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Palantir COO on company's NYSE debut

Shyam Sankar, Palantir's COO, joined The Final Round to discuss the company's direct listing on the NYSE, his outlook for the company's revenue and addresses how the company works with the government.

Video Transcript

- Well, one of the defining stories of the pandemic has been a really-- I guess just over the last quarter or so-- has been the number of companies coming public. And one of the most anticipated names set to make, and now has made, its debut on the markets is Palantir. The software company has begun trading on the New York Stock Exchange, completing its direct listing earlier today.

To talk more about the company, about the process of going public and operating in this environment, we are joined now by the company's COO, Shyam Sankar. So Shyam, thanks so much for joining the show today. Let's just start with the process of going public and the decision to go public from you guys during this year, during this period, and how that all kind of unfolded for you guys.

SHYAM SANKAR: Yeah, yeah, thank you for having me. It's great to be here. So we didn't actually decide to go public until the summer of 2019. That's when we announced to the company and the stakeholders that we were going to go down this journey and take this path. We thought at that time that we'd really be looking at the back half of 2021.

But in the context of the pandemic, where we saw a real acceleration in our business, the sorts of technologies that we'd been building for the better part of the last five years were ideally suited to helping institutions deal with the simultaneous supply and demand shocks. We saw a lot of uptake. We started 83 new engagements in the first three weeks of COVID alone, without getting on a flight. And so that acceleration, that tailwind accordingly accelerated our plans.

JEN ROGERS: So how do you think we should think about Palantir, Shyam? It's Jen Rogers here. I-- there's a lot of people that compare it to different data companies that are out there, talk about it data mining. Are you a services company? Are you a SaaS play? How do you think about Palantir as you make your debut?

SHYAM SANKAR: Yeah, that's a great question. And I think one of the aspects of the tailwind from the pandemic is it showed that a lot of the things that, sometimes internally, and certainly externally, people thought were bugs about the business were, in fact, features. So if you thought that somehow we were a services company, and that's what forward-deployed engineers actually did, it seems very hard to think about how would you start 83 new engagements in the span of three weeks without sending people anywhere. And so like these, the acceleration with Apollo, in terms of being up to onboard these customers with software-defined data integration that meant that we could do these incredibly complex data integrations in an afternoon with no code instead of years, as it would have used to take.

And so the way I think about the business, our ambition is to be the central operating system for the modern enterprise. And the word operating system is very important there. It's not the central analytics platform or data platform. It's really about decisions. What sort of decisions do institutions make? How do we help them wield all the data within their four walls to make those decisions, to make good decisions, and then continuously learn how to make better decisions based on that?

And so that takes, at the form of an Airbus, how do you build better, faster, cheaper airplanes, and at Chrysler, if you go to any factory in North America, you will find Foundry open by blue collar workers on the factory floor, using it to manage quality in real time. And for Gotham, you would find that special operations the world over are planned and executed in Gotham.

JEN ROGERS: You're going over a number of your customers there. You guys have a pretty small pool, but it's really a who's who of the world, from governments to Fortune 100 companies. Your-- if you asked maybe just the regular person what they know about Palantir, they might know some of the controversies around some of your government work, also that it's kind of a company that's known for secrecy. Now, you're public. You have to be more transparent. How do you think that changes the company? Does it make it easier for you to get some clients and harder to get others? Does it change the company at all, in your mind?

SHYAM SANKAR: Yeah. Well, you know, the most fun of the S-1 process, this listing process, has been getting to share with the world for really the first time in a very comprehensive way all the things that we've been working on for the last 17 years. And I think it's been exciting to do that. And clearly, as part of being a public company, we'll be engaging with the direct and indirect stakeholders at least on a quarterly basis. And that's something we're looking forward to. And it's time, after 17 years as a company.

- Hey, Shyam, it's Seana. Just speaking on those growth opportunities and really exposing yourself and getting more customers, when you think about the corporate customers versus your government work, how do you see this balance over the next couple of years? And also, what are your plans just in terms of transitioning your business to serving corporate customers at scale?

SHYAM SANKAR: Yeah. So presently, we're roughly 50-50 by revenue, commercial and government. And I think for both segments, we really very much are in just the beginning. I would say the government business, you can really think of it starting in late 2018 when we won the appellate-- the appellate court upheld the lawsuit on statute 2377, which favors commercial items, has the commercial item preference.

And on the back of that, there's been extraordinary growth in government. Of course, there was a better part of a decade and a half of R&D investment along the way there. And on the commercial side, the Foundry product's been generally available for about four years now. And as I think about the opportunity there, we have six of the Fortune 500. It shows you how much headroom we have left to grow. And we're very good at developing deep, unique relationships.

