![palantir technologies ipo reputation 2x1]()
- Palantir Technologies, one of the oldest unicorns in Silicon Valley, will face new levels of scrutiny when it finally reveals its financial information ahead of a public listing expected early this fall.
- The Peter Thiel-backed startup built its reputation as a secret purveyor of government spy technologies, supplying near-magical tools to law enforcement and military clients around the globe.
- But behind the scenes, Palantir has struggled to build the type of steady, recurring revenue model that makes other software startups so valuable on the public markets.
- As its long-awaited public listing approaches, much of Palantir's bread-and-butter work has transitioned to the sort of mundane enterprise software contracting that doesn't jibe with its cloak-and-dagger image.
- Business Insider spoke with nearly a dozen former employees, investors, and industry experts about the state of the business and found that Palantir's reputation might ultimately be stronger than its fundamentals.
- Visit Business Insider's homepage for more stories.
In 2017, Denmark faced a crisis of conscience.
The Danish police, flush with a nine-figure government grant meant to stop the next terrorist attack, had just signed a deal with Palantir Technologies for a "super weapon" that would bring "revolution" to the nation's crime fighters.
"It will be a quantum leap into a modern police force," the chief of police Svend Larsen told the Danish newspaper Berlingske. The system would help the police seamlessly integrate multiple sources of data about a suspect — even if all the cops had was a license plate or a telephone number — much faster than humans could ever do manually. In the future, Larsen said, Palantir would be able to help with predictive policing.
But the prospect of Palantir voraciously ingesting reams of personal data to help state investigators prevent crimes spurred a lengthy national debate over privacy and law enforcement in the traditionally progressive Scandinavian country. In April 2017, Denmark passed the Law Enforcement Act, which regulated and affirmed the right of the police to collect and store personal data on residents, and Palantir's contentious, data-aggregating superweapon was at last sanctioned by the state.
"The short version is that it works. They have delivered," Larsen told Business Insider over the phone one day in February, taking a break from his bicycle commute home in Copenhagen. "They are really agile, and really nice to work with."
Seventeen years after its founding, Palantir clings to its carefully cultivated reputation as a secretive, vaguely sinister digital enabler of government hyper-surveillance and political control. Named, like many of the billionaire cofounder Peter Thiel's creations, after an artifact from J.R.R. Tolkien's "Lord of the Rings" trilogy — the palantiri are mystical stones that permit the owner to see surreptitiously across vast distances — the company's self-styled mission is to "save the shire" from the malevolent forces arrayed against it. Its reputation as a bogeyman for civil libertarians has only grown more intense as the company doubles down on contracts with controversial entities like the US Immigration and Customs Enforcement and ethics-bending projects like the Department of Defense's Project Maven, widely seen as a major step toward autonomous killer drones.
But digital omniscience was only half of Palantir's promise — it was also supposed to make money. It was one of Silicon Valley's first legendary unicorns, a brash upstart that would use technology to upend the world of government contracting. Because it treated internal financial data with almost as much secrecy and furtiveness as its classified work, Palantir's condition as a business is a mystery to most outside observers. That will all change later this summer, when it is expected to finally — after a nearly two-decade delay almost unheard of for a venture-backed company — publicly file paperwork with the Securities and Exchange Commission announcing a public listing.
The move will at long last shine a light on Palantir's finances and put an indelible public price tag on a company that has thrived — reputationally, at least — in the shadows. On the eve of Palantir's long-awaited coming out, Business Insider spoke with nearly a dozen former employees, investors, and industry experts about the state of the business, uncovering its deepest, darkest secret yet: Despite the cloak-and-dagger image, most of Palantir's work is mundane enterprise technology contracting that is more Bill Gates than Lisbeth Salander. What began at the turn of the century as a private venture-backed magical spy outfit will finally hit the public markets later this year as a glorified human-resources vendor.
"I honestly think it's more boring than people think," one former employee told Business Insider. "There was always a secretive mystique about the company, but the reality is they were basically competing in the enterprise software space."
Palantir did not respond to a request for comment for this story.
