Inside Palantir, Silicon Valley’s Most Secretive Company

From BuzzFeed:

A cache of internal documents shows that despite growing revenue, Palantir has lost top-tier clients, is struggling to stem staff departures, and isn’t collecting most of the money it touts in high-value deals. 

A trove of internal documents and insider interviews has pulled back the curtain on one of Silicon Valley’s most secretive and highly valued companies, Palantir Technologies. Started in part with CIA money, the data-analysis company promised that its software would revolutionize everything from espionage to consumer businesses, and it has grown in both revenue and employees. But the documents and interviews show that Palantir has also lost blue-chip clients, is struggling to stem staff departures, and has recorded revenue that is just a fraction of its customer bookings.

Over the last 13 months, at least three top-tier corporate clients have walked away, including Coca-Cola, American Express, and Nasdaq, according to internal documents. Palantir mines data to help companies make more money, but clients have balked at its high prices that can exceed $1 million per month, expressed doubts that its software can produce valuable insights over time, and even experienced difficult working relationships with Palantir’s young engineers. Palantir insiders have bemoaned the “low-vision” clients who decide to take their business elsewhere.

More than 100 Palantir employees, including several prominent managers, have left the company this year through April 15, a confidential log shows. At that rate, the company is on track to turn over about 20% of its staff in 2016, almost double the average rate of the three previous years, according to internal figures.

On April 22, in an extraordinary move for a company that had prided itself on paying salaries below market rate, Palantir CEO Alex Karp announced a 20% pay raise for all employees who had worked there for at least 18 months. Karp also canceled annual performance reviews, saying the current system wasn’t working.

Palantir has previously made public the value of what it calls its “bookings” for 2015: $1.7 billion. But actual cash collections have been a closely held company secret. They amounted to less than a quarter of bookings last year — $420 million, according to slides and an audio recording from a February presentation. That was up 50% from the prior year. Still, the gulf between cash received and bookings — contracts that often include lower-paying trial periods or complex performance bonuses — raises questions about Palantir’s ability to convert those deals into revenue. Palantir was not profitable in 2015, spending more than $500 million, according to the presentation.

Palantir says that its business is strong and expanding, and that despite the staff departures, it has doubled its ranks over the last three years. The company didn’t dispute that it had lost some clients, but a spokesperson, Lisa Gordon, said that “the majority of the company’s customer relationships are multiple years in length, and many are as long as 10 years.”

“We’re looking to do transformational work with our customers,” Gavin Hood, Palantir’s chief of staff, said in an interview with BuzzFeed News. “Finding the right partner to do that transformational work takes a lot of care and a lot of attention.” He added, “There’s a lot of reasons why that doesn’t always work out.”

Asked about the gap between Palantir’s bookings and its cash collections, Hood declined to comment. But at a 2014 conference in New York, Karp said, according to CNBC, “Some of our biggest appointments are with people who barely can pay us.” He added, “We have lots of clients where we get zero money.”

Hood said that employee turnover was “a very natural part of the company’s evolution and growth.” He added that Palantir “has a really strong culture” and that people “don’t always fit” there.

The blanket 20% pay raise is “an example of what we need to do as leadership of this company to keep up with the changing nature of our people,” Hood said. “When our company does well, our people should do well.”

Investors have high hopes for Palantir, which has raised more than $2.5 billion in capital, according to data provider PitchBook, and was valued at $20 billion in a 2015 funding round. But amid expectations of surging revenue and, eventually, profit, internal communications show that the company has struggled to create products and services that some clients are willing to pay for.

A two-year effort to create a data-sharing consortium of consumer packaged goods companies — including Coca-Cola and Kimberly-Clark — has stumbled, the documents show. Candy maker Hershey was the original member of the would-be consortium and is still a Palantir client, but one executive there recently said for that project she “did not see value from Palantir in 2015,” according to notes from a private meeting.

Palantir also recently reversed course on an effort to create an elite cybersecurity squad responding to emergencies such as massive data hacks. The company had staffed up specifically for that purpose, according to three confidential sources familiar with the matter. As of April, one member of that elite team who remained was doing work for Palantir itself, two of the sources said. Gordon, Palantir’s spokesperson, declined to comment on the team.

These revelations are reported here for the first time. BuzzFeed News interviewed six current and former employees who insisted they not be identified, spoke with Palantir’s Hood and Gordon, and obtained more than 1,000 internal emails and other documents. The result is an unprecedented look at Palantir’s inner workings.

Founded in 2004 by former PayPal CEO Peter Thiel and several others, Palantir uses proprietary software to crunch vast amounts of data for the likes of JPMorgan Chase and the United States military’s Special Operations Command, with the goal of producing useful and even predictive insights. Its earliest backers included In-Q-Tel, the venture capital arm of the CIA. The company, based in Palo Alto, California, is essentially a hybrid software and consulting firm, placing what it calls “forward deployed engineers” on-site at client offices. Among American tech startups, only Uber and Airbnb have been valued more highly than Palantir....MUCH MORE

Previously:
"How A 'Deviant' Philosopher Built Palantir, A CIA-Funded Data-Mining Juggernaut"
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox"

"startup employee rights"https://t.co/E6N0M1peYK pic.twitter.com/p1hlFBFZ2q

— David Yanofsky (@YAN0) February 24, 2016

Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1

"Palantir has confidentially filed for a public listing" (SPOOKY)

Two from Business Insider:
July 6

• Palantir, the secretive $20 billion big-data company, has filed a draft of its paperwork for a public listing, it announced in a press release Monday.
• Rumors resurfaced last month that the company, launched in 2003 by PayPal alumni including Peter Thiel, was preparing to file its S-1 with the Securities and Exchange Commission.
• Palantir has struggled to live up to its valuation in recent years, as shares of the company flooded the secondary markets at a major discount.
• Activists have long criticized Palantir for its controversial work with Immigration and Customs Enforcement.

Palantir, the secretive and controversial big-data company cofounded by Peter Thiel, has confidentially filed a draft version of the paperwork for a public listing of its stock, the company announced in a press release on Monday.

The company did not specify whether it planned to raise money through a traditional initial public offering or to simply offer publicly tradable shares through the alternative "direct listing" process recently used by Slack and Spotify. Regardless, the move sets Palantir up for what could be the highest-profile market debut of the year, after the coronavirus pandemic effectively froze the market for some of the most anticipated IPOs.

With its prospectus, or S-1 registration statement, now filed with regulators, Palantir could be on track to list shares in September, as Business Insider and others have previously reported.

