The Codestrap Interview

His main thoughts about Palantir's 2023 & going into 2024

Welcome back to DailyPalantir! I hope everyone had a Merry Christmas and got to spend time with their families.

A few days ago, I got to sit down with Codestrap — one of the most technical members of the Palantir community and part of their official developer relations team. He currently works at PWC and helps implement Foundry/AIP for clients. We discussed a variety of topics, all summarized below. If you want the video version of this, you can watch it here.

Each topic will have 5 bullet points summarizing Codestrap’s thoughts and then a final paragraph to conclude.

FedStart

Question: What do you think about FedStart and the broader role for Palantir to expand their government business going into 2024?

1. The increase in the U.S. military defense budget, particularly emphasizing software and AI, presents a significant opportunity for companies like Palantir. This increase reflects a strategic shift in government spending, focusing more on advanced technological capabilities. The FedStart program is at the forefront of this shift, designed to revolutionize government software systems. It aims to address existing deficiencies and a general lack of advanced software solutions in many government agencies.

2. The FedStart program is seen as an innovative and untapped opportunity for startups, similar to a venture capital fund but focused on government needs. It's compared to the transformative impact of Amazon Web Services (AWS) in the technology startup space. The program is expected to catalyze a new wave of technological innovation within government agencies, providing much-needed modernization and efficiency.

3. The primary goal of FedStart is to facilitate a smoother, more efficient interface between the technology sector and government agencies. It's designed to overcome the cumbersome and often prohibitive traditional procurement processes that have long been a barrier to innovation in government settings. By accelerating the sales and deployment processes, FedStart could significantly streamline the way startups bring their solutions to government agencies.

4. While there's potential for adapting a similar framework for the commercial sector, the unique challenges of selling software to the federal government are highlighted. These challenges are distinct from those in the commercial market, involving complex procurement processes and specific compliance requirements that are unique to the government sector.

5. There's potential for Palantir to play an instrumental role in guiding technology startups towards addressing specific government challenges. This could lead to the development of an incubator-like program, where Palantir provides insight and guidance on the major challenges faced by government departments. Such a program could be a game-changer, helping startups to develop targeted solutions for government problems, leveraging Palantir's extensive experience and platform capabilities.

Overall: Codestrap was incredibly bullish on FedStart as a gateway program to further allow the defense tech ecosystem to thrive and create more innovation — he believes the government in the US WILL have to modernize, and Palantir will play a key role in helping them.

Israel

Question: Was it right for Palantir to take such a public stance in support of Israel?

1. The strong support for Israel, along with Palantir's public endorsement of the country, is significant. This stance is seen as a reflection of personal values and beliefs. The commitment to Israel's cause is portrayed as a key aspect of the individual's and Palantir's principles.

2. Acknowledging the divisive nature of taking a stand on such a sensitive issue, it's understood that this can lead to mixed reactions. This stance could potentially affect Palantir's growth, as it may resonate positively with some, but negatively with others.

3. For companies like Palantir, which take public stances on contentious issues, developing a strategy for reconciliation is seen as important. This approach would aim to repair relationships with those who might have been alienated by such strong positions, ensuring a more unified approach in the future.

4. Diverse reactions to Palantir, ranging from negative to positive, highlight the complexity of public perception. This variation in opinion underscores the importance of managing public perception carefully, particularly in relation to investor relations.

5. The importance of investing in a strong investor relations team for Palantir is underscored. Such a team would be instrumental in communicating the company's positions and helping to mend any rifts that may have arisen due to their public stances, thereby maintaining a balanced public image.

Overall: Codestrap unequivocally felt Palantir did the right thing with their stance on Israel, however, he did stress that there needs to be a plan to still reconcile with clients who will now not want Palantir’s software simply because of their public stance — they need to still capture parts of the market even with clients who don’t agree with them.

Bootcamps

Question: The bootcamp GTM strategy is something management has emphasized is one of their key ways to expand distribution of AIP to clients, do you think this strategy is working?

1. Palantir's boot camp strategy is presented as an innovative approach to market its product, Foundry. The focus is on providing hands-on experience with the platform, enabling users to understand and appreciate its capabilities. This strategy contrasts with traditional sales tactics, emphasizing direct engagement with the product over conventional sales methods.

2. A significant aspect of the boot camps is teaching prompt engineering, a crucial skill in AI application development. Participants learn to interact effectively with AI models, gaining practical skills in crafting queries to achieve meaningful, replicable results. This hands-on experience is considered vital for developing AI intuition and understanding the platform's potential.

3. The strategy acknowledges the limitations of traditional sales approaches and seeks to showcase the product's strengths directly to potential users. By focusing on hands-on experience, Palantir aims to overcome previous challenges in sales and marketing, allowing the product's capabilities to speak for themselves.

4. While the boot camp approach is praised for its effectiveness in engaging users, concerns are raised about its scalability. Organizing such events involves significant logistics, limiting the number of potential participants. Alternative methods like webinars and larger conferences are suggested to complement the boot camps, aiming to reach a broader audience.

5. Looking ahead, the strategy envisions integrating hands-on experience with broader marketing efforts, such as attending major conferences. The goal is to enhance Palantir's market presence, leveraging use cases and potential pricing models to attract a wider audience and drive sales growth. The overall aim is to capitalize on AI's potential to transform industries and address major challenges.

