Roommates, PayPal fraud, and the unconventional story behind Palantir

Today, Palantir helps governments fight terrorism and businesses organize their data. It wouldn’t exist without PayPal.

Photo by Drew Angerer/Getty Images

Roommates, PayPal fraud, and the unconventional story behind Palantir

When your clients include the CIA, NSA, FBI, and a bunch of other folks on that level, it’s safe to say you’ve built something noteworthy.

Yesterday, lucrative software firm Palantir reported $341m in Q1 revenue (+49% YoY).

But without 2 dudes rooming together in law school, Palantir would likely never have existed.

Unsurprisingly, its story begins at Stanford

That’s where Peter Thiel and Alex Karp were roommates, and received their JDs in 1992. Following that:

  • Thiel worked on PayPal
  • Karp went to Germany to get a PhD in philosophy

At PayPal, Thiel dealt with rampant fraud that at one point made up 1%+ of PayPal’s total volume.

Thiel & Co. refocused the company around building tools to help humans track internet fraudsters, and PayPal was sold in 2002.

That’s when Karp — broke and jobless — returned from abroad

Thiel called him up and said, “Hey, Alex, there’s this methodology we had at PayPal. Think it would make a great company for stopping terrorism.”

So in 2004, Thiel assembled Palantir’s founding team, with Karp as CEO.

A ~$2m investment helped develop a prototype — based on tech developed at PayPal — and get a foot in the government’s door.

The team had zero experience with classified info, but a demo was intriguing enough that Palantir continued working with intelligence officials.

And the rest is history. (More or less.)

So what the heck does Palantir do now?

Years later, Palantir has 149 customers across the public and private sectors. It boasts:

  • 15 deals worth $5m+ and 6 worth $10m+
  • Q1 government revenue of $208m (+83% YoY)
  • Q1 commercial revenue of $133m (+72% YoY)

Perhaps the least surprising thing from yesterday’s announcement: Palantir is accepting payments in bitcoin.

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