WEBVTT 00:00:00.160 --> 00:00:04.077 Palanteer reporting third quarter results above expectations in a big way. 00:00:04.160 --> 00:00:08.077 The company issued better than expected fourth quarter guidance. Uh shares down 00:00:08.160 --> 00:00:11.437 in the pre-market this morning. We'll talk about that as well. But joining us 00:00:11.520 --> 00:00:14.557 right now is somebody we've been talking about frankly all morning. Alex Karp is 00:00:14.640 --> 00:00:17.357 with us. Uh Palunteer CEO Alex, it is so 00:00:17.440 --> 00:00:19.757 good to see you uh this morning. Uh we 00:00:19.840 --> 00:00:22.877 had your biographer on the broadcast uh 00:00:22.960 --> 00:00:26.957 before and and and we're speaking about you now in third person, but now we're 00:00:27.040 --> 00:00:30.877 now we're doing it in first person. Uh the earnings were a blowout I think 00:00:30.960 --> 00:00:34.717 across the board. We can talk about maybe why the why the stock market's 00:00:34.800 --> 00:00:38.797 reacting the way it is. But you know I was listening to the call yesterday and 00:00:38.880 --> 00:00:42.317 I wanted to just for those who didn't get an opportunity to hear it. I think 00:00:42.400 --> 00:00:44.717 you made some fascinating points about 00:00:44.800 --> 00:00:51.160 why you think this company and maybe even yourself are so misunderstood. 00:00:51.360 --> 00:00:55.037 >> Um well there are lots of easy ways to misunderstand me. I misunderstand myself 00:00:55.120 --> 00:00:59.037 and you know it's not like the super conventional playbook thing. Look, we're 00:00:59.120 --> 00:01:03.037 an anti-playbook company. Uh if you want to do the personal version, I'm like 00:01:03.120 --> 00:01:07.837 this uh dyslexic formerly and I believe currently still left of center who 00:01:07.920 --> 00:01:12.077 actually sticks up for progressive values which triggers you know TDS uh 00:01:12.160 --> 00:01:15.757 loving people because I think the Democrats aren't no longer progressive. 00:01:15.840 --> 00:01:20.237 And then the company is built in a truly suagenerous unique way which would only 00:01:20.320 --> 00:01:24.397 be possible in America and actually explodes every assump assumption of how 00:01:24.480 --> 00:01:27.437 an expert would build a software business. The more you actually know 00:01:27.520 --> 00:01:32.237 about building software the more odd, unique and inexplicable our rise in 00:01:32.320 --> 00:01:34.077 success and I would say domination on 00:01:34.160 --> 00:01:36.557 the enterprise software battlefield 00:01:36.640 --> 00:01:39.437 looks and is. Um and then I would say 00:01:39.520 --> 00:01:44.157 one of my main issues is Palanteer because we were anti we called uh we 00:01:44.240 --> 00:01:47.837 called a lot of things that are kind of establishment views that often are uh 00:01:47.920 --> 00:01:51.837 viewed as kind of being super woke into question in every single assumption of 00:01:51.920 --> 00:01:56.477 Palanteer. The people who piled in uh to Palunteer were people investing their 00:01:56.560 --> 00:02:01.037 own money often people who are not in the investor class non-experts and even 00:02:01.120 --> 00:02:04.957 till today the experts sit on the sideline and say hey this can't be true 00:02:05.040 --> 00:02:06.717 while the average American who invested 00:02:06.800 --> 00:02:08.717 in Palanteer and for the first time 00:02:08.800 --> 00:02:12.557 maybe arguably in since World War II uh 00:02:12.640 --> 00:02:16.637 average Americans got venture returns investing in Palunteer. So you have this 00:02:16.720 --> 00:02:19.437 massive divide uh between the average 00:02:19.520 --> 00:02:24.077 person who evaluated themselves and the expert class that still was working on 00:02:24.160 --> 00:02:27.597 assumptions that have historically not been true that obviously if you look at 00:02:27.680 --> 00:02:31.037 the earnings if you actually look at we grew the company uh I mean I'll go 00:02:31.120 --> 00:02:33.997 through if you want to go through the numbers but extraordinary results and 00:02:34.080 --> 00:02:39.757 then the expert classes weak need and the retail people are all in. So, but in 00:02:39.840 --> 00:02:41.917 fairness, >> but