Palantir Business Model & Valuation

Palantir Business Model and Palantir Valuation Analysis – Unicornomy

Palantir Business Model
Palantir Business Model

About Palantir, Founders, Funders and Facts

Well, Palantir is someone that many start-uppers don’t know about, YET!

This is no surprise to me since the firm is almost 12 years old as of the day or writing this post, but has ZERO PR for its activities and to what it does.

This has to do with the fact that all of palantir’s clients have a strong NDA to protect their identities and the fact that palantir can not publicize them as their clients.

But Palantir Valuation will blow your mind.  Let’s get onto it.

Palantir Founders : Palantir is founded by the Original Mafia of PayPal i.e. Peter Thiel in 2004 and by Alex Karp, Joe Lonsdale, Stephen Cohen, and Nathan Gettings. Peter is the largest share holder till date.  Also Peter Thiel is the Author of the StartUp Famed Book “Zero to One” which gives lots of insights to startup founders about how and why of running their companies.

Palantir Funding :  Palantir has raised massive Equity rounds at sky high valuations.  Good old Tiger Global, The CIA (via In-Q-Tel Fund), Founders Fund (Thiels own Fund) are primary investors.  They have cumulatively put in around $1.800 billion into Palantir to boost its Valuation to $20 Billion.

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Palantir Business Model

Palantir Business Model is developed around its technology by employing best computer scientists and analysts from intelligence agencies over three years, through pilots facilitated by In-Q-Tel (lead and the first investor). The software concept grew out of technology developed at PayPal to detect fraudulent activity arising out of frauds of credit cards and refunds, much of it conducted by Russian organized crime syndicates. Palantir proposed using human analysts to explore data from many sources, called intelligence augmentation.

Palantir is essentially an Enterprise Software Company with a SaaS model (B2B SaaS) with lot of Customization to the software as per the demands of the clients with an On-Premise Installation.  The software is a BIG DATA crunching machine which combines data from multiple sources and gives out predictions on input datasets.

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Clientele are Governments, State Agencies, Financial Fraud detection Agencies, Anti Terrorism Agencies etc.

Clients of Palantir Include : At least twelve groups within the US government, including the CIA, DHS, NSA, FBI, CDC, the Marine Corps, the Air Force, Special Operations Command, West Point, the Joint IED-defeat organization and Allies, the Recovery Accountability and Transparency Board and the National Center for Missing and Exploited Children.

Palantir Valuation

The basis for such a high palantir valuation is the fact that this is very secretive business with a very high entry barrier.  Thiel took 6 years to get into FBI for them to use Palantir for their data analysis.

The contracts are very high in value from as small as $1 million a month to about $100 million per year in revenues from the same client.

Combining the immense sticky nature of the product with the high ticket size and the extremely high entry barrier the valuation multiple that this company gets is about 20X (a billion dollars in revenue with 20 billion dollar worth value).

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Palantir Valuation
Palantir Valuation

Palantir Business Model

Palantir has software engineers that develop the software for big data analysis of various input fields for connecting the dots.

These engineers are deployed on client side (statistical analysis) along with on premise installation of the software that Palantir developed.

The client is charged for the employee and the software both.

Palantir Technologies Revenue Lines

Palantir Technologies
Palantir Technologies

Palantir Technologies has following products:

Palantir Gotham
Palantir Gotham (formerly known as Palantir Government) integrates structured and unstructured data, provides search and discovery capabilities, knowledge management, and secure collaboration.  Palantir’s privacy controls purportedly keep investigations focused, as opposed to the expensive data mining techniques that have drawn criticism from privacy advocates concerned about civil liberties protection.

Palantir Metropolis
Palantir Metropolis (formerly known as Palantir Finance) is software for data integration, information management and quantitative analytics. The software connects to commercial, proprietary and public data sets and discovers trends, relationships and anomalies, including predictive analytics.

These softwares are sold to corproates and governments on a per annum subscription basis.

Disclaimer : How does Palantir Make Money & Palantir Business Model is completely the view of the author.  Use discretion while using the information, unicorn economy not responsible for loss arising out of the use of the information.

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