Palantir's two-sentence announcement on Monday did not provide any details about the offering, including the amount it hopes to raise, the valuation it expects to fetch, or the timing, saying only that the company had "confidentially submitted a draft registration statement" with the US Securities and Exchange Commission and that the listing was expected to take place after the SEC review process, "subject to market and other conditions."...MORE

And:
July 8
The life and career of Alex Karp, the billionaire CEO who's taking Palantir public in what could be one of the biggest tech IPOs of the year

The last private round, also on July 6:
"SEC filing indicates big data provider Palantir is raising $961M, $550M of it already secured"

Previously on SPOOKY:
October 2018 
"Man Terrified of Palantir, More Terrified to Explain What Palantir Is"
May 2016 
Inside Palantir, Silicon Valley’s Most Secretive Company
"How A 'Deviant' Philosopher Built Palantir, A CIA-Funded Data-Mining Juggernaut"
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox"

And many, many more.
Sept. 2018 
"Morgan Stanley's long romance of Palantir pays off as IPO nears" (also Thiel on dope)
Now pricing at 55 times sales, that's terrifying.
April 2018 
"Palantir’s New Patents Shed Rare Light On Its Data Methods"
Sept. 2017
"Forget Wall Street – Silicon Valley is the new political power in Washington"
August 2017
Palantir: the ‘special ops’ tech giant that wields as much real-world power as Google
Sept 2016
A Deep Dive Into Spooky City: Peter Thiel and Palantir
Sept. 2016 
Palantir Is Demanding The U.S. Army Give It Some Business
Aug 2016
Unicorns: How Palantir Invaded Washington And Played The Lobbying/Influence Procurement Game Better Than The Incumbants
July 2016
"Pokémon Go Is a Government Surveillance Psyop Conspiracy"
May 2016
Inside Palantir, Silicon Valley’s Most Secretive Company
February 2016
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox" 
August 2015
Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1 
June 2013
Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG)

"Man Terrified of Palantir, More Terrified to Explain What Palantir Is"

With news of an IPO being valued at $41 billion (WSJ) it's probably time to bust out one of the strangest Palantir stories we've seen bobbing on the river of news.

From Fortune:

He knows it’s bad. It’s Palantir after all. But there is one fear greater than one man’s fear of the ever-evolving data surveillance state: explaining what exactly Palantir is.

A 38 year-old accountant, Morgan Watts’s fear of Palantir is all-consuming. He’s covered his MacBook’s webcam, and installed the Signal messaging app. He’s even started browsing the web exclusively in Incognito mode.

“Palantir, man.” said Watts, when asked why he’d taken these privacy measures. However, when asked what Palantir is, or does, Watts had a decidedly less definitive answer.

“I have a full-time job, a family, and a thriving tomato garden. I can’t be expected to explain the inner workings of Peter Thiel’s brainchild. I just don’t have the time for a such a thing,” Watts said, lying.

As Watts described his style of news consumption, it became clear how one man can be so fearful of a company without understanding its purpose.

“I like to read headlines without reading the accompanying stories. Reading several headlines and drinking two cups of coffee give me just enough general anxiety to start my day,” Watts explained.

It is unlikely that reading more about Palantir Technologies would quells the fears held by Watts. In a 2017 report, the company’s multimillion dollar project with the Immigrations and Customs Enforcement Agency (ICE) came to the public’s attention. Technology companies have come under fire for their work with ICE, especially when they’ve been accused of facilitating the separation of families.

The Palo-Alto based company, founded by Peter Thiel, with solutions ranging from “Cyber” to “Law Enforcement” to “Skywise” responded with the following statement. “There is nothing to worry about. We don’t recommend anyone reads more about Palantir.” 

Okay, just kidding. The above is satire, fāke™ news, from a major business publication that risked provoking the hordes.
Here's the Wall Street Journal story, October 18:

Secretive Data Company Palantir Weighs Giant Public Offering

Data-mining giant Palantir Technologies Inc., one of Silicon Valley’s most secretive companies, is weighing an initial public offering likely to be among the largest in recent years, people familiar with the matter said.

Palantir is discussing with investment banks Credit Suisse and Morgan Stanley plans to go public as soon as the second half of 2019, the people said. Some bankers have told the firm it could go public with a valuation of as much as $41 billion—depending in part on the timing—or twice what it was most recently valued by private investors, the people said.

People familiar with the plans said they remain in flux, and that Palantir could ultimately decide to stay private or offer shares at a lower price to what is being discussed.

The discussions come amid a gusher of technology giants charging toward newly volatile public markets. The Wall Street Journal reported earlier this week that ride hailing firms Uber Technologies Inc. and Lyft Inc. are eyeing public debuts. Uber received proposals to go public at a staggering $120 billion valuation, nearly double its value in a private fundraising round just two months ago.

Other well-known startups considering IPOs in the months to come include messenger Slack Technologies Inc. and delivery service Postmates Inc., The Journal has reported.
Anything close to $41 billion would be a lofty valuation for a company of Palantir’s current size. The company has told investors it expects around $750 million in revenue this year, up from roughly $600 million a year earlier....MORE

Now pricing at 55 times sales, that's terrifying.

Previously:
Sept. 2018 
"Morgan Stanley's long romance of Palantir pays off as IPO nears" (also Thiel on dope)
April 2018 
"Palantir’s New Patents Shed Rare Light On Its Data Methods"
Sept. 2017
"Forget Wall Street – Silicon Valley is the new political power in Washington"
August 2017
Palantir: the ‘special ops’ tech giant that wields as much real-world power as Google
Sept 2016
A Deep Dive Into Spooky City: Peter Thiel and Palantir
Sept. 2016 
Palantir Is Demanding The U.S. Army Give It Some Business
Aug 2016
Unicorns: How Palantir Invaded Washington And Played The Lobbying/Influence Procurement Game Better Than The Incumbants
July 2016
"Pokémon Go Is a Government Surveillance Psyop Conspiracy"
May 2016
Inside Palantir, Silicon Valley’s Most Secretive Company
February 2016
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox" 
August 2015
Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1 
June 2013
Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG)

And perhaps most alarming of all:
Robot Writing Moves from Journalism to Wall Street

The level of alarm is of course directly related to one's perspective. 

"'Several steps ahead: Why Palantir stock is surging" (PLTR)

From Yahoo Finance, Aug 4: 

Palantir shares surged north by more than 27% on Tuesday after the company reported quarterly earnings that CEO Alex Karp called "otherworldly" in a call with analysts Monday evening.

While some analysts were quick to frame the nearly 30% pop as recovery from a sell-off through June and July that saw Palantir wrapped into the doubts around the staying power of the software sector, the run-up extends a rally going back to 2024 that has seen the stock price boom from roughly $25 to more than $150 per share in only two years. 

That shift in share price can really be traced back to the 2023 launch of Palantir's AIP platform, said Louie DiPalma, an industrials sector analyst at William Blair.

The company's existing platforms — Gotham for government operations and Foundry for the commercial sector — allowed customers to fuse massive amounts of disparate data and perform complex analysis of that data. AIP, released in April 2023 shortly after OpenAI debuted ChatGPT the previous November, allowed customers on both platforms to connect large language models to their existing datasets, layering AI-powered analysis and computation on top of Gotham and Foundry.

The product "gained particular traction across end-market verticals," DiPalma said, and served as a clear catalyst for the stock's explosive growth. As the market bought into the promise of AI, the Street turned toward the company that already provided the data analysis software for both the US government and many of the world's largest companies, from energy majors ExxonMobil (XOM) and BP (BP) to Airbus (AIR.DE) and mining giant Rio Tinto (RIO).

When Anthropic raised its most recent funding round, the frontier AI lab disclosed $47 billion in annualized run-rate revenue, with most of that revenue accounted for by the company's enterprise offerings, per analyst estimates. Palantir, by contrast, reported US commercial revenue of $764 million, with a remaining deal value of $6.24 billion.

