"Explore Palantir Technologies' journey at the John Molson MBA International Case Competition 2022, focusing on challenges, recommendations, analysis, and current positioning in the market. Discover key insights on profitability strategies, strategic partnerships, and commercial growth potential within 2 years."
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
January 2022 JOHN MOLSON MBA International Case Competition 2022 Palantir Navigating the dilemmas of Big Data PBS Consulting Sarah Horacek, Lu s Martins, Tiago Ling, Alex Ghinescu Presenting to Mr. Alex Karp, Chief Executive Officer of Palantir Technologies
Why are we here today How can Palantir Technologies become profitable in 2 years? Challenge Key Issues Controversy around big data Limited customer scope Recomen- dations Strategic Partnership Commercial Expansion Pursue Gov Clearance 1
Our view of your current situation The challenge in detail Alternatives and Recommendations AGENDA Implementation Plan Financials and Risks Summary 2
Where you are today? Product Price Place Promotion Predictive analytics Specialized software platforms for human- driven machine-assisted analysis of real-world data Services priced according to value provided to customers Price is perceived as high Small sales team Focused in gov sales Historically the company did not hire non- technical people and did not have a marketing department Government US Gov (main) Western Allies Commercial Low volume, high specialization, low data-driven use 4 Analysis Recommendations Implementation Plan Financials & Risks
Where you are today? Product Price Place Promotion Predictive analytics Specialized software platforms for human- driven machine-assisted analysis of real-world data Services priced according to value provided to customers Price is perceived as high Small sales team Focused in gov sales Historically the company did not hire non- technical people and did not have a marketing department Government US Gov (main) Western Allies Commercial Low volume, high specialization, low data-driven use Historically the company had an approach to develop existing customers and it is currently changing its view and increasing the sales team. Product differentiated from the competitors allows its customers to build on top of existing platforms. Although the price is high, it is in accordance with the company s value proposition. Palantir has too much of its revenues focused on its 3 main customers (28%). 5 Analysis Recommendations Implementation Plan Financials & Risks
Why are we here today? Need for greater information security Use AI to drive predictive analytics and big data Data privacy active protests Trends show that there are great opportunities for Palantir to grow its business. 6 Analysis Recommendations Implementation Plan Financials & Risks
Financial trends Software Industry Growth ($ thousands) 500,000 Palantir Financial Information ($ 000) 450,000 Account Q1 2021 400,000 Revenue 341,234 Forecast 2.8% CAGR COGS 74,111 350,000 Gross Profit 267,123 300,000 Sales & Marketing 136,097 250,000 Forecast 4.6% CAGR R&D 98,471 200,000 Genral & Admin 146,569 150,000 Total OPEX 381,137 100,000 Income from Operations -114,014 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Software Industry Revenue ($million) Wages ($millions) Key Takeaway: Industry operating expenses (wages) are rising quicker than revenues and Palantir s OPEX is also currently greater than it s revenue. Palantir will need to lower OPEX now and in the future in order to become profitable. 8 Analysis Recommendations Implementation Plan Financials & Risks
Who is your customer? 28% of revenues coming from top 3 clients 67% of revenues coming from top 20 clients Main customers are government agencies Had success with comercial customers such as Airbus and BP Had failure business with Coca Cola, Home Depot, Hershey and American Express 9 Analysis Recommendations Implementation Plan Financials & Risks
Who is your customer? 28% of revenues coming from top 3 clients 67% of revenues coming from top 20 clients Main customers are government agencies Had success with comercial customers such as Airbus and BP Had failure business with Coca Cola, Home Depot, Hershey and American Express Palantair has its revenue stream too focused on its main customers. Previous experiences show that the product fits companies in industries with low volume, high prices, high specialization and low data availability, whereas it did not fit customers with high volume sales and with easy data access. 10 Analysis Recommendations Implementation Plan Financials & Risks
