Palantir Lashes Out at Silicon Valley Ahead of NYSE Listing

Palantir Technologies recently released its prospectus ahead of its IPO, aiming to be listed on the New York Stock Exchange (under symbol PLTR) starting September 23. In a letter written to investors, CEO Alex Karp ripped apart Silicon Valley for what he believes is their unpatriotic behavior and stressed that his company will strongly stand by the U.S. administration. The company has announced plans to shift its headquarters from Silicon Valley to Colorado.

The letter

In the letter, Karp points out that Palantir’s software is used by the U.S. and allies to protect some of the most critical institutions of the society, like defense companies, manufacturing industry, the energy sector, and so on. He admits that Palantir’s line of work presents difficult questions. Since the company supplies software to the government that can be used in surveillance or assisting soldiers during an attack, there has been a debate about collective security vs. individual privacy as well as the power that machines and AI are having over human societies.

However, Karp writes that the key question is to decide how such technologies will be used and by whom. He states that society has basically handed over the development of technologies that run the world to a small group of engineers in an isolated corner of the country, Silicon Valley. Karp asks whether America should outsource judgment of moral and philosophical issues to these people. He answers that this should not be done since the “engineering elite” of Silicon Valley, even though very knowledgeable in software, have little to no idea how society ought to be organized or what justice requires.

Karp says that though Palantir was founded in Silicon Valley, it does not share the values that are commonly seen in the region’s tech sector. He notes that right from the beginning, Palantir had refused to mine, collect, or sell data, which is completely contrary to what some of the big tech firms do. He calls out the duplicity of calling Palantir’s work with American intelligence and defense agencies as “controversial” while most of the consumer Internet companies basically monetize their user’s behaviors, thoughts, and browsing habits.

Karp believes that Americans will only tolerate the excesses of Silicon Valley to the extent that they build something that is valuable for the public. The very existence of a private enterprise is the result of the state and would not be possible without the state. As such, Karp feels no qualms about helping U.S. agencies.

“Our software is used to target terrorists and to keep soldiers safe. If we are going to ask someone to put themselves in harm’s way, we believe that we have a duty to give them what they need to do their job. We have chosen sides, and we know that our partners value our commitment. We stand by them when it is convenient, and when it is not. The ability of our most vital institutions to protect and provide for the public requires the right technology. And we believe that as a result, over the long term, the strength and survival of democratic forms of government do as well,” he says in the letter, as reported by CNBC.

Company valuation

In 2015, Palantir was valued in excess of US$20 billion. However, most experts are currently valuing the company at just above US$10.5 billion. As such, the upcoming IPO of the company might not give it the valuation that many investors were expecting. The company’s revenue model is also a cause of concern. Palantir basically has just 125 customers.

In 2019, each of these customers spent US$5.6 million on average. During the first half of 2020, Palantir’s revenues rose 49 percent to US$481.2 million. However, the company made a net loss of US$164.7 million. In fact, in its 17-year history, the company has never recorded a single year of profit. In its recent filing, Palantir even admitted that it expects operating expenses to increase in the future due to which it may not generate any profit for some time.

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