Palantir

Anduril

Palantir

Palantir's business model is enterprise software — specifically, large multi-year contracts with governments and corporations. Contracts typically start at $1-5 million and can scale to hundreds of millions annually for large government agencies.

The sales process is uniquely intensive. Palantir deploys "forward-deployed engineers" (FDEs) who embed directly with customers for months, configuring the platform for specific use cases.

This hands-on approach is expensive but creates deep integration that makes switching nearly impossible. Once Palantir is embedded in an organization's workflows, it's practically permanent.

Revenue split has shifted over time. Government contracts (US and allied nations) historically dominated, but commercial revenue has been growing faster.

By 2024, commercial revenue approached 45% of total. Annual revenue exceeded $2.8 billion.

The company has been profitable since 2023.

Anduril

Anduril flips the traditional defense business model. Instead of cost-plus contracts where the government pays for development, Anduril invests its own capital in R&D and sells finished products.

This means they own the intellectual property and can sell the same platform to multiple customers — the US military, allied nations, and potentially commercial clients.

Revenue comes from hardware sales (drones, autonomous vehicles, sensor towers), software licensing (the Lattice operating system), and service contracts for deployment and maintenance. The company has won contracts with the Department of Defense, Department of Homeland Security, US Special Operations Command, and allied militaries including the UK and Australia.

The venture-funded approach lets them move at startup speed. While Lockheed might take 7 years to develop a new system, Anduril can prototype in months and iterate based on field feedback.

The trade-off is massive upfront investment — they've raised $3.7 billion in venture capital to fund this approach.

Palantir

Palantir was born from the aftermath of September 11, 2001. Peter Thiel — PayPal co-founder and contrarian investor — realized that the same fraud-detection algorithms PayPal used to catch financial criminals could help intelligence agencies catch terrorists.

The US government had mountains of data but terrible tools for connecting the dots.

Thiel co-founded Palantir in 2003 with Alex Karp (a Stanford Law PhD who had studied social theory under Jürgen Habermas in Frankfurt), Joe Lonsdale (a Stanford student who'd worked at Clarium Capital), Stephen Cohen (an engineer), and Nathan Gettings (a Clarium colleague). They named it after the palantíri in Tolkien's Lord of the Rings — the seeing stones that let you view distant events.

The CIA's venture arm, In-Q-Tel, was the first investor and first customer simultaneously. The initial product, Palantir Gotham, was built specifically for intelligence analysts who needed to find connections across massive, messy datasets — linking phone records, financial transactions, travel data, and classified intelligence into a single coherent picture.

The company operated in extreme secrecy for its first decade, with most employees unable to discuss what they actually built.

Anduril

Palmer Luckey was already famous — and controversial — before Anduril. He founded Oculus VR at 18, sold it to Facebook for $2 billion at 21, and then was fired in 2017 after a political donation scandal.

He was 24 years old, already worth hundreds of millions, and suddenly had nothing to do.

Luckey teamed up with Trae Stephens, a Founders Fund partner who had previously worked at Palantir and as a member of the Trump transition team's Department of Defense group. They saw the same problem from different angles: the US military was spending billions on outdated technology from legacy contractors (Lockheed, Raytheon, Boeing) while China was rapidly modernizing.

The Pentagon's procurement process was broken — it took 10-15 years and billions of dollars to develop and deploy new weapons systems.

Anduril was founded in mid-2017 with a radical approach: build the technology first with venture capital, then sell finished products to the government. Traditional defense contractors get cost-plus contracts — they bill the government for development costs plus a margin, which incentivizes slow development and cost overruns.

Anduril said: we'll fund our own R&D, build the product, and sell it off the shelf. If it doesn't work, we eat the cost.

The name comes from the reforged sword of Aragorn in Tolkien's Lord of the Rings — a weapon that was broken and made new.

Palantir

Palantir's growth strategy for two decades was simple: get inside the US government, prove indispensable, and expand from there. CIA led to NSA.

NSA led to the Army. The Army led to the Air Force.

Each agency saw what the others were doing and wanted it.

The AIP launch in 2023 was the commercial growth inflection point. By integrating large language models into the platform, Palantir made its data analytics accessible to non-technical users.

A supply chain manager could ask questions in plain English and get answers from their data. This dramatically expanded the potential user base within existing customers and attracted new commercial clients.

"Boot camps" became the commercial go-to-market innovation. Palantir runs intensive multi-day workshops where potential customers bring their actual data and problems, and Palantir engineers build working prototypes on the spot.

Companies leave with tangible proof of value, which accelerates the sales cycle dramatically.

Anduril

Anduril's growth strategy is classic disruption — enter at the low end of the market with cheaper, faster products and expand upward. They started with border security (relatively low-stakes) and moved into counter-drone systems (active combat relevant), then into autonomous vehicles and munitions (core defense).

