The Bootcamps Are Coming
Bloomberg does a big article on Palantir's go to market strategy
Welcome back to DailyPalantir! On today’s newsletter, we discuss a huge new article that came out by Bloomberg on Palantir’s go to market strategy using their bootcamps. Let’s get into it!
Bootcamps Are Real
So, Bloomberg just did a huge piece of Palantir’s bootcamp go to market strategy. If you have been keeping up with the company over the past year, you know about the bootcamp strategy.
A refresher:
The importance of these boot camps lies in their ability to demonstrate the practical value of Palantir's software in real-time. Rather than relying on abstract presentations or hypothetical use cases, participants can see firsthand how the platform performs with their data and within their operational context. It gives people access to Palantir’s software NOW.
Furthermore, by conducting these boot camps, Palantir is able to bypass some of the lengthy procurement processes that often slow down enterprise software sales. The direct engagement model facilitates quicker adoption and integration into client workflows, which is crucial for demonstrating immediate value and building long-term relationships with customers.
Boot camps allow potential clients to test drive Palantir’s AIP before committing.
They provide an opportunity for hands-on experience with real-world applications.
This strategy accelerates the adoption process by showcasing immediate value.
It helps build trust and transparency between Palantir and its prospective customers.
The approach aligns well with modern buying preferences favoring trial before purchase.
Why does this article matter?
First, it gave more exposure on a huge business media publication to people who didn’t know what Palantir was doing when it came to their distribution strategy. Here was the headline:
Second, we actually learned more about the bootcamp strategy…
From the article:
First, our boy Rishi with a $5 Palantir PT (lol) says he is skeptical of Palantir's bootcamp strategy scaling without hiring a traditional sales force.
Kevin Kawasaki, Palantir’s global head of business development, answers this concern by explaining that they can't try to grow with a traditional salesforce in a linear way because their demand is....
exponential.
What does that mean? Palantir can't just hire 500 sales people and ask them to make 50 calls a day. That's not how you sell a software like Palantir but even if you did, it would NOT capture the amount of demand they are seeing from clients.
These clients want AI, and they want to see it in action, so bootcamps are the best way to sell.
HOWEVER, this is the part that blew me away:
"some customers who attend a Palantir boot camp can then turn around and host their own events for their own customers, allowing the model to proliferate indefinitely."
PALANTIR, THE COMPANY THAT COULD NOT SELL, HAS TURNED THEIR GO TO MARKET STRATEGY INTO A NETWORK EFFECT.
JD Power is already using what they've learned from bootcamps to host one on their own, which will only further show off Palantir's software and compound the growth of people learning how to use it and eventually buy it from Palantir.
Additionally…
Palantir's boot camp strategy can generate network effects by creating a community of users and advocates who are well-versed in the company's platforms. Network effects occur when a product or service becomes more valuable as more people use it. In Palantir’s case, boot camps serve as a catalyst for these effects by educating clients on how to leverage their data integration and analytics tools effectively. As participants return to their respective organizations, they apply their new skills to solve complex problems, demonstrating the utility of Palantir’s software to colleagues and other potential users within their industry.
The hands-on experience gained from these boot camps can lead attendees to share insights with peers in similar roles at other companies, potentially leading those individuals to seek out Palantir's solutions for themselves. This word-of-mouth marketing is particularly potent because it comes from trusted sources—peers who have no incentive other than sharing effective solutions.
From the article:
As more organizations adopt Palantir’s platforms due to recommendations from boot camp alumni, the overall value of being part of Palantir's ecosystem increases; common standards and practices emerge which facilitate collaboration between different entities using the same tools.
Moreover, as each new client integrates Palantir software into their operations, they contribute data and case studies that can enhance the platform's capabilities through shared learnings. This collective intelligence not only improves the product for existing customers but also makes it more attractive for potential ones. The iterative process where improvements driven by one client benefit many others creates a compounding effect on the value delivered across Palantir’s customer base.
It was exciting to see Bloomberg do this piece but even more exciting to see how big bootcamps can become for the company.
Shyam Sankar Quote Tweeted Me
In the tweet, Shyam showed a screenshot from an engineer at Anduril who built an entire product on AIP within 2 days because of how excited he was to get to work.
He said “bootcamping is believing,” which makes a ton of sense to me — when customers get into a bootcamp and work on a software, they start to believe they can actually make progress and use that software.
Someone who doesn’t get it
Here’s someone who left a comment under my last video — I respond below:
Let me address these arguments right now:
1.) Share buybacks don’t matter, the $4B in bonds helps them continue to increase EPS with net interest income. Palantir buying $1B of stock doesn’t materially increase your ownership. That money is so much better either being put into bootcamps or bonds — this is a growing company trying to hit an S curve, we don’t need to do buybacks like Big Tech.
2.) Excessive compensation is not true — SBC is 22% of revenues and it’s going to the best talent in the world. Literally these engineers are starting their own multi billion dollar companies (Anduril) — you want them motivated in stock. BTW, if the stock doesn’t go up, everyone loses — SBC keeps everyone aligned!
3.) No pricing strategy is FUNDAMENTALLY misunderstood. It’s basic value delivery before being paid — if they deliver value, they will figure out monetization. Also, Karp said that in June 2023. It’s been a year. I’m sure they’ve negotiated tons of deals and figured out how to price AIP by now, but the philosophy is provide value and worry about money later — which is why they are going to take the market.
4.) The share price doesn’t have a ridiculous multiple. Yes, topline growth isn’t as strong as other SaaS players, but you MUST understand how Palantir is scaling. Bloomberg just wrote an article on their GTM strategy and how the sales approach itself is producing network effects. Growth will come. Also, topline growth isn’t the only fundamental metric — adjusted operating margins 34% vs. 29% just 2 quarters ago and 17% just 18 months ago. FCF will be $850-$1B this year. GAAP profitable and potential S&P 500 $SPY inclusion. 70% US commercial growth with 40% guided growth for FY 2024.
Top line growth is qualitatively not understood by bears and quantitatively will change. Palantir is just getting started and those who understand what’s happening will be rewarded over time by the market handsomely because they saw what others didn’t see. The bear arguments below are easy to make, the bull arguments require research and thankfully….
Palantir is the most exciting company on the planet to research.
That’s it for today - see you tomorrow!
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