Silicon Valley rejects
Palantir was founded in 2003 in downtown Palo Alto, California, by a team of Stanford alumni led by Thiel. The World Trade Center site was still an open pit, the US had just invaded Iraq, and patriotism was in vogue. The idea was to sell quick and nimble data products to the US government, which had a history of paying a lot of money to establishment players like Raytheon and Lockheed Martin.
"We were watching the government spend tens of billions on information systems that were just horrible," Joe Lonsdale, a cofounder who is now an investor with 8VC, told Businessweek in 2011. "Silicon Valley had gotten to be a lot more advanced than government contractors, because the government doesn't have access to the best engineers."
Today, Thiel is best known for his reactionary politics, strong political support of President Donald Trump, and personal projects like building autonomous island nations, vanquishing death, and bankrupting media companies whose reporting he doesn't like. But when Palantir launched, Thiel was the fresh-faced former CEO of PayPal, which eBay had just bought for $1.5 billion. He quickly grew his windfall as the first outside investor at Facebook.
In 2004, Palantir brought on CEO Alex Karp, who had a philosophy doctorate and a background in money management and who first befriended Thiel while the two were law students at Stanford.
Things were slow to take off for Palantir, which struggled to raise outside capital and didn't land a paying government customer until 2008. Its first two outside funding rounds, in 2005 and 2006, came from Virginia's In-Q-Tel, an investment firm representing the US intelligence and defense communities.![President Donald Trump and Peter Thiel]()
Karp attributed Palantir's funding struggles to Silicon Valley's bias against enterprise software and government contracting, a claim buoyed by the fundraising success of peers like Facebook, which raised $40 million in rounds led by the established Silicon Valley investors Accel and Greylock during the same period.
"It was very scary, since doing enterprise software [from] 2005 to 2009 was a little bit like starting a circus in the middle of Palo Alto with engineers," Karp later told TechCrunch.
Its earliest contracts — with the US Navy, the FBI, the Department of Justice, and the Centers for Disease Control and Prevention — were tiny by software standards, but they proved Palantir's thesis that it was possible for a startup to find revenue in Washington, DC.
A patriot's panopticon
Soon, Palantir seeded its reputation as a patriot's panopticon, siphoning up previously unknown data streams and deciphering relationships that are beyond the capacity of human comprehension alone. A 2009 story in The Wall Street Journal described Palantir as an increasingly integral part of the national security establishment and a favorite among "terrorist hunters at US spy agencies." The story credited Palantir with using information about money transfers, phone calls, and shared social ties to uncover terrorist financing networks and thwart planned suicide bombings. US officials told The Journal that the software was crucial for the war in Afghanistan.
Meanwhile, the company was cozying up to the National Security Agency, the American surveillance behemoth that vacuums up internet traffic and telephone records in bulk. While Palantir didn't do the collecting, NSA analysts used Palantir software to make data sets easier to digest, according to a 2017 investigation by The Intercept. It's unclear when Palantir first contracted with the NSA, but The Intercept found that the NSA's UK counterpart, Government Communications Headquarters, was aware of the startup as early as 2008 after its reps caught a demo at an industry trade show.
In the summer of 2010, the company raised $90 million in venture capital at a $735 million valuation, in a round led by Thiel's investment firm Founder's Fund. In coverage of the round, Box CEO Aaron Levie called Palantir "the Jack Bauer of business software," a reference to the fictional protagonist in the popular counterterrorism drama "24" who saves strangers from danger while simultaneously mistrusting and alienating everyone around him.
A hot startup lacking a crucial component: a product
In many ways, life inside the company resembled that of any other booming tech company, with branded T-shirts and team bonding rituals like staff-wide sleepover parties. Hordes of recent college graduates gathered in a common cafeteria for catered meals of Dungeness crab and whole roasted pigs. Caviar and Champagne were brought in for special occasions.
The youthful spirit also brought its challenges: In 2009, a 60-year-old employee named Bernie Cohen lodged a series of complaints to the cofounder Lonsdale and other senior leaders describing a drunken frat-house culture, including office games of "beer pong," Gizmodo reported in 2016. Cohen was fired soon after he complained, and threatened legal action against the company in response, according to the report.
