Leaked S-1 screenshots show Palantir losing $579M in 2019
techcrunch.com
techcrunch.com
A tax loss isn't necessarily all bad news. If you have a tax loss in one year, you might be able to use that loss to offset profits in future years, to minimize taxes for your business in those years. This technique is called a tax loss carry forward because it takes a tax loss in one year and carries it into a future year.
So, what they might be doing is using this as an opportunity to "throw the baby out with the bathwater," as the saying goes. Show a bunch of losses prior to IPO (setting expectations low), then show gradually improving operating results. Investors love this kind of "story" because the potential for stock to go down is less then if they were to show a booming business right off the bat.
Finally, just to make a point about investors not necessarily being worried about a company showing losses, all you have to do is look at Amazon, who for years showed loses.
>In the screenshots of the company’s financials, Palantir lists a net loss of roughly $580 million for 2019, which is almost identical to its loss in 2018. The company listed a net loss percentage of 97% for 2018, improving to a loss of 78% for last year.
But as an Investor, it concerns me they spent $900M on Sales and Marketing in the Gov sector over 2 years.
That is essentially a lobby-dependent business model with long-term success contingent on the currently elected administration.
I would much rather see the screenshot for myself then have someone else explain to me what they think the most important aspects of it are.
Since it's incredibly unlikely that an anti-surveillance, anti-warhawk, anti-police state candidate will ever become president, and it's incredibly unlikely that congress will be dominated by those sorts of folks, I think Palantir's business model is safe as houses.
Unfortunately these type of setups tend not to care who is in power. As the types in power are never against this type of company. Look at Democrat support for NSLs (Obama notably expanded use of them despite being against them while campaigning).
There'll always be entrenched national defense & security + intel bureaucrats who hold power, regardless if a Democrat or Republican is in office. Seems Palantir has at least spent a pretty penny building relationships with some of those folks.
The article's title gets straight to the point. "Why Amazon’s History Of IPO-Era Losses Means Little For Today’s Unprofitable Unicorns".
[0]: https://news.crunchbase.com/news/why-amazons-history-of-ipo-...
2002 - Net Loss: -$ 149 million
2001 - Net Loss: -$ 567 million
2000 - Net Loss: -$ 1.41 billion
1999 - Net Loss: -$ 719 million
1998 - Net Loss: -$ 124 million
Source: https://www.evernote.com/l/AUlIcX9k_elHUY7Fjsg749afPPxh3verZ...
Amazon took a bite out of big-box retailers. They could grow by stealing their competitor's revenue streams. Palantir doesn't have that option, unless there are other equally giant contractors they can knock out.
Similarly, if a political entity calls themselves a name containing "democratic" or "republic", you can be assured that it is not a democracy.
Actually it's a counterpoint cause they renamed to Czechia right about when their government got less democratic :-)
Like the Italian Republic, Republic of Korea, French Republic, Republic of Ireland, or Republic of China?
The non-democratic countries are usually 'People's Republics'.
> If I say that my name is Costello and that my description is that of senior counsel, I think that will be clear to anybody who wants to know. If the Senator [Helena Concannon] will look at Article 4 of the Constitution she will find that the name of the State is Éire. Section 2 of this Bill declares that "this State shall be described as the Republic of Ireland." Its name in Irish is Éire and in the English language, Ireland. Its description in the English language is "the Republic of Ireland."
Nowadays, "Republic of Ireland" is usually only used where disambiguation from Northern Ireland is necessary.
There's a TLDR here if you don't have time to follow the entire thread (though highly worth it!!) : https://jalopnik.com/the-first-people-to-drive-across-the-co...
I enjoyed it so much I read Leopold's Ghost to learn more about the tragic history of DRC.
They're a big data company that works mostly with governments and militaries, and they're named after evil (and unreliable!) magical spying technology from The Lord of the Rings. It's clear why they feel the need to try to convince you that they're not evil.
