BUILDING THE SOVEREIGN ENTERPRISE WITH DAVID A. STEINBERG AND DR. ALEX KARP | ZETA LIVE '26 - ZETA GLOBAL HOLDINGS CORP

I'm very into this work. yeah let's hope it works I mean you're the star of the day so we need to make sure the star always says it's like the rich person is always telling you how poor they are the smart person is always telling how stupid they are the star is always telling you you're the star there's a personal equivalent of this I won't go into we're in a PG audience but no please I'm just kidding I want to hear it you know just well you don't want to hear it I had to kill a few minutes because of traffic so I I exposed that I had always wanted to be on this stage as a comedian oh really and And, you know, for some reason, my day job took me in a different direction. Well, you're doing pretty well in your day job. Maybe. As are you. We all both stick to our day job, but I come from a family where if you're not an academic, you're a failure. By the way, me too. Like, I was hanging out with my dad. Our CFO's dad was a very important person in the medical history and created radiology. I'm sitting at home with my Dad. We're having coffee. And he said, of course, not listening to anything I say. And then, no, it's crazy. And then I'm like, yeah, dad. And, you know, my CFO's dad was Dr. Glazer. And my dad knocks over the tea. He's like, you knew Dr. Glaser's son? I'm, like, yes, dad, yes. Right, yeah. You're on Palantir and Cares, right? I'm , like, okay, well, I think I'll go back to my day job. You know, I grew up sort of an upper middle class Jewish kid in New York. So it's like the fact that I was not a doctor, not a lawyer, not, you know, in academics made me a failure. Yeah. Child's table at the Seder. Exactly. Seder? Yeah. Let's talk about Palantir just for a minute. You guys are obviously crushing it. What's really interesting to me is what are going to be the most high stakes questions that complex organizations are going have to ask, about where AI is really going to change the work that gets done, Alex? Well, there's like, there is the first wave of, actually the first way of AI really happened in the military, but then my version of it was, it partly is classified, but you see it in Ukraine and other places. We're private here, you can talk about classified things, no problem. But I think actually the real problem in disseminating the truth was the truth in America, which is the defining place for AI, which is also super interesting because normally you have a revolution and like I spent half my life in Germany, you'd expect a German version, a French version, an American version, but really you have America and China and this This is already completely unique because if you think of other revolutions, philosophical, industrial, if you look at the history of Asia, for example, when Deng Xiaoping took over China, he immediately got industrial minds from America, Chinese Americans, and then Japan's rise vis-à-vis China. But these things were pretty intertwined, so Japan rose because it took over Chinese culture and then it took over western culture of how to do industrial this is a revolution that is basically at least the original thinking and research is completely done here and then derivative advancement fast follower china so that's already super unique then that leads to a lot of confusion because the first wave of ai which was you give us your data we put it in a model, the model kind of... Alex, are we still in the first phase or we're moving to... We're like, we're in the, I think we're both in the first and second phase. So a lot of people are in a phase of you give me I take your model, I run it, I chillax on paying you a lot money. I get very, I get value on very easy use cases. It doesn't work on complex use cases and I may or may not be in danger of outsourcing my primitives my knowledge that the my alpha what makes my business special to a model company that will compete with me effectively and put me out of business and then but it's this unique phase so like if you just may take a neutral example why is Europe not scared of AI why aren't they adopting it on the battlefield even though they have all this information of it's the thing that works it's because you can still look at the things that don't work and then say okay well this doesn't work, it's not worth it, but then, so this, let me just get to your question, which is, this is all backdrop for what are, what is actually working, and then the, what does it mean to work? The first big difference, like, it used to be that the delta between a good software implementation and one that was second rate was real, but it wasn't determinative for your life, and so when we built foundry which is a data integration platform which we're using with you that would save you time and money and make you more efficient it would make you a plus but b minus which would take longer was still in a range of if you were better at marketing and you had b minus or you owned your you you had a high moat like just say you're you're building a certain kind of missile right okay yeah maybe you could build them faster with foundry but you have a moat because it's hard to build this missile and also say you're a French company or German company, the German government's going to buy your missile even if it's B minus because it flies and it's German, right? Okay, so