that's what I want to ask you about 00:02:42.000 --> 00:02:45.437 in terms of the mis there because there is a misunderstanding. Clearly, you 00:02:45.520 --> 00:02:49.197 know, you look at the analysts, most analysts, you know, think that this 00:02:49.280 --> 00:02:52.557 stock is overpriced. You have people like Michael Bur out there shorting it. 00:02:52.640 --> 00:02:55.837 Everybody who's shorted this stock thus far has been on the losing end of it. 00:02:55.920 --> 00:02:59.837 And I'm trying to understand just if you look at sort of the growth trajectory, 00:02:59.920 --> 00:03:03.517 the sales, how much of the sales frankly I think actually even coming there was a 00:03:03.600 --> 00:03:07.677 huge part coming from even existing customers and just what the scale of 00:03:07.760 --> 00:03:11.197 this thing ultimately looks like in your mind. Okay, there are two parts. You 00:03:11.280 --> 00:03:15.597 know, of course, when I hear short sellers attacking uh what I believe is 00:03:15.680 --> 00:03:18.717 clearly the most important software company in America and therefore in the 00:03:18.800 --> 00:03:20.637 world in terms of our impact simply to 00:03:20.720 --> 00:03:23.197 make money and calling trying to call 00:03:23.280 --> 00:03:25.837 the AI revolution into question where we 00:03:25.920 --> 00:03:30.877 have these this anomalous numbers 114, rule of 40, etc. It just is super 00:03:30.960 --> 00:03:34.477 triggering because these people they could pick on any company in the world. 00:03:34.560 --> 00:03:37.517 They have to pick on the one that actually helps people that actually has 00:03:37.600 --> 00:03:41.117 made money for the average person. that that is actually supporting our war 00:03:41.200 --> 00:03:44.877 fighters. Why do they have to go after us? And I'll tell you what though, it's 00:03:44.960 --> 00:03:48.077 crazy motivating because I'll tell you why the short sellers are constantly 00:03:48.160 --> 00:03:51.917 getting screwed by Palanteer because every time they short us, we just are 00:03:52.000 --> 00:03:53.997 like tripling down on getting the better 00:03:54.080 --> 00:03:55.997 numbers and part honestly to make them 00:03:56.080 --> 00:04:00.077 poorer. But okay, so um the the the the 00:04:00.160 --> 00:04:04.077 question of like uh the actual power of 00:04:04.160 --> 00:04:07.597 the business and what is it worth? I mean, at the end of the day, one of the 00:04:07.680 --> 00:04:10.957 things that is actually in the book, the biography, and that I actually think 00:04:11.040 --> 00:04:14.077 that you always have to ask to to the is 00:04:14.160 --> 00:04:17.277 the person persuasive or are they right? 00:04:17.360 --> 00:04:21.917 And across all sorts of movements, political, I mean, you see this on the 00:04:22.000 --> 00:04:23.677 regressive part of the Democratic party. 00:04:23.760 --> 00:04:27.197 We're about to probably have a complete disaster. I was born in New York. Like, 00:04:27.280 --> 00:04:30.877 but if you actually said, "Do these things actually work?" Everyone's like, 00:04:30.960 --> 00:04:33.837 "Of course, I'm not going to vote for that." But instead, they asked, "Does it 00:04:33.920 --> 00:04:36.637 work in theory?" the theoreticians, 00:04:36.720 --> 00:04:38.797 you have to ask how often have you been 00:04:38.880 --> 00:04:41.597 right and Palanteer is about pragmatic 00:04:41.680 --> 00:04:44.477 decisions that create unfair advantages 00:04:44.560 --> 00:04:49.517 for America and its allies and on that we've been right for almost 20 years on 00:04:49.600 --> 00:04:53.037 all major decisions and I believe we'll be right going forward. Now, you could 00:04:53.120 --> 00:04:56.077 argue I don't know like they're constantly like but they they thought 00:04:56.160 --> 00:04:59.997 Panaltier was overvalued at 10. They thought it was overvalued at 20. I'm not 00:05:00.080 --> 00:05:01.597 even here saying what the valuation is. 00:05:01.680 --> 00:05:03.837 I'm just saying find a company in the 00:05:03.920 --> 00:05:06.717 world that has a rule of 114 that has US 00:05:06.800 --> 00:05:08.877 commercial growing at 121% that 00:05:08.960 --> 00:05:11.917 aggregate growth in the US is 77% that 