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    Palantir’s CTO, and thirteenth worker, has change into a secret weapon for Valley protection tech startups


    On August 5, Palantir’s CTO Shyam Sankar stood in entrance of about 20 nervous new staff on the firm’s Washington, D.C. workplace and gave a speech you’d anticipate at a brand new rent assembly: firm mission, Palantir’s historical past, and so on. But there was one half that may’ve appeared unfathomable a couple of years in the past: Sankar evangelized the significance of a brand new wave of protection tech startups, spun up by Palantir, Tesla and SpaceX alums.

    The significance was extra ideological than monetary. Any enterprise Palantir will get from startups is dwarfed by its authorities contracts, in any case. But you possibly can’t put a worth on philosophical bedfellows. 

    Palantir likes to remind the world that it’s not like different publicly traded corporations, i.e. buttoned-up and appropriately distanced from its cowboy non-public days. Sankar ends his orientation by cheekily inviting the brand new staff to shout “f–ok off” at him — a method, he says, to encourage a flat construction. And as he walks out of the occasion room into the workplace bullpen, he passes an indication referring to staff as “founders” and “trailblazers.”

    The signal is becoming: Sankar, who’s been on the firm for over 18 years, is decided to assist Palantir change into a driving pressure for protection tech startups, a sector that’s been flooded with over  $129.3 billion in enterprise capital since 2021, in accordance with PitchBook. 

    “To have this class of recent champions who’ve all reduce their enamel in Tesla and SpaceX and see the world in fully alternative ways, it’s offering an enormous quantity of vitality internally for us as we construct for them,” he stated, referring to startups like Apex Space and Castelion, whose founders hail from these corporations.

    That is why, in late 2023, he began a program that gives steerage and instruments to protection tech startups referred to as First Breakfast. He referred to it in his writings as Palantir’s “Amazon.com to AWS second.” Basically, it’s a play for Palantir to get in on the floor stage for the following Palantirs. It’s a enterprise technique, but additionally a philosophical one for Sankar, who spends hours every week on the cellphone consulting with protection startups and enterprise capitalists.

    Like his longtime boss Palantir CEO Alex Karp, Sankar likes to wax poetic about defending Western values and the way America’s industrial base stumbled after its WWII glory days (although maybe prime protection contractors like Lockheed Martin and RTX, previously generally known as Raytheon Technologies, would disagree that the trade has been resting on its laurels for 80 years). Sitting in a convention room lined with white boards, and a continuing stream of economic planes flying over the Potomac River behind him, he reiterated his darkest fears: that America will not be prepared for no matter nice battle comes subsequent. 

    “You have to actually begin from the premise that profitable shouldn’t be assured, which I imagine,” he stated. 

    He feels the mission of Palantir “is to assist the nation and the West win,” he stated of the software program firm that helps governments and companies analyze knowledge. “That’s going to require many extra of those corporations succeeding.” 

    Spawning a protection tech ecosystem

    In 2004, Sankar was destined to get sucked into Silicon Valley: he was getting a grasp’s in administration science and engineering at Stanford, was an early adopter of chilly showers and wellness developments, and had a militant strategy to work, in accordance with Kevin Hartz, Sankar’s first boss out of grad college. Hartz, who would go on to co-found Eventbrite, stated Sankar was the “final boyscout” and employed him because the fifth worker at Xoom, a service to assist folks ship remittances. 

    Hartz despatched Sankar overseas, the place he helped arrange Xoom in over 40 nations. 

    Much to Hartz’s dismay, Sankar revealed in 2006 that his ambitions had drifted to DC. “It wasn’t stunning in any respect, as a result of Shyam actually had the next objective,” he stated. “It makes good sense that like Peter [Thiel] successfully drafted Shyam in service.” 

    Sankar joined Palantir because the thirteenth worker. “At the time, the Valley wasn’t anti-government. It was extra like the federal government’s a dumb place to construct a enterprise,” Sankar stated. Investors, he recalled, instructed them, “We received’t provide you with a test as a result of we predict it is a loser enterprise.” 

    The crew’s brash angle didn’t assist. “Frankly, we weren’t that fascinated with how authorities acquisition labored,” Sankar laughed now. 

    They had their first breakthrough when In-Q-Tel, a CIA-affiliated enterprise agency, invested and helped them get hold of safety clearances. Twenty years later, Palantir has had a storied rise, profitable main offers with the federal government, like a $480 million contract with Project Maven, and dealing with intense scrutiny for its work with ICE and broader privateness considerations. 