You can see that in our ACVs, in our average contract value of $5.6 million in 2019. And that's grown roughly 30%, historically, by year over year. And we're only in 21 of the global 300. So I think there's a lot of room for us to grow and go to the commercial markets-- you can just kind of see that numerically-- and in the government markets, based on what we've been able to do in just the last two years alone. And I expect it to roughly track as it has, 50-50.

- And Shyam, thinking about-- just picking up on something Jen asked you about the transparency, when I read the S-1, I was struck by, I guess, the definitive nature, the forcefulness of the company's culture. And I guess I would ask, one, is this something that you felt like was focused through having to write it down and knowing it was going to be disclosed to everybody, and two, is this-- do you feel like some of this might have been new for your employees, or was everyone who was at Palantir aware of, you know, where the leadership team and where the vision for the company was before these documents were made public?

SHYAM SANKAR: Yeah, I mean really, you know, culture is something that emanates from every pore in the institution. Leadership can get up and try to talk about it, but I think the S-1 really resonated with our employees because it so succinctly captured everything that they have been working on, they have been building, and what they've believed to be true over these last 17 years. And so it struck a chord internally, and we hope that it at least shares how we're thinking about the world and is a basis for engaging outside stakeholders going forward.

JEN ROGERS: And talking about the stakeholders and your culture there, this class structure is getting a lot of attention. F-class shares, you've got the founders holding onto control here. Why does Palantir need to have a class structure that looks this way?

SHYAM SANKAR: Yeah. So historically, I would say it's been very important that Palantir is a founder-led company. Just think about the very origin of the business. You know, starting a deep tech company in Silicon Valley that wanted to serve government customers. I can't tell you how many VCs we met with who said I'd love to invest if you change basically everything about your company, and don't work with the US government.

And so it took a lot of founder discipline, founder commitment to the founding ideal to actually execute on the business. You think about suing one of your largest customers, the US Army, that was a very scary, hard decision, one that most conventional wisdom-- actually all conventional wisdom-- disagreed with. And it took really committed founders who both were willing to spend a decade trying to execute the mission, and then subsequent to that, working hand-in-hand with the customer to actually deliver some increased value to US taxpayers and to the Army as a customer.

And so I think it's been historically incredibly important, and on a going-forward basis, since we're just at the beginning-- I mentioned how early we are in the commercial business, how much room we have to grow in government business-- I think it will continue to be important. And it's not just my opinion. A majority of disinterested stockholders also agree with that. Presumably, that's why they voted on approving the government structure.

JEN ROGERS: So you're 17 years old. Your founding kind of comes out of 9/11. We have another crisis right now. But like I guess any kid that's 17 or 18, you're moving on. You're moving out of Silicon Valley. What is the sort of love lost between Palantir and traditional tech and Silicon Valley? Why move your headquarters? Why, in the S-1, kind of call out these differences? Are you really that different?

SHYAM SANKAR: Well, I would say at a high level, you know, we, for the better part of a decade, we've been a global company, with offices from Tel Aviv to Tokyo. And we're always looking for open-minded, curious, diverse talent. And so for the next phase of our business, we think the right home for us is in Denver. I would also say, though, that the Valley is a special place [INAUDIBLE] maintain a presence there.

The-- counterfactually, could you have started this business in the Valley? Prob-- could you have started this business anywhere other than the Valley? Probably not. Could you have started this business without our founders in the Valley? Definitely not. And so I think there's something about-- it was the right place for us before. We hope to maintain a presence there. But it's-- we-- Denver's probably the right home for us going forward.

- And then Shyam, just, I guess, to kind of wrap up here, in thinking about the future for the company now-- and you mentioned the transparency, and how that's going to change the business going forward, you know, just within the last couple of minutes, getting headlines that lawmakers are sending the SEC letters about questions related to your involvement with the government. I mean, is this the kind of thing that you expect now to be dealing with regularly as a public company, and is it something that, you know, your group in that executive suite is comfortable with dealing with as you try to operate the business going forward?

SHYAM SANKAR: Well, you know, we embrace complex problems, difficult problems. They have complexity, they have nuance. If you just think about the very first thing that we wanted to start the business to work on is we're going to build software that helps America and her allies kill or capture terrorists. That is a complex and nuanced thing. And so we're embracing that. And it gives us great joy to work on problems like catching human traffickers or cyber criminals or, you know, other forms of, you know, spies, basically, counter-intelligence. And I would say that we intend to engage with all of our stakeholders around these issues, naturally, as a public company.

- All right. Shyam Sankar is the COO of Palantir. Thank you so much for joining the show. Congratulations on making it to the public market. And hopefully, we'll be in touch down the road.