Exactly. Interviewed there, got the same bullshit vibe.
Like, I'm here to find out just how tasty the cookies are on the dark side, you don't need to convince me you are, quote, "saving the world".
>Taking short cuts with either stupid or ethical people is never going to work for them.
I think they are going for smart, non-ethical, but obedient enough people. Drinking the doublespeak kool-aid probably is a good enough indicator for that.
Only when Trump got on Twitter...
They then got Atlantis'd.
There's a few recurring themes in Tolkien's work - one of them is that marvelous inventions, created by clever people for good purposes, can either be turned to do evil - or the struggle to possess them will turn good people to do evil.
[1] In contrast to the rest of the Silmarillion, which was a cautionary tale of elven pride, hubris, and abuse/attachment to magical trinkets.
It seems like lots of people incorrectly assume it’s negative. It seems to show off a lacking in understanding of lord of the rings, more than anything.
All talk about "extremely high hiring standards", perks like "washing your laundry", "free massages", "wear pink on Friday" and similar nonsense, but not a single word about what is the company doing or what would I, should they hire me, be doing apart from gems like "Deploy Palantir at moment's notice".
Then I have found the zingers: "Palantir employees are far from anti-social. We have parties pretty often."
And the bit on how people there turned down or left Google and Facebook.
I mean WTF? Why would you include things like this in a recruiting pitch? The creepiness vibe was off the charts.
Then I did a bit of research and it was obvious why. I have told the headhunter in no uncertain terms to take a hike. But I have heard they are paying well - if you can stomach what they are doing.
The rest of your argument is just nonsense, sorry. If that was the case, then why to pay a recruiter to actively reach out to me? It is not like they don't have enough job seeking applicants at their doors, even today.
And they certainly did even 10 years ago when the above has happened and all the bad press about the shady stuff Palantir is/was involved in had yet to come out - before Facebook scandals, before Cambridge Analytica (where Palantir was involved), before Trump election (Palantir's founder Thiel is big Trump's donor), etc.
Recruiters are not paid up front, nor for the number of candidates they bring.
Recruiters are paid when a candidate accepts the job, so it’s in their interest to throw as many candidates as possible at the client in order to increase their chances of closing one.
Why? Because recruiters are not paid a fixed amount per se, but 15-25% of your first year’s salary.
What makes you think that? I know of at least one global brand using Palantir.
The software engineer role at Palantir is called "software engineer."[1]
https://jobs.lever.co/palantir/1619afea-6923-4047-a913-c9293...
I mean, just bribing people to get the contracts should be an order of magnitude cheaper, right?
For reference Nike only spent 7-8 times that on marketing in the same year.
It's not necessarily wrong if they hold the customer for decades, but that depends on the stickiness of the contract.
I'd imagine for a company like palantir to win in the long run would require the western world to value surveillance at the same level as tanks, ships, and fighter platforms. At which point they look like a digital Raytheon or BAE.
The general approach would be “give us 2-4 weeks to integrate your data and give you a demo”, and would give organizations a demo of the software using their own data.
There were some well known stories internally, of things like police agencies forgetting to ask about the product at all, and instead taking notes on suspects and investigations being shown to them in the demo for further follow up, because it was making connections and breakthroughs on stalled or cold cases. Those were the ones that they knew were hooked.
The flip side of this is the cost of deploying anywhere from 2-20 engineers into the field to handle the system setup and integration on the fly.
Not a sales guy, but I would just emailed them the notes later (or printed it beforehand) so they could just sit back and watch it happen.
However, most of the time the way they won over their (usually enormous) clients was just as you describe: they took a few weeks to pick through the client's existing data hoards, mapped out what were often dozens or hundreds of disconnected databases, found common identifiers for entities, hooked them all up into a unifying system and then just... queried it. Data unification on its own yielded really impressive results for the clients. To be fair, the company had built up some compelling experience/tech around doing said data unification, but that stopped short of any of the "AI" and was never really how they marketed themselves. Some at the company always saw that part of the process as just a prerequisite for "the real product", but in practice it seemed to be the most useful part.
