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Are Palantir employees' Common shares worthless?

Original post made by Palantir_Watcher, Downtown North, on Feb 23, 2016

I heard from a well-placed acquaintance today that because of the share price at which Preferred shares of private unicorn Palantir have/are being sold at right now, the company's share preference structure is such that Common shareholders - ALL employees, for example - are now worth exactly nothing.

Because Palantir's building leases account for ~25% of all downtown Palo Alto leased office space, this is a troubling indication that the popping of the current Internet bubble is or will soon have a significant impact on downtown Palo Alto commerce.

Anyone care to comment?

Comments (44)

Posted by Been There Once Before
a resident of Old Palo Alto
on Feb 23, 2016 at 3:35 pm

I predicted this several years ago. The unicorn shell game is being played with all the risk being placed on the backs of the non-founder employees. VC's have little risk - they get repriced at whatever subsequent rounds determine the market value to be - it is called a 'full ratchet' provision. Founders are fine - whether the valuation is $200M or $20B, they are still wealthy beyond imagination.

Palantir will continue to raise money, assuming the VC's continue to see positive market momentum, but as valuations fall from the stratosphere, employees will be on the short end of the stick. Those options they thought were worth millions promptly go to zero.

Employees will probably still keep their jobs, it is just the equity goes to zero. Some well placed employees might get new and/or repriced grants. Palo Alto commercial real estate will not tumble and become empty anytime soon, though if Palantir's business model is dependent on delivering $1K worth of consulting services for $2K in employees cost, that parade will be brought to a halt soon enough....

VC'a are now smarter about how to play this game. They think they can pull in institutional money to continue to feed their startups into the valuation stratosphere. All shell game are ultimately exposed..


Posted by Palantir_Watcher
a resident of Downtown North
on Feb 23, 2016 at 4:33 pm

This afternoon I taped 6 notices on public places near Palantir HQ mentioning this, and all 6 have been ripped down. I put new ones back up and we'll see if Palantir goons leave them up this time now that they know I'll be calling the media if they do so. It seems management doesn't want rank & file to know the truth - funny coming from a startup whose job is to help uncover the truth...


Posted by Palantir_Watcher
a resident of Downtown North
on Feb 23, 2016 at 4:57 pm

[Post removed.]


Posted by Citizen 7
a resident of Another Palo Alto neighborhood
on Feb 23, 2016 at 5:22 pm

Over the Christmas holiday I ran into the spouse of a family relation who works for a three-letter agency. I asked if he/she knew anything about Palantir, and was surprised to learn that he/she had been visiting the Palantir offices in Palo Alto 1-2 times a week for several years, and that employee turn-over is really high. He/she estimated the average length of employment, for a Palantir employee, was 2-3 years.


Posted by Law breaker?
a resident of Duveneck/St. Francis
on Feb 23, 2016 at 6:01 pm

This whole thing sounds like a fantasy. I would suggest that the person obsessing about palantir provide some ral sources for his claims about the company instead of the third party hearsay that he is posting here.
I also did not realize that in palo alto anyone can post whatever they want in public places. You may have been breaking the law!!!
But good to see that the obsession with palantir continues!!!


Posted by burly guards
a resident of Another Palo Alto neighborhood
on Feb 23, 2016 at 6:44 pm

[Post removed.]


Posted by Todd
a resident of Another Palo Alto neighborhood
on Feb 23, 2016 at 7:17 pm

Honestly if some weird dude was hanging around my office putting up fliers about my company I imagine our security would do the same thing.


Posted by 25%
a resident of Duveneck/St. Francis
on Feb 23, 2016 at 10:54 pm

Does Palantir really lease 25% of downtown Palo Alto office space? If so–wow, that is quite significant. No wonder their employees founded PAF. They need housing and it doesn't appear that the company is providing it.


Posted by Pets.com
a resident of Crescent Park
on Feb 23, 2016 at 11:17 pm

"They need housing and it doesn't appear that the company is providing it."

Nor apparently is Palantir paying its employees enough to afford housing locally. [Portion removed.]


Posted by Cory
a resident of Another Palo Alto neighborhood
on Feb 24, 2016 at 7:54 am

Palantir has now raised $2.32 billion in total. Palantir also now has a valuation of $20.33 billion, up from $15 billion in 2014. The new valuation makes it the fourth most highly valued tech startup, just under Airbnb, Xiaomi and Uber.

Now could this all go poof? Maybe. What would need to happen? Well, the US would have to destroy all of Isis, Al Qaeda, Hezbollah et al and destroy them. Additionally, the US would need to stop any threat posed by China, North Korea, and Russia. So assuming, we can bring about full world peace and stop all cyber threats as well, then yes, Palantir may be in trouble.