"Investors should view [Anthropic's ARR] as a bullish data point for Palantir, as that's indicative of the total addressable market Palantir is also targeting," DiPalma said. "There's the potential that Palantir is going to significantly increase that as it's going after the same workloads as Anthropic, OpenAI, and the other frontier labs."....

....MUCH MORE 

Some of our early Palantir posts:

And many, many more.
Sept. 2018 
"Morgan Stanley's long romance of Palantir pays off as IPO nears" (also Thiel on dope)
Now pricing at 55 times sales, that's terrifying.
April 2018 
"Palantir’s New Patents Shed Rare Light On Its Data Methods"
Sept. 2017
"Forget Wall Street – Silicon Valley is the new political power in Washington"
August 2017
Palantir: the ‘special ops’ tech giant that wields as much real-world power as Google
Sept 2016
A Deep Dive Into Spooky City: Peter Thiel and Palantir
Sept. 2016 
Palantir Is Demanding The U.S. Army Give It Some Business
Aug 2016
Unicorns: How Palantir Invaded Washington And Played The Lobbying/Influence Procurement Game Better Than The Incumbants
July 2016
"Pokémon Go Is a Government Surveillance Psyop Conspiracy"
May 2016
Inside Palantir, Silicon Valley’s Most Secretive Company
February 2016
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox" 
August 2015
Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1 
June 2013
Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG) 

"Man Terrified of Palantir, More Terrified to Explain What Palantir Is"  

"How A 'Deviant' Philosopher Built Palantir, A CIA-Funded Data-Mining Juggernaut" 

Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox" 

And many, many more.

SPOOKY. 

"The Palantir non-IPO: 5 things to know about the (formerly) secretive software company’s direct listing" (SPOOKY)

From MarketWatch:
11 SEC filings later, Palantir plans to list its stock while co-founders hold on to creative class of shares with ‘variable’ votes

Palantir Technologies Inc. was known for years as being the most secretive unicorn startup in Silicon Valley, but going public has turned the company from a shrinking violet to an exploding fountain of information.

Palantir publicly filed for a direct listing on Aug. 25, and plenty has happened in the month since.

• In its original filing, Palantir Chief Executive Alexander Karp loudly and publicly broke up with Silicon Valley in a letter at the very beginning of the document, a unique approach that sought to defend Palantir’s secretive work building surveillance and warfare capabilities for the U.S. government and allies. The letter confirmed earlier reports that Palantir had moved its headquarters from Palo Alto, Calif., to Denver, and seemed to denigrate advertising-based businesses such as Facebook Inc. FB, 0.78%, for which co-founder Peter Thiel serves as a board member. “Our company was founded in Silicon Valley,” Karp wrote. “But we seem to share fewer and fewer of the technology sector’s values and commitments.” 

• The company then revised its public filing six times; along with early versions submitted privately to the Securities and Exchange Commission, Palantir is now on the 11th version of its offering filing. It even revised its filing twice in one day and reversed changes that a TechCrunch reporter detailed on its voting structure. Palantir made that move after warning investors in its filings about getting information from the media. 

• Executives held a public webcast in which they discussed the company and its financial performance for two full hours, which again led off with a unique personal message from Karp, who was filmed while cross-country skiing. Executives then spent a half hour taking questions from potential investors, with both those videos posted online for later consumption. 

• Palantir later issued forecasts for the rest of this year and for 2021, which companies cannot officially do for an initial public offering but is allowed for a direct listing. 

• Meanwhile, protesters have demonstrated at the company’s old headquarters in Palo Alto, its new headquarters in Denver and its office in New York, mostly focusing on the company’s work with the Immigration and Customs Enforcement division of the U.S. government.

After all of that, The Wall Street Journal reported Sept. 24 that Palantir had informed investors that shares were expected to begin trading around $10 apiece, a price that would give the company a valuation of roughly $22 billion. Shares are expected to begin trading Sept. 30 on the New York Stock Exchange under the ticker symbol PLTR.

Here is what you need to know about Palantir’s direct listing.

Big-data software that got its start with the CIA
The core reason Palantir has been both secretive and controversial since its founding in 2003 is that it began with money from the Central Intelligence Agency to develop data-crunching software for the government. Palantir received original funding from In-Q-Tel, the CIA-funded nonprofit venture-capital arm, to develop its first major product, Gotham, which launched in 2008 to help government entities with surveillance and warfare planning, among other uses.

“Defense agencies in the United States then began using Gotham to investigate potential threats and to help protect soldiers from improvised explosive devices,” Palantir disclosed. “Today, the platform is widely used by government agencies in the United States and its allies.”

Palantir has moved beyond that business, however, and started serving corporate clients in 2016 with its second platform, Foundry. Palantir now says that a little more than half — 53% — of its customers come from the private sector instead of government, even as Palantir considers different divisions in the same government departments as separate customers.

While the majority of Palantir customers may be commercial businesses, that doesn’t mean the majority of its revenue comes from those contracts. Palantir had only 125 customers in the first half of this year that paid an average of $5.6 million each in 2019, but the top 20 customers spent an average of $24.8 million in spending in 2019. And its three largest customers — which Palantir does not name — account for up to a third of the company’s revenue and on average have been customers since well before Foundry was launched....

....MUCH MORE

"Palantir’s New Patents Shed Rare Light On Its Data Methods"

Following up on April 12's "Very Creepy Google and Amazon Patents (AMZN; GOOG)".
From CB Insights:

Palantir is one of the world's most opaque and influential data companies. We dig into its patents as Facebook's data privacy scandal refocuses media attention on how personal data is used in business and beyond.

Palantir Technologies, a privately owned Silicon Valley-based tech company, sells a suite of software for integrating, visualizing, and analyzing the world’s data.

Little is known about Palantir’s technology or products. Recently, reports surfaced that an employee of Palantir helped Cambridge Analytica mine millions of Facebook profiles in 2014, which could deepen scrutiny of Palantir.

Given the secrecy surrounding the company, any visibility into the company’s methods is useful in catching a glimpse into how it goes about mining data and extracting value from it for clients.
A cluster of recently published patent applications— two of them just last week — show that:

• Palantir wants to be able to parse datasets as large as trillions of email messages.
• It wants to use household data such as income and other signals to predict consumers’ future actions, such as cancelling a subscription service.
• In a very “Minority Report” type patent, Palantir also wants to use data points connected to individuals to predict future criminal activity.

Together, Palantir’s patent applications provide forward-looking insight into the company’s corporate product strategy and innovation, as well as where bleeding-edge population-data and analytics technology is headed. While an individual patent might only be a sketch of a potential product, taken together, activity across several patents can reveal strategic direction and priorities.

It’s worth noting that Palantir’s products and services are already deployed in the military, intelligence, law enforcement, and financial communities to fight crime.

Indeed, Palantir was partially seed-funded by the CIA’s venture arm, In-Q-Tel. And Palantir just won an $876M contract to provide data management software to the U.S. Army.

Also note that Palantir has been granted patents in the following areas over the last several years. However, the patent applications we investigate below detail the most recent iterations of those designs.
Mining and combining the world’s data:

1. System and methods for investigating large amounts of data

Patent application published: March 22, 2018
Palantir is building technology to mine and analyze multiple petabytes of data. That’s lots of data. For reference, neurologists estimate that the human brain’s ability to store memories is equivalent to about 2.5 petabytes. Facebook hosts around 300 petabytes of data in total. Palantir can mine both structured and unstructured data from the internet, as well as integrate the databases of third-parties into its system.