Lonsdale himself was later at the center of a sexual-abuse scandal after his former girlfriend Ellie Clougherty claimed in a lawsuit that he raped her during their relationship, which started in 2012 while he was her mentor through a Stanford program to increase student access to networks in the tech industry. Lonsdale denied the allegations and filed a counterclaim against Clougherty. Both settled in late 2015 following a public battle involving both a Stanford investigation and coverage in The New York Times.
But when it came to business, Palantir was not like other tech startups. From the beginning, Palantir would take on a new client and build a custom tool to meet that client's needs. Employees, even engineers, viewed themselves as consultants, and while Palantir Technologies was one of the hottest startups in Silicon Valley, it lacked the one thing that made hot startups in Silicon Valley valuable: a product.
Today, the company has 21 offices around the world, as far flung as New Zealand (where Thiel became a citizen in 2011), with unique clients as remote as Trinidad. It has expanded its core mission of saving America to include America's allies, and it has deep business relationships with several European governments, including France. Europeans tout Palantir's ability to restrict which users can access which data sets, a feature that aids in compliance to local privacy laws but adds to the complexity of onboarding new clients. Working for Palantir meant constant "deployments" — living out of a suitcase for months at a time to work closely with distant customers — according to former employees.
With so much tailoring, Palantir never achieved the high-margin, recurring revenue model that made big-name enterprise software companies like Salesforce and Zoom such a hit with investors. But this fact did little to hold back Palantir's valuation. By 2015, the company had raised more than $2 billion and hit its peak valuation of $20 billion.
Drinking the Kool-Aid
The secretive ethos on display to outsiders wasn't so different from the internal culture, former employees said. To this day, employees on the government projects are siloed from employees doing less-sensitive commercial work. Code names are used internally in lieu of talking about customers outright, so employees rarely know what projects their coworkers are working on. And many contracts require such high clearance (Top Secret/Sensitive Compartmented Information) that only a single-digit number of engineers can work on the account. In especially sensitive cases, the bulk of high-clearance work gets contracted out through companies like PVM Inc., which has made $857,000 working on Palantir contracts for US Immigration and Customs Enforcement since 2016, according to public contracts.
Thriving under these conditions required a lot of buy-in, or what former employees described as drinking the Kool-Aid. With below-market salaries, and large equity packages for those who stick around, working for Palantir was a long game.
"We have the lowest salary in the valley. We have very low cash salaries and very low equity salaries, but the minute you start to perform you get a lot of equity," Karp said in 2014. "You really want your people to be focused on solving the problem, not on cashing in."
An earnest belief that Palantir was changing the world helped with the wait. There was constant internal communication around humanitarian projects such as disaster relief with Project Rubicon, or resource-sharing with a nongovernmental organization in Syria, to convince employees that their company is "not evil," former employees said.
In the later years, conviction was also Palantir's biggest strength when it came to recruiting against larger, more flush companies like Google and Facebook. One recruiter, who left the company in 2016, said his team pushed hard on the type of work that the company did and mocked fluffier coding gigs as working on "the thumbs-up sign at Facebook." Once hired, employees did a two-week orientation jokingly referred to as INDOC, for indoctrination.
"Back then there was an allure and mystique. No chatter about IPO or fallout from Peter Thiel or his Trump saga," the recruiter said. "We would make fun of the other guys."
Trump meets tai chi
Thiel and Karp's competing political ideologies and public personas made them an unlikely duo, leaving people both inside and outside the company curious how they have managed to get along.
Karp, often seen practicing tai chi around one of Palantir's campuses, had an academic demeanor. His unrelenting quirkiness was an asset at the company as it worked to persuade new government agencies to give a Silicon Valley company the time of day, according to both employees and business contacts.
"People who don't know him think he's quirky for the sake of being quirky, but he's an extremely impressive person when it comes to selling the business and closing," the recruiter said.![Palantir CEO Alex Karp]()
Karp, an avid skier, once challenged the national Norwegian Police Service to a ski race to negotiate the terms of a contract, another former employee said, before lawyers intervened and insisted on a more conventional process.
