Alex Karp Sits Down To Discuss Software, The War, Palantir's Earnings & More | Palantir AIPCon 9

Responding to critics and short sellers

00:00Hello everybody. We are here at Palantir's ninth AIP Con with the CEO and co-founder of Palantir, Alex Karp. Alex, thanks for being here. >> Great to be with you. >> Over the past 6 months, a lot of people have had a lot to say about your company. The media has stuff to say, investors have stuff to say, short sellers have stuff to say. What do you have to say about what's happened over the past 6 months with Palantir? >> Um well, you know, maybe we should ask what the mullahs have to say about what's happened over the last 6 months at Palantir. I think you should start there. You know, like let's go right to the people of the customers. Ask the customers. You know, it's uh yeah, I you know, um

00:39we spent uh we started 20 years ago saying we're going to do value creation. Uh don't for you know, it's like we're not going to you know, take your weird category you learned at business school at Harvard probably, you know, about how to build software, build a parasitic little trinket and install it because that's what venture capitalists wanted, because that's what analysts wanted, because that's what banks would underwrite, because that's how they gave you your underwriting fee and and pre-bought your equity before they sold it to retail after their hedge fund friends got in and you got [ __ ] and they got laid. Uh um and we said we're not going to do any of that. We were going to build things

01:20uh that were super valuable and de facto get paid. I've been telling people for decades now we essentially get paid uh uh uh after we create value for you. >> Right. >> On your terms, according to your institution. We did this with clandestine services, special forces, Maven, every institution in government, every ally in the world, some of which love to admit they work with us, many of which don't admit they work with us. We then went into commercial. Everyone said we had no commercial product. But we grew commercial at a rate no one's ever seen before. >> The last earnings were one of the craziest earnings we've seen in the history of not just Palantir, but in the entire stock market. Why are you guys growing as fast as you

Why Palantir is growing so fast

02:03guys are growing? >> Well, again, it's very much linked to this. Everybody is still You build these organizations commercial, military, institutional, clandestine services. You can't really They're not built to change. At best, they're built to adapt. Our organization is maximally adaptive on the back of a couple I principles and has maximal range of motion. And that and they are built for right now, meaning people want value. And like, you know, now people who are trying to understand where the value is work with broad categories, large language models versus software versus hardware versus like the client, whether it is the US military now doing in my view, you know, it is all of our jobs to protect the

02:49warfighter. Even if you don't agree with any other part of government or this administration, once the warfighter is putting their life in danger, it's our responsibility, in my view, to support them, especially business leaders who are making doing very, very well in this country. But it's like, you know, at the end of the day. And then the other thing, by the way, is one of the biggest critiques of Palantir still is, but what is it? Is it software, hardware, LLM? I mean, read read the somewhat innate often I don't even think they're I think at this point they're probably just hired help when they're writing these crazy short things about us. But it's like, but but the legitimate thing is we

03:25don't fit into any of these categories. >> Yeah. >> But that's why we're valuable. That's why the client All of our clients need to move from categories that make no sense for them to the category that does make sense to them, which I'm the best in the world, whether it's the US CENTCOM or whether it's commercial clients. And by the way, it's the same thing internally. Like we're just trying to slot people into a position where we can get the most value for themselves and then therefore for Palantir. >> Software companies have gone through a fundamental re-rating in the broader market. A lot of people are wondering is AI eating software? The interesting thing about Palantir is I don't think you ever characterize yourself as just

Surviving AI disruption of software

04:01an AI company, just a software company. It was we are a value company. We get paid when we deliver value. How do you think you survive in this new world of AI disruption? >> Well, no, the thing is they they they of course they need broad categories and the broad category they may have of course but again, in the beginning the broad category that they had of us is we weren't a software company because we were a services company. By the way, one of the most important indicators in the market is everybody wants to be us. >> Yeah. >> Every two days >> Well, four deployed engineers is now being used everywhere. >> like you're going to see all the research labs are all everybody's going to have like a Palantir because it's the

04:34only way to create money for the customer which is the only way to get paid. Everything is too amorphous. Everything else is too amorphous and not quantifiable and you're going to be competing at the end of the day with somebody who's going to buy Palantir and how the [ __ ] you're going to explain to them that your your hype trinket is going to create value when it doesn't. Especially where the delta value creation on timelines, margins and our pure alpha is so large. Um, but to your point, no, we were never ever viewed ourselves as like we are X plus minus one. Right. We are a sui generis unique way of doing things which does include like a actual human labor augmenting the labor now with AI, uh encoding it both the

05:17knowledge of your institution meaning the data but also more importantly your assumptions around the data, especially assumptions that are impossible to capture like basically your tribal knowledge and melding that into something that is unique. And and part of the reason people don't want to understand is you know this famous thing, you know, you sit you sit you stand where you sit. It's very hard to acknowledge these things because this is a radically have have not world and a lot of people including the software thing, if you can't plausibly create value rapidly, you're going to disappear. Like and like but by the way, it's like, you know, white-collar workers, certain weak software companies, it's like steak

