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Goals:
To expand the Global Organization by penetrating the software industry within the German market.
Objectives:
Learn more about the German market and German business culture.
Identify potential customers. This can be done through our/our partner’s network, and by identifying key customer needs
Earn one customer by the end of our first calendar year.
Procure and maintain a growing pipeline of potential customers in key German and European industries, such as automotive, engineering, manufacturing, and financial.
Germany is a strong, well-established nation located in the western region of Europe.
It has the 4th largest economy in the world with a GDP of 4.15 trillion USD as of 2019
Four main industries in Germany include automotive, mechanical engineering, chemical, and electrical industries
Population of 83.02 million people as of 2019
Labor force of over 43.5 million as of 2020
Local currency: Euro
Market Rationale:
Germany is already functioning as a high-tech economy which means that our customers will already have established databases and technologies. Due to this, there is a high market potential within the German software industry. A high tech product will be compatible and useful to meet the needs of the users, and be successfully implemented into the market. Furthermore, Germany is number 22 on the World Bank's Ease of Doing Business rankings, which includes factors such as taxes and permits needed.
Economic Position:
Germany has the 4th largest GDP in the world, and the largest GDP in Europe.
Germany’s GDP is 3.49 trillion EUR (4.15 trillion USD). The total combined GDP of the second-largest through the sixth-largest European economies (UK, France, Italy, Spain, and the Netherlands) is 8.97 trillion EUR (10.66 trillion USD).
Expansion Potential:
Geographically, we are in a fantastic position for expansion: Germany is fairly central within Europe, so we could easily sell to customers in nearby countries (UK, France, Italy, Spain, Netherlands, etc.) with or without establishing new headquarters.
The strong economy and extremely large pool of potential clients also means that we will have many expansion opportunities within Germany itself.
What is Palantir?
Palantir is an American software company that specializes in big data analytics for virtually any industry or purpose.
The product we will be taking to the German market:
Palantir Foundry:
The Palantir website explains that "Palantir Foundry is a platform that reimagines how people use data by removing the barriers between back-end data management and front-end data analysis."
Focuses on:
Data security
Business ontology
Analytical diversity
Openness and extensibility
Target Market:
Initial Market Segment:
We will initially target market segments that include businesses that have big data. Key industries to be looking into will be automotive, mechanical engineering, chemical, and electrical industries.
Initial End Users:
Initially we will be targeting businesses with Palantir Foundry as the product. The end-users will be the employees of the businesses. Once we have established ourselves in the market, we plan to expand with Palantir Gotham in the German market.
Why is Palantir a good match for your unique marketplace?
A high-tech product will be compatible with our unique market place considering that Germany is already functioning as a high-tech economy. German industries have the foundation of databases and technology that provides Palantir with the opportunity to be successfully implemented. The unique situation surrounding the COVID-19 pandemic has also provided extra demand in the German market for solutions to problems our product can solve. As more companies allow their employees to work from home, especially during lockdown, security becomes an area of increasing uncertainty. Palantir's software will allow these companies to mitigate the risks associated with working from home by automating many of the processes of cyber security and accomplishing quicker and easier analysis of problem areas.
Seven Principles AG (7P Group) is an innovative consulting company that focuses on IT services and the digitization of business models. They specialize in information security, SAP Utilities, EMM, and individual software tailored towards new topics, such as digital transformation and 5G. They partner with medium and large-sized companies focused in the telecommunication, automotive, energy, travel, transportation, and logistics sectors.
7P has multiple large clients that we would be able to approach with Palantir products. They currently do approximately $97 million in revenue.
Type of partnership: Formal non-equity business partner/agent. This type of partnership allows for more hands-on interaction, helps to manage accounts, and connects our technology to users.
Assuming 4 cores and 50 users per client (standard Palantir requirements), we estimate $1.76 million in revenue during the first year (assuming one client), $5.28 million during the second year (assuming three total clients), and $10.56 million during the third year (assuming six total clients).
7P specializes with IT services and digitization, it is well versed with the role of technology in business models. This allows them to be a partner that is knowledgable with our particular German market as well as the industry.
Sharing a similar target market as 7P will be utilized to market Palantir to the correct businesses. For the distribution of the product, we will have an internal support staff to help install the software to the businesses. 7P will be responsible for the selling and payment of the Palantir product. The payment will be exchanged using Euros as the currency.
