Alex Karp on the Moral Responsibility to Shareholders
Does Palantir have a responsibility to appease shareholders, or to operate a business how they see fit?
“I want to go back to something you're talking about on stage. Where you've been active, the war in Ukraine being one example, but also Healthcare. And when you sit down yourself, because I know you've done a lot of the deals with public sector in the past 20 years, but also private sector, how do you get across that data competency is an advantage in Warfare or in healthcare?”
“It really depends on the unit. Ukrainian context, they had talked to the most important Clandestine Service in military in the world. They unanimously recommended Palantir and they're very technical. Then you have newer clients, at this stage my basic thing I tell clients/partners is ‘look everyone will tell you the same stuff, it all looks the same why don't you just see our stuff in action or talk to people who've used the software’ you know if you're going to buy the software off of PowerPoint don't buy us. You want to talk to someone who's used our software you'll buy us.”
“I know you're proud of your engineering team, you lead engineering right. But you've also done a lot on the sales side. I noticed that when you've grown the sales team it's been more on the private sector focus. Is that strategy working for you?
“It's definitely working in the US.”
“Elsewhere, we're at the beginning. Look, we didn't have sales people until a couple years ago, so a lot of this is figuring out how we can do this. I think we've kind of gotten pretty close to cracking the nut in the US, and then we have to expand it outside the U.S.
“You like working with the government.”
“Well I'm proud to work with the US government.”
“But you don't sell to China or operate in China with Chinese companies. Is that a sort of corporate patriotism, or is there no demand there for you?”
“Well we, for 20 years, when it was popular and investors thought it was crucial to work in China. We've said the same thing, there's no distinction between public and private entities there. Our products are actually also weapons of war. And we're not going to sell them directly or indirectly to our adversaries. This made us enormously controversial in Silicon Valley, and still makes this controversial in Silicon Valley. Quite frankly it's one of the decisions I'm most proud of. We are a company whose most important purpose is to power the West to even higher Heights, in the commercial and in the government context. We've done this in anti Terror, in the context of the pandemic, in the context of war, in the context of data protection, and you really can't do that if you're going to also transfer those Technologies indirectly or directly to your adversaries. And we've never done it.”
“You were talking on stage about how you're a public company and you have a responsibility to your shareholders. At times in the last 20 years, shareholders have complained to you - like why are you doing this? It's loss making, or why are you not doing that? - and we talked about your strategy, investors haven't really cheered it if you purely go off the share price performance. What is your message to them today about the deals announced?”
“So we are a company that has a primary mission. The primary mission is to make the West stronger and better. That mission has secondarily led to 61% CAGR over 20 years, 35% CAGR in the U.S Government. The share prices thing is I think a little bit of a red herring because it all take us down. I don't think our shares have been any more punished than anyone else's. So, if you are an investor and you want to go long on transforming our country and our allies, you have a hame at Palantir. I have never ever wavered from that statement. And if you're investing in US, thinking I'm going to change, you're making a mistake. We lay our cards on the table, there is nothing besides transparency here! When we went to the Ukraine, I didn't ask them ‘Can you pay us?’ I said ‘Here's the product’. If I had gone to standard investing they would have been like ‘Well you can't do this until they pay you’. When we started off in America on the pandemic and in Britain we said ‘look we can help’. This is the primary mission of our company, and I think where I'm very aligned with investors is they're hearing the truth. I'm not saying hey we might change this for that policy, we might do crazy deals in adversarial countries, we might put the other missions ahead of our point, NO! And by the way I tell the most important investors that every day. Palentarians, I tell our retail investors whom I Revere that every time I go on TV. You know what you're buying when you buy a Palantir.”
They have been fully transparent in their mission to uplift the Western society. The byproduct of uplifting the West is that there's a lot of profitability and revenue growth.
Palantir has always been a one-of-a-kind company that said we don't like the standard way that investors want companies to behave. we're not going to do that, we know what's the best for us. Which is a large part of why they left Silicon Valley and moved to Colorado.
In the context of going long Palantir, you must understand that they put their mission above all else.
The argument he is making is that if Palantir put investors' wants above their mission and went to Ukraine offering help, Investors not aligned with their vision would have prevented that from happening.
Palantir offered services in a time of need and effectively said don't worry about that yet, we can discuss price later,
Lets Just Save Lives
Large institutions would have demanded they get permission first, just throwing a wrench into things when there is no time to be wasted.
Same with Covid, When the pandemic broke out, Palantir offered help and again said: Lets Just Save Lives, putting their concern for money to the side for a moment.
Both of these events are the best marketing nonetheless, the best moral thing to do in that situation, but it's also the best marketing. If your product is actually working in that scenario, it will pay dividends in the future.
As evidenced by the $32 million dollar deal Palantir recently got with the NHS and the $440 Million dollar deal with the CDC.
When you buy Palantir, you're hoping there's an S curve of growth that they're able to attach themselves to, because of how radically transparent and product driven they are. They have to figure out the sales, but that's why you're in the stock. If you don't want to be long on that then you’re likely not a "Palentarian."