How a 'Deviant' Philosopher Built Palantir, a CIA-Funded Data Miner
ince rumours began to spread that a startup called Palantir helped to kill Osama bin Laden, Alex Karp hasn’t had much time to himself.
On one sun-baked July morning in Silicon Valley, Palantir’s lean 45-year- old chief executive, with a top-heavy mop of frazzled hair, hikes the grassy hills around Stanford University’s massive satellite antennae known as the Dish, a favourite meditative pastime. But his solitude is disturbed somewhat by “Mike”, an ex-Marine— silent, 6 foot 1, 270 pounds of mostly pectoral muscle—who trails him everywhere he goes. Even on the suburban streets of Palo Alto, steps from Palantir’s headquarters, the bodyguard lingers a few feet behind.
“It puts a massive cramp on your life,” Karp complains, his expression hidden behind large black sunglasses. “There’s nothing worse for reducing your ability to flirt with someone.”
Karp’s 24/7 security detail is meant to protect him from extremists who have sent him death threats and conspiracy theorists who have called Palantir to rant about the Illuminati. Schizophrenics have stalked Karp outside his office for days at a stretch. “It’s easy to be the focal point of fantasies,” he says, “if your company is involved in realities like ours.”
Palantir lives the realities of its customers: The NSA, the FBI and the CIA—an early investor through its In-Q-Tel venture fund—along with an alphabet soup of other US counterterrorism and military agencies. In the last five years Palantir has become the go-to company for mining massive data sets for intelligence and law enforcement applications, with a slick software interface and coders who parachute into clients’ headquarters to customise its programs. Palantir turns messy swamps of information into intuitively visualised maps, histograms and link charts. Give its so-called “forward-deployed engineers” a few days to crawl, tag and integrate every scrap of a customer’s data, and Palantir can elucidate problems as disparate as terrorism, disaster response and human trafficking.
Palantir’s advisors include Condoleezza Rice and former CIA director George Tenet, who said in an interview that “I wish we had a tool of its power” before 9/11. General David Petraeus, the most recent former CIA chief, describes Palantir to Forbes as “a better mousetrap when a better mousetrap was needed” and calls Karp “sheer brilliant”.
Among those using Palantir to connect the dots are the Marines, who have deployed its tools in Afghanistan for forensic analysis of roadside bombs and predicting insurgent attacks. The software helped locate Mexican drug cartel members who murdered an American customs agent and tracked down hackers who installed spyware on the computer of the Dalai Lama. In the book The Finish, detailing the killing of Osama bin Laden, author Mark Bowden writes that Palantir’s software “actually deserves the popular designation Killer App.”
And now Palantir is emerging from the shadow world of spies and special ops to take corporate America by storm. The same tools that can predict ambushes in Iraq are helping pharmaceutical firms analyse drug data. According to a former JPMorgan Chase staffer, they’ve saved the firm hundreds of millions of dollars by ad- dressing issues from cyberfraud to dis- tressed mortgages. A Palantir user at a bank can, in seconds, see connections between a Nigerian internet protocol address, a proxy server somewhere within the US and payments flowing out from a hijacked home equity line of credit, just as military customers piece together fingerprints on artillery shell fragments, location data, anonymous tips and social media to track down Afghani bombmakers.
Those tools have allowed Palantir’s T-shirted twenty-somethings to woo customers away from the suits and ties of IBM, Booz Allen and Lockheed Martin with a product that deploys faster, offers cleaner results and often costs less than $1 million per installation—a fraction of the price its rivals can offer. Its commercial clients—whose identities it guards even more closely than those of its government customers—include Bank of America and News Corp. Private-sector deals now account for close to 60 percent of the company’s revenue, which Forbes estimates will hit $450 million this year, up from less than $300 million last year. Karp projects Palantir will sign a billion dollars in new, long- term contracts in 2014, a year that may also bring the company its first profits.
The bottom line: A CIA-funded firm run by an eccentric philosopher has become one of the most valuable private companies in tech, priced at between $5 billion and $8 billion in a round of funding the company is currently pursuing. Karp owns roughly a tenth of the firm—just less than its largest stakeholder, Peter Thiel, the PayPal and Facebook billionaire. (Other billionaire investors include Ken Langone and hedge fund titan Stanley Druckenmiller.) That puts Karp on course to become Silicon Valley’s latest billionaire—and Thiel could double his fortune—if the company goes public, a possibility Karp says Palantir is reluctantly considering.
The biggest problem for Palantir’s business may be just how well its software works: It helps its customers see too much. In the wake of NSA leaker Edward Snowden’s revelations of the agency’s mass surveillance, Palantir’s tools have come to represent privacy advocates’ greatest fears of data-mining technology—Google- level engineering applied directly to government spying. That combination of Big Brother and Big Data has come into focus just as Palantir is emerging as one of the fastest-growing startups in the Valley, threatening to contaminate its first public impressions and render the firm toxic in the eyes of customers and investors just when it needs them most.