When Luba Lesiva created the Palantir Alumni syndicate on AngelList, she thought it would be a small project to help a handful of LPs invest in companies started by her former co-workers. By her mental count, the former head of Palantir’s investor relations could name at most a dozen, maybe two dozen alumni-led companies. Her thesis was the group would do a deal or two a year.
“I was massively, massively, massively wrong,” said Lesiva, the founder of what’s now called Palumni VC. “We’re at over 700 LPs in the syndicate right now. It’s not a small side gig anymore.”
The investor interest is proportional to the number of startups spinning off of Palantir, which is in the range of 100 or more. Lesiva tracks 170 that are either founded or led by ex-Palantir executives. The irony is that Palantir’s own software, which helps companies and the government find patterns within data, could probably better identify the links.
The Palantir group hasn’t reached the fame of the PayPal Mafia, whose infamous Fortune photo shoot and rapidly successful next acts made it legendary. Instead, much like the company itself, the group that I’m calling the Palantir Pack has emerged more quietly, taking years to focus on building their companies and firms.
The Palantir Pack includes early team members like co-founder Joe Lonsdale, first employee Alex Moore and 10th hire Garry Tan. All three have been founders and are now funders to a network of alumni. Other cohorts of founders, like much of the leadership team who started defense startup Anduril, bonded in their Palantir days. But unlike PayPal, which saw its early employees leave after eBay bought the company and immediately start new ventures, Palantir is still spinning out new founders and arguably hasn’t reached its full potential. There are new waves of up-and-coming endeavors that could add to the Pack’s unicorn ranks, like AI startup Arena, Web3 developer tool Kurtosis and data science company Hex — all of which have announced funding this year.
“The Pack has gradients of maturity, and there’s going to be a lot more,” predicts Trae’ Stephens, an early employee at Palantir who would go on to become a partner at Founders Fund and co-founder and executive chairman at Anduril.
The Palantir playbook started by going after big, ambitious, mission-driven problems and hiring the best talent out of universities to do it, the founders, early employees and VCs interviewed for this story said. At Palantir, they built an engineering-first culture that wasn't afraid to work hard and do unscalable things like deploying engineers out to customers to make it a success. Now the Palantir Pack is deploying the same playbook as it builds the next generation of startups.
“Those folks tend to be very entrepreneurial, they’re comfortable operating on their own,” Lesiva said. “So there's an outsized amount of Palantirians that end up wanting to build a startup, and that's how you end up with over 170 startups in the ecosystem.”
Perfecting the playbook
If there’s one thing that PayPal and Palantir share, beyond co-founder Peter Thiel, it’s that they are both startups that faced an enormous amount of challenges in their early days.
PayPal packed a lot of drama into its early years, from the merger between Elon Musk’s and Thiel’s competing startups to executive churn including Musk’s ouster to a difficult IPO and the eventual buyout by eBay. Palantir, founded in 2003, saw a slower burn: hard technical challenges and the difficulty of selling into the government right at the beginning of the Iraq War.
“There was a lot of pressure on margins, there was a lot of pressure on how to structure things so that we could actually have a scalable business with positive unit economics. It was not easy,” Anduril’s Stephens said. “I think everyone has that memory of fighting through it not being easy for a long time.”
It took 17 years for the company to go public, and it faced a lot of criticism, even internally, in that time for its helping companies and government agencies process and analyze data, like its controversial contract with ICE. There are still lingering questions over whether Palantir sees too much.
But working through that adversity was an essential ingredient in bonding the network together, Palantir alumni say.
“It's really hard for companies like Google to have these sorts of mafias because everything is just too good. It's like crazy profit margins or the growth profile is wild. Everyone gets incredible comp. So you don't build that sort of resilience that's required to go and become really high-caliber founders,” Stephens said.
Palantir was relentless in pursuing the top talent in Silicon Valley when it started. That’s the first step in the Palantir playbook: Hire the best and brightest talent, typically from universities, and then get them to bring in their friends.
