Life and business advice from Mark Leonard, Constellation Software

Mark Leonard is the founder and CEO of Constellation Software, the world’s largest acquirer of vertical software companies. Founded in Toronto in 1995, the company is now worth ~$70 billion USD. Mark brought a traditional investing approach that is more long term to the software industry, unlike Silicon Valley which has focused on growth over everything else. He is also a very private person, having virtually no presence on any social media, and he does no interviews or podcasts. In 2022, however, he was the keynote speaker at an investment conference and Jay Vas captured some incredible notes from the session. Sharing my favourite bits here: 

On his early career: He worked for a VC firm called Ventures West. They didn’t do too well, mostly because the VC industry in Canada sucked at the time. He got his true start (Constellation) later in his career in his late 30s.

On work/life balance: Mark studied a bunch of successful business builders, almost none of them had any real work-life balance. If you want to build something great, you need to dedicate a large amount of your time to it. Brought up the Dunbar number – basically states you can only really have ~50 meaningful relationships max. If most of those are people you work with, doesn’t leave much for people outside of work. Makes work/life balance statistically difficult.

His biggest regret: Not spending enough time with his family. Was hard to tell this was going to be a regret while in the midst of his career.

On leverage: 3 forms of leverage: knowledge, people, and capital. Mark says knowledge leverage is actually relatively easy to obtain if you focus in a specific area. People leverage is hard, you need leadership skills. But you want to eventually have all 3.

General business advice for a newcomer: Read a lot, especially business history and business biographies. Mark thinks they should teach way more biz history in schools.

On operating: Experiment frequently in business. The scientific method is the best method for any business.

On mentorship: Finding a good mentor is hard because no one who is successful/smart will have time for a mentee. Find something you can do for them, add value to them somehow. Something they’re genuinely interested in & you just happen to be good at. Bosses can be good mentors.

What would he change if he re-built CSU: Change incentive structure to be focused on organic growth. The current incentive structure caused managers to become acquisitive over everything else. That said, he still mentioned that organic growth is lower IRR on invested capital.

Another thing he’d change if he re-built CSU: Go global sooner, especially large regional platforms outside North America.

Learning from mistakes: Setup a system of iterative improvements in your business. Sooner you can learn and iterate, the better. After each deal, CSU does a post-mortem 1 year in. They discuss and share learnings, and improve process accordingly.