The Rundown - Deep Dive: What Palantir Actually Does (And Why It Matters)

Episode Date: May 10, 2025

Palantir began as a counterterrorism tool and has grown into one of the most influential—and debated—tech companies in the world. In this episode, we explore what Palantir actually does, how it gained traction through government work, and why its AI tools are being adopted by both corporations and militaries. We look at its rise from CIA backing to commercial success, and the questions it faces around privacy, surveillance, and global deployments.The content of the video is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures.Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Welcome back to the rundown for another weekend deep dive. Today, we are diving into one of the most mysterious and polarizing companies in the world. Palantir. What do they actually do? Well, it turns out they do a lot. So in today's episode, we're talking Palantir. We're taking a look back at their origin story, their breakout moment during the war in Afghanistan, and also some of the controversy surrounding the company,

like if they're enabling mass surveillance and turning into a private. privatized spy agency. There's a lot to unpack here, and I'm hoping by the end of this episode, we'll finally know what Palantir actually does. We got a great one for you today. Let's dive in. Palantir was founded over 20 years ago back in 2003. It was right after the dot-com crash and just two years after 9-11. One of the co-founders of the company was Peter Thiel. You might have heard of him. At the time, he had just sold PayPal to eBay for $1.5 billion. And yet this idea, of taking the fraud detection software that PayPal used and apply that software to fighting terrorism. Basically, he thought that he could help the government connect the dots from all of the data

they were collecting and use that to stop future attacks. That was the original vision behind Palantir. Now, if you're like me and you've never seen Lord of the Rings, the word Palantir might not mean anything to you. But apparently, it's a reference to some crystal balls from the movie. I mean, I got to say kind of an ominous branding choice for a data company, but it's definitely memorable. I got to give them that. And it kind of makes you want to watch Lord of the Rings, but unfortunately I don't have 12 hours to burn. Now getting back to Palantir here,

fast forward to 2004, and Peter Thiel brings in his Stanford Law School buddy, Alex Carp, to be the CEO. And if you guys haven't seen Alex Carb, the dude is a character, all right? He's not your typical tech bro. He's a philosopher and he has a PhD in social theory. And his take on tech is way different from the usual Silicon Valley crowd. From day one, He was focused on Palantir doing the hard stuff, counterterrorism, defense, law enforcement, which was a stark contrast from what everybody else was doing in Silicon Valley, like building a dog walking app. In fact, Alex Carr criticized Silicon Valley for building luxury tools for urban elites. All right, those are his words, not mine.

But I get it though, right? Because while other startups were busy optimizing dating algorithms and brunch delivery service, Palantir was working with the U.S. government on intelligence and national. national security. And over the last 20 years, Alex Carp has kept that mission pretty consistent to protect Americans from terrorism, but without violating civil liberties. We're going to get to that part in a bit. Now, these days, Alex Carp has shifted his focus to talk about artificial intelligence. In fact, he's sounding the alarm on AI, calling it an Oppenheimer moment. He's warning that if Democratic nations don't lead the charge in AI, then authoritarian governments will. In fact,

he wants the U.S. to launch a Manhattan project to lead in Battlefield AI. No surprise here, but I'm pretty sure Alex Karp would want Palantir to play a pretty big role in that. But yeah, he's made it pretty clear. He thinks that Silicon Valley has a moral obligation to support the West and not just waste time building the next photo sharing app. So yeah, I've got a feeling the vibes at Palantir HQ, probably pretty serious. They probably don't have many nap pods or ping pong tables. Now, before we talk about all the things that Palantir does today, let's first talk about how the company first took off. This may be hard to believe because Palantir is worth like $250 billion today, but when they first got started, not many people wanted to invest in them. See, Palantir's

main product was government software and VCs at the time thought that was too boring and unscailable. VCs would rather invest in their fourth social media platform or restaurant review website than a government contractor. But then in 2005, Palantir got a call from the CIA. See, not many people know this, but the CIA has a venture capital fund called Incutel. And Incutel gave Palantir early funding, but more importantly, they gave Palantir access to real-world Intel operations. And that was huge for Palantir, because for the next few years, Palantir's engineers worked directly with CIA analysts to refine and battle tester platform. And Palantir software showed off its value during the war in Afghanistan. Between 2006 and 2012, the U.S. military spent $25 billion, $25 billion.

trying to stop roadside bombs. But despite that, IEDs were still wrecking havoc and killing American troops. And this is where Palantir software really stood out. It did a fantastic job of identifying IED networks and placement of roadside bombs. In fact, the software was so good that soldiers started requesting Palantir by name. Some even said that not having access to Palantir was putting people's lives at risk. And at that point, Palantir wasn't just some startup anymore. It became a key part of the military's digital toolkit.

But despite the success on the battlefield, Palantir still wasn't exactly welcomed with open arms by the Pentagon. The Pentagon was still kind of hesitant using a Silicon Valley company. They were comfortable using the traditional defense contractors, the good old boys from Raytheon, Lockheed Martin, and Boeing. Those companies were making custom-made software specifically for the U.S. Army. So then Palantir did something in 2016 that is completely unheard of. They sued the U.S. Army. Palantir pointed to a law that says that governments have to consider commercial products before, spending millions of dollars to build custom ones from scratch. And Palantir ended up winning that

lawsuit, which eventually led to the Army awarding Palantir a major contract. And this marked a huge shift because this was the first time the U.S. military picked a Silicon Valley company over the traditional defense contractors. And over the last decade or so, Palantir has taken advantage of this opportunity and expanded their footprint. So let's finally address the question. What does Palantir actually do? Palantir has become one of the biggest tech companies in the world. They have a market cap of over $250 billion now, making them more valuable than Salesforce and IBM. And what's crazy is that those companies make 10 times more in revenue than Palantir does today. But that hasn't stopped investors from rushing in to buy their stock. Last year, Palantir was the best performing stock in the

S&P 500, up 340%. And heading to this weekend, it's already up more than 50%. 50% this year. It's now become one of the most popular stocks with retail investors up there with Tesla and Nvidia. But now let's talk about what Palantir actually does. What is the product that they sell? How do they make money? According to Palantir, they are building the operating system for the modern enterprise in the era of AI. I know that's a lot of buzzwords, but let's break it down. Palantir has two main types of customers, one of them being governments. I'm not just talking the U.S. government. We're talking international governments as well. And this includes military, intelligence, and law enforcement.