It's amazing how inefficient data-usage is throughout so many large organizations.
It's making me think that anyone who is not well-versed in at least the basics of database theory is crippled in the information economy. A lot of "tool-based" problems that people complain about are in fact user problems, when certain teams aren't maintaining their data with clear identifiers or internal standards.
Any big org that is silo'd is gonna have a big problem re: clear identifiers and internal standards. Heck, once we passed 500 headcount even just file naming convention was tough to roll out!
| Week# | clientid | key |
| W01 | CLI001 | CLI001W01|
You use this newly created key to match data on your databases/files
DATABASE A
Field List: {Temperature, Price, PART NUMBER, Delivery Time, SERIAL NUMBER}
DATABASE B:
Field List: {Mass, Length, Width, Height, PART NUMBER, Volume, SERIAL NUMBER}
You just have to create a new concatenation of PART NUMBER and SERIAL NUMBER, and now you have a unique identifier that will match between the two databases, and you can easily check which unique instances are present in both databases, and which in A are missing from B and vice versa.
Not sure what your level of coding proficiency is, but a flowchart of how you might get started increasing data wizardry would be something like this:
EXCEL
Master the following functions: INDEX/MATCH, Nested IF statements (especially using AND, OR, XOR, and NOT), IF/ISERROR, ISBLANK, CONCATENATE, and figure out how to combine all of these creatively
Master the creation and formatting of Pivot Tables
POWER QUERY
Master Power Query (you'll want to use online tutorials for this)
Once you're really, really proficient in Power Query, you may as well just start learning SQL and writing your own queries. Udacity and Udemy have multiple excellent free courses in SQL and Python.
Some more keywords you may want to look into:
- Relational Database theory - Bryce-Codd Normalization - CRUD applications - essentialsql.com - ExcelJet - MrExcel - Chandoo
I am by no means a real master, and my degree is in engineering, not programming, but independent research into basic database management has propelled me far past many coworkers in terms of efficacy. It really is astonishing how little the average person knows about proper database operation, despite the fact that most modern companies live and die by the strength of their data.
How off base is that impression?
This term also allowed them to book much more of their revenues as software licenses than services, which makes them look much more attractive to investors. With it, they were able to get a $20B valuation in the last round, where if they were viewed as a government IT services vendor they would've been lucky to be valued at $0.5B.
Changing the job title of a professional services staff member, whether it's "FDE", "Consultant" or "Customer Success", doesn't change the final gross or operating margins. The financials and economics remain the same whether this is at the deal or firm level.
>>With it, they were able to get a $20B valuation in the last round, where if they were viewed as a government IT services vendor they would've been lucky to be valued at $0.5B.
If Palantir didn't sell a product then you're right that they would be viewed as a services company which drops their valuation multiple. But since they sell a product, and presumably charge license fees for the right to use, their classification as a product company seems to justified from a valuation perspective.
Of the license revenue, I hope (but find it unlikely) management discusses a breakdown subscription (if any), term license revenue and one-time (e.g. perpetual/buyout).
It seems that they have consultants (that they called forward deployed engineers for some reason) who go into military, police & enterprise and set up some sort of bespoke data lake for all the docs and data flowing through the company.
Then they give users a tool to do investigation of the data using a tool that lets them build causal links between documents or maybe entities is a better name?
That seems useful - but the secrecy is weird. I saw some product videos from ages ago and it looked like software only an Enterprise could love. Looked incredibly slow, janky and overly complicated (I assume it's a convoluted interface so they can charge training fees!)
Can anyone yay or nay me here - is this what they do?
A summary/history: https://aletteraday.substack.com/p/letters-2930-palantir
http://web.archive.org/web/20190724214959/http://www.socialc...
