Palantir: Artificial Intelligence Leader

"Brilliant thinking is rare, but courage is in even shorter supply"

– Peter Thiel, Co-Founder of Palantir

arvy's teaser: Palantir, the brainchild of Peter Thiel, harnesses AI to turn vast datasets into powerful insights for governments and corporations. While its cutting-edge technology sets it apart, the AI landscape remains fiercely competitive.

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Epic fantasy.

It is a subgenre of fantasy that is defined by the epic nature of the setting, characters, themes or plot.

We all think of the same thing when we read this: The trilogy of "Lord of the Rings". It was awarded 17 Oscars, spread across three films. The third and final film, Lord of the Rings: The Return of the King, made the biggest contribution with 11 Oscars. There are only two films that have also won 11 Oscars: Titanic and Ben Hur. The tale of Lord of the Rings began in 1937 with the children's book The Hobbit, written by J.R.R. Tolkien. The whole story was written between 1937 and 1949. Yes, what many people do not know: The Lord of the Rings is almost 100 years old.

The story of Frodo and the Ring had a great influence on many people. One of them was Peter Thiel, who even named some of his numerous companies after something from the book.

One of them was after an all-powerful, seeing stone (chart 1).

Palantir.

Chart 1: Palantir’s Name Was Inspired by 'Lord of the Rings', Saruman with a Palantíri

Source: Business Insider

PayPal Mafia

First, let's talk about Peter Thiel.

He is a German American entrepreneur and venture capitalist who was involved in the founding of PayPal and Palantir, among others, and is known for being the first outside investor in Facebook in 2004. He bought a 10.2 % stake for $500,000.

Crazy guy, isn't he😉?

But that is not all. He belongs to the "PayPal Mafia".

What mafia, please?

The "PayPal Mafia" is a group of former PayPal employees and founders who have since founded additional companies. In addition to Thiel, the best-known members are Elon Musk (Tesla, SpaceX), Reid Hofmann (LinkedIn) and Chard Hurley, Jawed Karim & Steve Chen (YouTube).

Thiel has amassed so much knowledge that he taught the course "Startup" at Stanford University. The notes from that course, taken by student Blake Masters, led to a book titled Zero to One: Notes on Startups, or How to Build the Future (Chart 2).

The book is a page-turner at its finest and served us well, which is why you will find it in our arvy's book club.

Including the ten most important lessons from it.

Chart 2: arvy’s book club, From Zero to One by Peter Thiel and Blake Masters

Source: arvy

Big Data

Now we come to Palantir.

The US company has developed the largest data analysis software in the world. Its three products are Gotham, Apollo and Foundry:

1. Gotham is an intelligence and defense tool used by militaries and counter-terrorism analysts. Main client is the US government (chart 3). It accounts for 43% of its total revenue.
2. Apollo is a platform to facilitate continuous integration/continuous delivery (CI/CD) across all environments. Meaning it acts like a smart assistant for your software.
3. Foundry is used for data integration and analysis by corporate clients such as Morgan Stanley, Airbus or Fiat.

Palantir is currently the leading provider of artificial intelligence and machine learning (AI/ML) platforms in its segment and is expected to grow by 20% annually over the next five years. The strategy is to focus on large enterprises and develop customized AI/ML solutions that meet their business needs. The idea is to enable companies to develop solutions that leverage big data and lead to business and operational efficiencies.

This is a complex and time-consuming process, and for now, only large companies with deep pockets or the government can afford the high price tag for cutting-edge technology.

So, you can see that the name of the Palantíri, which means "seeing stones", makes a lot of sense. They are described as indestructible crystal balls that are used to communicate and see events in other parts of the world.

Palantir takes on a key role with Thiel as an ingenious pioneer of state-of-the-art technology. This also requires a lot of courage.

After all, the AI game is competitive.

Chart 3: Palantir Gotham for Defense Decision Making

Source: Palantir Gotham, Youtube

Adoption of Artificial Intelligence

Palantir is the benchmark in its field when it comes to the use of AI.

However, I must temper your enthusiasm a little, as both history and Palantir's share price have already shown. It is extremely difficult to determine the true winner in any emerging field, especially in technology, and I might even question whether there is a winner at all.

The adoption of AI can lead to a situation where everyone has it, so no one has an advantage.

As a comparison, I would cite (with reference to Warren Buffett) a football stadium. When the game gets exciting and the striker runs into the penalty area with the ball, the second row of spectators stand up to get a better view. This blocks the view of the spectators in the third row, who follow suit. Soon all the spectators are standing, but no one has a better view than before, but they are all less comfortable.

So, I do not think we will allow ourselves to judge who, if anyone, will emerge victorious.

But it remains exciting to follow the brilliant thinkers in this AI game.

And the courageous ones.

Chart 4: Palantir since IPO in 2020

Source: TradingView