Content Published Last Week

1. Trupanion: Inflation Challenges

2. HEICO / Wencor: MRO Synergies

3. Alteryx: Customer Profiles, GTM Strategy & Product Roadmap

4. Snowflake: IaaS vs PaaS & Analytics Budgets

5. Essentra Components History and Business Quality

6. FD Technologies: Exploring the KX Ecosystem

Trupanion: Inflation Challenges

One common question after analysing Trupanion centres around why their pricing always seems higher than competitors. In this interview, a Former Territory Partner walks through how TRUP prices policies relative to competitors:

Indeed, the old adage "you get what you pay for" holds true in this case. Trupanion is the only pet insurance company with its own actuarial staff...Trupanion aims to pay at least 70% of premium dollars to claims, often exceeding this goal. In comparison, the next nearest competitor pays 55% in claims. This could be due to higher administrative costs or profit sharing. Trupanion has done an excellent job in this regard, paying out more benefits. They've gathered lots of data. Zoetis used to give them a lot of data, and they’ve got a lot of data from all the hospitals they've been doing business with. So they know what the cost of care is in every specific area. Trupanion is a cost plus basis. They calculate the cost of care, add their administrative cost, and that's what the premium will be. This is then divided by 33.3% to determine who will be paying it as a factor related to the premium price. They don't mind paying large claims. In fact, they recently shared on LinkedIn that they paid an $80,000 claim, their highest ever, and used it as a marketing tool. - Former Territory Partner, TRUP

This interview further explores why TRUP’s model is unique and how competitors such as Healthy Paws in California and Pumpkin may aim to replicate TRUP’s strategy.

HEICO / Wencor: MRO Synergies

Following on from previous work on the HEICO / Wencor deal, we interviewed a Former Wencor MRO VP who explores the synergies of the two businesses on the repair side. The executive estimates that the combined entity can now cover ~25% of the ATA Chapters, a rough proxy for how much of a platform the company can MRO, up from ~12% each individually.

If I'm an airline and I send out an RFP and you're a highly specialized shop like a Soundair [owned by Wencor], and out of that RFP, you can only cover let's say 3% of the part numbers on this RFP, sorry, I'm not going to look at you. I need you to be at 25% or 30% or whatever; you need a bigger chunk than 3%…What was nice about the Wencor HEICO is that even though people considered them technically competitors, because they were both one and two in the PMA field, if you really looked at their capabilities and what drove their revenue, it was much more of a strategic fit, because Wencor did different things than HEICO. They did PMAs, they do MRO, but they didn't do the same thing, so it gives them that extra bandwidth. Together on an A320 for JetBlue, I think they could probably cover at least 20% to 25% of the component. - Former VP at Wencor

The fact HEICO / Wencor can cover more ATA chapters will enable HEICO to be around the table for RFP’s against large MRO shops such as Lufthansa Technik. This is important because airlines are cutting their vendor base:

The main advantage of being a part of a bigger group is increased bandwidth. What I mean by that is there are certain customers, like a JetBlue. JetBlue tends to minimize their vendor base, they want to work with five or 10, so there's a couple of ways in doing that. Working through an integrator, like AAR or Lufthansa Technik or somebody like that, or through consolidation have more to offer so that when the RFP comes out, you have a bigger breadth of parts to offer. That's a real advantage there from a Wencor perspective. - Former VP at Wencor

This interview further explores how Wencor scaled its MRO business, challenges with growth, and other advantages combining with HEICO.

Snowflake: IaaS vs PaaS & Analytics Budgets

Snowflake and Databricks have a known frenemy relationship with the public cloud providers. This Former SNOW and AWS VP explores how the relationship between the hyperscalers and Snowflake may evolve over the next decade. It starts with the segmentation of AWS' earnings:

If we examine where cloud providers generate their earnings and revenues, about 70% of revenue comes from foundational infrastructure services like compute, storage, and network. These, however, have relatively low margins, usually in the 20% to 30% range. The reason for this is Amazon's pricing, which everyone else has to match. The rest of the revenue and the majority of the earnings come from advanced services such as database analytics, machine learning, application management, and security. These services have margins in the 70% to 80% range. - Former SNOW and AWS VP

Snowflake and other PaaS vendors currently benefit from the support of the public cloud providers in this land-grab period.

At the same time, Snowflake is currently receiving technical support, deep discounts, and co-marketing from cloud providers. For instance, if a customer is running Snowflake on Amazon, the Amazon sales representative gets a substantial commission, almost as much as if the customer was running Redshift. - Former SNOW and AWS VP

This may not last:

As hyperscale providers shift their focus from revenue growth to earnings growth, they will start to compete with platform companies like Confluent, Databricks, and Snowflake, which they previously supported. - Former SNOW and AWS VP

This interview further explores how Snowflake may adapt to address this risk.

Alteryx: Customer Profiles, GTM Strategy & Product Roadmap

Despite constant growth in data analytics, Alteryx has seen its share price collapse from $170 to $40 over the last 3 years. In this interview, a former Account Executive describes the typical customer profile, core value proposition and missteps in the GTM strategy that may have affected performance.

To answer your question, there seemed to be a disconnect between the new executive and the customers' needs and expectations from the roadmap. Additionally, there has been an increasing focus on selling the Enterprise Licensing Agreement (ELA) for Alteryx in the past 18 to 24 months. This has been largely unsuccessful, as many representatives didn't understand how to execute it. - Former Strategic Account Director at Alteryx

Essentra Components History and Business Quality

Essentra, a UK-mid cap B2B distributor, recently spun-out its lower-margin and more capital intensive Filter and Packaging business to leave the remainco with its Industrials Components division. The company manufactures and distributes ~1m 'low-cost, high-benefit' SKU’s to large manufacturing and industrial customers throughout the production process. We’ve been exploring Essentra and how the company’s business quality compares to other distributors we’ve studied such as Diploma, Fastenal, and RS Group.

We interviewed a Former General Manager at Essentra Components to learn more about the products, customer base, and long-run unit economics of the business:

I'm pretty sure that Essentra has got a higher retained margin than RS has, because there's more costs involved in the RS business, even though there's a manufacturing piece there in Essentra, but the manufacturing is a big part of Essentra's strength, and it makes them pretty unique as far as that marketplace is concerned…Diploma will offer anything from repair and maintenance, specialist repair, and I'm pretty sure they are in the stores management side of things as well. If you looked at those three businesses, yes there's overlap because they all offer product, but there's a small area where the three of them actually overlap. - Former GM at Essentra

We will be covering Essentra in more detail next month.

FD Technologies: Exploring the KX Ecosystem

From the beginning, KX (FD Technologies) was designed to store both relational and time series data efficiently. The architectures of other technologies like traditional data warehouses and relational databases are not designed for storing such a blend of data. This allows KX to run queries faster than competing products, a competitive edge when serving the needs of time/speed-sensitive clients.

The main challenge with kdb+ is it cannot serve as a comprehensive database management system. While the solution excels at efficient data joining, it cannot be directly deployed in a production environment without additional software.

Time series is special because it's a timestamp of value and a few other things. However, on its own, it's not very useful except for replay. To extract value from powerful business applications, you have to join it with other data sets. - Former SVP of FD Technologies

This interview with a Former SVP of KX further explores the company’s competitive positioning in more detail.