Strange encounters with Karp served as a sort of initiation ritual for newcomers to the company. One intern from 2017 described being summoned to an interview with Karp on 15 minutes' notice. When the applicant got there, Karp had his feet on the chair and confusedly asked the applicant whether he worked at the company. Without even being asked to sit, the person was offered the internship and ushered out of the room.
Karp's accessibility was in stark contrast to Thiel, who despite his deep financial investment and board seat has rarely been seen at company events in the past five years. When he does show up to one of Palantir's campuses, he will discreetly sneak away to a remote office space, former employees said. He rarely, if ever, addressed the staff at meetings.
Stuck below $1 billion
As protective as Palantir was about its clients, the company was never more secretive than when it came to its own financial health, details of which it kept closely guarded from investors and employees alike.
"They have been notorious for withholding most of the information," said George Iakovou, the founder of the secondary firm Vika Ventures, which buys private stakes in startups from existing shareholders, like employees and angel investors.
The few revenue figures that have slipped out over the years paint a wobbly picture of a slow-moving ship, lacking the type of hypergrowth that its valuation would normally suggest. It's unclear whether the company has ever exceeded the $1 billion annual revenue figure that leaked in both 2014 and 2019, and at times the numbers that have spilled out contradict prior reports or the company's own public statements.
In 2014, when Palantir was valued at $9 billion, the company said it expected to bring in $1 billion in revenue, mostly from private companies interested in customized products. Later, Karp told The Wall Street Journal that the "government side of the business went profitable" in 2014.
In May 2016, when the company was valued at $20 billion, BuzzFeed News got slides and audio that showed the company made just $420 million in cash for 2015, despite publicizing $1.7 billion in bookings for the year, a difference that can be explained by trial periods or performance bonuses, according to the report. After a reported $500 million in expenses that year, profitability once again eluded the company.
In November 2018, The Journal reported that Palantir pulled in $600 million in revenue in 2017, and expected to make $750 million in 2018 and $1 billion in 2019, citing people briefed on the figures.
Earlier this year, before Palantir filed to go public, the company told its investors to expect $1 billion in revenue once again, Bloomberg reported, and just a few months before, during an end-of-year video recorded while cross-country skiing, Karp told employees that the company was profitable in 2019, Business Insider reported in January.
Profitability is rarely the goal at venture-backed startups, which pride themselves on spending every penny on growth and scaling. In the case of Palantir's peers in the enterprise software sector, this usually means selling the same product to most customers, who pay a monthly subscription fee to access the software. What makes these companies so valuable is that they can grow their revenue without dramatically increasing expenses.
Palantir has struggled to replicate this model. To this day, most of Palantir's work involves high levels of customization, more aligned with consulting than selling out-of-the-box software.
"It was personally frustrating to have to work with tools that were not stable and hadn't been built," said one data scientist, who left in 2017. "I was doing consulting data stuff. It seemed clear quickly that the goal was to phase out of that."
Over the years, Palantir's efforts to explore routes to recurring revenue seemed furtive and desperate. In about 2018, the company explored whether it should sell cloud storage, like Microsoft Azure or Amazon Web Services, one former employee told Business Insider. That never happened, but last December the company did get federal approval to sell a cloud version of its software product, which historically relied on its customers to host data on their own servers.
For a couple of years, Palantir considered building out a cybersecurity team to help clients with massive data breaches, BuzzFeed reported in 2016, though the company ultimately decided against it.
Palantir also made an effort to build out its artificial-intelligence capabilities, though it's unclear to what end. Sometime in about 2011, the company started hiring a small cohort of people with doctorates, known internally as "QEDs" — a reference to the Latin mathematics cliché — and left them in a room to figure out the future of technology, according to two employees familiar with the program. While their presence was known throughout the company, like most things at Palantir, employees outside the QEDs had little insight into what they were working on, the people said. The program stopped hiring around 2016, and by 2019 that dozen slowly dwindled until there was nothing left of the burgeoning research-and-development lab.