The invention outlined in the patent application is capable of “ingesting data from disparate heterogeneous data sources in a single data repository.” The application notes that input data may include transaction logs of banks, call data records, computer network access logs, e-mail messages of a corporation, or other potentially high-volume data that may contain up to billions to trillions of records.

Palantir’s overall goal is to be able to take that data and efficiently identify information of interest. With this tool “analysts can investigate top-down trends, behaviors, and activities, or conduct bottom-up target centric analysis”.

Predicting the future one household at a time:
2. System and method for determining a propensity of an entity to take a specified action
Patent application published: March 22, 2018

Palantir’s prediction tech builds off the mantra that past behavior is the best predictor of future behavior. Specifically, the tech described can acquire data on a subject, create a record of the subject’s behavior, extrapolate past behaviors into “features” that color the subjects’ actions, and then use the data to train a prediction model that spits out the likelihood that the subject will take specific actions in the future.

The example of predicting behavior detailed in the patent application includes ingesting data on average household income, number of cars, and bills to pay. That information can let an analyst see if the household is likely to cancel a subscription to a service within the next month. In the sketch below, the household being profiled is deemed to have a “medium” propensity to churn....

...MUCH MORE

Related:
Intimacy and Facebook Creepiness (FB)

"Is Palantir’s Crystal Ball Just Smoke and Mirrors?"

One of my favorite examples of investing in black boxes and the pitfalls therein is a little vignette I imagined while reading last year's "Lenders Raise Collateral Concerns Over WeWork CEO's $500 Million Personal Credit Line" (JPM; UBS)":

Ya think?

"Bob, we've been lending against the Emperor's personal wardrobe and it turns out there's actually nothing in the closet"

"Oh"

*****

Sure, Climateer Investing took "WeWork: 'Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.'" at face value:

Roger that, energy and spirituality. Over.... 

But we didn't lend a half-billion against it for Chrissakes  

Or more recently, Izabella d'Alphaville's piece on Cambridge Analytica.

And possibly the headline query, from New York Magazine September 27:

Back in 2003, John Poindexter got a call from Richard Perle, an old friend from their days serving together in the Reagan administration. Perle, one of the architects of the Iraq War, which started that year, wanted to introduce Poindexter to a couple of Silicon Valley entrepreneurs who were starting a software company. The firm, Palantir Technologies, was hoping to pull together data collected by a wide range of spy agencies — everything from human intelligence and cell-phone calls to travel records and financial transactions — to help identify and stop terrorists planning attacks on the United States.

Poindexter, a retired rear admiral who had been forced to resign as Reagan’s national-security adviser over his role in the Iran-Contra scandal, wasn’t exactly the kind of starry-eyed idealist who usually appeals to Silicon Valley visionaries. Returning to the Pentagon after the 9/11 attacks, he had begun researching ways to develop a data-mining program that was as spooky as its name: Total Information Awareness. His work — dubbed a “super-snoop’s dream” by conservative columnist William Safire — was a precursor to the National Security Agency’s sweeping surveillance programs that were exposed a decade later by Edward Snowden.

Yet Poindexter was precisely the person Peter Thiel and Alex Karp, the co-founders of Palantir, wanted to meet. Their new company was similar in ambition to what Poindexter had tried to create at the Pentagon, and they wanted to pick the brain of the man now widely viewed as the godfather of modern surveillance.

“When I talked to Peter Thiel early on, I was impressed with the design and the ideas they had for the user interface,” Poindexter told me recently. “But I could see they didn’t have — well, as you call it, the back end, to automatically sort through the data and eliminate that tedious task for the users. And my feedback from the people who used it at the time, they were not happy with it at all. It was just much too manual.”

Smoking his pipe, just as he had when he testified to Congress 33 years ago about his role in facilitating covert arms sales to Iran, Poindexter told me he had suggested to Karp and Thiel that they partner with one of the companies that worked on Total Information Awareness. But the two men weren’t interested. “They were a bunch of young, arrogant guys,” Poindexter said, “and they were convinced they could do it all.”

Seventeen years later, Palantir is seeking to cash in on its ability to “do it all.” Over the years, the company has worked with some of the government’s most secretive agencies, including the CIA, the NSA, and the Pentagon’s Special Operations Command. As recently as two years ago, its value was estimated at $20 billion, elevating it to the loftiest heights of the tech “unicorns,” privately held companies valued at more than $1 billion. On September 30, Palantir is scheduled to go public, selling shares in a highly anticipated gambit that could make Karp one of Silicon Valley’s richest CEOs and cement the reputation of Thiel, the first outside investor in Facebook and a co-founder of PayPal, as one of the most visionary tech entrepreneurs of his generation.

Palantir’s public offering is founded on the company’s sales pitch that its software represents the ultimate tool of surveillance. Named after the “Seeing Stones” in The Lord of the Rings, Palantir is designed to ingest the mountains of data collected by soldiers and spies and police — fingerprints, signals intelligence, bank records, tips from confidential informants — and enable users to spot hidden relationships, uncover criminal and terrorist networks, and even anticipate future attacks. Thiel and Karp have effectively positioned Palantir as a pro-military arm of Silicon Valley, a culture dominated by tech gurus who view their work as paving the way for a global utopia. (Palantir declined to comment for this story, citing the mandatory “quiet period” prior to a public listing.)

It’s a strange moment, given the widespread alarm over the ever-expanding reach of technology, for a tech company to be marketing itself as the most powerful weapon in the national-security state’s arsenal — wrapping itself in what one Silicon Valley veteran calls “the mystique of being used to kill people.” But as Palantir seeks to sell its stock on Wall Street, even some of its initial admirers are warning that the company’s software may not live up to its hype. More than a dozen former military and intelligence officials I interviewed — some of whom were instrumental in persuading government agencies to work with Palantir — expressed concerns about the firm’s penchant for exaggeration, its apparent flouting of federal rules designed to ensure fair competition, and its true worth. The company has largely succeeded, they say, not because of its technological wizardry but because its interface is slicker and more user friendly than the alternatives created by defense contractors.

“Where you get into trouble is when the software gets so complicated that you have to send people in to manage it,” said one former CIA official who is complimentary of Palantir. “The moment you introduce an expensive IT engineer into the process, you’ve cut your profits.” Palantir, it turns out, has run headlong into the problem plaguing many tech firms engaged in the quest for total information awareness: Real-world data is often too messy and complex for computers to translate without lots of help from humans.

One of the central claims made about Palantir — its creation myth, in essence — is that its software was somehow instrumental in locating Osama bin Laden. The company, which has posted a news story repeating the rumor on its website, likes to shroud its supposed involvement in an air of mystery. “That’s one of those stories we’re not allowed to comment about,” Karp once said in an interview.

The only known basis for the claim, which has been repeated in dozens of articles, comes from The Finish, Mark Bowden’s book on the 2011 raid that killed bin Laden. Bowden does not actually say Palantir was used in the raid, but he credits the company with perfecting the data collection and analysis that Poindexter had initiated with Total Information Awareness in the aftermath of 9/11. Palantir, Bowden writes, “came up with a program that elegantly accomplished what TIA had set out to do.”

