some of them may not know it, but it is happening. We pick it up. They don't know because they never get it. There was a recent Trojan attack targeting C-level executives, trying to get on to their machines and keylog them. That was quite a high-profile attack, even though it was actually only aimed at a few hundred users."
Preventing this sort of specialised attack is exactly the kind of robust solution that MessageLabs will need if it is going to consolidate and, crucially, get a bigger slice of the world's most lucrative information security market: the US. This, as Chamberlain admits, will bring special challenges, but he's not under any illusions. Board-level experience has shaped his views on how to get ahead over there: be more like them.
"Culturally we're not as aggressive as we should be, and it is unusual to be a European company that is successful in high-tech globally, and that is both an opportunity and a challenge," he says. "I think there's a prejudice in American companies that nobody can do it as well as they can, which makes it especially pleasing that we've been as successful as we have in the US market.
"The American market is as open as you can reasonably expect," Chamberlain continues. "I think there's chauvinism, a perception that European companies can't be as good, which just means you have to be twice as good, and demonstrate that. I think UK businesses have been been slightly naive in not recognising that."
Naive or not, the battle-hardened student of Napoleon and the chief marketing officer now find themselves leading their troops into new and, potentially life-changing engagements.