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But this week—after Palantir reported blockbuster earnings on Monday—Karp took a moment to bask in his company’s meteoric rise and take a jab at his critics.

Palantir, based in Denver, surpassed $1 billion in quarterly revenue for the first time this week, posting growth figures that blew past analyst estimates. Palantir’s stock soared to more than $160 a share, marking a 555% increase from this time last year. By market close on Tuesday, Palantir’s market cap had hit nearly $409 billion, making it the 23rd most valuable company in the world, just behind Johnson & Johnson, a company with more than 23 times Palantir’s revenue and more than 35x the number of employees. 

As he started speaking on Monday’s earnings call, Karp, who has a PhD in neoclassical social theory, was absolutely delighted—and true to form, a bit snarky, too.

“Well, as usual, I’ve been cautioned to be a little modest about our bombastic numbers, but honestly, there’s no authentic way to be anything but have enormous pride and gratefulness about these extraordinary numbers,” Karp said. As he wrapped up the call, he gave a quippy message to retail investors about the analysts that have “been wrong about every quarter.” “Maybe stop talking to all the haters—they’re suffering,” he said.

Palantir, a software company co-founded by Peter Thiel, has many “haters,” as Karp puts it. As a tech company that got its start selling to the U.S. military during the War on Terror, Palantir has been fully embedded in some of the most polarizing political debates of modern geopolitics. Particularly now, Palantir has stirred criticism over its software being used by Immigration and Customs Enforcement, as well as the Israeli military.

On the financial side, there’s a different kind of critic: those who question how such a relatively small company—one whose revenue and profits are so small in comparison to peers that it doesn’t even qualify for the Fortune 500 list—could reasonably become one of the most valuable companies in the world. 

For Palantir, it has been a slow, albeit volatile, climb to where it is now—marked by contentious legal battles, noisy protests and picket lines, and an eccentric leadership team and employee base who sometimes endearingly refer to one another as “hobbits,” in credit to the company’s Lord of the Rings nomenclature (Palantir is in reference to the seeing stones created by Elves that allow people to see far away or communicate with others). And, more recently, in the last two years, Palantir has ridden the generative AI wave.

“They’ve got their feet under them—they’ve got their sales cycle down a little bit more. They’re just making things really, really sticky for large multinational corporations,” says Evan Loomis, a venture capitalist who is close friends with Palantir cofounder Joe Lonsdale and whose construction technology startup, ICON, uses Palantir’s software platform Foundry.

While the company is currently one of the best-performing stocks in the S&P 500, Palantir’s stock has also been known to be incredibly volatile, and sometimes dramatically influenced by retail investor activity. Palantir is undoubtedly having a moment—but will it last?

‘Two times more expensive’

There are a host of near-term data points analysts look at: sales, cash flow, profit, customer retention. If you look at most of these near-term fundamentals, Palantir is trading at a premium.

“They are trading at least two times more expensive on the traditional metrics,” says Mariana Pérez Mora, an equity analyst at Bank of America Securities, who has been following the company since 2022.

But, as we speak, Pérez Mora reminds me about another important, longer-term metric for SaaS companies that Karp has repeatedly reminded onlookers to pay close attention to. That metric is called the “Rule of Forty.”

The Rule of Forty figure is calculated by adding the year-over-year revenue growth rate and adjusted operating margin. If those percentages are collectively higher than 40%, you have sustainable growth. 

If you look at Palantir’s last quarter, Pérez Mora points out, the rule of 40 was 94%. 

“That is the type of growth they are having. And the reality is that growth is accelerating, and that accelerating growth is not at the expense of profitability. And that is pretty unique,” she says, adding: “Palantir is trading as the company that they are growing into, and this is why it’s more expensive.” 

There are a few key contributors to these numbers. For one, new government contracts. 