How does Palantir competition look like? Specialization Size Palantir AWS Microsoft IBM Oracle AWS Microsoft Tyler Tech Inc Zscale Inc Splunk Inc DISA Palantir Alterix Inc Government entities AI market 11 Analysis Recommendations Implementation Plan Financials & Risks
How does Palantir competition look like? Specialization Size Palantir AWS Microsoft IBM Oracle AWS Microsoft Tyler Tech Inc Zscale Inc Splunk Inc DISA Palantir Alterix Inc Government entities AI market Given the controversies with big companies working with government (i.e. Google and Microsoft), expanding the volume of work with government agencies represents a growth opportunity that is aligned with the company s values. In the AI business market, Palantir offers a different solution from its competitors, where they build the Software in the customer s existing operating system. 12 Analysis Recommendations Implementation Plan Financials & Risks
Summing up Speed and flexibility of set up. Differentiator: clients can collaborate and secure sensitive data from misuse, do not replace pre-existing tools. Important customers are happy. Expensive product. Negative reputation caused by previous work with governments. Strengths Weaknesses Current trends of information security are aligned with the company fit. Trends for growth in AI increase Palantir s market opportunities. Possibility of social activism in opposition. Transparency and perception issues. Data privacy trend. Threats Opportunities 13 Analysis Recommendations Implementation Plan Financials & Risks
Designing the software of the future How can Palantir Technologies become profitable in 2 years? Challenge Key Issues Controversy around big data Limited customer scope Recomen- dations Strategic Partnership Commercial Expansion Pursue Gov Clearance 15
Why a partnership with IBM is a good opportunity for both companies Palantir IBM Key Takeaway / Decision Cost Partnership would allow Palantir to avoid OPEX related to commercial sales IBM could use existing salesforce and expand its product offerings Both companies would benefit from cost savings Growth opportunity Would allow Palantir to reach a broader customer range. A strategic partnership would allow both companies to grow their businesses Would allow IBM to improve product portfolio IBM has a broader solution for Business intelligence and offers analytics expertise in areas Palantir does not Synergy Strategic partnership takes advantage of both companies to offer a more well-rounded offering Very strong in certain aspects of Analytics where IBM is not as strong 16 Analysis Recommendations Implementation Plan Financials & Risks
How can Palantir expand its revenues outside existing customers CRITERIA Fit with company culture Potential ROI Investment needed Feasibility Complexity TOTAL Investment in 3 3 1 2 2 SPACs ALTERNATIVES Increase 3 3 2 3 1 sales/marketing team Strategic Partnership 4 4 5 4 4 Sell portions of offering separately 2 4 3 4 3 Scale 1-5, least to most desirable 17 Analysis Recommendations Implementation Plan Financials & Risks
How can Palantir expand its revenues outside existing customers CRITERIA Fit with company culture Potential ROI Investment needed Feasibility Complexity TOTAL Investment in 3 3 1 2 2 11 SPACs ALTERNATIVES Increase 3 3 2 3 1 12 sales/marketing team Strategic Partnership 4 4 5 4 4 21 Sell portions of offering separately 2 4 3 4 3 16 Scale 1-5, least to most desirable 18 Analysis Recommendations Implementation Plan Financials & Risks
Designing the software of the future How can Palantir Technologies become profitable in 2 years? Challenge Key Issues Controversy around big data Limited customer scope Recomen- dations Strategic Partnership Commercial Expansion Pursue Gov Clearance Focus on highly specialized industries with lack of data analytics Acquire IL-6 clearance Reinforce government contracts commitment Partner with IBM for sales of SaaS 19
Develop synergy by playing to strengths Strategic Partnership Pursue Clearance Commercial Expansion Strategic partnership with IBM What? Increase credibility in the commercial sector, increase reach to commercial prospects Palantir s solution is strong where IBM s is weaker (geo intelligence, interactive data visualization) providing good synergy Why? Maintain existing sales force in pursuit of expanding government contracts, strategically partner with IBM for a targeted pursuit of commercial accounts IBM will provide the sales force for promoting Palantir s offering in the commercial sector Benefit from IBMs brand reputation as a trustworthy, customer centric powerhouse Significantly increase reach to scale faster Decrease operating expenses by sharing costs of sales division, wages are growing at almost 2x the amount of revenue growth in the industry How? Pursuit of the commercial sector will benefit from the trusted IBM name, and reach scale faster with IBM s existing reach and commercial relationships 20 Analysis Recommendations Implementation Plan Financials & Risks
