Does Palantir Embody A Zero To One Philosophy?
Zero to One is a book on business written by Peter Thiel, Co-Founder of Palantir.
Peter Thiel, while a questionable public figure for many, is a fantastic business man. Partaking in the creation of PayPal and Palantir, as well as an outsized investor into Facebook. It is always a privilege when individuals like this convert their lessons and advice to books for us to read.
In this book, Zero to One, Thiel wrote that every company monopolizing an industry says that they are not a monopoly. Every company that claims to have a monopoly, in fact does not.
Google, which says that they don't have a monopoly on search, yet still controls the majority of the search market. To the point where people don't say “let me Yahoo that” we all say “Google it”. Within fractions of a second, Google is able to provide accurate search results from information anywhere on the internet. Google’s product is super sticky, that's monopolistic. All the while, Google is fighting off regulators over its apparent monopoly.
Airlines on the other hand, all 100 of them indicate they have monopolies on travel. Each one claims to be the best in class, but they're in an industry competing against each other. Airlines don't have monopolies, customers switch airlines freely, depending on prices. There are actually over 300 airlines in the United States alone, competing with one another destroying margins.
If you want to buy into business, you want to find one that's monopolistic, that can dictate pricing and dictate how things work. Companies that lean on the edge of monopolies have control, they can set the industry standard and not have to worry about literally competing against an entire industry.
The issue is that monopolies are not allowed, at least not here in the USA.
Back Door Monopolies
Have you ever heard of the PayPal Mafia?
PayPal was started by a group of high level entrepreneurs who all went off on their own to create businesses themselves. See if you can spot some names or companies that you recognize.
Much of the culturally defining tech companies of the past two decades have been created by a lot of these men. Each of whom got many of their connections and notability through their PayPal endeavors.
Was PayPal really just a backdoor monopoly for these men?
There is no denying that having connections with the Elon Musks of the world, the people who created Youtube, Yelp, LinkedIn, and Palantir, puts you in a position of power.
PayPal orchestrated the creation of a group of entrepreneurs who would go on to create a lot of the defining technology for the past couple of decades.
In a sense, these men created a backdoor monopoly on tech. Or at least on the funding of tech start-ups.
Being part of this “PayPal Mafia”, gave them all access to investments in these companies. Companies being started by people who through their connections are seemingly able to get unlimited funding.
PayPal was almost like an incubator company for entrepreneurs. Allowing bright minds to get some training and build connections before going off on their own. Also enabling everyone involved to get in on the ground floor of some of the largest more influential companies we have seen.
PayPal was a monopoly, just not in the traditional sense.
Is Palantir a Back Door Monopoly?
Palantir employees are leaving the company, or have left, over the past four or five years to start their own host of startups. Companies such as Afirm, Opensea, Anduril Industries, Ironclad and more.
It's just really interesting to see what happened at PayPal, as it is kind of happening at Palantir.
Now, Peter Thiel being the crafty investor that he is, what if he now has early access to invest into each person with an idea that he had a part in training. The returns and reach that could be achieved from a strategy like this is incomprehensible for the average person.
Palantir has their hand in seemingly every sector. Data exists everywhere, and they are going after healthcare, oil and gas, supply chain, semiconductor etc.
Is it possible that Palantir and the individuals working for Palantir are creating a Monopoly on data?
Palantir through employee stock compensation is able to attract some of the best talent on the market for data software engineering. CEO Alex Karp has stated that their training program is extremely rigorous and that only about half of the staff makes it through.
Is it possible that Palantir is embodying the Zero to One strategy, a lesson Peter Thiel potentially learned from PayPal? Gather the brightest, most ambitious talent on the market, connect them into an environment where it would be very difficult to fail, and then invest into their ideas as they all spread and take over different industries.
Three to five years from now it will be very interesting to see what this conversation looks like.
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