Carlyle acquires 1E.com, an endpoint and hybrid working specialist, in $270M deal

Remote work was the order of the day for the past 16 months, but as we (fingers crossed) move out of the pandemic, it’s looking like a lot of people may move into a new era of hybrid work: less focus being present in offices to feel like you are getting things done, less time commuting and more time to be productive. To help better address that opportunity, a company called 1E, which builds solutions for companies to enable hybrid working along with managing the wider space of endpoint management, has been acquired by Carlyle on the heels of a strong year of business.

The private equity firm has picked up the London-based company in a deal that values the company at $270 million.

The acquisition is coming in the form of a majority stake with CEO and co-founder Sumir Karayi maintaining a significant minority stake, along with employees of the company. The firm is completely bootstrapped — no outside investors, no VCs on the cap table prior to this deal — and profitable, with growth of 28% in the last year.

The birth and now exit of 1E is an interesting counterpoint to that of most of the enterprise startups that you will read about on the pages of TechCrunch, or maybe in tech press overall.

The company was started in 1997 when Karayi and co-founders Phil Wilcock and Mark Blackburn were at Microsoft working as in-house consultants helping enterprises adopt and adapt to Microsoft software. Karayi decided he wanted to start something of his own, rather than, in his words, “working for Microsoft forever.”

Given his background, his business started first as a consultancy, but he said that it didn’t take long to pivot, since “We realized that the problems we were looking to solve we needed to build technology to do that, so we started to write our own software.”

The company got its start as a Microsoft shop, building endpoint technology management, along with tools to help companies manage their computer terminals and networks better. That included products like NightWatchman, a power management tool for PCs and servers that helped save energy consumption for businesses; Nomad, a bandwidth management tool that helps reduce server usage; and Shopping, a platform for companies to build app store-like experiences for internal employees or customer-facing tools.

Over time — years before the COVID-19 pandemic — that also evolved into software to enable hybrid working environments, which were already emerging as a thing and already posing challenges to businesses and users.

“The challenge was that remote working was a second-class experience,” he said, with technical support, software usage, network connectivity, device issues and just about everything harder to sort out when problems arose for workers not working in the office. So 1E — a play on the last two characters of the error message you get on a failing PC, “STOP 0x0000001E” — built software to address that, too.

Overall the company amassed some 40 patents on its technology, which now is used across more than 11 million devices among 500 large enterprise customers, including AT&T, Nestlé and a number of big banks that can’t be named.

It’s been the remote working software that has seen the company through an especially strong year — no surprise there, given the environment many of us have been working in — where businesses have been buying its tools as part of their “digital transformation” efforts, and it was this that got Karayi thinking that the company — which had largely built the business it had today on an employee base of people who just like building new things, and word-of-mouth between end users — could finally do with an outside investment and cash injection to take the business to the next level.

“We’re going through a seismic change right now and we think it’s a big opportunity for 1E,” he noted, adding that while many of us might feel like remote work is everywhere, he believes this is just the beginning of how to enable better remote working. “I think the office boat has sailed,” he said.

1E went with Carlyle among a number of other bidders as it seemed like the right fit: strong support and understanding of the business, combined with a well-recognized name. The plan more generally is to follow the PE playbook if all goes well: four years of growth, with “all later options open.”

“We were attracted to 1E’s fully integrated digital experience technology, which is differentiated by its advanced remediation and automation capabilities, and are delighted to partner with Sumir as we support the company as it enters its next phase of growth,” said Fernando Chueca, a managing director in the Carlyle Europe Technology Partners (CETP) advisory team. “With strong industry tailwinds, we believe 1E has significant growth opportunities and we look forward to supporting another founder-backed business to scale through investments in product innovation, commercial operations, and international expansion.”