Or, if you live in the real world, where clearly some group VERY high up in government is guaratee'ing these 20-25 year leases, and you use your brain, cyber security et al is only going to grow as the world advances technologically.

Having huge NSA and CIA contracts are just ever so slightly diff than being pets.com. And don't think this isn't a boon to them every time a pets.com goes under and their office space becomes available. This is exactly what Palantir wants. And they will continue squeezing more and more people into the offices if PA tries to squeeze them space wise.


Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Feb 24, 2016 at 8:27 am

To quote a recent Techcrunch article about Palantir, "Since its founding in 2004, Palantir has managed to grow into a billion dollar company while being very surreptitious about what it does exactly." Many people think that Palantir doesn't really have a solid technological foundation, and the reason they have to pack so many employees into Palo Alto is they largely have to do the work manually. If your business model is to collect the "dumb money" from the government, that's fine. While it lasts.


Posted by Cory
a resident of Another Palo Alto neighborhood
on Feb 24, 2016 at 9:16 am

"Many people think that Palantir doesn't really have a solid technological foundation, and the reason they have to pack so many employees into Palo Alto is they largely have to do the work manually."

[Portion removed.]

We can learn bits of Palantir from the co's they acquire.

Recently acquired by Palantir, Kimono Labs- The company revealed that it is now being used by more than 125,000 developers, data scientists, and businesses, all looking to find structured data.

Kimono Labs explained that the acquisition by Palantir will give the team "unmatched support, resources, and the ability to work on things we could not tackle alone as a small startup."


Posted by Been There Once Before
a resident of Old Palo Alto
on Feb 24, 2016 at 12:48 pm

Cory -

There is no guarantee the US Government will continue to pay them anything. Clearly, cybersecurity will be an issue that will be important for a long time, and will be an important part of our security budget as a nation. But what exactly is Palantir's product or service? It is decidedly unclear. If it is a product (which most people tend to doubt), then it could easily be made obsolete by a better product from someone else. Why has Fireeye's stock tanked recently? It's product is no longer especially competitive. If Palantir is mostly a service (which is the bet made by most), then scaling and growing it is a major, major challenge. I know many Silicon Valley companies in the service business who have gone bankrupt as a result of success. The question then becomes how much does it cost you to provide the service, and how much is the customer willing to pay? If Palantir is mostly a service, why on earth have they needed to raise and spend $2B in such short period of time? Shouldn't the revenue and income from their current contracts pay for that? There is no product per se they are having to develop.

Your sarcasm aside, this has nothing to do with Trump or ISIS. It has to do with the nature of startups, hyper enthusiasm, and market bubbles. Palantir is private, and so they need to tell us nothing. Maybe they are insanely cash flow positive due to current contracts. I am going to bet that is not the case - that they are wildly investing in all kinds of things internally, pursuing the 'get big fast' mantra of the last dot-com bubble, and frantically trying to turn what is primarily a service capability into a product - and perhaps not doing very well at it.

If the VC and institutional investors are willing to continue to throw money at it, then of course they can play this game as long as they have permission. But the sense around town is that the game is up for unicorns buying markets and market share, and once again the world needs to get back to real profits and real losses.

My original point is that the VC's and founders can keep each other happy by throwing more money into the company at a lower valuation - and the only ones to get hurt will be rank and file employees. This will most assuredly happen. At Palantir, and many of the other unicorns out there. Grossly inflated startup valuations look good for VC limited partner meetings, and make founders look cool in the press, and make employees happy during the company meeting when they are announced - but I assure you the damage from this over-valuation bubble will be significant and long lasting.




Posted by Palantir_Watcher
a resident of Downtown North
on Feb 24, 2016 at 1:23 pm

Seems like the media is above all else intrigued to learn that Palantir security staff took down the flyers: Web Link


Posted by Watching the watcher
a resident of Charleston Meadows
on Feb 24, 2016 at 1:35 pm

Uh, palantir watcher, what exactly is qz.com and nowhere in the article does it say that palantir security took down anything. Nice try though


Posted by Watching_Watcher_Watch_Watcher
a resident of Downtown North
on Feb 24, 2016 at 2:26 pm

I saw the security guard take down the flyers with my own eyes. He has the right to do that, it turns out, but the person who wrote the article on QZ (a site I know nothing about other than it showed up in Google search results for "Palantir common shares") knew that as well because he saw what I saw.


Posted by David Yanofsky
a resident of Downtown North
on Feb 24, 2016 at 3:34 pm

Palantir_Watcher, I wrote the story on Quartz, I'd like to talk to you about this more. Could you send me an email to [email protected]?


