A trove of internal documents and insider interviews has pulled back the curtain on one of Silicon Valley’s most secretive and highly-valued companies, Palantir Technologies. Started in part with CIA money, the data-analysis company promised that its software would revolutionize everything from espionage to consumer businesses, and it has grown in both revenue and employees. But the documents and interviews show that Palantir has also lost blue-chip clients, is struggling to stem staff departures, and has recorded revenue that is just a fraction of its customer bookings.
Over the last 13 months, at least three top-tier corporate clients have walked away, including Coca-Cola, American Express, and Nasdaq, according to internal documents. Palantir mines data to help companies make more money, but clients have balked at its high prices that can exceed $1 million per month, doubts that its software can produce valuable insights over time, and even difficult working relationships with Palantir’s young engineers. Palantir insiders have bemoaned the “low-vision” clients who decide to take their business elsewhere.
More than 100 Palantir employees, including several prominent managers, have left the company this year through April 15, a confidential log shows. At that rate, the company is on track to turn over about 20% of its staff in 2016, almost double the average rate of the three previous years, according to internal figures.
On April 22, in an extraordinary move for a company that had prided itself on paying salaries below market rate, Palantir CEO Alex Karp announced a 20% pay raise for all employees who had worked there for at least 18 months. Karp also canceled annual performance reviews, saying the current system wasn’t working.
Palantir has previously made public the value of what it calls its “bookings” for 2015: $1.7 billion. But actual cash collections have been a closely held company secret. They amounted to less than a quarter of bookings last year — $420 million, according to slides and an audio recording from a February presentation. That was up 50% from the prior year. Still, the gulf between cash received and bookings — contracts that often include lower-paying trial periods or complex performance bonuses — raises questions about Palantir’s ability to convert those deals into revenue. Palantir was not profitable in 2015, spending more than $500 million, according to the presentation.
Palantir says that its business is strong and expanding, and that despite the staff departures, it has doubled its ranks over the last three years. The company didn’t dispute that it had lost some clients, but a spokesperson, Lisa Gordon, said that “the majority of the company’s customer relationships are multiple years in length, and many are as long as 10 years.”
“We’re looking to do transformational work with our customers,” Gavin Hood, Palantir’s chief of staff, said in an interview with BuzzFeed News. “Finding the right partner to do that transformational work takes a lot of care and a lot of attention.” He added, “There’s a lot of reasons why that doesn’t always work out.”
Asked about the gap between Palantir’s bookings and its cash collections, Hood declined to comment. But at a 2014 conference in New York, Karp said, according to CNBC, “Some of our biggest appointments are with people who barely can pay us.” He added, “We have lots of clients where we get zero money.”
Hood said that employee turnover was “a very natural part of the company’s evolution and growth.” He added that Palantir “has a really strong culture” and that people “don’t always fit” there.
The blanket 20% pay raise is “an example of what we need to do as leadership of this company to keep up with the changing nature of our people,” Hood said. “When our company does well, our people should do well.”
Investors have high hopes for Palantir, which has raised more than $2.