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Memo to Palantir: Be careful what you wish for

Analysis: Becoming a publicly traded company will raise Palantir’s profile. And taking shots at its critics and peers is only likely to amplify the scrutiny it faces in the months and years ahead.

Filing papers for a proposed new stock listing can be a bit of a double-edged sword for private companies seeking to go public.

That is a risk that Palantir Technologies, the data-mining specialist whose co-founders include CEO Alex Karp and venture capitalist Peter Thiel, seems willing to embrace—with gusto.

Unveiling the all-important S-1 filing, which Palantir did last week, is a milestone marking a private company’s coming of age. Companies use these filings to signal to Wall Street they’ve arrived, presenting a valuable opportunity to tell a story of successes, aspirations and risks, especially to a wider audience of investors and potential new customers.

But some companies—like Google and WeWork—have famously seized that moment to go a bit further, making a singular declaration or statement of purpose to set themselves apart. Remember the credo “don’t be evil” that Google pledged in its 2004 IPO? It later would find itself mired in clashes over anticompetitive behavior, digital privacy, sexism and controversial Pentagon contracts. More recently, WeWork, ahead of its doomed IPO last fall, brashly proclaimed its mission to “elevate the world’s consciousness.” This from a cash-hemorrhaging office-sharing startup now on life support under SoftBank‘s supervision.

Theatrical S-1s have long featured a bit of storytelling bravura but they sometimes end up looking quite laughable or ironic, especially later on as a company matures—or doesn’t mature (see WeWork).

Now it’s Palantir’s turn, and the company is about to find out whether it made sense in a prospectus for a direct listing to call attention to its superiority complex.

In a letter accompanying the S-1 papers, Karp took pains to paint Palantir as the alter-ego of Silicon Valley. Palantir, he wrote, only does business with “the world’s most vital” institutions whose work is critical to society as we know it. In the annals of S-1 chest-beating statements, this one stands apart.

“Our company was founded in Silicon Valley,” Karp wrote. “But we seem to share fewer and fewer of the technology sector’s values and commitments.” That’s more of a political broadside than forward-looking guidance of use to investors.

Plenty of major software companies going public in recent years have courted controversy by issuing a separate class of stock that gives founders greater voting power than common shareholders. Palantir’s prospectus revealed its plan to grant Class F shares to its co-founders, effectively giving them boardroom control.

To be sure, Palantir used its S-1 to make a forceful argument about the strength of its business model, which covers a diverse government and corporate market it values at well over $100 billion. But that wasn’t enough for Karp. He did more than disavow Silicon Valley’s mainstream software industry (recently moving Palantir’s headquarters to Denver from Palo Alto); he belittled his tech peers.

“The engineering elite of Silicon Valley may know more than most about building software,” Karp sniffed. “But they do not know more about how society should be organized or what justice requires.”

Many startups go off on lofty, even cringeworthy, tangents in making their case to investors. They usually don’t use the moment to settle scores or make enemies. But Palantir did just that in its filing.

Karp made clear Palantir has no qualms about taking sides in today’s fractured political climate. Already known for the secretive and sometimes-controversial nature of its security-related work, it had plenty of detractors as a private company.

Becoming a publicly traded company will raise Palantir’s profile. And taking shots at its critics and peers is only likely to amplify the scrutiny it faces in the months and years ahead.

Featured image: Alex Karp (Drew Angerer/Getty Images)

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