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A peek inside Palantir


Good morning! This Wednesday, it's IPO day. Again. I promise, we won't keep doing this forever, but clearly everyone's trying to file their S-1s so that they can squeeze in one last week away before the summer's over.

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The Big Story

How to raise $30 billion in a single day

Shakeel Hashim writes: The Chinese fintech Ant filed for its IPO yesterday, and the company hopes to raise a record-breaking $30 billion at a valuation of more than $200 billion when it goes public. How did we get here?

Ant started out as Alibaba's Alipay way back in 2004, before eventually being spun off into its own entity. It's now a titan of Chinese payments and finance — and an incredibly lucrative one.

  • Alipay, which has more than 1 billion annual users and 711 million monthly active users, is its most established business. Ant processed almost $16 trillion worth of payments last year, netting the company $7.4 billion in revenue.
  • But payments is no longer Ant's biggest business. In recent years, the company has aggressively grown its "digital finance technology platform," licensing out technology to financial services companies so they can offer loans, insurance and investment options on Alipay. Last year, that division delivered 56% of Ant's revenue, or $9.7 billion.

Unlike many tech companies listing this year, Ant is profitable. (What an idea!) Last year it made a profit of $2.6 billion, and it's already beaten that in 2020: It made $3.1 billion in the first six months of the year. But it's not all sunshine and rainbows:

  • Ant's complicated business means it's subject to a whole range of risks. Its IPO prospectus lists a plethora of potential regulatory issues, highlighting the risk of operating in such a sensitive and tightly controlled area as finance.
  • Geopolitics could pose a huge threat, too, the company said, pointing to the "deterioration in the relationship between China and the United States" as an issue on several fronts.

The company said it will sell at least 10% of its shares, but the Financial Times reports that it's aiming to sell 15%, to raise $30 billion at a $200 billion to $300 billion valuation. That would be the largest amount ever raised in an IPO, beating Saudi Aramco's $29 billion. Aramco, incidentally, ousted … Alibaba itself from the top slot, which it earned in 2014 after raising $25 billion.


A peek inside Palantir

Let's do the same Risk Factors digging we did yesterday, but this time with Palantir, the ultra-secretive data-analysis company. As ever, the company loses money, is excited about the future, thinks everybody's gonna get rich, so on and so forth. But what it's nervous about makes for fascinating reading:

  • The company is really worried about public perception of its work and its clients, particularly governments around the world. "Our relationships with government customers and customers that are engaged in certain sensitive industries, including organizations whose products or activities are or are perceived to be harmful, has resulted in public criticism, including from political and social activists, and unfavorable coverage in the media," it writes.
  • Ever-changing privacy regulations are causing some uncertainty, particularly the Privacy Shield and CCPA laws: Palantir warns they "pose a compliance challenge that could manifest in costs, damages, or liability in other forms."
  • And it makes a bold statement on China: "Our leadership believes that working with the Chinese communist party is inconsistent with our culture and mission," the company said, knowing that could hurt its growth potential.
  • Beyond all that, there's the greatest hits of risks: COVID-19, AWS and Azure uncertainty, and competition across the board.

There are also fun details about Palantir lurking in its S-1:

  • CEO Alex Karp has a $600,000 annual travel budget, which doesn't include nearly $1 million in plane-chartering costs. The company also saved more than $30 million on travel costs alone in the first half of 2020, thanks to the pandemic.
  • Palantir has $1.2 billion in existing contracts with governments in the U.S. and around the world, with another $2.6 billion pending.
  • Peter Thiel owns 329,364,684 shares in Palantir — about 20% of the company. Founders Fund has another 139 million. All of which is to say Thiel is about to make a fortune. Several fortunes. Several dozen fortunes.

CEO Alex Karp also wrote an open letter to go along with the S-1, which reads as one long zinger against the tech industry.

  • "The engineering elite of Silicon Valley may know more than most about building software," he wrote. "But they do not know more about how society should be organized or what justice requires."


There is no Oculus. Only Facebook.

Hark: a non-IPO story! Yesterday, Facebook announced the date for Connect, its AR and VR conference. But the date (Sept. 16) isn't what's interesting. What's interesting is the name, which is no longer Oculus Connect: It's now Facebook Connect.

In fact, the Oculus brand seems to be slipping away entirely. That team has been bundled into a new group called Facebook Reality Labs, which also contains the company's work on Portal, AR, neural interfaces and more.

  • Here's how Mark Zuckerberg described the unifying theory behind the group: "These technologies deliver the feeling of presence — as if we're right there next to each other — which no other screen or computing platform can deliver."

This development isn't terribly surprising: Facebook's been pulling its many brands under the Facebook umbrella for a while. (See also: Instagram by Facebook and WhatsApp by Facebook.) It's an interesting branding decision, though, given the complicated feelings brought up by the word "Facebook."

