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A Summary of

Palantir and the Chaos Dance

by
Mario Gabriele
The Generalist
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A Controversial IPO

  • One of the most controversial and polarizing IPOs of 2020 is for a company that's business is quite murky
  • For a company with a revenue run rate of $962mm and gross margins of 55%, the largest concerns are not regarding business risk, but political risk

Palantir's Origins

  • After selling PayPal for $1.5bn, Peter Thiel decided to start a data-mining engine
  • After 9/11, Thiel realized the value of data in solving complex and unpredictable situations
  • Thiel was also inspired by PayPal's fraud-detection called IGOR and felt that model could be applied to identifying and tracking threats to national security

Product

  • Palantir's S-1 is bold in its commitment to what it does
  • The company has two principal software platforms:
    • Gotham - Palantir's first product, built specifically for the US intelligence community for counterterrorism investigations and operations
    • Foundry - solves "needle in a haystack" data challenges for commercial enterprises

Market Environment

  • Very tough to value this esoteric and murky market
  • Palantir estimates their TAM to be $119bn, divided between $26bn in domestic public sector opportunities, $37bn in international public sector opportunities, and $56bn in private sector opportunities
  • Palantir is banking on expanding revenues in two channels: public sector opportunities with US strategic allies and commercial enterprise
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