Commercial Offer
Formal non-equity agreement
Payment terms: Documentary Credit
Palantir will acquire 60% of revenue, 7P will acquire 30%, and we (The GO) will acquire the remaining 10%.
Currency to be utilized: EUR (Euro)
Risks
Currency Risk: The Euro is a very stable currency and stronger than the USD, which will be financially advantageous to the GO.
Transaction Risk: Since we will be operating in EUR instead of USD, the Global Organization would bear the risk of currency exchange.
Payment Risk: In any partnership, there is always a degree of risk associated with ensuring you will be paid for the product/services provided, but we plan to mitigate this by dealing in documentary credit.
Partner Risk: 7P is a well-established and trusted company. By writing up the necessary legal documents, we will eliminate the majority of risk concerning partnership.
Competitive Risk: Although there are other data management/analytics services available, Palantir has unique products and services that stand well above the competition and they are continuing to innovate new, high-quality products to maintain their unique position.
Travel/Transportation Risk: Foreigners are not currently able to enter to Germany, which means the beginning stages of partnership will be slightly more difficult. However, since we are not selling a physical product and since 7P is well-established and highly competent, we do not foresee any unconquerable issues. Furthermore, this means that there will be no immediate travel risks, and since our product does not require physical transportation, we avoid all risks involved with this process as well.
Market Risk: Overall, Germany has an extremely stable economy and government, so we are confident that it will be a very low-risk market both now and in the future.
Two people assigned to each account (one in the first year) to train client operators and deploy + manage their account.
There will be ongoing maintenance and training logistics, but nearly all of these will be covered by our partner (7P) and Palantir headquarters.
Since our product does not require physical transportation, the only logistics involved in delivering the product to the client are simply assigning them their own cores within the Palantir main server farm.
We currently do not face any travel logistics, but we have prepared a tentative budget and travel plan (found below) for the future when COVID19 subsides.
Day Zero: Initially, we will launch our partnership with 7P and begin identifying and connecting with prospective clients.
End of Year 1: We will be in Germany, working with our partner (7P) to identify a pipeline of potential clients and continue securing business. We will be supplying Foundry to one customer in Germany.
End of Year 2: We will be supplying Foundry to two new customers in Germany (three total). We will be continuing to grow our customer pipeline and identify advantageous opportunities.
End of Year 3: We will be supplying Foundry to three new customers in Germany (six total). At this point, we will consider branching out into other nearby European countries with strong GDP’s, such as the UK, France, and Italy.
Estimated budget for travel of 4 team members:
Airfare: $8,269
Hotel (5 nights): $615
Per Diem (transportation, meals, misc.): $450
Total per person: $9,334
Total for 4: $37,336
US citizens are currently not permitted to enter Germany at present due to COVID-19 restrictions, so travel is unlikely to be realistic. In this case, the budget could either be overall reduced or reallocated to other functions. For preliminary contact with our partner, 7P group, we plan on utilizing an online meeting platform for both business and as a replacement for business dinners. While this would normally not be ideal, it allows our initial investment required to be greatly reduced.
We estimate that most of the funds will be allotted to salaries needed to maintain relationships and maintain the market as well as legal fees. Marketing and Market Research is not a priority because these actions will mainly be taken through our partner. Due to the high cost and therefore our low projected number of clients, we need to put the most emphasis on educating our clients found through 7P and helping them implement the Palantir software.
As a preliminary budget, we estimate a need to appropriate two representatives from Palantir to educate consultants at 7P. Palantir typically assigns two full time engineers to each account, and we think that realistically, we will acquire one client in our first year. They would serve primarily to help with integration and maintenance of the software within the company, as well as help teach 7P the ins and outs of Foundry, allowing them to then educate clients in integrating the software. Because we would be appropriating their time towards Germany, we have to consider their salary in our budget. Therefore, we estimate that it will cost $300,000 in year one (a full $150,000 salary for each representative). This section of the budget would increase each year as we continue to sign on new clients.
Some legal representation and fees will also need funds allocated. This is difficult to estimate and is highly situational, but we believe it will likely be somewhere around $100,000 in yearly fees.