And the other type of customers they have are big corporations. And it's across pretty much every industry, finance, health care, energy, and logistics. And Palantir sells these customers three core software solutions. The first one is called Foundry. Foundry is used by companies to organize all their messy data and find insight to make smarter decision. It's kind of like having a management consultant, but with software and without the overpriced PowerPoint decks.

Foundry pulls in all the company's data, they clean up that data, and they help build dashboards, models, and workflows to improve operations, spot inefficiencies or forecast outcomes. Now, the other software that Palantir offers is called Gotham. That's the software used by the military and the CIA to visualize networks, track threats, and plan mission. You know all the cool tech and software they used to show in the Jason Bourne movies back in the day? That's what I envision Gotham is like. Now, these software solutions have been around for a while now. Gotham was first launched back in 2008, while Foundry was launched in 2016. But it's Palantir's latest tech offering that's been a total game changer for the company. It's called AIP, and it launched back in 2023.

AIP is an AI layer that sits on top of Foundry and Gotham, and it's been the main growth engine for the company. AIP lets Palantir's customers build and deploy AI agents that automate workflows and handle tasks, like targeting enemies or, optimizing supply chains. Just depends on the client, you know. Think of AIP like a chat GPT style interface for Palantir's tools. You can literally ask it what's going on with a supply chain in a certain region, and this software will generate an answer using real-time data. And this thing has been a huge hit, not just with government, but across corporate America. Palantir said that demand for AIP was ravenous, and it helped drive a 55% year-over-year growth in Palantir's U.S. business. It's used by companies like United Airlines in AT&T, and some companies have even given AIP a shout-out on

their earnings call like Walgreens, Hertz, and Citibank. The success of AIP is helping Palantir expand beyond just government contracts. Their commercial business is growing fast. That being said, government contracts are still Palantir's bread and butter. It makes up 59% of Palantir's U.S. revenue. And that business is still growing. Federal sales were up 45% in Q1. In fact, Palantir just locked in some major new deals, including a $30 million contract with ICE and a $178 million contract with the Army for their Titan program, which is building an AI-powered military vehicle. And here's the thing. We're still in the early innings of AI use in the military. The Department of Defense requested $1.8 billion for AI in 2024. That's just 0.2% of the total

defense budget. But the money allocated towards AI is expected to grow over the next few years. And no surprise here, Palantir thinks they can take a big piece of that pie. Which begs the question, should we be a little worried about all of this? Well, let's talk about it. Palantir's rise hasn't come without backlash. Their tools have sparked major concerns around surveillance and civil liberties, which is ironic because protecting civil liberties is supposedly part of their mission. Let's talk about some of the controversies that Palantir's face.

It started all the way back in 2011. Palantir got tied to a pitch deck, one that outlined a plan to undermine wicked. WikiLeaks and to smear journalists critical of the U.S. government. Palantir's CEO Alex Karp publicly apologized about that and he cut ties with the contractors involved in all of it. But since then, the criticism around Palantir's work has only gotten louder. As I mentioned earlier, the company works with ICE. Palantir's software have been used to support immigration enforcement, which sparked protests and petitions. In fact, Paul Graham, the co-founder of Y Combinator and a Silicon Silicon Valley legend tweeted that Palantir was building the infrastructure of a police state.

And that tweet kind of sums up the philosophical divide between Silicon Valley and Palantir. And by the way, Palantir's international work has raised some eyebrows too. In 2023, the company confirmed it was supporting Ukraine with battlefield intelligence tools. And then in 2024, they announced a partnership with Israel's Ministry of Defense to support unspecified war-related missions. Now, the details of those involvements are vague. Both partnerships sparked debate about how AI is being used in modern warfare. Valentir insists it only works with U.S. allies under Democratic oversight, but their presence in

active war zones remains deeply controversial. So the criticism against Palantir is loud and it's growing louder, but Palantir, they're not backing off. If anything, they're doubling down. And their investors seem to kind of love it. So there you have it. A quick deep dive on Palantir and what the company actually does. The company's software seems to be powering everything.

from border security to battlefield AI to corporate boardrooms all around the world. Some see Palantir's work as essential. Others see it as dangerous. But one thing is clear, Palantir has no plans to fade into the background. If anything, they're forcing a tough conversation about the role that tech plays in privacy, security, and our democracies. And while we're having those conversations, some of their investors are getting very, very rich. Well, all right, guys, that's it for today's weekend.

I hope you guys enjoyed that episode. If you did and you have like 12 extra seconds, consider giving us a five-star rating on Apple or Spotify. We recently crossed 5,000 five-star ratings on Spotify, so thank you guys so much for that. It's an incredible milestone, and it could not have happened without your guys' support. And just like Palantir, we have no plans on slowing down.

Remember, we filmed these weekend deep dives with videos, so if you want to see me talk about Palantir and some interesting graphics and charts, watch this episode on Spotify or YouTube. And if you guys have any topics that you think we should cover in future deep dive episodes, let us know in the comments. Thank you guys again for spending a part of your weekend with us and listening to this show. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here on Monday.