Will Palantir Maintain 30% CAGR?
At Palantir’s Foundrycon event, a Bloomberg representative got the chance to sit down and interview Alex Karp. The following is the conversation that took place in regards to the creation of Palantir and its growth origins.
The Interviewer asks Alex Karp if Palantir needs chaos to exists, and questions how they might maintain their projected 30% Annual Growth rate over time.
“I want to just start with Palantir, founded out of 911. You've Won business from the pandemic, you've won business from the war in Ukraine. Does Palantir need chaos to thrive and grow? Does it need that kind of environment?”
“Look, um we build products that shine under War conditions. So the more businesses experience turbulence, the more the world experiences pandemics and unfortunately War, the more the tools you need actually have to work. Our competition is jargon, PowerPoints, fraudulent products, and these products just disappear when you have economic crisis right you have a pandemic you have a war. The stuff we've been building over 20 years, shines. You saw this in the counterterrorism context, saw it in the pandemic context as discussed here.”
Palantir Is Insurance
This is the point that Karp has been making for a long time. His argument is not that we are warmongering, rather his argument is that bad things will happen, it is inevitable. Pandemics, Wars crises, attacks of terror, espionage all of these things will eventually happen. Palantir acts as an insurance policy in that they will help keep infrastructure stable for when the inevitable happens.
Otherwise, the biggest companies in the world and entire governments that control society, run the risk of falling apart.
“Well a lot of that though is public sector isn't it? I think what's interesting about Foundrycon while we're here, a lot of those in attendance, the deals you announced, they're actually in the private sector.”
“Well our Theory, and it's being proven that exactly the same thing happens in the commercial sector. So if you have all these data architecture, which is basically 50 products that are churning your data, pleasuring you or providing no real Alpha. When times get bad, your supply chain gets broken, you have to deal with the different kind of Workforce, you're drilling for oil under regulatory conditions that you find to be new and harsh, you have to track emissions, you have to rebuild your supply chain. The old products just don't work.”
“One of the pieces of news is SOMPO expanding its relationship with you. A $50 million dollar extension, but it's already a client. My question to you is how reliant is Palantir on the private sector right now? on the kind of an existing cluster of clients growing what they're doing rather than new customers.”
“Well we like both. You know we really like the older customers because we've shown it works. We can say ‘look we're creating a billion in value, obviously you should expand our software uh offering’. We like new customers, I mean the unvarnished version is Palantir is growing like a weed in the U.S, which is adaptive and embraces new technologies. And we are embracing that.
“Can I ask you a mechanical question? Your target rate for 30% annual growth by 2025, mechanical question, but the new deals you're announcing today evidence that you're on track for that?”
“My lawyers literally shoot me if I answer questions like that, but if you look at what's going on in the world. Radical disruption, our products are succeeding. And the U.S market, part of the reason I can't answer that question is you'd have to say well we did Q4, our U.S market growth is really impressive.”
It seems the strategy for growth they have in the US is working. The reason it's working is because we're more adaptive than the rest of the world. If something's a problem in the US, we try to solve it, we embrace new ideas and that's why Palantir is thriving here. If we can, if they can get this to the rest of the world I mean that's a big deal.
At the end of the day, will they average an annual Compound Annual Growth Rate of 30%? Especially after this year, which doesn't seem like it will quite hit the mark?
Only time will tell.
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