Reflections on Palantir

Palantir does UI and visualization well but needs an inordinate amount of field support engineers to groom the dirty disparate data that governments do a poor job cleaning (either due to incompetence, field conditions, or both).

The amount of manual labor doesn’t justify its market price, but because governments rarely change their vendors, there is significant lock in that probably supports some amount of their market cap.

I have a pet theory about private equity: they're in the business of laundering boring jobs for college graduates. Few kids dream of graduating college to work at a chemicals plant in Baton Rouge. But working for Accenture in New York or Atlanta, now that's sexy. Even if you spend your entire work week *checks notes* working at a chemicals plant in Baton Rouge. (Investment banking is similar, though the transaction orientation makes the division of labour a little more sensible.)

Palantir pays less for its consultants (sorry, FDEs) than Bain et al. Few in their generation dreamed of graduating college to work at a soulless corporate consultancy. But a tech company, now that's sexy.

More pointedly: It's remarkable how an ostensibly 80% GM business only barely became profitable last year. Palantir's Q2 '24 cash flows from operations at 40% of revenues looks closer to the mark [1]. (Palantir's cost of revenue "primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing [operations & maintenance] and professional services, as well as field service representatives, third-party cloud hosting services, travel costs, allocated overhead, and other direct costs" [2].)

[1] https://www.sec.gov/ix?doc=/Archives/edgar/data/0001321655/0...

[2] https://www.sec.gov/ix?doc=/Archives/edgar/data/0001321655/0...

The worker gets the status and security of a tech/consulting job, while having more variety than actually working at the chemical plant, not being at the whims of their org chart, and also just the reframing probably makes it more enjoyable anyway. All the while, the important work is getting done.