    It has additionally spawned an entire ecosystem in its wake. Palantir co-founder Joe Lonsdale now funds a few of the largest protection tech startups by way of his enterprise agency 8VC; different alums, Trae Stephens, Brian Schimpf and Matt Grimm, went on to co-found Anduril, the protection tech unicorn now valued at $14 billion. And ex-Anduril staff are on the coronary heart of key early stage protection tech startups like Saronic Technologies, Salient Motion and Wraithwatch.  

    As the protection tech increase grows, so do Sankar’s existential fears about America’s war-readiness. He recalled one thing an officer instructed him: “The army we’ve immediately is the one we’re going to struggle with in 2032.” 

    Imagine, he stated, if a enterprise determined that “the infrastructure I’ve immediately is what I’m going to run my enterprise on in 2032.”

    “You’re going to be going out of enterprise,” he stated. 

    First Breakfast and a head begin

    He’s written publicly about numerous long-shot initiatives, like making a army reserve for tech leaders and suggesting the DOD loosen up on micromanaging contractors. “What if Congress acted extra like a restricted associate of a VC than a bureaucratic bean-counter?” he wrote. 

    But his largest effort to place these concepts into motion has been First Breakfast, named after the notorious “Last Supper” in 1993, when then-Secretary of Defense Les Aspin warned the key army contractors that the protection funds was about to sharply lower; it led to mass consolidation amongst the most important protection corporations. 

    First Breakfast is basically a set of software program instruments that Palantir has used internally for years, marketed to assist up-and-comers shortly navigate the troublesome authorities approval course of and qualify for contracts. Sankar is hoping he may help the brand new technology of risk-taking founders succeed within the sector. “We want that eccentricity again,” he stated. 

    One of the important thing choices is FedStart, a program that approves startups to construct their software program atop Apollo and Rubix, two already-accredited platforms constructed by Palantir. This provides startups a head begin within the authorities accreditation course of, which might in any other case take a startup over a yr and a half and price hundreds of thousands in auditors and compliance consultants. Palantir costs for FedStart, although Sankar insists it’s discounted and that the corporate is simply “actually charging you our consumption prices.”

    First Breakfast additionally gives startups a free service that gives the businesses entry to in any other case disparate army knowledge, making it straightforward to entry and use by way of safe APIs. Ben FitzGerald, the CEO of protection tech unicorn firm Rebellion Defense, stated that the First Breakfast tooling “can save a ton of time, a ton of technical complexity,” and “a ton of further compliance.” 

    “Those are the kinds of improvements that I’m actually excited to see, as a result of it doesn’t require an act of Congress,” FitzGerald stated. “It doesn’t require a brand new Deputy Secretary of Defense to come back in and attempt to innovate. We can work with the present programs.”  

    Beyond all of the speak of protection tech’s shared mission, it’s additionally only a good enterprise transfer for Palantir. Ross Fubini, managing associate at XYZ Venture Capital, estimated a minimum of ten of his portfolio corporations use instruments from the First Breakfast. He stated he sees First Breakfast as an opportunity for Palantir software program to underpin all the brand new startups within the house. “For Shyam, I believe it’s two issues directly,” he stated. Shyam, he stated, cares about “the federal government and social stability” — however he additionally “undoubtedly believes it’s good for Palantir to develop the ecosystem.” 

    Sankar is aware of offering a leg-up with software program isn’t sufficient to make protection tech an space the place VCs will frequently make investments at hype-like ranges — not when there’s an enormous query mark round how these startups discover an exit. Palantir is likely one of the few IPOs within the protection tech house. “For the ecosystem to work there needs to be liquidity on the opposite finish,” he stated, musing that a minimum of some startups must promote to the key protection gamers, like Lockheed Martin or Boeing. 

    Yet the protection “primes” have so far proven little curiosity in snatching up the brand new protection tech startups, one thing Sankar hopes will change sooner or later. “You want a broad set of choices for liquidity,” he stated. “Otherwise, every part’s much less beneficial.” 

    But that’s a long run drawback, one to be chipped away at by the various protection tech startups newly armed with warfare chests.

    As for First Breakfast’s quick future? “I’ve been eager to do a literal breakfast,” Sankar stated, earlier than sighing. “But I believe the tech crowd wakes up late.”



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