"AI was not a big investment," the data scientist said. "It was at some point, and then it was seen as a mistake."
'There was a sense that they wanted us to feel it was magic'
It wasn't until 2016, 13 years after its founding, when Palantir ironed out its business model and found a way to move past its underwhelming growth.
Part of Palantir's recent financial success can be attributed to political will. In late 2016, as Trump prepared to enter the White House, Thiel joined the transition team and filled key government positions with allies. Among them is Michael Kratsios, Thiel's former chief of staff, who joined the administration as a technology adviser to Trump before being promoted to chief technology officer of the White House in 2019. (In July, he took on a new role at the Pentagon.)
At about the same time when Thiel's bet on Trump paid off in November 2016, Palantir prevailed in a long-running lawsuit over the Army's $6 billion contract for DCGS-A, a centralized computer system for managing military intelligence. Palantir had argued for years that it was unfairly shut out of the bidding process, and a US Court of Federal Claims agreed, opening the doors to giant contracts it had only dreamed about before.
![Michael Kratsios at National Space Council]()
By 2017, Palantir's second big bet came to fruition when it finished a two-year push to transform its sprawling constellation of bespoke tools into two formal software products that it could sell at scale: Gotham for law enforcement and Foundry for commercial clients.
Gotham, its investigative product, aggregates data to create comprehensive profiles based on names, phone numbers, and license plates.
It's the platform used by the Los Angeles Police Department and the Sacramento County Sheriff's Department, by foreign police forces like Denmark's, and by US Immigration and Customs Enforcement, which used a custom version of Gotham called "Falcon" during workplace raids, leading to the arrest of more than 1,500 people over civil immigration violations from October 2017 to 2018, according to WNYC.
"It was just amazing how stuff would get linked by this phone number, by this address. And not only linking, but it would show you who or what is at the center of all that," Claude Arnold, who served as a special agent in ICE's Homeland Security Investigations division in Los Angeles until 2015, told WNYC.
On the commercial side is Foundry, a data-integration platform that began as a custom project for the hedge fund Bridgewater Associates. It's used by Palantir's largest customer, Airbus, as well as some on the government side like the Food and Drug Administration. "Think of it as almost a data highway, with on-ramps and off-ramps to multiple use cases and multiple sources," Mark Beyer, a distinguished research vice president at Gartner, told Business Insider.
Coca-Cola, American Express, and Nasdaq have all come and gone as customers using a precursor to the platform called Metropolis, as documented in a 2016 leak to BuzzFeed News. At JPMorgan, which started working with Palantir in 2009, the platform was used by a rogue security operative to illicitly spy on senior bank executives, according to a Bloomberg Businessweek investigation from 2018.
"The commercial product didn't even seem like it was revolutionary or impressive. It was simple, and built on top of an open-source product," said the engineering intern who worked at the company in 2017. "There was nothing I would call shady. It was a very standard data-processing tool. Consultants would try to find a use for these tools. There was a sense that they wanted us to feel it was magic."
Confronting an educated market
There was a time when it was like magic. When Palantir first got to market, its biggest competitor was another reclusive company called Ab Initio, which, like Palantir, was rare at the time because it treated data as a moving thing.
"Fifteen years ago, the way that Palantir currently does data integration and built this type of solution was highly distinct," said Beyer, who advises companies and governments on which data products to buy. "The level of distinctiveness is now being challenged by other data-integration vendors. The market itself has been educated, and the vendors and providers have features that match a lot of what Palantir used to have as distinct."
Today, Palantir's biggest competition comes from data-integration companies like Informatica, Talend, Denodo, and Cambridge Semantics (not to be confused with its democracy-upending name twin in the analytics space), according to Beyer. And despite its best efforts, there's little evidence that the company ever succeeded in creating fully out-of-the-box analytics tools. The bulk of its projects still require customers to sign up for professional services, Beyer said.
