Palantir raises $680M

https://uk.finance.yahoo.com/news/u-data-company-palantir-raises-003057349.html

by bane • 11 years ago

62 67 11 years ago

uk.finance.yahoo.com

Data is the oil of the 21st century.

This one seems like the sleeping giant of the top venture-backed companies. I suppose the media can't as easily describe and talk about it and understand it as much as Uber or AirBnb, so they just move on to the more fun companies.

drcode• 11 years ago

I don't know, I'm not seeing a "sleeping giant" here... Plantir has been around for a long time already at this point- Getting an additional cash infusion, especially one so small for a company of Palantir's size, sounds like the move of a company that is struggling.

huntermonk2• 11 years ago

I see what Joseph is saying about that macro trend. In Austin, RideScout (Kayak.com for transportation options) just sold for ~$100m to Daimler AG with only tens of thousands of user.

The importance to Daimler was seeing all the driving and traveling data for each user.

duaneb• 11 years ago

They are sleeping in the sense that they go under the radar of most of the public in spite of being massively influential.

ryporter2• 11 years ago

This raise is relatively small because it is a continuation of the previous raise. To me, it actually sounds more like a bullish sign that they were able to raise more than their target amount at such a high valuation. The investors had access to far more information than we outsiders do. If Palantir were truly "struggling", then they likely would not have been able to secure more investments at that same high valuation.

hyperbovine• 11 years ago

Data is the oil of the 21st century.

Interesting. So you're saying we'll reach "peak data" in about 100 years?

joshmn• 11 years ago

There's only so much to know. What's more important is what we do with it, and how we apply it.

paulddraper• 11 years ago

Well, we'll keep getting better and better at extracting more worthwhile data, and increase our ability to use the data we have. And data will allow extensive growth (of business). It might be reaching, but yes, kinda.

alex_hirner• 11 years ago

Interesting thought, I suspect there is something like peak computation per ft^3 and we will hit such barriers earthbound (with quantum computing being the equivalent to solar+cheap storage for this problem).

josephjrobison3• 11 years ago

I think like oil, we'll keep finding new ways to dig deeper and get more out of it through innovations and new technologies, don't you agree?

sremani• 11 years ago

I disagree with the analogy. Human population will not grow from 1 billion to 7 billion because of data, that is the kind of change we got with oil. Oil is a hard asset, data is not entirely hard asset.

wbc• 11 years ago

can you explain how oil enabled human pop to go from 1b to 7b?

argonaut2• 11 years ago

Everyone in tech knows about Palantir.

personjerry• 11 years ago

Soon Palantir will also know about everyone in tech.

sawwit• 11 years ago

The snake oil?

adenadel• 11 years ago

According to Crunchbase this is the 17th round of funding. That seems insane to me.

jsprogrammer• 11 years ago

You don't let your key spy software company fold up.

onion2k2• 11 years ago

Series Q. Quite appropriate in a James Bond spy movie kind of way.

mtgx• 11 years ago

But Palantir is that villain trying to put everyone under surveillance.

MaxScheiber• 11 years ago

To be clear, they raised $129M in this exact round of funding, which complements $550M previously raised in 2015.

bane4• 11 years ago

They also raised $605.49 in 2014. Total funding to date is $1.8B over 17 rounds. At a $20B valuation this puts them at about 11:1 valuation over funding, which is informative about their investors guess into their growth prospects.

https://www.crunchbase.com/organization/palantir-technologie...

nthitz• 11 years ago

Can anyone please give a non-vague answer to what Palantir does?

BinaryIdiot3• 11 years ago

As someone who has worked with Palantir and used their products in various, indirect and proxy contexts it gets confusing as to what you can talk about and what you can't depending on god knows what 15 papers you signed to be on the contract which has access to Palantir.

I suspect this is a big part of why people don't talk about it much and why their website is so incredibly vague and, honestly, really terrible at explaining what they do. I found this Quora question and answer which ultimately doesn't really describe what I have interfaced with before https://www.quora.com/What-specifically-does-Palantir-do. Perhaps I simply didn't interact with that part of the product.

Sorry for the semi vague and terrible answer. Briefly looking at some of these videos may be of help as it shows Palantir and other software doing some sort of entity extraction from documents https://www.youtube.com/watch?v=3NAVSyfjcDo

nimrody• 11 years ago

Thanks for the video link. This video: https://www.youtube.com/watch?v=dVsx4I8gkKk is very impressive.

hendzen• 11 years ago

Palantir has a core team of engineers building out a very general data analysis framework. Their core product consists of a GUI for manipulating and sharing annotated graphs (i.e. edges and vertices). The actual edges and vertices of the graph can have complex types defined by some arbitrarily detailed ontology. The GUI also includes tools for producing visualizations and charts from numerical and textual attributes of the edges/vertices. The core product is very powerful when configured properly and it is used to solve important problems in both government and industry.

