REVEALED: Palantir Technologies, The Secretive $735 Million Tech Security Company Helping Hedge Funds And Governments

alex karp palantirPalantir CEO Alex Karp

Palantir Technologies is a secretive Silicon Valley company that makes software primarily used by US intelligence agencies and hedge funds.It’s notable because:

  • It freaked everyone out with a presentation on how to destroy WikiLeaks by doing things like harassing journalists (it has since retracted the presentation and apologized);
  • Its co-founder and chairman is Silicon Valley demigod Peter Thiel, who thinks it’s going to be as big as Facebook, where he was the earliest investor;
  • No one seems to know what, exactly, Palantir does.

Thankfully, we’re here to clear that up.

But before the tour, a few facts about Palantir:

  • The company’s 2010 revenues are thought to be around $50 million;
  • It raised $90 million last year at a $735 million valuation;
  • Its CEO Alex Karp is an interesting guy, with a JD from Stanford and a PhD from Frankfurt University in social philosophy, who worked at PayPal;
  • Even though the CEO is a humanities guy, Palantir is up there with Google and Facebook in terms of the hardcore technological prowess of its employees, and it usually hires the top students out of Stanford;
  • The company’s core team came from the data mining and security team of PayPal’s heyday when it was fighting Russian mobsters hacking into the system left and right.

Palantir has done things like uncovering a China-based cyber espionage network that attacked NATO and the Dalai Lama, and helped the US government uncover fraud in the attribution of stimulus funds.

Ok, so what does Palantir’s software do?

Palantir, named after the seeing stones in The Lord of the Rings, is fundamentally analysis software.

It lets non-technical users visualise reams of data from several databases in a user-friendly way. That way, they can look at specific bits of information and the links among them, so they can find answers to complex questions and find the proverbial needle in a haystack.

Still not clear?

Let’s take a tour and look at three applications: terrorist attacks in Iraq, fraud in government contracts and Palantir Finance. (We got these examples from demo videos on Palantir’s website, and all the data is from publicly available sources.)

Here's what Palantir looks like when you start it up

Let's search for terrorist attacks in a specific area of Baghdad

Here they are--and they're ranked by histograms on the right so you can see the most common types of attack, when they occur, etc. That's Palantir's secret sauce: letting you look at complex data in an easy way. We'll see it has many applications.

You can also plot those attacks on a satellite map with a click.

And you can look at them simultaneously with a timeline, so an analyst can tell when attacks tend to happen in what area

Clicking on one dot will let you drill down on a specific attack

Another use case is looking at government procurement; here, Department of defence

You can bring up all the parties involved and their relationships...

...and bring up all the people and entities related to one of the parties in the relationship...

...and drill down with a search of anything in any connected database about those entities...

...this brings up more information.

Here we can see that a company in the government contract was involved in computer fraud and bribery. That sounds like the kind of stuff that ought to be looked into, no?

You can drill down even further to specific reports (and search them, and cross-reference them). Again, it's not that this stuff was impossible before Palantir; it was just much harder and time-consuming.

Let's look at Palantir Finance now. The high-level idea is the same, but the way it works is different.

This is a scatterplot showing the companies in the S&P 500 by earnings yield and return on assets.

It's then just drag and dropping to look at a subset of these companies and turn them into an index...

...which turns out to outperform the S&P 500

Here's Palantir Finance's strategy tool...

...regression analysis tool...

...and chart tool.

So what does it all mean?

Well, we've never been an intelligence analyst or at least that's what we claim, but Palantir's software seems to do pretty much what it advertises: make it easy and convenient to search through massive databases, both at a high level and deep in the weeds. It seems simple enough, but it's exactly the kind of thing that is fiendishly complex to make simple. Certainly as a finance geek, the possibilities offered by Palantir Finance make your writer salivate.

A common refrain after each terrorist attack or attempt is that various intelligence agencies had the various bits of intelligence to foil the plot, but couldn't 'connect the dots.' This is the problem that Palantir is meant to solve: pulling in information from many sources and making it as easy as possible to connect the dots.

What of the Orwellian implications of Palantir's software?

Palantir CEO Alex Karp made an interesting (though self-serving for sure) point in an interview: because Palantir is so precise and records everything, it's also a tool to hold intelligence agencies accountable. Through Congress and the courts, people can hold agencies more accountable for what they do.

Karp also argued that Palantir does the opposite of data-mining, and that's also better for civil liberties. Data-mining uses an algorithm 'that nobody understands' to 'cast a wide net' and identify people who might or might not have bad stuff. Palantir meanwhile starts with individual pieces of information about specific people, so it's less likely to have collateral damage, so to speak.

Prior to starting Palantir, Karp was a philosopher who did work on civil liberties and discrimination, so we're inclined to believe he's sincere. We're just not sure whether he's right.

Want to look at the dark side of Palantir now?

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