6 ms·

Good god. According to crunchbase [1], they've raised over $1.6 Billion, last raise was $50m in December and $444.2m last September! For a software startup mak

by bane 11y ago

Good god. According to crunchbase [1], they've raised over $1.6 Billion, last raise was $50m in December and $444.2m last September! For a software startup making knowledge management software with a nice interface! I feel like they'd be pretty easy to disrupt technology-wise. There's enough big-data, open source graph, visualization and mapping front-ends to probably build a reasonable competitor pretty quick. If they ever have to run as a real business, it's going to hurt real fast. Either that or I'm horribly wrong and something else is going on, and hiding it all behind private equity markets is making it hard to see. One thing is for sure, most of the options the employees have are probably diluted beyond all recognition at this point. 1 - https://www.crunchbase.com/organization/palantir-technologies https://www.crunchbase.com/organization/palantir-technologie...

Bahamut 11y ago
At the least, it is not easy to break into government contracting - the expense of the security clearances necessary, having to bid for contracts, and working with the complicated systems with all of the typical bureaucracy attached to them makes it not a simple thing to disrupt. Connections can matter a lot as well. There's a reason why most of the companies in the government contracting world in the US are large established companies.
- vonmoltke 11y ago
  Actually, the SBIR/STTR programs[1] streamline this process quite a bit. My company has been living in this space for its entire 20-year existence, but it offers an "in" for small companies. In fact, fostering small business creation and supplier diversity are specific goals of the SBIR/STTR programs. Furthermore, the vast majority of government work does not require any sort of formal security clearances. [1] http://www.acq.osd.mil/osbp/sbir/ http://www.acq.osd.mil/osbp/sbir/
  - Bahamut 11y ago
    I have heard of those - however, for the type of space that Palantir operates in, it is absolutely true.
    - vonmoltke 11y ago
      We are in Palantir's space; we consider them a competitor.
      - bane 11y ago
        I found that there's a surprising number of companies that seem to intersect with Palantir on their competition matrix. I think their success is a mix of massive investment in sales, marketing and BD, plus reasonably good execution on purchase. This competitive intersection allows them to position themselves against all kinds of seemingly unrelated companies.
deleted 11y ago
[deleted]
- foldr 11y ago
  Is there any reason to think that this company is worth a lot of money other than the fact that it's raised a lot of money?
  - huac 11y ago
    Steady (and growing) cash flow from contracts with large organizations (whether you like their clients or not), very strong technical staff and consequently, inventions, prominent brand and public awareness, etc..
    - foldr 11y ago
      That's pretty vague. Of course they can hire good people if they have lots of money. But what exactly is it that makes the company valuable? This seems to be going round in circles. People keep giving them money, so they must be worth lots of money.
      - huac 11y ago
        i feel like you're being obtuse? don't confuse money raised in investment rounds (such as in the OP) with money that customers pay to palantir. a company's value is the discounted value of its cash flows, future and present. palantir should expect to make money from its contracts, sale of software (i'd lump the value of their patents, etc here), and whatever else they have dreamed up. since they have lots of customers paying them a lot, palantir has value. investors want to invest in a company that's growing. hence they give palantir money so palantir can keep growing. if palantir doesn't keep growing, they'll lose (part of) their investment.
        foldr 11y ago
        I understand that people are giving Palantir a lot of money. We don't know (do we?) how much they are actually getting from customers. My question is: what does Palantir actually do to create so much value?
obstinate 11y ago
>For a software startup making knowledge management software with a nice interface! Like saying that the Mona Lisa is a nice painting of a woman.
TheMagicHorsey 11y ago
You severely underestimate the value of large govt. contracts. Govt. contracts are very sticky. The govt. doesn't often change the software it uses, and when it does change the software it uses it signs up for ludicrously huge sums. You need terrific political connections to get these govt. contracts. Even with better technology, a start-up can't win a govt. contract. Ask one of your friends that works at Amazon about how long it took them to get govt. to use AWS. Also, if you have worked with a govt. institution you'll quickly learn that the processes and human capital used by the govt. are quite poor compared to the private sector. As a result, govt. contractors quickly figure out special tools/processes/training to serve the govt. which are not easy to replicate without the experience of actually serving a govt. dept. Many things, which in the private sector you might leave to your intelligent counterpart at the customer, with the govt. you have to handle yourself, or develop a special training program. The govt. can budget for these training programs or additional assistance, so it will not affect the bottom line ... but you have to develop those programs and processes, and you can't underestimate the importance of it. In the private sector if on the customer side an engineer cannot figure out how to go through a simple 3 step process to configure some software, he may be fired by his supervisor. In the govt., you will be asked to break the 3 step process down into 10 smaller, simpler steps, and to create a special video tutorial for govt. workers. Even after that, you may need to staff a help-line that is open during East Coast working hours. It is very easy in Silicon Valley to overestimate the capabilities of the people who will be using your software, because you may be dealing with very good talent at your early customers in California. The minute you get your first govt. contract you'll see that you were badly mistaken about what kind of resources you need for customer support.
- bane 11y ago
  So in the government contracting space there's effectively two kinds of work that are relevant here: - products, which Palantir claims to be - services, which Palantir appears to be by offices and head count You are right that product contracts (and associated services like installation and training, O&M, etc.) can be fairly sticky, but the government has been on a trend towards open-standards, open-source etc. and proprietary software products are under lots of pressure to be incomparably better than anything else out there. But "cheeks-in-seats" service contracts are not. The government is notorious at tossing out incumbents on service contracts and bringing in new companies, who then simply hire all the people who worked on the previous contract. Palantir seems to push themselves out there as a two-product company with some sales-staff. It's obviously not going to be turn-key software, there's likely to be some configuration and support stuff up-front. But once you, as a product company, get big enough, even those tasks can be handled competently by other companies. [1] But their product sales don't look to be a huge dollar amount. fbo has a couple awards from 2011 for ~$750k licenses. This is four years ago, but we're not looking at dozens of millions of dollars. edit here's an award for $20m for Palantir support to the war in Afghanistan. Note that DoD only reports contracts over $6.5m. So the bulk of their DoD awards must be falling under that threshold. edit here's a 5 year contract from DoJ for ~$10m. http://www.govconwire.com/2014/04/doj-selects-palantir-software-to-analyze-money-laundering-cases/ http://www.govconwire.com/2014/04/doj-selects-palantir-softw... hardly $20billion dollar valuation contract sizes. So it's likely most of their growth trajectory has been in specialized consulting services that direct customers to their products, but also use other tools and solutions. But again, once the ecosystem is big enough, the government can just try to compete that work out and hire another company to handle that work...companies that might not direct the solution-space towards Palantir's products. 1 - https://www.palantir.com/partnerships/service-providers/ https://www.palantir.com/partnerships/service-providers/
benhamner 11y ago
Looking at Palantir only as a software company is incredibly misleading. They sell high-ticket custom solutions to massive organizations that they leverage many of their internal software tools and libraries to build. This involves large amounts of custom product and engineering development, ingesting complex data sources, integrating with operational processes, and communicating results and insights back to the customer in a way that changes the customers behavior and adds value.