Palantir also has a much larger corps of consulting engineers (FDEs in Palantir parlance) who actually build the ontologies, import a customer's data in to Palantir, and then provide ongoing support to users. A huge portion of this work is writing scripts to munge the data from arbitrary formats (SQL tables, CSV, Excel, etc) to the format supported by Palantir. A core reason for Palantir's success is that they convince large numbers of top engineering students from MIT, Stanford, Berkeley, Harvard, etc, to do this relatively unglamorous work for below-market pay.

Due to the imbalance in headcount between core engineering and the consulting division, Palantir, in practice, operates more similarly to Accenture or McKinsey than to Google or Facebook. However, for some unknown reason, their valuation seems to be calculated like that of a high margin software company, rather than like that of a low-margin services business. In particular, to increase revenue by N dollars, Palantir needs to hire O(N) employees.

dkarapetyan• 11 years ago

Yup, correct on all counts.

serge2k• 11 years ago

A core reason for Palantir's success is that they convince large numbers of top engineering students from MIT, Stanford, Berkeley, Harvard, etc, to do this relatively unglamorous work for below-market pay.

how?

spacecowboy_lon• 11 years ago

Mkinsy and co are not low margin bushiness - they charge chunky day rates for new grads.

spdionis• 11 years ago

I can confirm that Palantir is considered a top choice (among google, facebook, etc.) or even better among the best students in romanian top engineering universities. They say that their interviews are even harder than e.g. google's.

deskamess• 11 years ago

Any examples of how much 'below market rates' their salaries are? I was under the impression it was on par or slightly below. The Googles/Facebooks/MS are usually well above market rate.

crdb2• 11 years ago

TL;DR: it's the McKinsey of this century.

From my relatively limited experience in the space: most companies have trouble actually doing anything with their data beyond slicing it a couple of ways [0] and making bad graphs with it; these same companies also have a lot of trouble hiring and retaining [1] people capable of doing it (I know because they end up my clients).

Palantir will offer large amounts of money (despite accusations of below market pay; although a good portion is in equity) and a half-decent lifestyle-wise, not too corporate environment to young smart engineers to go and help them outsource that function for the kind of companies that do not care about paying large fees to "get the best", and for whom the consultant status helps cut through the red tape.

The "products" are, from my limited understanding, more like a loose collection of accumulated knowledge from clients which can help future deployments not reinvent the wheel (particularly since so many of the engineers are young and inexperienced). This is also a selling point. "We get it right because we did it before with all these prestigious clients".

Each client has its own infrastructure and schema, and so most data related projects are naturally oriented towards a lot of manual effort - talking to technical staff, reading through code, understanding the data customers and feedback loops... and whilst many companies in the space pretend to offer "plug and play" BI (or data science, or whatever) in practice without a strong data team behind it, these end up failing pretty badly. So I see Palantir's competitive edge as its staff, not its products, and I don't think much (as a data professional) of pure product data companies.

In many ways, Palantir is what McKinsey was half a century ago: it offers job variety and a pick of the best clients to the "top ranked" fresh grads and early professionals; it offers these "guaranteed fresh" minds to clients who have trouble attracting them in-house to solve difficult problems that can't in theory be solved by the internal talent pool; it brands itself as the "top" company globally doing this. If it is successful, it will just keep growing its competitive advantage ("you don't get fired for hiring IBM"). And I think their focus on people instead of software is a great idea in an age of exceptional open source products and ever cheaper hardware.

Where might its cash flow come from? I see two sources:

a. as you get further into a data project, you've built the infrastructure and it is comparatively easy to provide answers. For example, once I'm done with a data warehouse, I can produce a complex report or query answering just about any question management can throw at me in 10 minutes to 2 hours; this will take them two weeks to use. So the time actually spent working, vs the monthly retainer, just keeps going down with time (and of course experience - if you wrote the query for another client you can just change the variable names and output).

b. the value add from getting the data right is extremely high. Cf [0] below. For many modern companies it can be the difference between a 50% increase in profits and not being a going concern the following year. As CEOs realize this, and realize that no, you don't get "80% of the quality for 20% of the price" by going for the lowest bidders, prices track up and stay there.

[0] Most classically trained managers that I've met are unable to cope with more than 2 variables at the same time. A graph is basically a 1D or 2D model with your brain and past experience being the curve fitting. This becomes an issue if the business model fits 20 or 100 dimensions better (e.g. many trading strategies and even market making) and most of your competitors are very comfortable with it.

As an example, I've witnessed two e-commerce companies in the same country with a 10x difference in conversion rate; one had statisticians to manage its marketing spend, the other preferred going by the traditional way of "if its conversion rate is high I'm going to add more budget".

[1] I know an exceptional data scientist who changed jobs 4 times in the last year... each workplace bidding him up!

georgespencer• 11 years ago

[1] I know an exceptional data scientist who changed jobs 4 times in the last year... each workplace bidding him up!

I'm guessing the list of people who want to offer him a full time role now is enormously diminished. (I find it really hard to believe he was offered "can't turn it down" deltas at each new role.)

bane4• 11 years ago

They build two different, non-overlapping products (or at least they did when I last looked into them about 3 years ago).