“It's really hard for companies like Google to have these sorts of mafias because everything is just too good."
One of Palantir’s co-founders took an advanced Natural Language Processing class at Stanford after he had graduated in order to recruit the best talent on campus, recounted Moore, Palantir’s first hire who is now a partner at 8VC after starting a few other companies. The early Palantir team also used its own network-analyzing product in combination with Facebook’s friend-connection data to pin down potential recruits’ social links.
Another time, an eBay employee let the team secretly set up shop in a conference room and interview people to poach them from inside the eBay office, said Lonsdale, who is also founder of multibillion-dollar startups like Addepar and the venture firm 8VC. “It’s a level of aggression to do whatever you can to get the top people to bring them over,” he said. “The culture of the company was who are your smartest friends, who are their smartest friends, and whatever they're doing is not as important as what we're doing.”
It wasn’t just a matter of getting the brightest technical talent in the door that set them up to become a new wave of startups after their tenure at the company. The company is unique in using forward-deployed engineers, or FDEs, to basically replace a sales team and embed with customers to solve their problems on-site. It was a strategy in part to help with talent, Lonsdale said: The more engineers were exposed to customers' problems, the more likely they would feel responsible for their work and bring in their friends to help solve them.
Deploying engineers in what it called an 80-20 model — where Palantir’s software could solve the first 80% of a customer’s needs and then the FDEs had to make tweaks and revisions to the other 20% on-site — also meant that Palantir employees had a lot of ownership of the product.
“It's rare to have that up-front perspective inside an enterprise to the real-world problems,” said Pratap Ranade, whose startup Kimono was acquired by Palantir in 2016. He left in 2017 and worked at another company before starting his latest venture in AI, Arena. “That was a powerful lesson that we carried over, which was that mindset of going physically to customers, spending time with the customer and their people and really understanding it,” Ranade said. “Even though to some degree, you're doing things that don't scale.”
The do-whatever-it-takes mentality is something that’s deeply ingrained in the Palantir culture because the company is so mission-driven and focused, said early employee Matt Grimm. During his tenure, he ended up deploying to Iraq and Afghanistan to implement Palantir’s tech.
Amplitude, co-founded by Palantir alum Jeffrey Wang (front in gray blazer), was valued at $5 billion shortly after its market debut in 2021.Photo: Nasdaq
“When you as an employee go through that, you build this sort of connective fiber, this in-the-trenches-with-your-colleagues kind of mentality that in the long run leads to a very tight and close-knit community. And I think Anduril’s no clearer example than that,” said Grimm, who co-founded the company and is now COO. “There’s a reason that in our C-suite, four of us all started at Palantir within six months of each other and all had that exact same early experience and that exact same kind of struggle and then worked through it.”
Finding their mission
The same intensity in the culture that helped bond the Pack together is also what many alums say has helped them become deeply obsessed with the problems they’re solving and being willing to tackle ambitious ideas.
Some are building on top of Palantir’s software through its new Foundry for Builders program, which is giving startups access to its Foundry software to build a company on top of it. While Palantir doesn’t invest as a company in its former employees like some companies have done, the first class of Foundry for Builders was specifically for its alumni companies, ranging from Medicare adviser Chapter to legal-tech software Hence to defense communication software Adyton.
“I notice that many Palantir alums have gone on to found companies where transforming an entire industry is the actual mission of their company,” said Palantir’s Meredith McNaughton, head of the Foundry for Builders program. “They have an ambitious use case in mind where getting the data foundation right is central to the success of their company.”
Building on top of Palantir’s products isn’t a prerequisite of the Palantir Pack, though. The one thing linking them is that there’s a story behind why the founders cared about starting them beyond just wanting to start a company, says Stephens.
"It's rare to have that up-front perspective inside an enterprise to the real-world problems."
