#246 Mark Leonard's Shareholder Letters

**David Senra** (0:00)
I want to tell you about a one time only limited event that I don't think you're going to want to miss. I am doing a live show with Patrick O'Shaughnessy from the Invest Like the Best podcast in New York City on October 19th. Patrick has interviewed over 300 of the world's best investors and founders for his podcast. I've read over 300 biographies of history's greatest entrepreneurs for my podcast. We'll be talking about what we learned from seven years of podcasting, sharing our favorite ideas and stories, and doing a live Q&A. There will also be special event-only swag. If you live in New York City, I think it's a no-brainer. But if not, I think it's a great excuse to fly in. I've already heard from a bunch of people that bought tickets, they're flying in from other cities. Some people are flying in from other countries. That's setting the bar really high, so I will have at least four shots of espresso, or four energy drinks before or during the show, so we can make it a night that you'll never forget. If you're interested in attending this unique live event, I will leave a link down below. I highly recommend you get your tickets today, and I hope I get to see you in New York on October 19th. Mark Leonard reminds me of Warren Buffett. Anyone who likes reading Berkshire shareholder letters will enjoy Leonard's. The Globe and Mail describes part of what Leonard has accomplished at his company, Constellation Software.
With an initial $25 million investment in 1995, Mark Leonard has built Constellation into a world-leading consolidator of vertical market software companies. These are companies that create products to help run businesses in specific industries. Over the years, Constellation has acquired over 500 businesses.
Typically, Constellation's acquisitions are small, in the $2 to $4 million range. But add them all up, slip in a dose of Constellation's financial and operational discipline, and you have a company with a market cap of $40 billion. In this age of zero privacy, Mark Leonard has managed to maintain a practically unthinkable level of anonymity for just about any individual, let alone an executive who runs one of Canada's most dynamic and fastest growing software companies. That was an excerpt from a blog post about the founder of Constellation Software, which is Mark Leonard. I just spent the last several days reading every single one of his shareholder letters, and so that is what I'm going to talk to you about today. And so Mark's interesting for a number of reasons. One, I just touched on in that excerpt, he took a $25 million investment almost 30 years ago, and has compounded it over, what, 27 years to a $40 billion market cap. I'm obsessed with people that found and run the same company for a long period of time. Based on my math, Mark was 39 when he started the company, and he's still working on the company, and he's 66 years old today. What also makes him interesting is that he's a recluse. There's only one photograph that you can find online of what he looks like. He actually looks strikingly similar to Rick Rubin.
And so outside of the occasional underground podcast that you might be able to download on the dark web, the only way to get information about him is to read his shareholder letters or listen to his investor calls. And I just love the idea of this super smart genius who's just like, I don't need to speak. My numbers speak for themselves. And so the way I actually learned about Mark Leonard is actually through my friend Liberty. My friend Liberty runs one of the only newsletters that I actually read. I read two newsletters. His is one of them. I'll leave a link down below, but you can go to libertyrpf.com and you can check it out. And it was through reading his newsletter for many years because Liberty's been studying Mark for almost a decade. And so he was the one that helped me organize all the research and all the information that I used as the basis for the podcast. And so before jumping into some highlights from his shareholder letters, I want to pull out this quote that I heard Mark say on this podcast that's not publicly available. And so Mark was asked the question, why is decentralization, autonomy, and control so important to Constellation? And so Mark's answer to this question, you clearly see, okay, this guy's a misfit. He's going to fair right in on founders. So it says, why are decentralization, autonomy, and control so important to Constellation? Where did that come from? And Mark's answer was fascinating. He says, it starts with personal preference. I don't like anyone telling me what to do. I don't like anyone saying, I'm an authority figure and you will do it this way. I can't think of anything that annoys me more. So he's talking about, I'm building a system that I want to work in. Not only that, but I want to attract other people that are like-minded. And you'll find that highly talented people are not going to want to work under a highly centralized command and control business. He's talking about this was a personal preference. I don't like anyone saying, I'm an authority figure and you will do it this way. I can't think of anything that annoys me more. I was struck by principles, meaning when he grew up, I guess he meant like they literally hit him. I challenged teachers. I left home early. I had a bootleg radio license. I built a flamethrower. I did things that were not accepted by lots of other people. The ability to choose what I think is right is something I prize highly.