00:05:12.000 --> 00:05:16.397 has throwing off free cash flow in a way that's anonymous and that is fully 00:05:16.480 --> 00:05:19.997 aligned with our customers and you figure out the value but they're in the 00:05:20.080 --> 00:05:22.717 business of being skeptical and being wrong and we're in the business of 00:05:22.800 --> 00:05:24.877 giving an unfair advantage to American 00:05:24.960 --> 00:05:30.317 workers, American war fighters and our investors. Being short is is a very 00:05:30.400 --> 00:05:33.197 difficult place to be because you can lose everything, right? You can drive 00:05:33.280 --> 00:05:35.277 these people into the ground. Michael 00:05:35.360 --> 00:05:37.597 Bur put a really big bet on. It's almost 00:05:37.680 --> 00:05:41.117 a billion dollars. It's $912 million. 00:05:41.200 --> 00:05:45.597 That's a big step for him to put into that. What when you say you redouble 00:05:45.680 --> 00:05:47.917 your efforts, what do you do? What do you go back in? 00:05:48.000 --> 00:05:51.757 >> Um, well, first of all, he's it's like he's actually putting a short on AI. So, 00:05:51.840 --> 00:05:54.077 the way I read it was us and Nvidia and it's like 00:05:54.160 --> 00:05:56.877 >> the biggest position is you though. I'm just through all his shorts. 00:05:56.960 --> 00:06:00.077 >> Okay. So, and and then by the way with the shorts is very complex. It's not 00:06:00.160 --> 00:06:03.597 even clear that I honestly I think what is going on here is market manipulation. 00:06:03.680 --> 00:06:07.677 We delivered the best results everyone anyone's ever seen. It's not even clear 00:06:07.760 --> 00:06:10.717 he's not doing this to get out of his position. I mean these people they claim 00:06:10.800 --> 00:06:14.877 to be ethical, but you know like they're they're actually shorting one of the 00:06:14.960 --> 00:06:18.157 great businesses of the world. And I'm not against shorting as a matter of 00:06:18.240 --> 00:06:21.117 theory, but I'm just saying pick something that is not doing a noble 00:06:21.200 --> 00:06:24.957 task. And you know, it's us against them and that's a good position for us. I I 00:06:25.040 --> 00:06:27.117 mean look when you're printing a rule of 00:06:27.200 --> 00:06:29.677 114 again people who aren't technical I 00:06:29.760 --> 00:06:34.557 think roughly a an incredible score like an Olympic grade score on rule of 14 is 00:06:34.640 --> 00:06:37.997 like 50 I mean that's roughly like if you're between 50 and seven you're an 00:06:38.080 --> 00:06:42.077 Olympic athlete of unique influent athlete this is like Michael Phelps like 00:06:42.160 --> 00:06:44.237 score like Michael Jordan like there are 00:06:44.320 --> 00:06:47.037 no scores like this there and and 121 00:06:47.120 --> 00:06:49.597 growth off of almost a 1.5 run rate in 00:06:49.680 --> 00:06:53.037 US commercial and a 77 77% growth in the 00:06:53.120 --> 00:06:55.197 US and an aggregate off of an aggregate 00:06:55.280 --> 00:06:58.557 base of of $4.5 billion. By the way, I 00:06:58.640 --> 00:07:01.117 predicted we'd get here. So, you know, 00:07:01.200 --> 00:07:05.037 it's like I if you want to short that, 00:07:05.120 --> 00:07:09.117 be my guest. You go ahead. We're just going to go do our things. I mean, look, 00:07:09.200 --> 00:07:10.637 I'll tell you, there's a tale of two 00:07:10.720 --> 00:07:14.237 cities in our society. We need experts 00:07:14.320 --> 00:07:18.477 versus retail. And you see it like, you know, I don't know why these newspapers 00:07:18.560 --> 00:07:22.557 are running, helping Mandani win. I don't know why we can't have honest 00:07:22.640 --> 00:07:26.397 discussions about our future. I don't know why we have to allow fentanyl 00:07:26.480 --> 00:07:30.877 attack, but it's almost always sympathy for the expert that doesn't need it. The 00:07:30.960 --> 00:07:34.397 short seller that has some ridiculous reason for doing something against I 00:07:34.480 --> 00:07:38.637 mean most of GDP growth in this country is because of AI. The real question is 00:07:38.720 --> 00:07:40.877 how do we grow that and expose workers? 