No one I spoke with in either national security or intelligence believes Palantir played any significant role in finding bin Laden. Thiel, according to Poindexter, wasn’t even interested in building on TIA’s work. “His people were telling him they didn’t need it,” Poindexter recalled.

From the start, Palantir has drawn on a circle of loyal insiders to build the company. In the late 1980s, as an undergraduate at Stanford, Thiel founded a conservative student publication called The Stanford Review to wage war on what he saw as the university’s liberal agenda, including “mandatory race and ethnic studies” and “ ‘domestic partner’ status for homosexuals.” (Thiel, who is gay, married his longtime partner in 2017.) The Review served as a breeding ground for Palantir: Over the years, according to an analysis by a Stanford graduate named Andrew Granato, 24 of the company’s employees came from the staff of Thiel’s student publication.

Palantir’s initial technology was likewise adopted from one of Thiel’s other endeavors: PayPal. In 2000, engineers at the online-payment company wanted to use software to help identify fraudulent transactions, but they found that computer algorithms alone couldn’t keep up with how quickly criminals adapted. Their solution was a program called Igor, after a Russian criminal who was taunting PayPal’s fraud department, that flagged suspicious transactions for humans to review.

In 2003, after PayPal was sold, Thiel approached Alex Karp, a former Stanford classmate with a Ph.D. in neoclassical social theory, with a novel idea: Why not apply Igor to track terrorist networks through their financial transactions? At the time, the CIA unit responsible for locating bin Laden had little experience, or even interest, in such an approach. Thiel put in the seed money, and after a few years of pitching investors, Palantir got its first major breakthrough in the national-security world with an estimated $2 million investment from In-Q-Tel, a venture-capital firm set up by the CIA. According to a former intelligence official who was directly involved with that investment, the agency hoped that tapping the tech expertise of Silicon Valley would enable it to integrate widely disparate sources of data regardless of format. “I have mixed feelings about the CIA,” Richard Perle told me, “but their angel investment in Palantir may have been their most inspired move.”

In-Q-Tel’s investment provided Palantir with something even more important than cash: the imprimatur of the CIA. As doors started to open in Washington, Palantir began to attract fans in the secretive communities of intelligence and national security. One former senior intelligence official recalled visiting the company in Menlo Park, California, around 2005. Palantir didn’t even have its own space — it was working out of the offices of a venture capitalist involved in the firm. “We go out back to the carriage house, and there were sleeping bags under the desks,” the former official recalled. “That’s where the engineers who were doing the code were actually living and sleeping.”

But contracts with spy agencies were never going to provide Palantir with enough scale to satisfy investors. The company needed new customers, especially in the lucrative world of defense contracting, and Thiel knew just how to get them. In Zero to One, his 2014 book on entrepreneurship, Thiel notes a critical move in PayPal’s success: In the early days, the company essentially paid people to sign up, handing out $10 to each new customer.

Under federal rules for procurement, which are laid out in a telephone-book-size manual, you can’t pay Pentagon officials to buy your product because that would constitute bribery. And it makes no sense to entice individual soldiers to use your product, because they don’t have the power to make procurement decisions. But that, remarkably, is exactly what Palantir did.

Not long after In-Q-Tel’s investment, the company began providing software and training to members of the armed forces about to deploy to Iraq and Afghanistan. Rather than focusing on lobbying the Pentagon from the outside, Palantir introduced its product from inside the military, creating both an internal demand and a network of pretrained users. “They would basically contact the soldiers and say, ‘Hey, I would like to give you some training on this tool you will get in theater. Would you like to get trained on it?’ ” recalled Heidi Shyu, then the Army’s chief weapons buyer.

Chris Ieva, a Marine infantry officer who was attending the Naval Postgraduate School in 2006, was an early beneficiary of Palantir’s unorthodox marketing technique. The school is located in Monterey, California, just down the road from Silicon Valley, and Palantir had already established a foothold at the institution. Ieva was excited when he was invited to visit the tech start-up, where he saw engineers walking around with T-shirts that read GOOGLE IS OUR BACKUP JOB.

But Palantir wasn’t trying to recruit Ieva as an employee. Instead, he said, he got funding worth about $10,000 to support his graduate work, which paid for a high-end computer and access to critical data. Ieva was also supplied with Palantir’s software, which the school was leasing for $19,000 a year; the company provided an analyst at its own expense to work with students. “In return,” Ieva told me, “I had to publish a thesis, and the findings would sort of go back to them.” By the time he deployed to Afghanistan in 2011, Ieva was a true believer in Palantir. He was not only trained to use the company’s software but given a personal version to take with him....

....MUCH MORE

"Peter Thiel's Palantir set to file to go public 'within weeks'"

From CityAM:

Palantir, the data analytics firm co-founded by billionaire Peter Thiel, is said to be preparing documents to file for an initial public offering (IPO) within the next few weeks.
People familiar with the matter told Reuters that Palantir has been encouraged by recent successful IPOs on Wall Street, and wants to cash in on the current market.

However becoming a publicly listed company would shine an increased spotlight on Palantir’s financials and activities. The company is known for working on sensitive US government projects, such as tracking illegal immigrants and terrorist networks.

Palantir also holds a contract with the NHS which gives it unfettered access to anonymised personal data of thousands of Brits, documents released by whistleblowers showed last Friday. The firm’s London office is now its largest, despite originating in California....MORE

Previously on SPOOKY:
October 2018 
"Man Terrified of Palantir, More Terrified to Explain What Palantir Is"
May 2016 
Inside Palantir, Silicon Valley’s Most Secretive Company
"How A 'Deviant' Philosopher Built Palantir, A CIA-Funded Data-Mining Juggernaut"
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox"

And many, many more.
Sept. 2018 
"Morgan Stanley's long romance of Palantir pays off as IPO nears" (also Thiel on dope)
Now pricing at 55 times sales, that's terrifying.
April 2018 
"Palantir’s New Patents Shed Rare Light On Its Data Methods"
Sept. 2017
"Forget Wall Street – Silicon Valley is the new political power in Washington"
August 2017
Palantir: the ‘special ops’ tech giant that wields as much real-world power as Google
Sept 2016
A Deep Dive Into Spooky City: Peter Thiel and Palantir
Sept. 2016 
Palantir Is Demanding The U.S. Army Give It Some Business
Aug 2016
Unicorns: How Palantir Invaded Washington And Played The Lobbying/Influence Procurement Game Better Than The Incumbants
July 2016
"Pokémon Go Is a Government Surveillance Psyop Conspiracy"
May 2016
Inside Palantir, Silicon Valley’s Most Secretive Company
February 2016
Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox" 
August 2015
Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1 
June 2013
Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG)

"Palantir: The all-seeing tech giant"

 From The Week, July 21:

The company's data-mining tools are used by spies and the military. Are they now being turned on Americans? 

