Welcome to Biz Brainstorms –
My name's Connor, I'm the author of this newsletter. Every week I'll send you an email covering ideas, lessons & tools to help you start or grow your business.
These emails are designed to be skimmed. Enjoy. 🧠 ☕️
The Constellation Software Business Playbook
The 5 Fundamental Reasons Real Estate Investors Win
🖥 Constellation Software
In 1995, Mark Leonard started Constellation Software with a $15M investment.
Fast forward today... this company is worth $30B in the public markets.
So it brings to mind... what is Constellation Software??
The quick summary: They buy & operate software companies doing between 2-5M in revenue spanning over 60 industries; from health care to law to public transit.
And... after looking at their 25% Compounded Annual Growth Rate (step aside Warren Buffet) the majority of their growth comes from acquisitions of these new companies:
It's hilarious, because if you visit their site, Constellation Software has 6 operating groups:
And then you visit Perseus Group and realize... that company alone owns over 600 companies 😂
And... this is the company CEO (Mark Leonard). What. A. Legend.
Leonards plan for the future?
Sit on cash and wait for companies to face uncertainty during recessions.
If you want to study deal machines... look no further than Mark Leonard. In 2022, Constellation Softwares acquired nearly 3 deals per week 😳
PS – Everything I shared here was stolen from Tom Tunguz's piece.
And this deep dive on his latest shareholder letter.
📚 Personal MBA
Recently I came across PersonalMBA.com – the book has insane reviews
I'll be honest... I haven't read it.
I have, however, read a lot of the articles on the website covering the contents of the book. Here are some of my favorites for you to glance over:
Caveman Syndrome (how biology screws us in 2022)
Excessive Self Regard Tendency (why I've never finished a daily to-do list in my life)
Energy Cycles ← This one took me a year to learn after quitting my job.
🏡 5 Fundamental Reasons Real Estate Investors Win
I've been invested in real estate for the last ~16 months.
The more time I spend in this industry, the more I understand it.
And the more I become convinced it's the best investment opp for risk-adjusted returns.
5 Reasons Why:
Tax Advantages: It's not about what you earn, it's about what you keep.
The richest people on the planet own real estate because you can:
a) Apply depreciation as an expense towards cashflow to pay less taxes on your profit
b) Defer capital gain taxes when you sell through tools like 1031 to reinvest into future properties
Access To Leverage: No other asset on the planet has access to as much leverage as real estate.
It's the reason couples can buy a $300,000 house with only $15,000 in the bank. You can begin to build a large investment portfolio & use that cashflow to pay down your debt.
Cash Flow: Honestly this is the worst reason to invest in real estate (in my opinion). Compared to stocks, it's phenomenal. Compared to companies, it's horrendous.
The amount of people I know who bought a Single Family house for a cashflow investment and deal with headaches after squeaking out $200/month in cashflow is not worth it. It's basically a glorified dividend.
No Business Model Risk: When starting a company, you have to validate your idea and sell it to a defined target market. Even if that market is growing like crazy, the fact there are still shifts in demand
Real Estate is different because there’s nothing to validate. And it's the biggest market in the world.
Everyone needs home. Because of this, you don’t need a genius idea with brilliant execution to be a Real Estate millionaire.
You need capital... and time.
Inflation Hedge: Historically, as inflation rises, so do these home values. Which becomes very enticing when you have fixed debt (more on that in a future piece). 😁
Side rant: This entire piece is the crux behind the phrase "The Rich Get Richer" when you own assets that rise with inflation, you benefit. When you own dollars/paychecks during inflation, you suffer.
📱 Phone Addiction
In 2023, people are paying more attention than ever to their screen time:
It's obvious that America needs to work on our physical health. But the tailwinds of mental health are rising, and the number one enemy that often gets blamed tends to be social media & phone screen time.
Personal trainers advertise their lose 10 pounds in 10 weeks programs.
Why not do the same for screen time?
I believe a fantastic offer for a cohort based course would be "How to cut 1 hour/day from your phone in 30 days."
PS – Here's a random thing I wrote last week inspired from a phone call with a friend. It's unedited so ignore typos/half-baked ideas: How Idiots Get Rich