International sales are a major growth vector. Anduril has contracts with the UK Ministry of Defence, the Australian Defence Force, and other Five Eyes allies.

The AUKUS defense pact between the US, UK, and Australia specifically calls for technology sharing in areas where Anduril specializes.

The Ukraine war was an inflection point. It demonstrated that small, cheap, autonomous drones could be decisive in modern warfare — exactly the kind of systems Anduril builds.

Suddenly, every military in the world wanted what Anduril was selling, and wanted it fast. The company's order backlog reportedly exceeds $10 billion.

Palantir

The ethical debate follows Palantir everywhere. Privacy advocates have criticized Palantir's work with ICE (Immigration and Customs Enforcement), police departments, and intelligence agencies.

The company has been accused of enabling mass surveillance. Karp has been unapologetic — arguing that democracies need powerful analytical tools and it's better that a company with ethical guidelines builds them than the alternative.

Customer concentration was a historical risk. For years, a handful of massive government contracts drove the majority of revenue.

Losing a single contract could crater a quarter. The push into commercial has diversified the revenue base, but government still represents over 55% of revenue.

Valuation has been the market debate. Palantir trades at astronomical revenue multiples (60-80x revenue at its 2024 peaks), which assumes massive future growth that may or may not materialize.

Bears argue it's the most overvalued stock in tech. Bulls argue that AIP will drive exponential commercial growth.

The debate is loud and ongoing.

Anduril

The ethical debate around autonomous weapons is constant and unavoidable. Anduril builds systems that can identify and engage targets with varying degrees of human oversight.

Critics argue this is a step toward fully autonomous killing machines. Anduril maintains that a human is always "in the loop" for lethal decisions, but the line between "in the loop" and "on the loop" (supervising but not directly controlling) is blurry.

Recruiting is both an advantage and a challenge. Anduril pays Silicon Valley salaries and offers startup equity, which attracts top engineers who might never consider working for Raytheon.

But some engineers refuse to work on weapons systems on principle. Google famously dropped Project Maven (a Pentagon AI contract) after employee protests.

Anduril leans into the controversy — they explicitly look for people who are comfortable building defense technology.

Scaling manufacturing is the next hurdle. Software companies scale effortlessly.

Hardware companies that build drones, missiles, and autonomous vehicles need factories, supply chains, and quality control at defense-grade standards. Anduril is building a massive manufacturing facility to produce thousands of autonomous systems, but transitioning from prototype to mass production is where many defense startups fail.

Palantir

Palantir Gotham — the original intelligence platform used by government agencies for counterterrorism, military operations, and law enforcement. Integrates and analyzes data from disparate classified and unclassified sources.

Palantir Foundry — the commercial platform that lets corporations build data-driven applications without coding. Used for supply chain optimization, clinical trials, financial modeling, and manufacturing.

Palantir AIP (Artificial Intelligence Platform) — launched in 2023, this layer brings large language models and generative AI into Palantir's existing platforms, letting users query and act on their data using natural language. The product that supercharged the stock price.

Palantir Apollo — a continuous delivery system that manages software deployment across every environment: cloud, on-premise, classified networks, and even air-gapped military systems.

Anduril

Lattice — an AI-powered operating system that fuses sensor data from multiple sources into a single real-time picture of the battlefield. Think of it as the central nervous system that connects all of Anduril's hardware.

Ghost — a family of small autonomous aircraft (drones) designed for surveillance, electronic warfare, and strike missions. Ranging from handheld to medium-altitude.

Anvil — an autonomous counter-drone system that physically intercepts enemy drones by ramming into them mid-air. Yes, a kamikaze drone that kills other drones.

Sentry Tower — autonomous surveillance towers originally deployed on the US-Mexico border for border security, using AI to detect and classify objects and people. Altius — a family of tube-launched autonomous munitions that can loiter over an area and strike targets with precision.

Palantir

In-Q-Tel (the CIA's venture arm) was the first investor and provided both capital and credibility. Peter Thiel's Founders Fund invested from the founding.

The company raised extensively from institutional investors including Tiger Global, Dragoneer, and Sompo Holdings. The September 2020 direct listing on the NYSE (similar to Spotify — no new shares sold) valued the company at approximately $22 billion.

The stock subsequently surged past $200 billion market cap in late 2024.

Anduril

Andreessen Horowitz has been the most prominent backer, leading multiple rounds. Founders Fund (Peter Thiel's firm) invested early — Trae Stephens was a Founders Fund partner before co-founding Anduril.

General Catalyst, Valor Equity Partners, and 8VC (Joe Lonsdale, another Palantir co-founder) also invested. The Series F in 2024 valued the company at $14 billion.

Fidelity, T. Rowe Price, and Sands Capital participated in later rounds.