Joe Lonsdale, cofounder of Palantir, on what they built: https://www.quora.com/Did-Palantirs-founders-consider-the-et...
Why did Peter Thiel and Joe Lonsdale found Palantir? https://www.quora.com/Why-did-Peter-Thiel-and-Joe-Lonsdale-f...
The "Intelligence" and other unstructured data area is the main place where Palantir is most known.
It's useful to think of the Palantir company as a Systems Integrator in the classical sense known to the US Federal Government's DoD and Intelligence Communities, and other governmental entities at other levels (e.g. municipal/state). You can also think of them as technology consultants that integrate with customer missions to understand and provide mission-effective technology solutions.
As a systems integrator, they aim to solve customer problems and provide technical solutions; the product can be considered to be parts of their software platform(s), new tools/additions/augmentations, professional services, and relationship/engagement management.
Forward deployed engineers often act as consultants/systems/sales engineers to characterize customer needs and integrate Palantir platforms with customer systems, which often includes the need to write new code/adapters/interfaces; today, you might call them data engineers.
Palantir also has"Software Engineers" that primarily work on the platform(s), rather than directly with customers.
Regarding "evil/not-evil" and secrecy, etc. We're living in a very divided age where many people feel their cause is righteous and more just than others across the political spectrum. We're also seeing that people are too commonly painted as "evil" if they don't share viewpoints.
The thematic mission of much of Palantir's work relates to matters including National security, etc, which their employees are proud to take part in and contribute. This is tied to the meaning of "Save the Shire," where Palantir employees believe in and do their part in the mission to preserve and do good, from their perspective. Lord of the Rings references are plentiful in this world, and Palantir employees have self-referred to themselves as the "Hobbits" working to "Save the Shire."
One of Palantir's early investors was In-Q-Tel, and Peter Thiel. You'll see this theme present in other places involving In-Q-Tel (it's their purpose for existing), and Peter Thiel's other investments (e.g. Anduril Industries, which has many former-Palantir employees).
Other interesting facts: Palantir was/is based out of Palo Alto, CA and occupies a large chunk of Palo Alto's commercial office real estate. It's main office once, or still does, occupy Facebook's former headquarters building, 100 Hamilton Ave, from its early days.
> Other interesting facts: Palantir was/is based out of
> Palo Alto, CA and occupies a large chunk of Palo Alto's
> commercial office real estate. It's main office once, or
> still does, occupy Facebook's former headquarters
> building, 100 Hamilton Ave, from its early days.
Also, they totally played up the security angle with a mega NDA and security guards who escorted me to and from my car, and another level of security guards to walk me around during the tour and someone even waited outside the restroom while I peed.
One of the biggest things that turned me off about them was the founders crazy Lamborghini looking sports cars in designated spots at the front of the building CLOSER THAN THE HANDICAPPED PARKING SPACES. Like... you call yourselves a medical lab testing company yet your little ego trip is shafting real medical patients? Get over yourselves.
Best call of my career, and now I have an "I turned down Theranos before we knew they were a fraud" happy hour tale.
I had never heard of it before until very recently I saw it mentioned on reddit. It looks interesting
It's hard to form useful judgements on a single data point.
> In relative numbers, operating expenses changed from 157% of revenues in the first half of 2019 to 107% of revenues in first half of 2020 [while revenue grew 49% yoy].
Seems to suggest that a lot of the expenses were elective, or non-elective but have a sub-linear correlation to revenue growth. Honestly, these numbers are not as bad as the opinions interspersing the numbers makes it out to be.
Sounds to me like a private company that's tightening the belt while leaning into being a public company and continuing to grow.
They need to demonstrate they can grow revenues without a proportional growth to operating expenses, and that they can sustain this trajectory until revenues > operating expenses.
An operating expense:revenue ratio of 107% (i.e. you spend 1.07 for every 1.00, which is their H1 2020 numbers) is bad in isolation.
