
Palantir Technologies Raises $450M - andore_jr
http://on.wsj.com/1CTAHq9
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littletimmy
Now this is one company I don't understand. From everything I read, it sounds
like a technology consulting company (which is going to have huge scaling
issues). Yet it raises money like a software startup. What's going on?

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bjt
Yeah, I don't get it either.

> CEO Alex Karp announced in 2013 that the company would not be pursuing an
> IPO, as going public would make “running a company like ours very
> difficult.”

[https://en.wikipedia.org/wiki/Palantir_Technologies](https://en.wikipedia.org/wiki/Palantir_Technologies)

11 years old, 1500 employees, never planning to go public. At some point you
have to stop calling it a "startup".

~~~
mason55
I'm curious what they are telling investors about possible liquidity events.
It's not like there are many companies out there that can do a $20B
acquisition and if they're not planning to go public I wonder how the
investors are planning to get enough money out to cover their risk and beat
their expectation from other investments.

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tlogan
Oracle, Microsoft, or IBM. Any other?

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jonknee
A large military contractor would be way more likely (Lockheed Martin,
Northrop Grumann, etc).

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chinathrow
I really wish people working there would eventually leave and blow the whistle
on what they really did there.

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dimino
They're a consulting company, what's so interesting about what they do, other
than their cool name?

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VonGuard
Their consultations with the NSA, for a start?

If you dislike Palantir, though, you should also dislike Sqrrl.

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dimino
Lots of companies do work for/with the NSA, and I doubt that's a significant
percentage of their business anyway.

Just seems like there's a weird (and generally incorrect) fascination with
Palantir that I don't understand.

In my field specifically, Palantir has this reputation for being a good
cybersecurity company that simply doesn't _come_ from anywhere concrete.

It's just confusing.

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chinathrow
Are you serious? A "good" cybersecurity company? Why on earth can you make
that bold statement? Unless proven otherwise, any big data companies in bed
with the agencies are not considered good these days.

Have you forgotten, that your metadata is still being scooped up at large and
propably sifted through thanks to companies such as this very exact Palantir?

~~~
dimino
Chill out, I mean "good" as in competent.

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fiatmoney
How much of this is cash-out of previous investors & employees? AFAIR Palantir
employees have compensation packages ridiculously overweighted to illiquid and
hard-to-value stock.

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bane
Good god.

According to crunchbase [1], they've raised over $1.6 Billion, last raise was
$50m in December and $444.2m last September! For a software startup making
knowledge management software with a nice interface!

I feel like they'd be pretty easy to disrupt technology-wise. There's enough
big-data, open source graph, visualization and mapping front-ends to probably
build a reasonable competitor pretty quick.

If they ever have to run as a real business, it's going to hurt real fast.
Either that or I'm horribly wrong and something else is going on, and hiding
it all behind private equity markets is making it hard to see.

One thing is for sure, most of the options the employees have are probably
diluted beyond all recognition at this point.

1 - [https://www.crunchbase.com/organization/palantir-
technologie...](https://www.crunchbase.com/organization/palantir-technologies)

~~~
TheMagicHorsey
You severely underestimate the value of large govt. contracts. Govt. contracts
are very sticky. The govt. doesn't often change the software it uses, and when
it does change the software it uses it signs up for ludicrously huge sums. You
need terrific political connections to get these govt. contracts. Even with
better technology, a start-up can't win a govt. contract. Ask one of your
friends that works at Amazon about how long it took them to get govt. to use
AWS.

Also, if you have worked with a govt. institution you'll quickly learn that
the processes and human capital used by the govt. are quite poor compared to
the private sector. As a result, govt. contractors quickly figure out special
tools/processes/training to serve the govt. which are not easy to replicate
without the experience of actually serving a govt. dept.

Many things, which in the private sector you might leave to your intelligent
counterpart at the customer, with the govt. you have to handle yourself, or
develop a special training program. The govt. can budget for these training
programs or additional assistance, so it will not affect the bottom line ...
but you have to develop those programs and processes, and you can't
underestimate the importance of it.

In the private sector if on the customer side an engineer cannot figure out
how to go through a simple 3 step process to configure some software, he may
be fired by his supervisor. In the govt., you will be asked to break the 3
step process down into 10 smaller, simpler steps, and to create a special
video tutorial for govt. workers. Even after that, you may need to staff a
help-line that is open during East Coast working hours.

It is very easy in Silicon Valley to overestimate the capabilities of the
people who will be using your software, because you may be dealing with very
good talent at your early customers in California. The minute you get your
first govt. contract you'll see that you were badly mistaken about what kind
of resources you need for customer support.