Target expansion to those most relevant Strategic Partnership Pursue Clearance Commercial Expansion Expand commercial offering What? To achieve profitability Why? Target these industries via the strategic partnership with IBM Become the central operating system of targeted industries Target non-retail sectors that have high specialization, high prices, lack of data availability Recommended sectors: Core to National Security: Supply Chain, Energy, Transportation High need for security and predictive analytics: Manufacturing, Healthcare How? Focus on key industries that will benefit the most from Palantir s offerings and with the least exposure to increasing protest of data use to become default operating system in these sectors 21 Analysis Recommendations Implementation Plan Financials & Risks
Maintain pursuit to be the default operating system of the US government Strategic Partnership Pursue Clearance Commercial Expansion Continue to pursue Level (IL) 6 clearance with the Department of Defense What? Further penetration into government sector, securing desired role as the default operating system for the U.S. government Why? Maintain existing sales force that are working on government contracts Pursue clearance to increase penetration into sector How? In government contracts relationships are key and sales cycles are long, so it is recommended to maintain your current sales force and pursuit of clearance to further the goal of becoming the default operating system 22 Analysis Recommendations Implementation Plan Financials & Risks
Implementation Plan Strategic Partnership Pursue Clearance Commercial Expansion 2022 2023 Action Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Strategic Partnership Approach IBM with a partnership proposal for sales force sharing Negotiate with IBM Launch joint sales force team Maintain and realign inside sales force to focus on government contracts 24 Analysis Recommendations Implementation Plan Financials & Risks
Implementation Plan Strategic Partnership Pursue Clearance Commercial Expansion 2022 2023 Action Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Commercial Expansion Approach potential customers (healthcare, energy, transportation industry) Internal product development for the potential customers Customer trials of the new products Feedback and (limited) continuous product development Final product launch and customer acquisition 25 Analysis Recommendations Implementation Plan Financials & Risks
Implementation Plan Strategic Partnership Pursue Clearance Commercial Expansion 2022 2023 Action Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Pursue government IL-6 clearance Signal interest to the government in getting IL-6 clearance Develop the required data security measures Government audits for IL-6 clearance IL-6 proposed clearance 26 Analysis Recommendations Implementation Plan Financials & Risks
Risk Assessment Risk Mitigation Risk Matrix VERY HIGH Partnering with IBM will lend credibility to Palantir to overcome protests Continued scrutiny of data privacy policies 1 1 HIGH Approach other potential partners such as Salesforce or Oracle. If a partnership is not created, develop in house sales team targeting specific industries mentioned. PR campaign around protecting individuals. PROBABILITY MEDIUM 2 IBM does not want to enter into strategic partnership 2 LOW VERY LOW 3 Broaden target to include high profit industries with high need for security (eg finance) and/or develop compartmentalized options VERY HIGH Low penetration into targeted industries VERY LOW LOW MEDIUM IMPACT HIGH 3 30 Analysis Recommendations Implementation Plan Financials & Risks
Summary How can Palantir Technologies become profitable in 2 years? Challenge Key Issues Controversy around big data Limited customer scope Recomen- dations Strategic Partnership Commercial Expansion Pursue Gov Clearance Focus on highly specialized industries with lack of data analytics Acquire IL-6 clearance Reinforce government contracts commitment Partner with IBM for sales of SaaS 31
Summary How can Palantir Technologies become profitable in 2 years? Challenge Key Issues Controversy around big data Limited customer scope Recomen- dations Strategic Partnership Commercial Expansion Pursue Gov Clearance Focus on highly specialized industries with lack of data analytics Acquire IL-6 clearance Reinforce government contracts commitment Partner with IBM for sales of SaaS 33