Until Palantir discloses its financials, it's an open question what impact these customers, which the company has positioned as a key component of its growth, have had on the business. As of 2016, such private customers made up 75% of Palantir revenue, according to Fortune. But in 2018, The Wall Street Journal reported that private customers made up just half of its revenue. At the time, the company told investors that these customers would eventually make up 70% of its revenue, according to that report.
In either case, it takes a lot of Foundry customers to make a dent. Palantir's contracts in this space are relatively small and often hover near the $20 million mark, former employees told Business Insider.
That could explain why Palantir has continued to take on controversial government jobs, even as activists protest outside Karp's home and employees leave for less political posts. Government jobs still make up the most formidable chunks of Palantir's revenue, proving that the company's biggest strength is customized builds in which it's competing against clunky, old-guard rivals.
In December, the company announced a new $111 million contract to build an Army military-readiness tool that pulls together data about soldiers, including location and mental-health status, to establish which troops are ready for deployment. It's functionally a mix of human resources and supply-chain software, with human beings as the product being managed.
Palantir ultimately beat out competition from the professional-service companies Accenture, Deloitte, and Ernst & Young, as well as a peer in the enterprise software space, Microsoft.
The company has also won several major contracts in 2020, totaling over $150 million in new awards this year. Some of that is from an $823 million Army contract, which Palantir is working on with the airplane and tank manufacturer BAE Systems, to build out the next phase of DCGS-A. Another part is a new $80 million contract to build a logistics-management system for the Navy, which Palantir won out from under Raytheon.
ICE marked a turning point
The Trump administration may have opened the doors to Palantir's biggest contracts, but by the end of Trump's first term the company's intimate association with Trump and his agenda has become a major liability.
In 2019, the world stood horrified as the US separated migrant children from their caregivers and housed them in dirty and dangerous border detention facilities. Employees across Google, Amazon, Microsoft, and Salesforce protested their employer's contracts with related agencies like Customs and Border Protection.
Many CEOs, including Salesforce's Marc Benioff, publicly questioned whether they would work with immigration agencies in the future. Others, like Microsoft CEO Satya Nadella, quietly reassured employees that their work was not being used to separate families at the border.
Palantir, on the other hand, seized the opportunity to publicly flatter its most important customers.
"Silicon Valley is telling the average American 'I will not support your defense needs,'" Karp told CNBC in a January 2019 interview from the billionaire stronghold of the World Economic Forum in Davos, Switzerland. "That is a loser position. It is not intelligible. It is not intelligible to the average person. It's academically not sustainable. And I am very happy we're not on that side of the debate."
![Activist protest Palantir and ICE in New York City in September 2019.]()
Palantir doubled down on its work with ICE and renewed a contract worth $50 million in August 2019. Altogether, ICE (code name Mystery Inc.) has spent about $150 million with the tech company since 2011.
That same month, Thiel argued in a New York Times op-ed that it was "naive" and "bad for America" that Google continued to work in China while refusing a contract to support the US government's Project Maven, a Defense Department effort to build artificial intelligence for drones.
What Thiel didn't mention at the time was that after Google dropped Project Maven, Palantir secretly stepped in and took over the job, as Business Insider reported last year.
Despite the strong line that Karp and Thiel took in public, the ICE contract marked a turning point for dissent within the company. Employees started to question whether there were any limits to the company's ambitions, engaging in lengthy conversations over Slack whenever a news story came out about ICE's excesses, one employee said. Eventually the director Akash Jain held small meeting groups with angry employees to hear their demands.
About 200 employees signed a letter to Karp expressing concern about the ICE contract, The Washington Post reported. Separately, 60 employees signed a petition that asked management to donate the profits from its work with ICE to a charity, according to the report. After Palantir renewed its contract, employees started to leave the company over the ordeal.
"I completely understand the effort to enable our government in terms of technology," one of those former employees said. "But the abuses of this government and the unnecessarily inhumane overstepping to prove a point really soured me in terms of the government work. It became harder and harder to explain this to myself and my friends."
Later, when Axios asked Karp about Palantir's work with ICE in May of this year, he lamented the employee departures and said he had personally suffered pushback from his family and friends. "I've asked myself if I were younger, in college, would I be protesting me?" Karp said in the interview.