But when it was 157% at the same time last year? The fact that they could move from 157% to 107% while significantly growing revenue is a very positive signal.
2. Likely their actual cashflow is not as bad - I suspect that, likely other tech cos, they have a lot of expenses in the form of stock comp, which is not an actual cash cost to the company. but must be accounted for per GAAP.
The biggest media/entertainment conglomerates, NGOs etc - many of these are in this boat.
The secret is that the compensation is in "soft" power for the ownership and execs, not financial gain¹.
¹(They likely have that covered too, especially with their "new" soft power).
Being a product company is so much better in Silicon Valley. Revenues scale. Engineers work on general problems. Skills are reusable.
At the time (2014) they were building Gotham and Metropolis. There was a small team of product evangelists in the team, whose role was to find commonalities between projects.
I could feel they were conflicted. It looked like the platforms were not valued by the customers. Customers valued answers to their operational problems. And problems across companies and industries get solved very differently. Crossing data between license plates wasn't the same as extracting data from credit card statements. Platforms may provide foundations to speed up implementation and save money, but nothing customers could value directly.
I could tell they wanted to be a product company. Palantir is structured like a regular Silicon Valley company. They have a CEO, a COO, and product roles. They give stock options and now are forced to go public. And they never never present themselves as consultants. One of my friends there took offense at describing the company as 'Tech McKinsey'.
Compare it with firms such as McKinsey and BCG. They are private partnerships. They pay junior consultants higher than any other company at equivalent positions, they give no shares until partners. The partners at these firms possess the network. They do the selling, and that's all they are focused on. Answering customers' problems. It might scale less, but it provides a 100% tailored solution to the customer.
The only question is that what customers value. Do they value Palantir platforms with high recurring fees? Or did they like the first data joins, but eventually thought it was too expensive, or they should build it themselves? Which would mean Palantir has to constantly generate new contracts, much like McKinsey and BCG. Only Palantir knows.
So let's break this down: A 17-year-old software firm (they are not a startup) has Has only 125 paying customers Generates 742MM in revenue Raised between $2.6 - $3.0 billion dollars in venture capital to generate that $742MM Has never broken even in 17 years Lost $580 MM Concentrates nearly a 1/3 of its revenue in 3 customers (avg rev ~$67MM per those top 3, a staggering amount for a software company of this size) Grew revenues by 25% YoY, that's good, but 91% of that comes from existing clients, that's bad Valued at $20 billion by private investors And the coup de grace, the founders want to keep 49.999% control in perpetuity regardless of their stock ownership. I expected a lot more given the hype and aura this firm has had for so many years. This company is being valued at 26x its revenue, which is insane even in SaaS land. Good luck to anyone who purchases these shares on the open market. I would highly recommend against it.
This doesn't point to a successful value adding business but rather mass market delusion...
Until there isn't and the Ponzi scheme collapse.
2) Their revenues increased and the losses stayed the same. Isn't that a path? They also mention a lot of the costs are S&M. If you stop growing that can be drastically cut.
I also continue to not understand what their product really is and if it’s actually valuable. They seem to just throw armies of people at data problems which might produce some results but is hardly a scalable or valuable business model.
1. Peter Thiel, Facebook, $500k
2. Peter Thiel, Donald Trump, $1m
No matter who wins the next election, Thiel and his buddies are guaranteed more contracts. Welcome to the new American plutocracy!
At same time they've raised so much money that being acquired by a PE firm or basically anything else other than going public would likely be detrimental to common shareholders given liquidity preferences.
And now given all the backlash that police department funding is getting and the possibility of a Biden presidency looming it's very possible that the type of "surveillance policing" that Palantir enables will be severely cut, and in fact some cities have already begun to ban these practices.
Exactly. People love to point at Amazon as long unprofitable, but don't realize the company was generating massive cash flows for reinvestment, too.
There's no inherent reason startups or tech companies should lose money endlessly.