What does Palantir do? 
Named after the mystical seeing stones in J.R.R. Tolkien's Lord of the Rings, the secretive tech firm sells software that can crunch colossal troves of data. Depending on the application, that might include GPS data, text messages, social media profiles, legal filings, phone records, and thousands of other information points, which it distills into charts, maps, and other forms of intelligence. Palantir's specialty is detecting connections and patterns: "the finding of hidden things," as CEO Alex Karp puts it. The company was launched in 2003 by Peter Thiel, a tech billionaire and major Trump donor, and Karp, a self-described neo-Marxist with a philosophy Ph.D., and seeded with $2 million from the CIA. The intelligence agency used Palantir's software to track terrorists after 9/11—it is widely believed to have helped the U.S. locate and kill Osama bin Laden—and the firm has helped Ukraine's military identify Russian targets, Los Angeles police track crime patterns, and JPMorgan Chase combat cyberfraud. But most of Palantir's work is for the U.S. government, and business is booming. Since President Trump's January inauguration, it has won more than $900 million in federal contracts, and its share price has more than doubled. "Palantir is on fire," Karp told a May earnings call.

Which agencies work with the company? 
Palantir's tools are used across many agencies for a wide range of purposes. It has helped the CDC track disease outbreaks, the IRS sniff out tax cheats, the FDA monitor supply chains, and the Department of Homeland Security chase down drug traffickers. Most controversially, during the first Trump administration it helped Homeland Security track undocumented migrants, prompting pushback from employees and protests at Palantir's Palo Alto and Manhattan offices. In April, CNN and Wired reported that Palantir engineers were helping build a master database that will draw data from across federal agencies—including the IRS, Social Security Administration, and Health and Human Services—to target undocumented immigrants. The firm is "helping build the infrastructure of the police state," charged tech investor Paul Graham. Palantir's biggest government client, though, is the Defense Department, with whom it has a $1.3 billion contract running through 2029.

How does the military use its tech? 
In Palantir's early years, the Marine Corps deployed its software in Afghanistan to better predict the locations of roadside bombs and potential insurgent ambushes. The company is now helping the Pentagon develop the Maven Smart System, which uses AI to analyze satellite imagery, drone footage, radar feeds, ground reports, and other data to present commanders with battlefield options. The Pentagon has already used the technology to identify airstrike targets in Yemen, Syria, and Iraq. Palantir has also worked closely with the Ukrainian military, embedding engineers with troops, and recently signed a $91 million deal with Britain's Defense Ministry. "They are the AI arms dealer of the 21st century," said Jacob Helberg, a national security expert and outside adviser to Karp. Palantir's defense work, especially the use of its software by Israel in Gaza, has drawn condemnation from inside and outside the company.

How has Palantir responded?
Karp, who has called himself a "progressive warrior," acknowledges that using AI-driven algorithms to aid killing is "morally complex." But he believes that in a world full of malevolent forces bent on America's destruction, survival depends on leveraging our technological advantages and that tech firms must aid that effort. "A lot of this does come down to, Do you think America is a beacon of good or not?" he said. Palantir aims to help "power the West to its obvious, innate superiority" and "bring violence and death to our enemies."....

....MUCH MORE 

"Morally complex," blah, blah, blah.

 “nervi belli pecunia infinita” — the sinews of war are infinite money. 

—Cicero

And: 

"Ils ne se servent de la pensée que pour autoriser leurs injustices, et emploient les paroles que pour déguiser leurs pensées"

—François-Marie Arouet--'Voltaire', Dialogue xiv. Le Chapon et la Poularde (1766).

"Men use thought only to justify their wrong doings, and employ speech only to conceal their thoughts"

Palantir: the ‘special ops’ tech giant that wields as much real-world power as Google

...Palantir is at the heart of the US government, but with its other arm, Palantir Metropolis, it provides the analytical tools for hedge funds, banks and financial services firms to outsmart each other....

From The Guardian, July 30:

Peter Thiel’s CIA-backed, data-mining firm honed its ‘crime predicting’ techniques against insurgents in Iraq. The same methods are now being sold to police departments. Will they inflame already tense relations between the public and the police?

In Minority Report, the 2002 movie adaptation of the Philip K Dick novel, Tom Cruise plays a police officer in the LAPD “pre-crime” unit. Using the premonitions of sentient mutants called “pre-cogs”, the police are able to predict when someone is going to commit a crime before it happens, swooping down from helicopters and arresting them on the street before they can do anything. Their “crime” is that they merely thought about it.

Palantir, the CIA-backed startup, is Minority Report come true. It is all-powerful, yet no one knows it even exists. Palantir does not have an office, it has a “SCIF” on a back street in Palo Alto, California. SCIF stands for “sensitive compartmentalised information facility”. Palantir says its building “must be built to be resistant to attempts to access the information within. The network must be ‘airgapped’ from the public internet to prevent information leakage.”

Palantir’s defence systems include advanced biometrics and walls impenetrable to radio waves, phone signal or internet. Its data storage is blockchained: it cannot be accessed by merely sophisticated hacking, it requires digital pass codes held by dozens of independent parties, whose identities are themselves protected by blockchain.
What is Palantir protecting? A palantir is a “seeing stone” in JRR Tolkien’s The Lord of the Rings; a dark orb used by Saruman to be able to see in darkness or blinding light. “Palantir” means “one that sees from afar”, a mythical instrument of omnipotence.

In 2004, Peter Thiel – the billionaire PayPal co-founder, Facebook investor and and latter-day Trump ally – created Palantir alongside Nathan Gettings, Joe Lonsdale, Stephen Cohen and Alex Karp. Their intention was to create a company that took Big Data somewhere no one else dared to go. In 2013, Karp, Palantir’s CEO, announced that the company would not be pursuing an IPO, as going public would make “running a company like ours very difficult”. This is why.

Palantir watches everything you do and predicts what you will do next in order to stop it. As of 2013, its client list included the CIA, the FBI, the NSA, the Centre for Disease Control, the Marine Corps, the Air Force, Special Operations Command, West Point and the IRS. Up to 50% of its business is with the public sector. In-Q-Tel, the CIA’s venture arm, was an early investor.

Palantir tracks everyone from potential terrorist suspects to corporate fraudsters (Bernie Madoff was imprisoned with the help of Palantir), child traffickers and what they refer to as “subversives”. But it is all done using prediction....

...MUCH MORE 

A Deep Dive Into Spooky City: Peter Thiel and Palantir

From the Baffler:

Improv-da
How Palantir has made corporate orthodoxy out of experimental theater

Palantir Technologies, the multi-billion-dollar Palo Alto–based data-analysis software company founded in 2004 with CIA seed money, gives its new employees a reading list. One assignment is Lawrence Wright’s The Looming Tower: Al-Qaeda and the Road to 9/11, which feeds directly into the company’s mythology. Rumor has it—though Palantir neither confirms nor denies the report—that the company’s software helped locate Osama bin Laden. This distinction has earned the private intel firm, as author Mark Bowden observes, a bad-ass literal claim to the industry’s highest term of praise: “Killer App.”

Another book on Palantir’s syllabus is, well, quite a bit different. It’s called Impro: Improvisation and the Theatre, the 1979 classic on improvisational acting by Royal Court Theatre director-guru Keith Johnstone. The choice seems odd. True, improvisation happens to be a huge fad for the business-managerial class. Blue-chip companies such as PepsiCo, McKinsey, MetLife, and Google all have hosted improv seminars, while improv-themed courses are now entrenched at top business schools such as MIT, Duke, and Stanford, the alma mater of Palantir Technologies CEO Alex Karp and cofounder Peter Thiel.