Concerns about Palantir's ethical status resurfaced this spring following reports that the Centers for Disease Control and Prevention was working with Palantir to track the global spread of coronavirus. The company has a similar deal with the UK's National Health Service and had reportedly pitched several European countries on its software.
The CDC (codename Spin Doctors) is one of Palantir's longest-standing customer relationships, though the agency has struggled to convert the center into a big spender.
The CDC started out using Palantir's investigative platform Gotham, but it eventually moved onto the commercial platform Foundry, which it used to aggregate and track data about outbreaks using a database that tracks pathogens and anonymized data about which people are sick. Though its contracts span the past decade, the CDC mostly spent six-figure sums each year; its largest contract, for $5.1 million, was in 2015 as the CDC responded to the Ebola outbreak in West Africa. As coronavirus ravages the US, the CDC has only two active contracts with Palantir: one from September 2019 for $1.5 million and one from February for $677,000.
Despite Palantir's long relationship with the CDC, and the shire-saving mission of public health, news of their partnership sparked fears that Palantir could use data gleaned from the CDC in its efforts to help ICE hunt and expel people living in the country illegally.
"Our existing privacy laws are woefully inadequate to protect the sensitive and personal information that Palantir will analyze," Amnesty International's Michael Kleinman and Charanya Krishnaswami wrote in The Washington Post on May 21. "Without adequate protections, we run the risk of massive, ongoing government surveillance of all Americans in the name of public health."
Money before politics
On Valentine's Day of this year, Palantir informed its employees that they would not be receiving the cash bonuses they had been expecting as a reward for what Karp had told employees was the first profitable year in the company's history. Instead, the company would slowly move toward restricted stock units, a form of equity that is worth something only if the company gets acquired or goes public.
The change meant less tangible compensation for an increasingly frustrated employee base, who like many of the company's investors were eager to cash in on their long-held equity. For years Karp had publicly distanced himself from the idea of going public, and Lonsdale called an impending initial public offering "fake news" as recently as June 2019. Some of the more optimistic employees and alumni, long accustomed to reading into hieroglyphic company updates, took it as a positive sign that Palantir the company was finally getting its finances in order for a public offering.
Behind the scenes, Palantir was weighing its options. Despite deflated rumors that the company would go public in 2019, the company had also put out feelers for a new funding round to add to the $2.75 billion it had already raised. The new round would have valued Palantir at $26 billion, according to a Reuters report from September.
In mid-June, amid reports that an IPO was imminent, the company raised $500 million from the Japanese company Sompo Holdings at an undisclosed valuation. Finally, on July 7, the company announced that it had confidentially filed a draft S-1 with the Securities and Exchange Commission, the first major step in taking the company public this fall.
With perhaps just months to go before an IPO, Palantir and its leadership team have taken steps to distance the company from its long-held images as a clandestine surveillance company in bed with a white nationalist government.
Less than four years ago, Thiel stood at a lectern at the National Press Club in defense of Trump urging voters that "what Trump represents isn't crazy and it's not going away." But a week before Palantir filed confidentially, news leaked that Thiel had told friends and associates that he would not campaign for Trump leading up to the 2020 presidential election.
The company also expanded its board to meet California regulations that require public companies to have independent board members and at least one director who is a woman. On June 23, the Wall Street Journal reporter Alexandra Wolfe announced she was leaving journalism to join the company's board. In the same news cycle, as Americans protested police violence against Black people, Palantir acknowledged for the first time that while the rest of Palantir's directors were white, Karp is mixed race — his mother is Black.
With its coming public listing out in the open, Karp's recent comments on Palantir's work with controversial government agencies also take on a new light. In his interview with Axios, Karp mused about the ethical questions Palantir faced and acknowledged outright that its products were used to kill people.
Asked whether Palantir used its government contracts as an excuse to be less transparent as a company, Karp smiled wryly.
"You know," he said, "sometimes you luck into things that work well for you."
Are you a current or former employee at Palantir? Contact this reporter at bpeterson@businessinsider.com or DM on Twitter at @beckpeterson.
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