This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Constellation Software. Constellation is a conglomerate which owns more than five hundred vertical market software businesses. It was founded by Mark Leonard in 1995 and has delivered remarkable returns to shareholders since going public on the Toronto stock exchange in 2006. To break down Constellation, I’m joined by Chris Cerrone, a Partner and Portfolio Manager at Akre Capital Management. We discuss Mark Leonard’s genius, why Constellation is the gold standard for employee compensation plans, and how the business has perfected its acquisition engine, which allows it to buy dozens of software businesses each year. Please enjoy this breakdown of Constellation Software.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke   Show Notes [00:02:37] - [First question] - How Chris and Akre came across Constellation Software  [00:05:21] - An overview of Constellation [00:08:40] - The origins of Constellations’ 30-year legacy of extraordinary returns [00:11:57] - A deeper explanation of vertical market software as it relates to Constellation [00:15:30] - The impressive scale of Constellation despite its niche-targeted portfolio [00:18:04] - Their incentive structures and their avoidance of stock-based compensation [00:21:05] - Additional ways in which Constellation stands out, relating to the Rule of 40  [00:23:20] - The barriers that keep competitors and copycats from overtaking them [00:28:00] - The three legs of Constellation’s acquisition engine [00:32:57] - Recent spin-offs of assets as opposed to straight acquisitions [00:35:45] - How Constellation is planning for the future [00:38:13] - Why they’re considering expansion towards non-VMS acquisitions [00:40:30] - Capital allocation and Mark Leonard’s outlook more broadly [00:43:46] - How the business reflects Mark’s nature and values [00:47:31] - How much technology risk does the business face? [00:50:56] - Is organic growth a concern?  [00:57:40] - Lessons for operators when studying Constellation’s story

This is Zack Fuss, an investor at Irenic Capital, and today we're breaking down Qualcomm. When you think of semiconductors, Qualcomm isn’t necessarily the first name that comes to mind but its size and utility in our lives is truly striking. The business has an enterprise value of $150 billion and set the standards for 3G, 4G, and 5G mobile connectivity that we rely on so heavily in our daily lives today. I bet that if you don’t have a Qualcomm product in your pocket right now, you most certainly have one in your home. To break down the business, I’m joined by Jay Goldberg, a semiconductor industry consultant and partner at Snowcloud Capital. Please enjoy this breakdown of Qualcomm.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Tegus, the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt   Show Notes [00:02:41] - [First question] - Describing what a semiconductor is for laypeople  [00:03:51] - Distinguishing between chip designers and producers [00:04:53] - Why the semiconductor industry evolved the way it did  [00:05:57] - The history of Qualcomm from the 50s leading up to today  [00:08:40] - Where Qualcomm fits into the world of wireless phones  [00:12:01] - What winning the war of standards means for their economics writ large [00:13:42] - The dynamics within the business that influenced their growth  [00:16:00] - Qualcomm’s direct competitors as they exist today  [00:17:20] - The relationship between Qualcomm and Apple [00:19:42] - What’s happened over the last couple of years in the industry [00:21:05] - The possibility of a structural tailwind in a digitally interconnected world  [00:22:56] - Some of the competitive hostility in the semiconductor space [00:26:58] - Unique directions Qualcomm could be taken beyond positioning  [00:29:02] - What they can do with their abundant free cash flow  [00:30:24] - Variables that preserve and could threaten their margins  [00:32:58] - Where Qualcomm sits within the global struggle for chip dominance geopolitically  [00:35:00] - Capacity constraints that could impact them directly  [00:36:51] - Lessons for investors and operators when studying Qualcomm’s story [00:39:50] - Unique characteristics of Qualcomm’s company culture   [00:41:06] - Thoughts about Steve and Aman as CEOs [00:43:08] - Where Meta, Apple, and Microsoft source their chips