~~~
bane
So in the government contracting space there's effectively two kinds of work
that are relevant here:

\- products, which Palantir claims to be

\- services, which Palantir appears to be by offices and head count

You are right that product contracts (and associated services like
installation and training, O&M, etc.) can be fairly sticky, but the government
has been on a trend towards open-standards, open-source etc. and proprietary
software products are under lots of pressure to be incomparably better than
anything else out there.

But "cheeks-in-seats" service contracts are not. The government is notorious
at tossing out incumbents on service contracts and bringing in new companies,
who then simply hire all the people who worked on the previous contract.

Palantir seems to push themselves out there as a two-product company with some
sales-staff. It's obviously not going to be turn-key software, there's likely
to be some configuration and support stuff up-front. But once you, as a
product company, get big enough, even those tasks can be handled competently
by other companies. [1] But their product sales don't look to be a huge dollar
amount. fbo has a couple awards from 2011 for ~$750k licenses. This is four
years ago, but we're not looking at dozens of millions of dollars.

 _edit_ here's an award for $20m for Palantir support to the war in
Afghanistan. Note that DoD only reports contracts over $6.5m. So the bulk of
their DoD awards must be falling under that threshold.

 _edit_ here's a 5 year contract from DoJ for ~$10m.
[http://www.govconwire.com/2014/04/doj-selects-palantir-
softw...](http://www.govconwire.com/2014/04/doj-selects-palantir-software-to-
analyze-money-laundering-cases/) hardly $20billion dollar valuation contract
sizes.

So it's likely most of their growth trajectory has been in specialized
consulting services that direct customers to their products, but also use
other tools and solutions. But again, once the ecosystem is big enough, the
government can just try to compete that work out and hire another company to
handle that work...companies that might not direct the solution-space towards
Palantir's products.

1 - [https://www.palantir.com/partnerships/service-
providers/](https://www.palantir.com/partnerships/service-providers/)

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dimino
Is there a name for the (anti?)pattern where a company pushes hard to be
considered a "product" company, but has to scale its hiring to its customers
pretty linearly?

Such a company might have a general software package but that package has to
be changed for every customer.

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agounaris
Well how a 11 year old company is considered a start-up :S

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KB1JWQ
I still occasionally see people refer to companies with thousands of employees
(including some that have gone public) as "startups."

The term is being diluted...

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cryptoz
I don't think the term startup means that you have only a few employees.
Rather, it means you are still researching your business model, still in a
growth stage, etc. Certainly Tesla and SpaceX are startups, despite having
thousands of employees. Tesla is experimenting with home batteries, licencing
tech, SpaceX considering internet satellite constellations, etc. They are both
very far away from achieving their goals, and stability as revenue-generating,
competive companies. Definitely still startups.

Same goes with Uber, etc.

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jackgavigan
Previous discussion about Palantir, including whether it's a software/product
company or a consultancy/services business:
[https://news.ycombinator.com/item?id=8872054](https://news.ycombinator.com/item?id=8872054)

~~~
dimino
Apparently in that comments section, the leaker was legit:

> Palantir is trying to raise another ~400mm to finance their operations.

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bane
No, they received that round. Then another $50m later. This is _yet_ another
$400m+ round since then.

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inmyunix
$450m. what's that, about a year's worth of salaries for Palantir?

ok, two years?

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stephenhuey
Probably much less. The organization is very flat and for the first several
years they offered only 3 salary options close to 100K (something like 80,
100, 120) since they were still offering equity. Last I heard this system is
still in place. So let's just say the typical overhead is around 150K and
multiply that by 1500 employees (NYTimes/Wikipedia, 2015) and that gives us
around $225 million.

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signaler
Look it, they mine big data and then draw conclusions from it. They're like a
software version of human precognition, and have made intuition into an
algorithm. Hard to say if these investments are justified when a lot of the
problems posed by Big Data can be solved with things like R and filtering. I
can see the need to buy more storage for such datasets, and 'elastic' storage
sounds like the hard problem here - not data mining.

~~~
x5n1
This does not work, but the US government is fond of snake oil and security
theater. Real security comes from stable people with stable ideologies. The US
instead often as a result of bad policy destabilizes ideology and people in
certain regions and then tries to use technology to make up for the lack of
wisdom. Which leads to security theater and other security snake oil.