Overall: Codestrap believes the bootcamp strategy is working effectively and is highly differentiated from other companies but will need to massively scale going into 2024 in order to drive the growth we want to see from Palantir.

Competition from Microsoft/Amazon

Question: We’ve seen competition for AIP from Microsoft Fabric and Amazon Q, are they going to eat Palantir’s lunch?

1. Palantir's approach to AI differs significantly from that of Microsoft and Amazon. While the latter companies have strong sales networks and well-established products, Palantir is uniquely positioned with its emphasis on creative AI applications. This approach involves AI autonomously performing tasks that go beyond simple efficiency improvements in human-directed tasks, marking a shift from the current AI use cases.

2. There's an acknowledgment of Microsoft and Amazon's strengths in the AI market, but Palantir's innovative application of AI is seen as a key differentiator. Their strategy moves AI from a role of assisting humans to one where it can operate independently, tackling complex tasks without constant human guidance.

3. The focus on AI's independent operation is highlighted as a significant departure from the norm in the AI industry. This strategy is not just about enhancing human tasks but transforming them, enabling AI to handle entire processes that were traditionally human-controlled. This shift in approach could redefine the role of AI in various industries.

4. Palantir's innovative use of AI is likened to an artistic endeavor, contrasting with the more conventional approaches of Microsoft and Amazon. This artistic vision is seen as central to Palantir's success, enabling them to explore transformative AI solutions that go beyond standard industry practices.

5. The company's unique culture is credited for its innovative approach to AI. Unlike its competitors, Palantir is seen as a hub of creativity and innovation, setting it apart in the AI landscape. This culture is not just about technology but also about rethinking how AI can be applied to solve real-world problems creatively.

Overall: Codestrap doesn’t see the massive threat from MSFT and AMZN the way others have — they have competing products in a space that is massively growing, so there should be competition, but Palantir has a unique approach to innovation because of their size and their ability to adapt, likely leading to them finding product market fit for AIP in a way that allows them to grow even with MSFT and AMZN being in the mix.

Snowflake

Question: How do you feel about one of Palantir’s highly regarded competitors, Snowflake, going into 2024?

1. Snowflake's stock valuation has been a subject of criticism, contrasting with the positive view of its product. The product is well-regarded for its functionality, but the company's financial growth doesn't seem to justify its high market value, especially given its recent trend of decelerating growth and declining profits.

2. In the data warehousing market, Snowflake's growth potential is viewed skeptically. The market is mature, and Snowflake's effort to evolve into a Lakehouse model and grow through acquisitions is seen as an uncertain strategy for reinvigorating growth.

3. Snowflake's shift to the Lakehouse concept, which combines various data processing methods, appears as an effort to adapt to changing market demands. However, it seems to lag behind industry leaders like Databricks, raising doubts about its ability to innovate at the same level.

4. There are significant concerns about Snowflake's strategic direction, particularly its ability to maintain growth momentum and stand out in new technological areas. Its reliance on acquisitions for growth is perceived as a reactive measure rather than an indication of organic, innovative development.

5. Choosing acquisitions over internal development presents challenges for Snowflake, particularly in integrating new technologies and company cultures. This strategy's success in bolstering Snowflake's market position and growth is yet to be determined, with its effectiveness in this regard still in question.

Overall: Codestrap believes Palantir is offering a different product than Snowflake, which innovated in the lakehouse space years ago, but companies are now looking for something different. With declining growth and a massive premium on their valuation, the question becomes if their growth can continue and if they are offering something unique to the market over the next decade.

2024 Expectations

Question: What are your expectations going into 2024 for Palantir?

1. Reflecting on 2023, the sentiment is one of success and positivity, paving the way for ambitious goals in 2024. The focus is on achieving hyper-growth, with aspirations for significant increases in growth rates, potentially reaching as high as 70%. This ambitious target underscores a strong confidence in the company's scaling capabilities and its potential to make a substantial impact in its field.

2. A major aspiration for 2024 is to experience a breakthrough quarter, with growth rates potentially soaring to 50-60%. This period is anticipated to be a crucial turning point that could capture Wall Street's attention, establishing the company as a formidable player in the market. This expectation is not just about financial success but also about gaining recognition and validation in the broader business community.

3. The discussion around modularizing products like Foundry and AIP suggests a strategic shift towards focusing on specific use cases. This approach aims at enhancing scalability and adaptability, thereby better addressing the diverse and evolving needs of their client base. Modularization is seen as a way to provide tailored solutions, which could lead to increased efficiency and customer satisfaction.

4. While some participants maintain a more conservative outlook for 2024, balancing their optimism with realism, others express strong belief in the company's potential for breakthroughs, especially in the burgeoning AI market. This varied perspective reflects a blend of cautious optimism and an eagerness to push the boundaries of what's achievable.

5. The potential for regulatory challenges in the AI market is acknowledged as a possible hurdle that could impact the pace of growth and innovation. Despite this, there's a prevailing sense of optimism about the future. The participants recognize that while external factors like government regulations could pose challenges, the opportunities and potential for growth in the AI sector remain vast and exciting.

Overall: Codestrap wants to see growth. A lot of it. While I (Amit) am not sure how much growth we can reasonably expect, Codestrap believes we need monster quarters this year to even justify the current valuation — 2024 will be exciting to see how it plays out!

That’s it for today - thank you for reading and I’ll see you tomorrow in your inbox!