Improv training supposedly boosts creativity, spontaneity, communication, teamwork, and a positive mental outlook. But what added value do Palantirians, as company employees call themselves, get from simply reading Impro as a sort of employee manual? Why should workers merely learn the rules of improvisation rather than train under them? Cui bono? As is so often the case in Silicon Valley, the benefits of the freedom- and productivity-enhancing product don’t go to the user, but to the boss.

In an industry filled with companies dedicated to “making the world a better place,” Palantir sees itself as the best and brightest: the company that hires the smartest engineers to solve the world’s biggest problems, such as fingering terrorists, spotting fraud, negotiating underwater mortgages, and distributing humanitarian relief. For today’s world-conquering technologists, all these problems have to do with Big Data—how to access its informational value for maximal human benefit. And if Big Data is the nail, Palantir is wielding Thor’s hammer. The company custom-builds software platforms for companies, government agencies, and the military to help them integrate their enormous, disparate sets of data into a searchable whole. The Palantirians carrying out this mission are known as “forward deployed engineers” or FDEs, who work on-site with clients to build the software platform through direct interaction—like a crack special-forces Geek Squad, but wearing black Palantir track jackets. The company’s high-priced contract work also follows a hard corporate-right profile, as when its FDEs infamously embarked on an elaborate data-driven bid to discredit WikiLeaks supporters and left-leaning critics of the U.S. Chamber of Commerce. It’s not for nothing that Peter Thiel has lately been in the news for bankrolling the Hulk Hogan lawsuit that sent Gawker Media into bankruptcy—and for attending the GOP convention in Cleveland as a speaker and Donald Trump delegate.

To Rule Them All

The first thing to understand about Palantir’s improv-inflected business model is that, like Thiel, it seeks to practice innovation and radical disruption in an ultra-controlled environment. Indeed, before we circle our way into the cult of Impro, let’s acknowledge another key literary touchstone, one that neatly distills these seemingly contradictory corporate impulses into a renowned geek fable of power won against remorselessly organized adversity. Thiel named his company after the magical seeing stones featured in J. R. R. Tolkien’s The Lord of the Rings trilogy—indispensable devices that allow users to view far and secret places without risk of detection. The idea for Palantir sprang from Thiel’s days at PayPal; there, he soon realized that building a program to spot fraud became an existential necessity for a company dependent on credit-card transactions. Readers of the LOTR trilogy may recall that the Palantíri had ambiguous value and actually enabled the evil Lord Sauron to view their users. But Thiel, a lifelong Tolkien enthusiast, argues for a more generous interpretation: the stones were “indisputably good” in the first two ages of Middle Earth, he insists, and though they were used for evil in the third, “that just reminds us that there’s great responsibility that comes with power and that anything can become corrupted if we’re not careful.” And sure enough, Palantir claims that it has embraced privacy and civil liberties protections as a “core engineering commitment” that is “baked in” to its platforms ab initio. Along with its “legal ninjas” and “philanthropic engineers,” the company has a cohort of workers it calls, with no apparent intended irony, “civil liberties engineers.”

Like Thiel, the company takes its Tolkien to heart: LOTR permeates its culture, and its offices around the world are named after Middle Earth locales: Palo Alto is the Shire, home of the humble hobbits; McLean, Virginia, where it does its government work for the national security state, is Rivendell, the glorious city of the Elven elites; Los Angeles is Gondor; Abu Dhabi is Osgiliath. And the company’s world-rescuing motto, emblazoned on hallway signs and company T-shirts, is “Save the Shire.”

Beyond such nerdy fandom, Palantir appears to surpass other tech companies in its zealous adoption of hacker culture, down to the cots in offices, special logos for all working groups, and its ball-pit conference room. It is a “mission-driven” enterprise in which employees are so committed that they are willing to work horrendously long hours for less pay than they could get at Facebook or Google—in the low six figures. (“We are a high-calorie, low-salary environment,” says the CEO.) Every summer the company schedules a “hack week”—its very own Burning Man, according to a former FDE—in which employees, freed from everyday Palantir obligations, spend their time coming up with a solution (a “hack”) to a problem of their choosing....MUCH MORE

HT: naked capitalism

Previously:  

"Palantir Has Filed a Dramatic Lawsuit Against a Major Early Investor" 

Unicorns: How Palantir Invaded Washington And Played The Lobbying/Influence Procurement Game Better Than The Incumbants

Inside Palantir, Silicon Valley’s Most Secretive Company 

Venture Capital: "Morgan Stanley Marks Down Its Stake In Palantir, Dropbox" 

Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1 

"How A 'Deviant' Philosopher Built Palantir, A CIA-Funded Data-Mining Juggernaut"

"Morgan Stanley's long romance of Palantir pays off as IPO nears" (also Thiel on dope)

We don't put money into IPOs, can't get the ones we want, too much of ones we don't; but the information content of an IPO, both in disclosure and as a measure of sentiment can be quite valuable.
In the case of Palantir you can bet there will be tremendous demand for the offering documents in certain northern Virginia locales as well as Moscow, Beijing, Tehran and Tel Aviv.
London and Paris as well.

First up, Bloomberg via Crain's New York Business, September 4:

Morgan Stanley is usually at the forefront of whisking young tech companies public—handling stock offerings for Apple Inc., Google Inc. and Facebook Inc. Now its bankers are finding it’s also lucrative to slow-walk a unicorn into the light of day.

After a decade vying with Wall Street rivals, Morgan Stanley is emerging as the adviser-of-choice for Palantir Technologies Inc., Peter Thiel’s secretive data-mining and visualization venture. The bank has earned about $60 million in fees arranging private funding for the 14-year-old company. That haul might double if Morgan Stanley handles an initial public offering for Palantir, a deal people familiar with the matter say is nearing as the company turns profitable.

The investment bank’s spot at the front of the herd caps an unusually long and elaborate Wall Street courtship of a Silicon Valley startup. Along the way, some of the financial industry’s largest firms have taken stakes in Palantir, become its customers, and in one case, even stumbled into a minor scandal, prompting a severing of ties.

At Morgan Stanley, investment bankers led the effort to build a relationship, but a sleepier part of the firm also proved pivotal. Its $474 billion asset-management arm helped provide funding to Palantir, giving the private enterprise time to develop.

Morgan Stanley is among banks that arrange equity investments for big investors including family offices, hedge funds and sovereign wealth funds, helping pump additional cash into the likes of Uber Technologies Inc., WeWork Cos. and Flipkart Online Services Pvt.—closely held ventures that, in an earlier era, would probably have gone public already. Part of the reason Palantir picked Morgan Stanley was its ability to work with government-backed entities that tend to be patient, long-term shareholders, two people said.

Palantir expects to turn a profit in 2018 and will probably file for an IPO in 2019 or early 2020, according to people with knowledge of the matter. The increasingly earnest preparations for its debut have added urgency to banking relationships that have been in flux for more than a decade.
Representatives for Palantir and Morgan Stanley declined to comment.