Posted by Lizette Chapman
a resident of Community Center
on Feb 24, 2016 at 4:10 pm

Nice article David. I'm following up as well. I'm a reporter with Bloomberg Business Week and would also like to speak with you, Palantir_Watcher. I was looking at some Palantir funding data and would like to run some things by you. I'm at [email protected] Would you please shoot me an email?


Posted by Pets.com
a resident of Crescent Park
on Feb 24, 2016 at 4:10 pm

"Having huge NSA and CIA contracts are just ever so slightly diff than being pets.com."

You don't know how much truth your (presumed) sarcasm contains. Government contracts have had to be competed among all qualified willing parties since Congress passed the Competition in Contracting Act (CICA) in 1984. Sole source awards are extremely rare. Palantir is guaranteed nothing beyond opportunities to periodically submit proposals.

BTEW, it seems to me that monolithic business activity on this scale should be banned in downtown.


Posted by Forehead slap
a resident of Menlo Park
on Feb 24, 2016 at 4:28 pm

Two "reporters" from "business websites" ask anonymous internet commenter for insights on a private company's financial state. Ladies and gentlemen, welcome to journalism in 2016!

From now on I will assume that any anonymous source referenced on Bloomberg is an anonymous internet poster. It will probably make the articles more fun!


Posted by Citizen 7
a resident of Another Palo Alto neighborhood
on Feb 24, 2016 at 5:45 pm

Forehead slap said:

"From now on I will assume that any anonymous source referenced on Bloomberg is an anonymous internet poster"

Ah... that would not be a logical assumption. Just because the source is anonymous to you, doesn't mean the source is anonymous to the reporter. Just because a reporter talks to an anonymous source, doesn't mean the information makes it into the paper, and just because the source is anonymous doesn't mean the information came from the internet.


Posted by Palo Alto Resident
a resident of Old Palo Alto
on Feb 24, 2016 at 6:02 pm

@Forhead slap: I agree, interesting to see where these anonymous sources sometimes come from. This is especially shocking to me because I read Bloomberg all the time.


Posted by Curmudgeon
a resident of Downtown North
on Feb 24, 2016 at 6:11 pm

"I agree, interesting to see where these anonymous sources sometimes come from."

Like, Watergate's Deep Throat.


Posted by Citizen 7
a resident of Another Palo Alto neighborhood
on Feb 24, 2016 at 6:24 pm

"Shocked" that a Bloomberg reporter would talk to an internet poster? Where do you think Palantir gets ALL of its information?


Posted by Palantir_Watcher
a resident of Downtown North
on Feb 24, 2016 at 7:00 pm

I merely wanted to help Palantir employees to be aware that they should take care of themselves, but this ain't my fight nor one I'll bloody myself over. Reporters: Palantir preferred share transactions are occurring. Find who's involved and there's your story.


Posted by Mom
a resident of Adobe-Meadow
on Feb 24, 2016 at 10:35 pm

My son works for another start-up and the employees common shares are worthless there too. My suspicion is that it must be a rather common issue right now in start-ups.


Posted by Venkman
a resident of Old Palo Alto
on Feb 25, 2016 at 8:10 am

Palantir_Watcher, pretend for a moment that I don't know anything about metallurgy, engineering, or physics, and just tell me what the hell is going on.


Posted by musical
a resident of Palo Verde
on Feb 25, 2016 at 8:35 am

Just don't tell me that 35 years of accumulated Social Security shares will be worthless.


Posted by common
a resident of College Terrace
on Feb 25, 2016 at 5:57 pm

According to NYT, many start-ups may be overvalued and stocks not worth much:
Web Link


Posted by No_Longer_There
a resident of Downtown North
on Feb 26, 2016 at 9:00 am

I used to work for Palantir (I left after about 9 months). Oh, the stories I could tell... Working there was like dating someone really hot, but also off-the-wall crazy. I don't regret it though (both having worked there, and having left all of my equity on the table after 9 months). Turnover depends on where you are: some people really like it, on my project I was the 4th person to quit in 4 months.

Palantir is not a bad company. But, if you asked me what it is they do, I would have to use what some consider a very dirty word: I see them as a pretty good third-party integrator. They're also very good at marketing (especially for a company that claims to do no marketing at all). Given that, it's no surprise that some people believe that Palantir is actually worth $20B :)


Posted by Bloomberg Reader
a resident of Another Palo Alto neighborhood
on Feb 26, 2016 at 11:06 am

Look like Bloomberg has better sources than anonymous internet posters: "Palantir Staff Shouldn’t Believe the Unicorn Flyers"

Web Link


Posted by Commentator
a resident of Professorville
on Feb 26, 2016 at 12:46 pm

From the cited article: "Palantir staff can relax a bit. The terms of recent fundraising rounds don't contain many of the provisions that can crush the value of common shares held by employees."

Relax, everybody. They don't have "many" tools to shaft you with.


Posted by common sense
a resident of Midtown
on Feb 26, 2016 at 11:27 pm

Reported in Fortune Magazine website "A Morgan Stanley mutual fund has marked down the value in ... Palantir by 32% "

Web Link


Posted by Fortune vs Bloomberg
a resident of Downtown North
on Feb 27, 2016 at 11:43 am

Sounds like the reporters at Fortune Magazine have better sources than those at Bloomberg.


Posted by Observer
a resident of Crescent Park
on Feb 27, 2016 at 2:49 pm

Their corporate shenanigans and realestate gobbling are bad enough. But not enough for them.
They hire people who are on Palo Alto city committees so they can bore from within.
Not to mention that quite a number of their employees are active in Palo Alto Forward, advocating for development.


Posted by Norm
a resident of Adobe-Meadow
on Feb 27, 2016 at 3:22 pm

Observer- something needs to be done to counter the " anti-Everything stance pushed by PASZ and their acolytes on the council. Someone needed to step up for the people of Palo Alto, bravo palantir


Posted by Citizen 7
a resident of Another Palo Alto neighborhood
on Feb 28, 2016 at 11:48 pm

Palantir seems to have adopted the techniques of one of its clients, and is treating Palo Alto like a banana republic... or is Palantir treating Palo Alto like a banana republic at the behest of a client?

We learned from Ferguson MO. that the federal government been is worming its way into local government by providing all kinds of para-military gear to local police departments.

Palantir has been providing PAPD and other local police departments with "free" software.


Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Feb 29, 2016 at 4:19 pm

I consider Palantir a trojan horse. They hire Palo Alto insiders, their employees founded PAF which is aggressively pushing an intense urban transformation of Palo Alto into a dense metropolis agenda. They do not provide housing for their employees, but rather push incessantly, through their allies in the Transportation and Traffic Commission, for subsidized dense housing. A private company is intensely involved in shaping local politics about the most important issue, Palo Alto's future and the character of the town.


Posted by Housing
a resident of Downtown North
on Feb 29, 2016 at 4:40 pm

I'm confused. What company, in the bay area, provides housing for their employees? Palo Alto isn't some Offshore Oil Rig for tech workers, it's a wonderful community. What's so wrong about wanting to live AND work there?


Posted by Commentator
a resident of Professorville
on Feb 29, 2016 at 5:49 pm

"What's so wrong about wanting to live AND work there?"

There's nothing wrong with wanting. I've been wanting to live in Pebble Beach for many years, but that's as far as it gets until I invent the next Facebook.

No employer I know of directly houses its employees. But employers that value their employees pay them enough so they can live in the area and continue working for the company. It is the well-paid buyers who pay the prices that determine the cost of housing in our open and free market.

Certain Palo Alto employers rely on nanny-state socialism to underwrite their business model. They need the city of Palo Alto to subsidize them by providing discount housing for their workers, whom they grossly underpay while promising gold where the company rainbow ends. It's a great deal for their wealthy investors, a mirage for their workers, and an unfair burden on our general homeowners.

Just say no to this nanny state for wealthy capitalists. Employers who will not pay their employees a living wage by local standards should be welcome to leave. I would quit if I found myself in misfortune of working for one of those sweatshops. Get out while the gettin's good, before the stampede.


Posted by Robert
a resident of another community
on Feb 29, 2016 at 6:15 pm

@Commentator

Perhaps there would be more incentive to leave if you quit patronizing and supporting those places that employ low paid workers; restaurants, grocery stores, etc... or were you only referring to those awful tech companies?


Posted by Commentator
a resident of Professorville
on Feb 29, 2016 at 7:59 pm

"Perhaps there would be more incentive to leave if you quit patronizing and supporting those places that employ low paid workers; restaurants, grocery stores,"

A strange nonsequitor. I've never patronized Palantir. Have you? How?

Read my post again and get back to me in the morning.


Posted by Do Tell
a resident of Another Palo Alto neighborhood
on Feb 29, 2016 at 8:06 pm

A former Palantir employee, a family friend, told my son that basically, simplified, Palantir does the " dirty work for the NSA"

Is this true? If it is, do we, as citizens of Palo Alto, even want them here, taking up so much spec downtown???


Posted by Frank Everstine
a resident of Downtown North
on Feb 29, 2016 at 10:32 pm

"Is this true? If it is, do we, as citizens of Palo Alto, even want them here, taking up so much spec downtown???"

No. They certainly are not a community-oriented service, or even particularly high tech. They belong inside the Beltway.


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