Palantir Technologies Inc. (NYSE:PLTR) co-founder Joe Lonsdale disclosed that the data analytics company nearly collapsed in its early years before CEO Alex Karp secured crucial contracts with federal agencies.

What Happened: Speaking on the Shawn Ryan Show podcast released Wednesday, Lonsdale revealed that about three years into Palantir’s development, key team members were ready to quit due to insufficient contracts.

“It came really close to dying,” Lonsdale said. “A few of our top guys were basically ready to quit. They were like, ‘Joe this is just not working out.'”

Lonsdale convinced the team to persist for six more months, during which Karp made significant inroads with federal agencies. “Alex Karp did a really great job at figuring out how to get both the FBI and CIA to move on something, and all of a sudden it was good,” he explained.

The company later faced resistance from military procurement officials, leading to an unusual legal battle. “We ended up suing the government. I never sue anyone, but Palantir had to… and we won,” Lonsdale said. He noted that after military units began using Palantir’s software, they acknowledged its effectiveness despite earlier skepticism.

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Why It Matters: The revelations come as Palantir’s stock has surged approximately 330% year-to-date, with the company’s artificial intelligence platform gaining significant traction. Recent endorsements include billionaire investor Stanley Druckenmiller, whose family office acquired 769,965 shares in the first quarter of 2024.

Lonsdale emphasized Palantir’s evolution from a data organization platform to incorporating AI capabilities. “It turns out, it’s very powerful to then apply AI on top of it,” he said, noting that the company’s early focus on data organization positioned it well for AI integration.

Wedbush Securities analyst Dan Ives remains bullish on Palantir, predicting 2025 will be a breakthrough year for the company’s AI platform. The company’s market capitalization now exceeds $162 billion, surpassing traditional defense contractor Lockheed Martin Corp.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.