Morgan Stanley began strengthening ties to Palantir Chief Executive Officer Alex Karp more than five years ago in an initiative that involved the bank’s chief operating officer at the time, Jim Rosenthal. Morgan Stanley became a customer of Palantir and began raising capital for the data firm. Some of Morgan Stanley’s most senior dealmakers—technology banking chief Michael Grimes, head of private sponsors David Dwek, and lead software dealmaker David Chen—nurtured the relationship.

Watching bankers

While regulatory filings show Morgan Stanley has been the primary bank arranging private funding to Palantir in recent years, it wasn’t always necessarily in the lead.

JPMorgan Chase & Co. became one of Palantir’s first large commercial customers, enlisting its help to hunt for misconduct in the wake of the 2008 financial crisis. That was a turning point for the startup, which previously catered to the Department of Defense and other government agencies. At times, Palantir stationed more than 100 engineers at the bank’s offices, which functioned as an unofficial research and development lab to develop commercial applications.

JPMorgan praised Palantir’s software publicly, using it for years to spot insider trading and fraud, and inducted the startup into its Hall of Fame. The bank also bought a stake in the venture. But, after a senior JPMorgan executive got caught using the software to spy on employees, the relationship unraveled. The bank quietly shut down the program a few years ago.

UBS Group AG also has worked with Palantir in the past, although its history is less colorful. It helped raise some private funding for Palantir in 2015 but isn’t currently working as a formal adviser to the company, two people familiar with the situation said.

At its peak in 2015, Palantir investors valued it at $20 billion. An IPO for such a company would generate about $60 million in underwriting fees, according to consulting firm Freeman & Co., which based its estimate on a transaction for $2 billion in proceeds....MORE

And at ZeroHedge earlier today:

How Peter Thiel Made A Killing In Tilray

The momentum stock du jour - Tilray - has captivated trader attentions ever since its IPO at $17 in July, following which it has catapulted in what has been a relentless parabolic fashion. And while most know the general story behind the Canadian pot company, what may come as a surprise is that Tilray CEO Brendan Kennedy’s Privateer Holdings, holds more than 58 million of the total 76 million shares outstanding, a stake now worth more than $12 billion after the stock soared more than 10-fold from its July public offering. And, according to Bloomberg, when Tilray’s unlisted Class 1 shares are included, Privateer’s holdings rise to almost 75 million shares, worth more than $15 billion.

The curiously low float - together with a painful short squeeze - is one of the reasons behind the stock's tremendous move. As Bloomberg notes, the limited number of shares available for trading is also be adding to the volatility, making it more expensive for skeptical investors to short the stock. That however has not daunted the skeptics such as Citron Research, which earlier on Wednesday said it remains short on Tilray, calling the stock’s surge “beyond comprehension” in a Tweet Wednesday.
However, what even fewer know is that one of the biggest winners from Tilray's explosion, is none other than Peter Thiel who is an investor in Privateer.

Privateer’s partners include Brendan Kennedy, 46, who serves as Tilray’s chief executive officer, Michael Blue and Christian Groh. Kennedy and Blue are both graduates of Yale School of Management’s MBA program. Kennedy and Groh both formerly worked together at SVB Analytics, a non-bank affiliate of Silicon Valley bank.

Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holdings’ $75 million Series B financing round in December 2014, according to the company’s website. That stake may now be approaching (or has surpassed) $1 billion.

And as investors were counting their profits, Tilray surpassed Canopy Growth as the world’s largest cannabis company, with a market value of more than $20 billion. Canopy, which added a New York listing in May, is worth only $12 billion. Tilray jumped another 50% to $230, giving it a value higher than American Airlines Group....

...MORE

"Palantir Stock Soars After Earnings. The CEO Sees a World of ‘Increasing Chaos and Danger.’" (PLTR)

The stock is up $4.09 (24.46%) at $20.81.

From Eric Savitz (we are fans) at Barron's, February 5/6:

• Palantir Stock Soars After Earnings. The CEO Sees a World of ‘Increasing Chaos and Danger.’
• Palantir’s commercial revenue jumped 32% in the fourth quarter. Investors are excited about AI.

Shares of Palantir were sharply higher after the company posted better-than-expected fourth-quarter revenue growth.

Strong demand from the company’s commercial customers offset lighter-than-expected government revenue.

The stock was up as much as 19% in premarket trading the morning after the company reported earnings.

For the quarter, Palantir reported revenue of $608 million—up 20% from a year ago—and ahead of Wall Street’s $603 million estimate. The results suggest an uptick in recent business; revenue grew 17% in the third quarter.

On an adjusted basis, Palantir earned 8 cents a share, in line with the Wall Street consensus estimates as tracked by FactSet.

Palantir’s commercial revenue was $284 million, up 32% from a year ago, and ahead of the Wall Street forecast of $271 million. That includes 70% growth in the U.S. commercial business, a sharp acceleration from 33% expansion in the third quarter, to $131 million.

In an interview with Barron’s, CEO Alex Karp said that the commercial business in the quarter was “bombastic, baller, incomprehensibly good.”

Government revenue was $324 million, up 11% but shy of analysts’ forecast for $333 million. Karp says that the current geopolitical situation—with unrest in the Middle East, war in Ukraine, and a contentious relationship between U.S. and China—will benefit Palantir in the long run.

“The government is a complicated business,” Karp says. “The parts of the government that are preparing to go to war are either using Palantir or are about to use Palantir.”

During the fourth quarter, Palantir closed 103 deals across both commercial and government customers worth more than $1 million, Karp says, double the year-ago quarter.

Shares of Palantir are up 98% over the last 12 months, boosted by excitement around artificial intelligence.

“Our results reflect both the strength of our software and the surging demand that we are seeing across industries and sectors for artificial intelligence platforms, including large language models, that are capable of integrating with the tangle of existing technical infrastructure that organizations have been constructing for years,” Karp said in a letter to shareholders.

For some investors, buying Palantir shares carries political overtones. Originally funded in part by In-Q-Tel, the CIA’s venture capital arm, the company has remained a vocal supporter of the U.S. military. In 2020, Palantir moved its headquarters to Denver from Palo Alto, due partly to the company’s feeling that its business focus didn’t fit in Silicon Valley....

....MUCH MORE

An example of Mr. Savitz's work when he isn't maniacally posting during earnings season, January 6, 2024:
Super Intelligence: "AI Is a Child. 2 Investors on What It Might Be When It Grows Up"

And a tribute post from 2010:

Eric Savitz Turned 15,000 Today

Posts that is.
Back in 2008 we called him the "Hardest working man in Show Business", a line we repeated during the Feb. 2009 reporting season: "Eric Savitz , The Hardest Working Man In Show Business! And: Book-to-Bill Ratio at 0.10"

As of 6:32 p.m. PST, I counted 22 posts at Tech Trader Daily timestamped "February 25, 2009..."
and I have a feeling that this time of the quarter is what Mr. Savitz lives for. "I feel good..."

Here's his "15,000 Posts - And Counting":

Oh my.
A few minutes ago, I hit the “publish” button on Tech Trader Daily post number 15,000. A little back-of-the-envelope math finds that comes to about 11 posts a day for the last 1,348 days; back out the weekends (but not holidays) and you get about 15 posts a day since the thing got going in late May 2006....MORE