Disclaimer: Any views or opinions expressed are personal and do not represent the official position of Constellation Software Inc. or any of its subsidiaries or affiliated companies.

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Welcome to Episode 13 of our interview series.

We know how OBSESSED this community is with Constellation Software. But for all the analysis written about Constellation from the outside, it's rare to speak with a senior exec on what happens after the acquisition: what breaks, how you fix it, and how resources are allocated. 

I sat down with Kanchan Java, who was recently promoted to the President, Pegasus Portfolio at Perseus Group, one of Constellation's operating groups. 

If you're new to the Constellation phenomenon, or need a refresher on the world’s most active software acquirer, check out these 3 articles:

• How Constellation Software wins deals and keeps talent - while remaining ultra-frugal

• Buying $100M+ revenue software businesses for 1x? This can be done - if you’re Constellation Software

• Inside a 30 year old ERP growing 30%, running on 30% margins - and owned by Constellation Software of course

Kanchan has been at Constellation for 8 years, 3 of which were spent as General Manager of Charter Software - a dealership software business serving agricultural, outdoor power, and construction equipment dealers. We used Charter as a case study of a business that Constellation bought, and subsequently more than doubled revenue and profits. 

We talked about:

1. Why onboarding new acquisitions at Constellation isn't as cookie-cutter as you might think

2. Post-acquisition: a road trip to see 50 customers

3. Why you shouldn’t have R&D running Product

4. What does firmwide AI adoption look like in a highly decentralised organisation like Constellation

5. What does “decentralisation” actually mean to Kanchan? And what are her priorities?

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If you prefer to listen to this interview, please head to the Rollup Stories podcast on Spotify. 

Sorry, one more thing: we’re excited to announce the NYC Serial Acquirer Conference taking place on March 31. If you’re serious about building - or backing - serial acquisition platforms, this is the room you want to be in. We couldn't be more excited to partner with Edwin from the Road To Carry newsletter. Speaker line-up and tickets here.

1. Why onboarding new acquisitions at Constellation isn't as cookie-cutter as you might think

Pavel: When you acquire a new business, what does onboarding look like? Do you get a playbook, or is it more a case of good luck figuring it out yourself?

Kanchan: I wish there was a document that everyone worked from in the same way. However, since Constellation is very decentralised, we have collections of playbooks in different places. Playbook number one is the integration plan, which we work on before we even close the acquisition. 

Pavel: When you buy a new business, how much pressure is there to hit financial targets in year one versus focusing on fixing the foundation first?

Kanchan: We evaluate a lot of our businesses on IRR, and anyone familiar with IRR knows that the timing of cash flows really matters. 

In mature vertical market software businesses, you can continue to run profitably while reinvesting into the product, into customer satisfaction, into future growth.

Pavel: What happens when things don't go according to plan? Say you've executed a price increase or an operational improvement, and it's not landing the way you expected. 

Kanchan: You go back to the investment case and re-evaluate. With Charter, we had competing products in our portfolio and weren't sure how to support them all long-term. 

Our concerns proved to be unfounded since. Charter catered to smaller agricultural dealerships and outdoor power equipment dealers, while another brand in our portfolio served large agricultural dealerships. There was room for both. 

Once we confirmed that Charter had a strong niche and that the customers for one product weren't interested in our other products, we pivoted. We decided to grow the business, reinvest seriously into the product, and that's when I got involved.

2. Post acquisition: a road trip to see 50 customers

Pavel: In your first year, you visited 50 customers. Walk me through what those visits looked like, and what you were watching for.

Kanchan: We planned it as a series of road trips: we'd fly into one city and out of another, fitting in as many customers as possible along the way. 

The first thing we did was map all our customers geographically - you'd be amazed how often people focus only on large accounts and miss a smaller customer 90 minutes down the road.

We would spend a couple of hours at each customer's site. The goal we shared in advance was simple: we want to understand where your business is headed. What are your pain points? What are your opportunities? Understanding what customers are trying to achieve means you can align your roadmap with them rather than just collecting a wish list.

We'd talk through our product roadmap. If you don't proactively tell customers what you're building, they assume the list of everything they want is still open. You consolidate 10 requests from Customer A and 10 from Customer B into something coherent, rather than drowning in competing priorities.

We brought trainers on some visits. Customers got some free training, and we got to watch real users interact with the software. Hearing directly from the people using the product every day is incredibly valuable.

Sometimes, I took developers along. That was eye-opening. They'd be sitting there thinking about complex, technically interesting problems to solve - and a customer would say, 'When I get to this field, the cursor ends up over there, and every single day I have to move it before I start typing. Can you just make it start in the right place?'. This is the stuff you cannot get from a phone call or a feature request form.

We'd look around. Is there a whiteboard on the wall? What are you capturing there that our software doesn't handle? Are you jumping from our tool into another tool? Can we integrate better or bring that functionality in-house? It's the kind of insight you only get by being in the room.

3. Why you shouldn’t have R&D running Product

Pavel: After the customer visits, what were the first hires or structural changes you made?

Kanchan: Something that was stressed to me very early by experienced GMs within Constellation: separate product management from R&D. 

In a lot of small businesses we acquire, R&D decides what goes into the software. It's the developers, or in many cases the founder themselves, who talks to customers and then comes back and says, 'We're building this and this.' If the founder retires after the sale, you have a complete void. If the R&D person is filling that role, they're often building things customers don't end up using, because developers don't have much face time with customers.

One of the first meaningful changes we made at Charter was hiring a product manager. She came from outside the industry. Our customer surveys showed the software wasn't easy to use. It struck me that the existing team couldn't see it. They thought it was a training issue. This happens a lot with products that have been built over 10, 15 years by responding to customer requests. You end up with enormous functionality, but no one's been thinking about UI/UX or whether it's intuitive. 

The product manager brought a fresh perspective. She'd never seen the software before. She was a problem solver who liked working with rural customers - exactly our customer base. We gave her a clear brief: here's the problem, make it easier to use.

While watching the trainers, she kept hearing things like: 'I know it says this on screen, but what it actually means is this.' So, she asked: why not just rename the fields so they say what people expect them to mean? Internally, there was pushback - developers thought renaming fields was a waste of their time when they had important work to do. I said there is nothing more important than being intuitive to the customer.

4. What does firmwide AI adoption look like in a highly decentralised organisation like Constellation

Pavel: After the successful integration of Charter you were promoted to a portfolio President. Constellation is actively embedding AI into products - computer vision, production issue flagging, plain-language data queries. Can you pick one of those initiatives and walk me through the mechanics and the customer ROI?

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