Palantir has been working with the government since the beginning—its first customer being the CIA—and government contracts still make up a majority of its business. At the end of July, Palantir signed a 10-year contract worth up to $10 billion with the U.S. Army.  It was one of the largest software contracts the Department of Defense has ever signed and, by far, Palantir’s largest contract to-date. And, ironically, it is the same customer Palantir sued (successfully) almost 10 years ago, accusing the department of unlawfully excluding companies like Palantir from its procurement process. 

There could be more contracts of this scale on the table, too. The Fostering Reform and Government Efficiency Act, or FoRGED Act, currently on the table would reshape the Department of Defense’s procurement process for private contracts, eliminating hundreds of statutes and making it easier for tech companies like Palantir to sell to the government. The legislation, which Palantir has publicly endorsed and which its executives have pushed for in public hearings, would likely cut into the advantage that some of the industry incumbents like Boeing, Lockheed Martin, RTX, and Northrop Grumman have gained over the years. 

The Department of Defense has been making trims to its budget since Trump named Pete Hegseth to the top role. But Palantir is seemingly benefitting from that, too. Only a couple months after the Department of Defense said it had cut more than $5.1 billion in contracts to consulting agencies, including Accenture and Deloitte, both companies announced new strategic partnerships with Palantir to collectively deliver solutions to government clients. 

But the lion share of growth at Palantir over the last year is coming from a newer segment of customers—the commercial side of the business. Revenue for the commercial side rose 93% year-over-year this past quarter. And nearly all of those contracts stem from the generative artificial intelligence platform it released in 2023, called “AIP” (which stands for the ever-original “artificial intelligence platform”). 

Perez Mora says that while a lot of companies are building and offering large language models, Palantir has found a way to help companies make use of them—and drive real results for their businesses. 

On this last earnings call, Karp said that Citibank was onboarding its customers and running the relevant know-your-customer and security checks in seconds, down from nine days. He said that residential mortgage enterprise Fannie Mae is uncovering mortgage fraud in seconds, versus two months. And he said that Lear Corporation is using Palantir’s platform to manage tariff exposure.

Investors seem to have taken note, as there is a direct correlation between the launch of AIP in 2023 and the steady upward trajectory Palantir’s stock has experienced since.

But generative AI is still new—and many companies and industries haven’t fully explored or realized just what jobs AI will be able to replace or make more efficient. Palantir itself doesn’t seem to have it sorted out either. 

CEO Karp said in an interview on CNBC this week that he thinks Palantir could keep growing revenue while reducing headcount by 500 jobs to about 3,600 people. But if you look at Palantir’s headcount, it has been doing the opposite: adding about 200 people between 2023 and 2024, not cutting roles. For all that companies like Alphabet or Salesforce are boasting of the efficiencies they are adding within their ranks by using AI, those same companies have seen their workforces grow.

One of Silicon Valley’s most controversial companies

Palantir’s valuation may be climbing to new heights, but the company is as controversial as ever. They’ve been the target of sit-ins, picketings, and other protests that have pulled in hundreds of people in New York City, Palo Alto, Denver, Seattle, and Los Angeles, condemning Palantir’s contract with the ICE (Palantir has been running a ​​six-month pilot contract “centered on enforcement prioritization and immigration lifecycle management,” the company says.) Palantir has a partnership with the Israeli Defense Forces for “war-related missions,” which has also come under fire. A report submitted to the UN Human Rights Council in June that singled out companies aiding Israel in the war in Gaza, including Lockheed Martin, said there was “reasonable grounds to believe” Palantir was providing automatic predictive policing technology and core defense infrastructure to Israel. 

A Palantir spokeswoman said the company “does not provide the technology for Israel to conduct missile strikes or targeting operations in Gaza and has no involvement in the Lavendar or Gospel systems. These targeting capabilities are entirely independent of and predate our partnership with Israel’s Ministry of Defense.”