1) A collaborative semantic graph tool [1] -- this is the thing they're best known for. The client tool is a unified interface for both adding new information to the semantic graph as well as searching/exploring what's already in the graph. It does this in a way that scales to a fairly large number of simultaneous users and allows organizations to build and explore collective "knowledge". The input focus is on manually selecting and "tagging" semantic elements in free-text, aligning those with the system's ontology framework and even connecting together different semantic elements with certain constrained relationship types. [2] Over time this aggregates into a hihgly curated knowledge-base that can be mined more efficiently than reading lots and lots of reports and news articles.

They support a few other odds and ends (maps, various statistical tools on the semantic graph, different search methods). There's plenty of other vendors that do parts of this, but Palantir brought excellent user interface design and better collaboration tools to the party.

These days, their core semantic graph tech could probably be replicated by half a dozen engineers using HTML5 technology and some sort of scalable hadoop-like back-end in a few months. It's not that interesting of a technology. On a personal level, you could do...~70% of what they do with something like yED or Visio. Protege [3] would probably get you another 10% of the way there. A good google docs-style collaboration another 10% and so on. There's nothing uniquely revolutionary about the tech other than they brought it together in the right way.

My impression is that most of the money they make is on integrating customer data sources into the tool so users have more things to markup and add to the knowledge base. Enterprise integration is a very lucrative and time-consuming job and a competitor's quick rewrite (like I mention above) won't be able to compete against Palantir's entrenched relationship and large marketing teams. This is where most of their engineering resources are going at the moment.

2) A "big data" statistical exploration tool meant for finance. [4] I don't know much more about it other than they designed a new language for it and if connected up to the right kinds of data sources looked really powerful in the videos I saw of it in action.

They have lots of open positions all over the world, which makes me think they have lots of offices all over the world, which means they do lots of sales and marketing globally, penetrating new markets. My guess is that the huge numbers of enormous funding rounds go into marketing pushes into different verticals and locations.

They used to have a demo on their website you could play with, but they've taken it down. The tool was nice looking for 2010-ish, but it had a Java JRE requirement that was pretty old and wouldn't run on newer runtimes.

1 - https://www.youtube.com/watch?v=f86VKjFSMJE

2 - https://www.youtube.com/watch?v=l-UrRJMDGWc

3 - http://protege.stanford.edu/

4 - https://www.youtube.com/watch?v=U8YMPS_DZPk

unixhero• 11 years ago

Pardon my ignorance. But at a funding level of USD680M, isn't it more prudent to do an IPO?

loosescrews2• 11 years ago

They don't seem to think that is a good idea: http://www.cnbc.com/2014/03/19/free-advice-dont-go-public-sa...

nova22033• 11 years ago

best known for helping the U.S. government track down al Qaeda leader Osama bin Laden

Is this true?

kqr2• 11 years ago

Yes. Their software analyses connections between people and locations in huge databases of call records, email correspondence, money transfers and so on and so forth.

bane4• 11 years ago

No.

discodave• 11 years ago

Why do they need more cash? This seems like a business model where they should be profitable already. If they are not, what do investors expect to change to lead to the profits-promised-land?

Contrast to Atlassian which built an (arguably) much more scalable software business with much less funding.

ryporter2• 11 years ago

I don't think that, strictly speaking, Palantir "needs" more cash. However, it puts them in a more secure position grow aggressively, even if markets take a hit in 2016.

Contrasting them to Atlassian, Palantir is much more ambitious. While they are best known for their government work, they are now far more than a government contractor. They have very strongly expanded to into many different other fields, and aim to be the data analysis leader, period. In that sense, they are a more scalable business.

To be clear, I'm certainly not saying that Palantir's approach is any way superior. It is certainly more risky. My point is that, while Atlassian is steadily profitable, Palantir is pursuing a path of "Go big, or go home." Raising more money lowers the chance of "going home."

(Disclosure: I worked at Palantir from '06-'08. Everything I post about them is my own opinion based on publicly disclosed facts.)

adventured• 11 years ago

How do you know Atlassian has a much more scalable business, without knowing the specific details of Palantir's business operations, its growth rate, its profitability, its revenue, etc?

Besides, what's bigger than spying and gathering data on citizens these days? Governments around the world are allocating increasingly vast sums of money to it. It's certainly a drastically larger business opportunity than Atlassian's $319m in sales (after 13 years). Governments are not going to spend less on what Palantir does, they're going to spend a lot more, and then after that they're going to spend a lot more. What would it be worth to be one of the principle software contractors for the US Government for the next 20 years, and perhaps the five eyes in general? How about a $60 billion market cap like some of the other big defense contractors? Why not... that's the age we're entering.

sgt• 11 years ago

I am just curious - what kind of technology does Palantir use? By that I mean - what kind of databases, which programming languages, how do they scale and so on.

loosescrews2• 11 years ago

I don't know about the databases, but I know they use a lot of Java. I think they might have their own database.

MasterScrat• 11 years ago

For frontend they use TypeScript: https://www.palantir.com/2013/12/announcing-three-open-sourc...

oliv__• 11 years ago

Haha first time in a while that I see a link to yahoo.com on the front page. Marissa is that you?

Palantir raises $680M

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