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PLTR Platforms Unleash Network Effects
Platforms are key for Palantir to become the Operating System of the Modern Enterprise.
In the previous article (PLTR: The Biggest Networks Start Small), we shared Palantir could be seen as an early Enterprise Network looking to scale its size by being exposed to multiple clients.
Under this framework, the platforms like Skywise (developed by Palantir and its client Airbus), could be seen as an adjacent network facilitating Palantir in becoming exposed and capturing new clients.
By expanding and creating networks Palantir could reach more clients to boost their growth.
United Airlines is an example of a client of Skywise and a direct Palantir client:
Palantir wrote a crucial sentence about the airlines using the Skywise platform:
“Each one is now an existing or potential customer” - Palantir S-1
Platforms will be crucial to empower network effects
We saw previously (PLTR SPACs Crucial Role in the Network) that SPACs could be seen as the bootstrap component to facilitate the network reaching critical mass.
Once critical mass, the so-called “tipping point”is reached, further growth should be sustained by “Finding Clusters” to solve common problems of a related group.
With platforms, Palantir is creating the basis needed to fully exploit the expected network effects from the critical mass.
Becoming the Operating System of any sector
Palantir has already developed 5 vertical platforms with its clients, each tackling a specific sector:
Airlines = Skywise with Airbus;
Semiconductors = Athinia with Merck;
Cancer Research = Syntropy with Merck;
EV Infrastructure = EV Operating System with Wejo;
Insurance = Athena with Swiss Re;
Commodities with Trafigura [not built yet];
Heavy Industries with Hyundai Heavy [not built yet].
We can think of these vertical Platforms having a similar function of a Facebook group: a network inside the bigger network.
Groups in a network show these characteristics:
Groups are valuable as there is a common necessity/goal;
The value of the group increases by increasing the number of users;
Once most of the people of a niche are in that group, you can’t afford to stay out.
Platforms’ contribution to growth is still relatively contained given the relatively small size of the network and the time needed to develop and scale these platforms. As we are going to see with Skywise, the network can really expand after ~5y of developing the platform.
Platforms are the tools to become the Operating System of each sector thanks to network effects.
Skywise, the operating system for the airline industry, seems to be the biggest platform network developed up to now on Foundry:
+17.000 users using the platform.
We can visually see the network effects taking place from this chart showing the user count on the Skywise platform.
Understanding the dynamics of Skywise helps us better understand why platforms can become a cornerstone of long-term growth.
The bigger the network (airlines, suppliers, users) the more:
more data is produced;
better operating decisions are performed.
More in detail, for the airlines these translate into:
cost savings from less downtime;
more safety from better preventive maintenance.
For instance, EasyJet and Skywise signed a five-year agreement after Skywise correctly predicted faults before they occurred, therefore avoiding 31 delays and/or cancellations. Thank you @jonescm128 for the source.
For Airbus this means:
client stickiness because Skywise becomes crucial for operations;
ability to improve future plane models and manufacturing by understanding more sensor data.
Every additional airline joining the network and user using the platform make the network more valuable for Airbus and Airlines.
For Palantir, this means entrenching and expanding its reach, therefore its growth.
Platforms, now still in early stages, could become the key driver of growth once the critical mass of clients is reached.
The more clients Palantir has, the easier is to reinforce existing networks by making them join existing platform networks or create new ones for common problems of a certain industry.
By expanding and creating networks Palantir could reach further clients to boost its growth.
With these platforms, Palantir could become the reference operating system in any industry, pursuing its goal of becoming the operating system for the modern enterprise.
“We are helping people manage parts and people together” - Shyam Sankar, PLTR COO
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View expresses are my own. Do not represent Financial Advice.
I own (many) PLTR 0.00%↑