Karp addressed some of the criticism Palantir has received over the years on the last earnings call. “Palantir gets attacked just because we help make this country even better, because we support the values, because we defend it,” he said. Earlier this year, Karp and Palantir’s head of corporate affairs, Nicholas Zamiska, published The Technological Republic, which criticizes Silicon Valley for spending its time on consumer apps and dodging working with the government and playing a role in defending freedoms and democracy.

But there has also been some notable pushback even from former employees in the last couple years. In May, more than a dozen former Palantir employees signed an open letter to the tech community, alleging that Palantir had violated principles core to the company due to its work with the Trump Administration. 

“Palantir prides itself on [a] culture of fierce internal dialogue and even disagreement on difficult issues related to our work,” a Palantir spokeswoman said. “The small number of former Palantir employees—13 of 4,000—raising concerns are certainly entitled to express their views.”

Despite heightened criticism on the public stage, Silicon Valley has come to not only accept, but embrace defense tech since 2022, when Russia invaded Ukraine. It’s one of the hottest sectors around right now, with companies like drone startup Anduril garnering a $30.5 billion valuation in the private markets.

Indeed, tech companies used to shy away from defense contracts. But under the Trump Administration, there’s been a tidal shift. Meta teamed up with Anduril to start working on helmet and headset projects for the U.S. military. Numerous LLM companies, including OpenAI, xAI, and Anthropic, started working with the Department of Defense on national security. Even Google, which famously stopped working with the government in 2018 after internal upheaval from its employees, has gotten into the military business.

In some ways, Palantir—and SpaceX, too—have been a catalyst for the shift. Palantir had initially been rejected from top Silicon Valley venture capital firms when the founders tried to raise initial capital, as Sequoia Capital and Kleiner Perkins both famously passed on the investment. Cofounder Thiel ended up putting in much of his own money and raising capital from former officials from President George W. Bush’s administration as well as the CIA’s venture capital firm In-Q-Tel.

Now, with Thiel protegee J.D. Vance as Vice President of the United States, and a defense-tech-friendly White House in charge, the company has access to the inner circle at the highest levels of power. And Karp, who pens a “letter to shareholders” that’s published on Palantir’s site in English, German, and French each quarter alongside the financial results, has a lot of thoughts to share. “The United States is not, and should not be permitted to become, a soft compromise and amalgam of global values and tastes,” Karp wrote in his most recent letter, referencing a 1943 work by C.S. Lewis which describes  “men without chests.”

“Such men without chests,” Karp says, “promise to shepherd us forward yet lack much substance and content, even a flicker of an animating worldview or belief structure, other than their own self-preservation and advancement.” For now, at least, Karp’s worldview and Palantir’s business seem to be defying the critics, the haters, and the chestless.

MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say. The following comes from Matt Jones, CEO of Medallion and former CEO of Songkick.

Jones has spent over 15 years building direct-to-fan platforms and has facilitated hundreds of millions in artist revenue through various fan engagement models.

Substack just raised $100 million by proving how well direct commerce works for its creators. A scalable direct-to-fan model could revolutionize music, but Substack’s subscription model won’t work for artists, says Jones…

Last week, Substack announced a $100 million Series C funding round, adding more fuel to a platform that’s already moving hundreds of millions of dollars directly from audiences to creators.

This funding round reinforces the fact that direct commerce in the creator economy is here to stay. It’s also a wake-up call for the music industry. Not because Substack is about to take over music (more on that below) but because Substack’s “magic dust” – the principles of its business model – so clearly resonate with musicians.

After all, Substack’s core customers (writers, journalists, podcasters, etc.) and musicians have historically faced similar challenges. They’ve struggled to monetize their work, their audiences are spread across multiple platforms, and they’ve been forced to participate in an ecosystem where intermediaries capture most of the value.