05:55dinners and a widget, that's not going to survive. It doesn't matter. You could do weird financial machinations. None of it is going to work. Uh and if you're just doing pure, you know, pure pure pure LLMs, well, that's very hard to make that work in enterprise. You see this again, without going into all the Pentagon drama, it's like, "Yeah, but you know, it's like that's nice and we're replacing you." >> Well, 2 years ago you said at AIP Con number four that the world will split up into chips and ontology. And quite frankly, you said it in a very simple to understand way that to this day I hear from people saying, "Oh yeah, Karp told us 2 years ago the LLMs will be useful, but they will not be where the value

Chips and ontology, two years later

06:32comes from." Do you think the world has figured that out yet? >> No, what the world has figured out, I don't know. It's very hard. I think it's it's super hard for people like No one's figured out this world completely. And we have never seen anything like this. We have like technology has in the modern world has been very aligned with the society itself. >> Yes. >> But this technology is not purely aligned with the society the way it originally was. You have like people who've historically had the best jobs in the world, the most protected, most respected, most interesting. Yeah, but those jobs are going to disappear and very rapidly. And those people are not used to having like, you know, the way

07:09vocational labors are treated, right? So, it's like that's going to be We we have on the military front, all of a sudden America's doing things that, you know, like 2 3 years ago a lot of people were looking at America as like, "Well, we could definitely do that, especially if we didn't spend half the money, right?" No one thinks that now. And and it's like on every front. So, this is a We're in We're in unchar- charted territory. And the best thing that can happen to you is you And again, this is where people could learn from retail. You first of all, you have to be on the front line yourself. You cannot outsource what you're doing to an expert unless that expert then conversely the definition of an expert nowadays has to

Palantir's message on the war

07:47be you were right and therefore I think you might be right tomorrow not you have some weird degree or something or someone says you're an expert or you you know and and then you really have to investigate these things yourself and you have to be open to yeah things are changing so rapidly that yeah what existed yesterday is not going to exist tomorrow. >> There's a war happening right now. I'm sure there's a lot of people that have a lot of thoughts about it. What is Palantir's message about what's happening? >> Well, everybody who's watching this should just reflect no matter where you are on war or this administration or anything else this country has an ability to define itself meaning the our constitutional order and

08:28the spirit around it and our economic success because it is defended by courageous men and women who are willing to put their life on the line and by the way life on the line they also have many most have like children at home spouses at home like these are people taking on enormous risk that have a lot to lose and at Palantir we're you know as has been reported on the front line of a lot of these things and we obviously believe once once once the proverbial bullets start flying we have one side we're on that side we're going to support it all the way through beginning during and after we're not particularly attenuated to popularity or polls the warfighter is fighting for us and we are going to fight for them.

Supporting the Department of War

09:15>> A lot of people have debated the value of what makes an AI company an AI company and you know you have what's happening in the world right now with different models competing for the infrastructure to be able to provide value some models not being liked by the government. Is Palantir in a strong position over the coming years to continue supporting the Department of War regardless of what AI models are in power or in popularity? >> Well, I mean, it's uh we provide the the the air the layer that makes these models value valuable and it it it orchestrates where where and how they're used and and a lot of things that can't be discussed in public, but um I look, I'm very focused on we will do whatever's best for the warfighter.

09:57We're That's that's the priority, maximum priority for us. Uh I think we're doing pretty well as a company and you know, people will We're just going to be a very exciting ride. >> The operating margins of Palantir also have grown pretty exponentially. I mean, a year ago they were at 17%. We're now pushing 50%. We have not seen anything like this in software. What is >> Well, what about our rule of 127? >> Well, it's it's a new rule every 90 days >> Hey, size matters. It matters. People want to say it doesn't matter. >> Um what is the magic behind putting up the most insane numbers we've seen in software history? Is it internal culture? Is it >> it's it's the sum is the parts are very strong and the sum is much stronger than

Operating margins and company culture

10:41the parts. I mean, we are an artistic Look, there there there are very Nietzsche once said there were two artists of the German language and somewhat arrogantly, a kind of arrogance I relate to, said, "Uh myself and Heine." There are very few artists in business. I am one of them. Palantir is an artistic project and everybody else is trying to build things in like a non-artistic, very much based on what they has been understood in the past kind of way when the there is no road map, there's no playbook, and it's it really is the neuro divergence Yes. of Palantir as a company and our ability to manage highly in their own way differentiated and often in their own way without even realizing it neurodivergent people against a task

11:32that is more important than us. And then that seeps into the quality of the products and and and the way we execute. And you know, it's that concatenation um and then you could just judge us by our enemies. Look at them. Judges by our enemies. Yeah. >> Got it. Okay. Alex Karp, CEO, thank you so much. >> Yeah. Thank you. Yes. >> That was great. Hopefully nice meeting you for you. Good stuff. >> Yeah, I know. I always like seeing you. It's one of my highlights. >> Yeah, you know, I like seeing you, too. It's fun. >> Alex Karp, what do you think about the brick work here? >> I like the whole thing. >> You know, my background at my home studio is bricks. >> Yeah, I know. >> I know Iliano picked out the

12:08>> It's fake bricks. So just the ongoing joke online is like oh, the bricks are fake, they're real. >> Yeah, everyone's debating. >> Bricks and mortar. Hey.