by bane 11y ago

Bahamut 11y ago

At the least, it is not easy to break into government contracting - the expense of the security clearances necessary, having to bid for contracts, and working with the complicated systems with all of the typical bureaucracy attached to them makes it not a simple thing to disrupt. Connections can matter a lot as well. There's a reason why most of the companies in the government contracting world in the US are large established companies.

vonmoltke 11y ago
Actually, the SBIR/STTR programs[1] streamline this process quite a bit. My company has been living in this space for its entire 20-year existence, but it offers an "in" for small companies. In fact, fostering small business creation and supplier diversity are specific goals of the SBIR/STTR programs. Furthermore, the vast majority of government work does not require any sort of formal security clearances. [1] http://www.acq.osd.mil/osbp/sbir/ http://www.acq.osd.mil/osbp/sbir/
- Bahamut 11y ago
  I have heard of those - however, for the type of space that Palantir operates in, it is absolutely true.
  - vonmoltke 11y ago
    We are in Palantir's space; we consider them a competitor.
    - bane 11y ago
      I found that there's a surprising number of companies that seem to intersect with Palantir on their competition matrix. I think their success is a mix of massive investment in sales, marketing and BD, plus reasonably good execution on purchase. This competitive intersection allows them to position themselves against all kinds of seemingly unrelated companies.