While the music industry has been debating (without end) streaming economics and artist compensation, Substack has quietly built a direct-to-fan platform that’s economically sustainable and grounded in three brilliant principles:

• Control: Unfiltered by algorithms, Substack creators have direct access to their subscribers.
• Monetization: Rather than relying on large platforms that aggregate demand and dictate economic terms, creators earn directly from their audiences and thus keep a higher percentage of revenues.
• Incentives: Substack only makes money when its creators make money – it takes a 10% cut of paid subscriptions. This alignment means the platform’s success depends on creator success, not on maximizing ad impressions or keeping users scrolling.

I’ve worked with artists – from small club acts to stadium artists – for nearly 20 years, and it’s hard for me to think of one that wouldn’t be excited by those three principles at the core of Substack’s business model.

So…why aren’t all musicians flocking to Substack? 

After years of seeing artists trying to bring to life ‘paid subscriptions’, I think it’s because of Substack’s ‘1:1’ (i.e., creator-level) subscriptions.

Why Substack’s subscription model breaks down for music

After facilitating hundreds of millions of dollars in direct-to-fan commerce on behalf of artists and watching dozens of ‘paid fan club’ experiments across every artist tier, I’ve seen some patterns that reinforce why music is different from Substack’s core creator industries:

1. While writers publish regularly on predictable schedules, musicians have natural creative cycles – periods of writing, recording, touring, and crucially, resting – that don’t align with an ‘always on’ publishing schedule.
2. Musical artists face a dense thicket of stakeholders (and contractual arrangements) that can have tremendous influence on how the artist can ultimately monetize their IP or gate access to make a paid tier enticing for fans.
3. Musical artists have a unique (and highly variable) monetizable IP ‘surface.’ Musicians can monetize everything from master recordings to music videos, ticket pre-sales, unreleased music and behind-the-scenes content. Accordingly, a direct commerce platform for music would need to handle a variety of different fan UXs across live, digital music and commerce. Features like ticket sales and merch product drops attract lots of fan demand, and require a completely different consumption experience than just distributing content.
4. Individual musical taste is broad and complex. On Substack, people might pay for a handful of their favorite newsletters. But our passion for music works differently. We don’t just love a few artists. We love different artists for different emotions, different memories, different occasions. Music is biographical, and we want access to our full musical selves – preferably in a single place.

The opportunity in music: networks over silos

Our industry’s next breakthrough won’t come from incrementally improving streaming payouts or fighting over playlist placement. It will come from building systems that give artists what Substack gives writers: creative control, direct economic relationships with fans, and a platform that’s incentive-aligned with the creators it supports.

Music demands a unique platform, a unique product experience, and a unique economic model. Instead of Substack’s 1:1 creator-level subscriptions, we should explore models that create value through network effects, which is when a platform grows in utility as more people join.

Networks can create value through access and timing rather than siloed content gating. For fans, a networked experience can deliver a hub for engaging with all of the artists they love, along with other fans. For artists, a networked experience can respect creative cycles and reduce the constant pressure for content production.

This, in turn, could produce collaborative dynamics between musicians. Because of ‘network effects’, artists would become each other’s distribution channels. If we make it easy for fans to access all of their favorite artists, then overall engagement goes up and all artists benefit.

I built my career on the belief that artists deserve a much larger ‘share of wallet’ from every fan they have than what they’ve been getting. I still believe that. But after watching countless paid fan club offerings on a variety of platforms launch with excitement and quietly fizzle out, I’ve had to confront an uncomfortable truth: except for a very unique kind of artist, an artist-level paid subscription is a terminally broken monetization mechanic.

For 99.99% of musicians it doesn’t work and will never work at scale.

In my experience, artists don’t want to feel like they’re taking advantage of their fans. And they don’t want content creation to feel like subscription justification. They want authentic relationships that happen to generate revenue, not revenue streams that require manufactured authenticity.

The thing that will revolutionize music for artists and fans won’t be exactly like Substack. But the blueprint exists (and hats off to Substack for leading the charge). The technology works and fans are ready.Music Business Worldwide