“One of the most pathetic versions of Silicon Valley is what I would call whiteboard founders. There are people that are like, ‘I want to start a company because it's the fastest path to making a ton of money, so I’m gonna stand in front of a whiteboard, I'm gonna write every idea I can come up with, and then pick the least bad one,’” Stephens said. “I don't think Palantir alumni companies start that way.”
Often their work at Palantir informed their next company. Peregrine Technologies’ Nick Noone worked on law enforcement during his tenure at Palantir before starting a company focused on using data for public safety. The co-founders of Blend had worked on commercial lending projects at Palantir before starting their digital mortgage provider, which went public last year at a nearly $4 billion valuation. Mosaic’s co-founders all worked together on Palantir’s finance team before leaving to build better software for CFOs, recently raising $25 million from Founders Fund. Vontive’s Shreyas Vijaykumar spent seven years at Palantir and worked on a partnership with Freddie Mac, where he met his co-founder. The pair raised $135 million from Palantir-linked firms like Goldcrest Capital, 8VC and XYZ Venture Capital and emerged from stealth earlier this year with a data-focused approach to investment real estate mortgages.
Health care, an emerging focus in Palantir’s business, has seen a similar rise in startup interest from alumni. There’s companies like Little Otter focused on pediatric mental health and Kranus Health, which is working on digital erectile dysfunction therapy. In Australia, Michael Winlo is working on Emyria, a drug development biotech focused on psychedelics.
There’s even a handful of Web3 companies like unicorn OpenSea, which was co-founded by Alex Atallah, and consumer companies like Partiful, described as Eventbrite but for Gen Z.
A common link running through the network is the funders who support them. Much like the PayPal Mafia, an essential ingredient to the emergence of the Palantir Pack is having well-connected alumni who continue to back companies.
Lesiva’s Palumni VC group is the most-targeted venture capital arm, but Palantir alumni are also a force within venture capital. Lonsdale co-founded 8VC and has several ex-Palantir alums like Moore as partners. Stephens works with Thiel at Founders Fund. Tan, the 10th employee, later started Initialized Capital. Others like Accel’s Steve Loughlin and XYZ’s Ross Fubini were advisers to Palantir. Goldcrest’s Adam Ross, who was on Palantir’s board, is also a key investing link between many of the companies. When Ranade raised money for Arena earlier this year, he ended up with investment from Founders Fund, Initialized and Goldcrest — not even realizing that all three had Palantir ties.
The one part of Palantir’s culture and playbook that many alumni have purposefully chosen not to follow is Palantir’s penchant for secrecy. For Ranade, that means being transparent about the org structure and decisions inside the company. For Anduril, it’s meant explaining from the beginning what its technology can and can’t do, and getting multiple people from the company out there as public faces.
“There's just no reason it needed to be as controversial as it was. And I think that that's what we're trying to work actively against at Anduril. It was like we're just going to tell people exactly what we're doing,” said Stephens.
The power of the Palantir network is that it can still continue and is creating more companies. In the summer 2022 Y Combinator batch, there are at least four startups that are from Palantir alumni: Ilumadata, Moonshot, Medplum and Windmill.
Many employees join Palantir and do a tour of duty before taking some time off and starting their next thing, says 8VC’s Moore, who is still on the board of Palantir. The intensity of the company and its culture makes it feel like the engineering equivalent of wanting to join SEAL Team Six. “Instead of going to grad school, they go to Palantir,” Moore said. “They do their tour of duty and they make the company a little bigger, better, but it's not a short-term optimization where you're making a fortune. It’s not like crypto last year. There's no tricks to it. It's just hard work.”
But just like pressure can turn carbon into diamonds, it can turn engineers into founders and Palantir alumni into the next generation of startup founders. Palantir used to be a footnote to the PayPal story, but through their distinct experiences, unique culture and refined playbook, its offspring have built out their own network in the valley. One extensive enough that it might take Palantir software and a forward-deployed engineer to analyze its true extent and scale.