deleted 11y ago

[deleted]

foldr 11y ago
Is there any reason to think that this company is worth a lot of money other than the fact that it's raised a lot of money?
- huac 11y ago
  Steady (and growing) cash flow from contracts with large organizations (whether you like their clients or not), very strong technical staff and consequently, inventions, prominent brand and public awareness, etc..
  - foldr 11y ago
    That's pretty vague. Of course they can hire good people if they have lots of money. But what exactly is it that makes the company valuable? This seems to be going round in circles. People keep giving them money, so they must be worth lots of money.
    - huac 11y ago
      i feel like you're being obtuse? don't confuse money raised in investment rounds (such as in the OP) with money that customers pay to palantir. a company's value is the discounted value of its cash flows, future and present. palantir should expect to make money from its contracts, sale of software (i'd lump the value of their patents, etc here), and whatever else they have dreamed up. since they have lots of customers paying them a lot, palantir has value. investors want to invest in a company that's growing. hence they give palantir money so palantir can keep growing. if palantir doesn't keep growing, they'll lose (part of) their investment.
      - foldr 11y ago
        I understand that people are giving Palantir a lot of money. We don't know (do we?) how much they are actually getting from customers. My question is: what does Palantir actually do to create so much value?

obstinate 11y ago

>For a software startup making knowledge management software with a nice interface! Like saying that the Mona Lisa is a nice painting of a woman.

TheMagicHorsey 11y ago

You severely underestimate the value of large govt. contracts. Govt. contracts are very sticky. The govt. doesn't often change the software it uses, and when it does change the software it uses it signs up for ludicrously huge sums. You need terrific political connections to get these govt. contracts. Even with better technology, a start-up can't win a govt. contract. Ask one of your friends that works at Amazon about how long it took them to get govt. to use AWS. Also, if you have worked with a govt. institution you'll quickly learn that the processes and human capital used by the govt. are quite poor compared to the private sector. As a result, govt. contractors quickly figure out special tools/processes/training to serve the govt. which are not easy to replicate without the experience of actually serving a govt. dept. Many things, which in the private sector you might leave to your intelligent counterpart at the customer, with the govt. you have to handle yourself, or develop a special training program. The govt. can budget for these training programs or additional assistance, so it will not affect the bottom line ... but you have to develop those programs and processes, and you can't underestimate the importance of it. In the private sector if on the customer side an engineer cannot figure out how to go through a simple 3 step process to configure some software, he may be fired by his supervisor. In the govt., you will be asked to break the 3 step process down into 10 smaller, simpler steps, and to create a special video tutorial for govt. workers. Even after that, you may need to staff a help-line that is open during East Coast working hours. It is very easy in Silicon Valley to overestimate the capabilities of the people who will be using your software, because you may be dealing with very good talent at your early customers in California. The minute you get your first govt. contract you'll see that you were badly mistaken about what kind of resources you need for customer support.

bane 11y ago
So in the government contracting space there's effectively two kinds of work that are relevant here: - products, which Palantir claims to be - services, which Palantir appears to be by offices and head count You are right that product contracts (and associated services like installation and training, O&M, etc.) can be fairly sticky, but the government has been on a trend towards open-standards, open-source etc. and proprietary software products are under lots of pressure to be incomparably better than anything else out there. But "cheeks-in-seats" service contracts are not. The government is notorious at tossing out incumbents on service contracts and bringing in new companies, who then simply hire all the people who worked on the previous contract. Palantir seems to push themselves out there as a two-product company with some sales-staff. It's obviously not going to be turn-key software, there's likely to be some configuration and support stuff up-front. But once you, as a product company, get big enough, even those tasks can be handled competently by other companies. [1] But their product sales don't look to be a huge dollar amount. fbo has a couple awards from 2011 for ~$750k licenses. This is four years ago, but we're not looking at dozens of millions of dollars. edit here's an award for $20m for Palantir support to the war in Afghanistan. Note that DoD only reports contracts over $6.5m. So the bulk of their DoD awards must be falling under that threshold. edit here's a 5 year contract from DoJ for ~$10m. http://www.govconwire.com/2014/04/doj-selects-palantir-software-to-analyze-money-laundering-cases/ http://www.govconwire.com/2014/04/doj-selects-palantir-softw... hardly $20billion dollar valuation contract sizes. So it's likely most of their growth trajectory has been in specialized consulting services that direct customers to their products, but also use other tools and solutions. But again, once the ecosystem is big enough, the government can just try to compete that work out and hire another company to handle that work...companies that might not direct the solution-space towards Palantir's products. 1 - https://www.palantir.com/partnerships/service-providers/ https://www.palantir.com/partnerships/service-providers/

benhamner 11y ago

Looking at Palantir only as a software company is incredibly misleading. They sell high-ticket custom solutions to massive organizations that they leverage many of their internal software tools and libraries to build. This involves large amounts of custom product and engineering development, ingesting complex data sources, integrating with operational processes, and communicating results and insights back to the customer in a way that changes the customers behavior and adds value.