  • A Verge study found only 41% of people trust Facebook with their information (ironically, people trust Instagram slightly more). Still, 71% of respondents said they had a favorable opinion of the brand.
  • Facebook's brand recognition, of course, is off the charts. Love it or hate it, everyone knows what it is, which may be an advantage over the lesser-known and more gamer-friendly Oculus.

So while this is probably off-putting news for gamers who might feel nervous about privacy, it may actually be a vote of confidence for VR. Social VR is certainly becoming more important — teams within Facebook are already using Quests to have virtual meetings — and this could mean it becomes a part of the core Facebook platform more quickly than expected.

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People Are Talking

Yelp CEO Jeremy Stoppelman explained exactly how Google stifled his company's search rankings:

  • "They're like, 'Oh yeah, Yelp is coming up so much. We have to do something. Okay. Whenever Yelp is going to show high-end results, we should trigger our map box and make sure that our results are above it.' They literally had an 'if' statement in their code that said, 'If Yelp, then show us our stuff above it.'"

On Protocol: The future of robots could be zooming around your living room right now, said iRobot's Colin Angle:

  • "This focus on the control of the robot, it's only going to get more natural, and the type of collaboration that is possible between the owner and the robot will continue to grow. Our ambitions are not just to have an intelligence system that drives vacuuming robots, but instead, an intelligence system that drives all robots."

Y Combinator CEO Michael Seibel offered a new framework for thinking about investing:

  • "We have to make sure the experience is extremely high quality, that founders get a lot of value and raise money, but as long as we hit those bars, I'm hoping YC resembles a large and successful state university system as opposed to an Ivy League network."

Speaking of YC, Accel's Amy Saper noted during Demo Day that there's a new analogy in town for startups:

  • "The 'Uber for X' analogies are over. Most popular comparisons from this YC Demo Day: @Shopify for X, @Superhuman for X, @Stripe for X."

Making Moves

April Underwood has a new company. The former Slack CPO is now running Local Laboratory, which she said is "on a mission to empower local businesses and the people who love them."

Halimah DeLaine Prado is Google's new general counsel. She's been at the company for almost 14 years, and fills a role that's been open since Kent Walker left it in 2018. She's now one of Google's most senior Black executives, too.

Tony Hsieh is retiring from Zappos. Kedar Deshpande is the new CEO, and announced the change in an impressively short email to staff this week.

In Other News

  • There's a new bill you need to know about: AB 1286. It passed a committee vote in California's Senate last week, and shared bike and scooter companies say a clause banning injury liability waivers could destroy their businesses.
  • Verily launched an insurance subsidiary, Coefficient. It's backed by Swiss Re, and will offer employers stop-loss insurance using an "analytics-based underwriting engine."
  • On Protocol: When YouTube sent its moderators home, video removals doubled. That's because it started relying more heavily on algorithmic moderation, casting a "wider net" to make sure the really bad stuff got caught.
  • You're not the only one confused by Google's privacy settings:Documents released as part of a lawsuit show a bunch of Google engineers said they hardly understand how some of the options work.
  • Facebook is testing an in-app Shops tab, part of its broader ecommerce push. It's also rolling out its Instagram checkout feature and Instagram Live Shopping to all U.S. sellers.
  • On Protocol: The White House wants to win at quantum computing, and announced a series of new initiatives that it hopes will make that happen.
  • Amazon is opening a 1.8-million-square-foot office in India. The Hyderabad building will be Amazon's biggest global office, and its first fully owned one outside the U.S. It's also yet another sign of the company's anti-remote attitude.
  • Apple's also investing in India: Bloomberg reports that it plans to launch an online store in the country, with two physical retail stores planned for Mumbai and Bangalore.
  • Facebook's new content moderation battle has a twist. After the Thai government told the company to block a huge group that talks about the country's king, Facebook said it plans to challenge the order in court, because "requests like this … contravene international human rights law."

One More Thing

A computer made my sandwich

Ethan Rosenthal, a data scientist at Square, had my favorite COVID-related project yet: to do something completely meaningless. Well, he failed, because he solved a crucial societal problem, and optimized how to assemble a peanut butter and banana sandwich. "It's really quite simple," he writes. "You take a picture of your banana and bread, pass the image through a deep learning model to locate said items, do some nonlinear curve fitting to the banana, transform to polar coordinates and 'slice' the banana along the fitted curve, turn those slices into elliptical polygons, and feed the polygons and bread 'box' into a 2D nesting algorithm." Simple!

Join us today


Join us today at noon ET for the second event in our National Political Conventions series 'Building the Future'. This event series is hosted in partnership with ITI.

RSVP here.

Today's Source Code was written by David Pierce, with help from Shakeel Hashim. Thoughts, questions, tips? Send them to, or our tips line, Enjoy your day, see you tomorrow.

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