Recommendation: Buy Now & Show Me Those Diamond Hands Later (Thank Me On August 4th).
Written from the Perspective of A Software Engineer
Palantir Technologies Inc. is a software as a service company with a counter-intuitive customer acquisition strategy and has played a key role in recent public health crisis responses and enterprise-level integrations with Palantir's 'Gotham' & 'Foundry', their core product offerings with strong upside scalability within and across enterprises.
Palantir's Foundry connects intelligence to operations. Developed in crisis when time matters most, Foundry automates years of implementation work so that you can start operating smarter right away.
Simply put, Foundry offers data analytics and data governance layer in 1 platform without making either feature hard to maintain at the enterprise level.
- Substitute a suite of homegrown enterprise solutions for business intelligence. Instead of having enterprises maintain many data warehouses and a lot of homegrown backend logic to stitch data pipelines together, Palantir Foundry itself is the ETL process (Extraction, Transformation, and Loading of Data).
- Enterprises minimize the cost of owning more data over time (economies of scale). It's very similar to the idea of modularity in software engineering, where chunks of architecture become increasingly reusable. This makes the cost of acquiring, storing, and analyzing new data significantly cheaper in $ and time.
- Versioning semantics to keep data and business logic in sync
- Microservice architecture with built-in coordination, security, and upgrades to keep individual components in sync
- Dynamic, systemwide security and access controls to replace unreliable one-off policies
Business Model: Absorb High Customer Acquisition Cost with Long Term Recurring Revenue + Establish Barriers to Entry.
- Palantir is an engineering-driven company, which means they treat their customers like individual consulting clients. Palantir will absorb the entire cost of implementing a pilot to demonstrate to enterprises that their solutions are scalable.
- They follow a 2 step process when working with customers:
- Demonstrate core value proposition & implement a pilot. The pilot itself is always in the context of solving a difficult data governance problem for their customer.
- Their pilot implementation timelines are very efficient. Please take a look at how they helped in the Hurricane Florence crisis & their contributions to the Covid-19 crisis response.
- Scale Horizontally/Vertically
- Palantir has a unified view of data governance, including security and access to data. This is a good value proposition to pitch to other enterprise data teams within the same organization, who often struggle with maintenance overhead and coordination costs of data security & user-access management.
- Expand customer base within and across enterprise verticals because Palantir charges a per-seat licensing fee. As adoption within organizations increase, so do average recurring revenue per customer.
Palantir enters markets where traditional IT as service competitors tend to avoid due to high barriers to entry. Palantir focus on engineering first culture fosters better solutions and timelines. Palantir goes after big-ticket enterprises where the time value and cost of owning data increases exponentially.
Here are some notable markets that Palantir is already participating in.
· Case Management
· Cyber Security
· Disaster Preparedness
· Healthcare Delivery
· Insurance Analytics
· Law Enforcement
· Trader Oversight
|· Capital Markets
· Crisis Response
· Disease Response
· Insider Threat
· Legal Intelligence
· Pharma R&D
Economics (Microeconomic Perspective)
When demand for stuff rises, so does the demand for complementary goods OR suppliers to those goods.
- Demand for Complementary Goods is Rising
- You can think of Palantir as either the immediate upstream partner OR a complementary good to some of the below-emerging technologies.
- Demand from Emerging Markets + Seasonal Demand
- Key Emerging Technologies or Themes:
- Genomics Research
- Cancer Research
- Protein Folding/DNA based research
- Enterprise Adoption of AI
- Increasing Need for Coordinated Crisis Response (Natural Disaster, Disease Control..etc).
- Healthcare adoption of better data governance
- Digitization of Legal Work (Moving from Paper to Digital).
- Public Crisis Response (Wildfire Season for example)
- Economies of Scale
- Many technology companies that have done well in the past decade are similar in that:
- They focus on engineering first
- Solve scalability problems
- Accrue long term value from Economies of Scale
- Palantir is no different.
Company & Culture:
- Palantir, as I've highlighted is engineering focused, and partition their employees into two broad classes - 'Devs' and 'FDEs' (Forward Development Engineer).
- FDEs are a combination of consultants + engineers, where they work with clients to implement solutions. This is the jack of all trades role. They have the technical background to work with clients and their respective development teams to implement solutions.
- Palantir has a breadth of talent, and no team offers the same skillset. It looks like the culture fosters creativity and a lot of ownership in work. This decentralized structure allows teams to work as independent startups within a larger enterprise.
Upcoming Earnings Release: August 4th 2021
Here's a funny retweet: