Palantir CEO Alex Karp: Investors Will Be 'Positively Surprised' At The Company's Margins | CNBC

so Alice thank you for taking the time to chat I appreciate it thank you for talking to me so I want to sort out when people think of Palantir even probably you're in Silicon Valley they have this idea of a very secretive startup that works hand-in-hand with the CIA the FBI helping to track down terrorists and criminals but when you explain what Palantir does how do you want people through it well it's different in in different parts of the business where we're now a very global company in the National Security arena were probably the best-known most successful product so people know us and they know we're used for targeting for and for data protection and so people know our work in the cotton in the context of the Special Forces so finding bad people integrating the data allowing special operators to use the data in the field on their laptops to continue their mission they know our work in the kind of national security context as finding networks that are hidden they know our work in the illicit traffic networks finding human traffickers so more what the police and internal security would do and actually outside of America we're very very well known for complying to civil liberties norms and data protection norms so interests the interesting thing about is we are somewhat of a company that's shy we I tend to think we're more shy than secretive we don't we're not consumer Internet we stick very closely to our own business but because about the breadth and depth of our of our work we're in over 40 countries on on the clandestine side it's much more like people know the results and then they want to know why and so what we sometimes have to explain is this is actually built on in data integration motor that is very specialized for very certain things so in the National Security a context we work hand in hand with most of the special operators in the Western world we work in hand-in-hand with most of the classical investment services both external and internal in the Western world especially in what's known as the five eyes so the english-speaking countries that won world war two and in northern Europe but also in many other countries were very well known for police work and we're very well for data protection what we explain is why does it actually work and this has to do with our our efforts so we spent three years building an engine that will allow you to take any data in any source and integrate it in a way that's usable while applying rules to the data so that the Secret Service person the person and intelligence personal special operator sees all the data they are allowed to see none of the data that they're not allowed to see which is very important because these things tend to be collaborative so if you go into the field as a special operator you're probably working also with special operators from Norway from other NATO countries from Britain where you share a lot but not everything and then when you go to the final model and you're there you need to know the data intervening actually works and that engine the engine that powers that that's what we provide on the commercial side we spend years and years trying to develop a commercial product and successfully built one recently which largely allows people integrate industrial data it's very specialized for industrial use cases also alleged you do data protection but it's the power of it comes from the ability to scale across an enterprise and make workers more valuable and so let me let me ask you a stop there when we talked about on the commercial side a corporate client give me Chrysler for example I know is a client give me an example of how Chrysler is using Palantir technology right now so you have a problem when you're building any kind of motor or and doing any kind of drilling so we're well-known in the industrial drilling context in the flight context in the automotive context although we're we don't talk about that much publicly but you have essentially a massive amount of data but it's very hard to figure out or predict which part is likely to break under which conditions in a motor and knowing that as difference between making a lot of money or much more money than your competitors or much less money than your competitors because you know the parts have different costs so one part of a typical case in a plane or in a car would be one part cost two cents one car cost a thousand dollars if you replace if you can predict that per day placing the part that cost two cents every two months instead of five months saves you the thousand dollars you have a massive market imagine and a safety advantage but these things actually have to be done on the line as well so you need a product that interfaces with everyone in the company the CEO the the managers but also the auto workers that that has an engine that can power that and then a front-end that they can work with intuitively and the thing that's very special here that that actually I'm we're very much driving is I believe Silicon Valley is creating innovation without jobs and it's really hurting our world and what's very special about foundry is that creates innovation with jobs so the factory work is 1,500 people at Chrysler using our product 1,500 people who are technical but they're not PhDs and in in in in computer science or math at Airbus we have 5000 workers using our product now maybe I'm just going back to my old philosophical days but what's made this company special is not that we're secretive it's not that we're an enterprise software it's that we've been very focused on fighting terrorism with data protection and what we're recently now very focused on as well is innovation with jobs now why should we care well because if you don't have jobs you're not gonna have democracy and I think you know I mean obviously we were born in Silicon Valley and we're of Silicon Valley in some ways but but this this this movement towards innovation with no jobs is really hurting our society and it's it's bad for companies it's bad for our country it's it's bad for our partners and what's made our product successful is when we find a convergence between philosophical moral and technical things and we bring it together and that's actually been the secret of P G or a government product it wasn't about making money sure we're a business we like making money it was about how can we make sure the special operator comes home or comes home with legs and that really is motivating and so that like on the commercial side really finding something where workers can use the product and once the worker starts eating a product they're like really valuable because the work on the frontline can begin to do something that heretofore that no worker could do actually a computer alone can't do it because it could be its weight it's a factorial problem it's computers are no are not capable actually doing this yet maybe they will be in ten years but by then the world so good that maybe they don't get their irreplaceable so your point out is that Silicon Valley tech company should be doing more to promote job creation and Palance your software is helping that effort well I mean you're being diplomatic I think they should do more to stop destroying jobs and we're doing still we're doing innovation with jobs so if it was just neutral like you know the cost of a house here is four million dollar three million dollars the cost of a house in Detroit's forty thousand it's like why is that because Silicon Valley is eating up the west coast of America is eating up every job on the planet and that's a problem for our society now maybe other companies don't want to be involved in that that's their choice just like many companies don't want to be involved in stopping terrorists that's their choice or protecting data that's their choice our choice as a company is that we want to be involved in this and we are driving really really hard on this and by the way to your to your viewers which we've been very interesting is the famous saying in the valley asked for money get advice ask for advice get money you know the more we focused on these deep philosophical issues the more we've crushed it as a business and so and so the idea is that Palantir software is creating jobs at a Chrysler plant that's it's preserving jobs because once the Christ once the 1500 employees are using the software they're actually doing things that otherwise you'd need a PhD to do and so you're making them as valuable as the PhD in software and it scales across the enterprise so they're more valuable than a single PhD in software because what they figure out then scales across the owner once they figured out okay well this part in this part interact in a weird way if we change that then everyone in the whole in fact you see this at Airbus as well where you have these 5,000 people and a myriad of airlines hitting this data sack which allows them to lower cost and quite frankly obviously more important than most of us and increase safety and do you think outside CEO of a company is your responsibility then to also directly hire more people and Palantir well you know we do that but our primary responsibility is to let people keep the jobs that they already have you know again like we're not I'm not saying we're that pound here can like hire change everyone it's not software engineering or software engineer what I am saying is if you have a part of the company eating up the whole economy of every other part of the world including America including industrial things and other how do you have what it what is the to the person on the factory line like why should they believe in what they're doing and that can be changed and we are changing it now I also realize most Silicon Valley companies don't care and nor nor do they have a corporate responsibility do care but the funny thing the interesting thing about Palantir is we only win big where we start from a moral thing that's what actually motivates us and that's what allows us to go deep enough on the tech thing to be disruptive once you decide to turn back to your business there's been a lot of reports I want to get your take on this about customer churn and Palantir right so these reports of coca-cola American Express you know it's very interesting any of those contracts on pricing concerns yeah you know what what's very interesting about our company is that once we moved every we moved everything on the foundry platform and focused on industrials and the central thing is we have to focus on morale things that we care about and so when you look at our business you know the part of our business where we did this has grown 100 percent year-on-year for like three or four years so and and part of getting these things right in the beginning when you're building a product just like in the US government took us years and years and years of experimenting with massive data sets quite frankly I'm quite grateful to all the companies we got to experiment with that's how we built foundry and now we have this massive product it's quite interesting and it's quite important and you know the churn numbers on our government product are to minimus meaning if you take out the ones where it was like some reason we wanted to leave from always almost non-existent but it happens in any big business where a large business so and some of that might be our fault but what's interesting about the foundry product is we're starting to see that same kind of thing very sticky and very focused on industrial things and very focused on job creation and the job and then the workers and the corporate people become our allies so that that this is like a really good phase for us let me ask you this oh there's a lot of companies as you know that are focused on big data analytics software products and services you know the names of Microsoft IBM Oracle s ap what what do you think in that market what's pound tears competitive event well we're very focused on our own business and I we take that really seriously we're primarily a creative organization so that means we create we don't we don't we try not to look at what the other people are doing or obviously not over but the central difference is we go much deeper into the integration because of for moral reasons like we are trying to do tech that saves lives and protects lives so find terrorists protect our civil liberties we're trying to do tech and are doing tech that that does innovation and does jobs it's a completely different mandate than yet the companies you've listed which are great companies and then on the data integration side quite frankly I think you know people are very different they're doing analytics which is different than integration we provide essentially an analytic stack for free you know we're very well known for our products being very robust most software comes in two flavors it either doesn't work or it's not useful our for our software it comes in the flavor of it's very useful sometimes deadly there were reports outside reading you guys want track to turn a profit in 2017 did you did you hit that target you know my lawyers will not let me comment on any economic thing like that which I'd be very happy to talk about but I'm not really allowed to what I can tell you that might be interesting to you in this context is we are you know we were taking we understand that as a creative company we look creative to the outside world and not like what people are expecting in any context we don't look like a national cereal company the non-security address we don't look like a classic enterprise software company that people do that we have no salespeople at almost everyone is an engineer I'm a PhD in philosophy we are making great strides to standardize everything so that if we choose to ever do a public offering we could do it immediately and so and though in that context we're making lobster IDEs and at the time we chose to choose to show things I think people will be pretty surprised at at at like the quality of the revenue do you think you know some of those really investors have been patient outs do you think does the company now boast the kind of financials that you think would excite attract public market investors I think people will be when we do this I think people will be very surprised at at what they see and I think they will be positively surprised because what because we've been quote-unquote secretive people always assume that we're different than what they expect maybe sometimes positive maybe sometimes negative what what they will be surprised at is how a creative company can create margins that are very significantly better than what people know about normally say I want to touch on valuation too quickly actually a couple years ago you guys were bad at around 20 billion dollars some of your investors are can Blackrock though have been marking the value Palantir down not up what's your take on that and what do you tell those investors to get them just more excited about the future of the business talk to the clients look what we're doing look at our track record for delivering you know it's interesting we've been through we've been at this for a while and we've had times where people were really overly excited and under the excited there's a time where people you know are under estimating what what we're doing and that that time will be gone very quickly and by the way I'm very I it's like when he sings you're always annoyed when they're CEO and people like write an article but quite frankly we wouldn't be where we are except for these were you know these articles because people make no effort to compete with us you know why because they don't understand how well we're doing and that's really cool thank you please thank all the people every time someone writes something like that they are making us better and not for like because we you know it's not the Nietzschean thing anything it doesn't kill me makes sense because you know people really look at Palantir and they they have they don't understand what we're doing and why we're doing it and I'll tell you what we're doing we're stopping terrorism with data protection and we're doing innovation with jobs and you know what you'll find that the lagging indicator value of that is much bigger than people realize and they will find that out too a couple years ago it's no president like Trump held a meeting with top tech leaders it was Tim Cook Larry Page Jeff Bezos you were there which surprised some people were you surprised that you got in line to that minute I'm surprised when anyone invites me over you know I'm just a guy I'm a guy with a PhD and most people you know you know it's like dying what I'm invited I show up were a company that works in the service of more important institutions I was happy to be invited honored to be there glad to show up as the Trump administration being good for calendars business you know we're very focused on our clients I we work we work with our agencies directly I haven't seen a great impact on on our business depending on who's President did you home in Jenkins piece in the journal about the part Brown shooting I only bring it up because I talked to Lisa was it was just interesting about how it brought up Alan teared I mean he really thought Tech was gonna play a role in stopping a next mass shoot his point being that big data could help pinpoint the next year did you have strong feelings about that out did you agree with that because it made me think of obviously you guys the tech you deal what do you thought that thesis was valid um there there's a there's a there's a broad statement of like tech can help which is obvious the single biggest thing that we have to work on in this area not just in this area is like we need to know what we know and that is it that is a data integration problem now I'm not look I'm a representative built this company I care about their company greatly I'm not in but I probably first and foremost like all of us in America we want this to work whether there's a Palantir or with another company or with the US government I don't think any of us actually care but watching these things happen is is really hard for all of us and the part that I do know something about is that you cannot solve this problem unless the data is integrated and integrated in a way that's lawful and I know for a fact that there are ways to do that and I I hope and like many of us pray that we actually get that to work because it's not it's a tragedy and that quite frankly disgusting that these things happen hey there thanks for checking out CNBC on YouTube be sure to subscribe to stay up-to-date on all of the day's biggest stories you can also click on any of the videos around me to watch the latest from CNBC thanks for watching

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Id: QwoCgLvoUvs

Length: 17min 4sec (1024 seconds)

Published: Wed Feb 28 2018