Palantir Cofounder Joe Lonsdale Defends The Newly Public Data Mining Company Amid Ongoing Criticism

Palantir Technologies, the once-secretive data mining company, went public through a direct listing on Wednesday, hitting a market capitalization just north of $20 billion on its first day of trading Wednesday. The journey to IPO has been bumpy and at times controversial. Joe Lonsdale, cofounder of Palantir who left the company in 2009 but remains a significant shareholder through his investment firm, 8VC, tells Forbes why the company is necessary, and how he built it in the early days with billionaire investor and Palantir chairman Peter Thiel, CEO Alexander Karp, president Stephen Cohen and others in 2003.

“From the beginning, it was an unusual company, and we had big ambitions to build something that was very important for Western civilization,” says Lonsdale of the company’s grand initial vision. A computer science major who graduated from Stanford University in 2003, Lonsdale edited the conservative paper Stanford Review, which was cofounded by Thiel (by then, Thiel was already an alumni). 

“If you’re a scientist then you grew up on stories in the ‘70s and ‘80s where the NSA was actually the most sophisticated place in the world,” Lonsdale recounts. But in the aftermath of 9/11, the founding team realized that “the government had gotten way behind Silicon Valley.” Lonsdale joined Thiel’s hedge fund, Clarium Capital, before teaming up with the billionaire investor, Cohen (who was roommates with Lonsdale at Stanford), as well as former PayPal engineer Nathan Gettings to build a prototype for Palantir. 

Named after the fictional crystal orbs that can see into the past and future in the Lord of the Rings trilogy, the Palantir founding team wanted to build a product that achieved two goals: combine artificial intelligence and human analysis to help the government solve complex problems like tracking terrorists, manage hospital traffic and more, and to do it all in a cost efficient way for taxpayers. “From the start, we saw wasteful government projects costing tens to hundreds of millions of dollars that are[were] not doing what they’re supposed to be doing, which is solving problems and protecting civil liberties.” 

Throughout the years, Palantir has faced criticism for its work with the government, particularly its contracts with the Department of Homeland Security (DHS) and Immigration and Customs Enforcement Agency (ICE). On Monday, international human rights organization Amnesty International released a report detailing how Palantir software was being used in problematic raids of migrants that led to the separation of parents from their children. Another critique of Palantir is that at its core, it is a surveillance company that is eroding American civil liberties and rights. 

In response to the critiques, Karp wrote in the introductory letter of the company’s prospectus that Palantir’s technology “is used to target terrorists and to keep soldiers safe. If we are going to ask someone to put themselves in harm’s way, we believe that we have a duty to give them what they need to do their job.”

Lonsdale, who identifies as a civil libertarian and says he would prefer for the government “to see less [information about U.S. citizens] than it does,” argues that it is not the company’s place to dictate government policy. “That policy argument is one that should go on between our government and our populace,” he says. “But once you have the rules, you should do it efficiently and not waste billions of dollars.”

Lonsdale further explains that Palantir is simply “augmenting” what the government is already doing in a more efficient way,  “What people need to understand is that Palantir was built originally as a privacy engine,” he says. “If there is a crisis going on and the CIA needs to share something in a certain way with MI6 within an hour, they can suddenly now do that, versus hiring someone to come in for three months.” 

Palantir’s record remains controversial, but Lonsdale is quick to point out that Palantir’s platform was used by 35 countries as part of their pandemic response, without going into specific details on which countries and how exactly its services were used. “The company has proven its product in a very powerful way.”

At the offering, Lonsdale’s investment firm was one of the larger outside shareholders in Palantir, with a 1.9% stake in the company. It registered to sell 5.7 million shares in the offering, or 13.5% of its stake. Lonsdale left the company in 2009 with Palantir’s blessing to start his own venture, a wealth management platform called Addepar. Still, he remains close with the team. 

Asked about the criticism around the outsized voting control that Thiel, Karp and Cohen have — the offering prospectus spells out that the three cofounders have just under 50% voting control regardless of how many shares they sell — Lonsdale was cautiously optimistic. 

“If it was me, I might have changed [the rules] slightly [with] how much they could sell while still being fully in charge of it,” Lonsdale says. “But Stephen, Alex and Peter are all very different people with strong principles. They disagree with each other sometimes. The fact that there’s three of them is a really positive sign.”

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