00:07:40.960 --> 00:07:44.797 What is the worker available GDP? That's the question for our society. Instead of 00:07:44.880 --> 00:07:48.477 aligning on that, we've got these completely and again if the numbers 00:07:48.560 --> 00:07:51.997 weren't there, great. be my guest. But then the numbers are there. So then you 00:07:52.080 --> 00:07:55.277 you're not it's not even clear he's actually shorting us. It's it's probably 00:07:55.360 --> 00:07:59.037 just how do I get my position out and not look like a fool. I don't know. But 00:07:59.120 --> 00:08:03.197 I do think this behavior is egregious and I'm going to be dancing around when 00:08:03.280 --> 00:08:04.797 it when it when it proves it's proven 00:08:04.880 --> 00:08:09.037 wrong. Right. Alex, we've heard a lot of 00:08:09.120 --> 00:08:13.117 talk from the likes of a Michael Bur, but more broadly about whether we're in 00:08:13.200 --> 00:08:16.717 an AI bubble, whether the economics make sense. Clearly in the context of 00:08:16.800 --> 00:08:19.677 Palunteer uh they do make sense in so 00:08:19.760 --> 00:08:21.677 far as you you're you're printing money 00:08:21.760 --> 00:08:24.397 over there. Um not everybody in the AI 00:08:24.480 --> 00:08:26.797 space is printing money in the same way 00:08:26.880 --> 00:08:31.597 and they're spending an enormous amount um on chips, data centers and the like. 00:08:31.680 --> 00:08:35.277 How do you see the broader space right now in terms of just how things are are 00:08:35.360 --> 00:08:39.677 are developing? The there there are two subtle issues in AI. what is the 00:08:39.760 --> 00:08:43.437 addressable market and what is the addressable market for things that work 00:08:43.520 --> 00:08:47.277 meaning you make more money and your the quality of the money is higher so top 00:08:47.360 --> 00:08:51.037 line and bottom line grower we're in the business of the a part of the 00:08:51.120 --> 00:08:55.277 addressable market where it works and it can be quantifiable either commercially 00:08:55.360 --> 00:08:59.197 or on the battlefield so you that clearly and and over time you're going 00:08:59.280 --> 00:09:03.437 to have trader optimality meaning that every part of the stack is going to have 00:09:03.520 --> 00:09:07.117 to create more value than they charge that's just obvious and if that doesn't 00:09:07.200 --> 00:09:10.397 happen it will be a bubble and you I mean, I'm sorry. Short sellers can't 00:09:10.480 --> 00:09:13.357 tell a difference between products that work and products that don't, but these 00:09:13.440 --> 00:09:16.797 numbers should show you that there's a part of the market that to you quote you 00:09:16.880 --> 00:09:20.397 is printing cash. And it looks like that part of the market is the park we own. 00:09:20.480 --> 00:09:24.157 There's a separate question, by the way, which I think is equally relevant. What 00:09:24.240 --> 00:09:26.877 part of the GDP growth is available for 00:09:26.960 --> 00:09:31.677 workers? What we call worker available GDP? And that's like one of the unique 00:09:31.760 --> 00:09:34.877 things about Palunteer is whether it's on the battlefield like the people 00:09:34.960 --> 00:09:38.557 writing the scripts for these very complicated operations or building 00:09:38.640 --> 00:09:42.957 batteries or doing things on the factory floor are being enhanced by our product. 00:09:43.040 --> 00:09:46.717 And those two it's really those two questions are going to define arguably 00:09:46.800 --> 00:09:50.797 the future of what happens in this country. Does GDP grow because of AI 00:09:50.880 --> 00:09:53.357 which only can happen if if there's prao 00:09:53.440 --> 00:09:55.677 optimality or and and what the way we 00:09:55.760 --> 00:09:58.157 see it the c the customer pays less than 00:09:58.240 --> 00:10:00.397 the value they create which is abnormal 00:10:00.480 --> 00:10:03.197 uh not exactly equal prao optimality and 00:10:03.280 --> 00:10:07.517 that it's unknown honestly you have this massive growth but you know currently as 00:10:07.600 --> 00:10:11.117 far as I can tell the two companies he's shorting are the ones making all the 00:10:11.200 --> 00:10:13.437 money which is super weird like the idea 00:10:13.520 --> 00:10:17.197 that chips and what you want to short is 00:10:17.280 --> 00:10:20.640 batshit Crazy.