Palantir

Snowflake

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.

Snowflake

Snowflake charges based on consumption — you pay for the compute time and data storage you actually use. Compute is measured in "credits" consumed by virtual warehouses (their term for compute clusters), and storage is billed per terabyte per month.

This model is beautiful for Snowflake because customers rarely shrink their data — they only ever accumulate more.

The key insight was separating compute from storage. Customers can scale compute up or down independently, spin up multiple compute clusters against the same data simultaneously, and auto-suspend when not in use.

This means a company can run a massive analytics query during the day, shut down the warehouse at night, and pay nothing until tomorrow. Try doing that with Oracle.

Snowflake also makes money from data sharing. Their Data Marketplace lets companies buy and sell datasets directly through the platform — weather data, financial data, demographic data — without any copying or ETL.

Snowflake takes a cut of marketplace transactions and benefits from the network effects: the more data on the platform, the more valuable it becomes for everyone.

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.

Snowflake

Snowflake was born from frustration with Oracle. Benoit Dageville and Thierry Cruanes were senior engineers at Oracle for over a decade, and they watched traditional data warehouses struggle with the cloud era.

The old approach — giant on-premise appliances that cost millions and took months to set up — was clearly dying. But nobody had built a data warehouse from scratch specifically for the cloud.

In 2012, Dageville and Cruanes teamed up with Marcin Żukowski, a Dutch computer scientist who'd built a high-performance analytical database engine called VectorWise. The three of them started building in San Mateo, California, with a radical idea: completely separate storage from compute.

In traditional databases, storage and compute are locked together — if you need more processing power, you have to buy more storage too, and vice versa. Snowflake said that was insane and decoupled them entirely.

They spent two years in stealth mode before launching in 2014. The product was immediately different from anything on the market.

You could spin up compute clusters in seconds, run queries across massive datasets without managing any infrastructure, and only pay for what you used. Companies that had been spending six figures a year on Teradata appliances could suddenly do the same work on Snowflake for a fraction of the cost.

The product-market fit was almost violent.

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.

Snowflake

Snowflake grew through a relentless enterprise sales motion combined with a product that genuinely sold itself. Early on, they offered free trials that let data engineers experience the speed difference firsthand.

Once someone ran a query in 10 seconds that took 20 minutes on their old system, the sale was basically done.

They also invested heavily in a world-class sales organization. Frank Slootman, who became CEO in 2019 after running ServiceNow, brought an aggressive operational playbook that dramatically accelerated growth.

Under Slootman, Snowflake went from $265 million to over $2.8 billion in annual revenue in four years. He was famous for saying "growth is oxygen" and running the company with military precision.

The Data Cloud strategy was the long game. By encouraging data sharing between organizations on the platform, Snowflake created network effects — the more companies use Snowflake, the more valuable it becomes for everyone.

Over 9,000 customers now share data through the platform, creating a gravity well that makes leaving increasingly painful.

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.

Snowflake

Databricks is the existential threat. What started as a data engineering company has built a competitive SQL analytics product (Databricks SQL) that goes directly after Snowflake's core business.

The two companies are converging fast — Snowflake is pushing into data engineering and AI, Databricks is pushing into analytics. Both are spending billions to win.

Margins are also a constant battle. Snowflake runs on top of AWS, Azure, and Google Cloud, which means a significant chunk of revenue goes right back to the cloud providers as infrastructure costs.

Gross margins hover around 70% — good for most companies, but the cloud providers themselves operate at higher margins on the same underlying infrastructure. There's always the risk that AWS or Google could build "good enough" alternatives and undercut Snowflake on price.

So far, Snowflake's ease of use and ecosystem have kept customers loyal, but it's a fight they can never stop fighting.

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.

Snowflake

Snowflake Data Cloud — the core platform that stores, processes, and shares data across organizations with near-infinite scalability. Snowpark — a developer framework that lets engineers build data pipelines and ML models in Python, Java, or Scala directly inside Snowflake, without moving data out.

Cortex AI — their generative AI and machine learning layer that lets users build AI applications directly on their Snowflake data using LLMs and vector search. Snowflake Marketplace — a data exchange where over 2,000 providers list datasets that customers can access instantly without copying.

Streamlit — the open-source Python framework for building data apps, acquired in 2022 for $800 million, now deeply integrated as Snowflake's app-building layer.

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.

Snowflake

Sutter Hill Ventures was the earliest and most consequential investor — managing director Mike Speiser actually served as founding CEO and incubated the company. Altimeter Capital, Dragoneer Investment Group, and Salesforce Ventures participated in growth rounds.

Warren Buffett's Berkshire Hathaway famously bought $250 million in shares at the IPO price — Buffett's first IPO participation in decades. Sequoia Capital and ICONIQ Capital also invested pre-IPO.

The September 2020 IPO raised $3.4 billion at a $33 billion valuation.