we do the same thing, but so it, okay, so what happened, what's happening in the second phase of AI was, yeah, but your missile isn't going on target against the Russians or if you do not have a way of putting it there and that way is going to be an application layer with a model. And without that, interestingly, your B minus muscle is A triple plus with this, and your A plus muscle is useless. So that's just binary, and the profundity of that minimal example is something that we don't have. You know, in philosophical systems, I was going to be an academic, and my form of academia— Well, you have a law degree from Stanford. You have your Ph.D. in philosophy. In German. Your family's got to be somewhat proud of your academic accomplishments. No, we can go back to that. But it's like, and my dad is like, you could have been something with that. Literally. But I'm not joking. It sounds like. I get the same thing. So I understand. You rarely have, when these massive things happen, from modernity to post-modernity to, or what is it, let's just take an American example. What does it mean to internalize the first, second, and fourth amendment? The first amendment being a right of free expression, which is, first of all, the constitution was given to us by a higher being. So it's already different than Europe. But then first, Second, and Fourth Amendment, right of first expression, right to defend to first expression. Which is really what the second amendment is about. And the right of privacy. These are concepts that are so radical, it takes generations. So, here you have something, it's very simple, like you now have a thing, a technology that will make a rocket, to use a very simple example, that was third rate, first rate, and deadly. Or you have Something Without It that will take the first rate rocket and it's not useful. So, this is true in every single enterprise, commercial enterprise, and what is it that is special about AI? So just take an example you have unique ways of understanding how a market will react to a message Yes, okay, you are going to how do you share those insights? With it with a partner where you only share the insights that you want to share and they want to with you And how do augment them where both the data the insights and the models you run against them are? Sovereign meaning unique to them or could be white labeled and sold to others Well, and that's one of the things we love so much about Foundry. Our integration of our data cloud on Foundry gave us far more ability to do those things. And we're now able to onboard clients in hours that used to take months, but give them control. I'm going to pivot us back and bring us a little lower to the ground so most of us here can understand the vast majority of what you say. we talk about data sovereignty a lot we have a lot of ceos in the room a lot of cmos in theroom alex what does that really mean it means that well first of all and this is a very advanced thing and we're going to be able to augment this and then put models on it and then train the models so that the models reflect just what you know and do not expose it to the outside so basically okay every business what is a business a business a business meaning something that at some point in the future will provide high quality revenue, meaning free cash flow. Okay. And what is, why is free cashflow, what everyone thinks about analysts, why is this an important concept? Because it basically tells you, you have something unique in your business that is valuable enough where you have pricing parity so that you can charge more than the cost of the goods. Okay, that is a business. Every business in the end of the day comes down to that. Why can you charge more than it costs you to produce it? Because you have some unique way of doing something, whether that's how you build it, how you produce it, how you distribute it, and how you market it. Okay. And preferably it's unique along the whole stack. And the more unique it is along the stack, the better your financials at some point in the future will be. I mean, there's always a lapse of time, but I basically, I do, I think the free market will get you to pricing parity over a 18 month period right or so and okay so in every one of those things the way you produce it so supply chain how you how you integrate it what the final product is what the aesthetics of the product and how you explain it to the market you need to advance your unique capability learn from the world and never ever exposed to anyone else how you're doing it exactly and the minute you someone else can do any part of those things as well as you can your pricing parity goes down and at some point your value goes down I mean these are like a lot of times it's okay so normal software is built to to force you to adopt something that's parasitic. So you, they take every one of those things, turn it into a commodity and sell it to everyone else. That's how you, we couldn't get financing because I kept telling these VCs, yeah, but we're going to make, we're gonna make our partners and clients happy. They're like, why would I? Wait, what? Happy clients? When you want to start a company and you talk to VCs what they wanted to hear was clients will be unhappy, but they can't get rid of you. Like They want to hear bad marriage. It can be sticky, right? Yeah. No, it has to be sticky as a metaphor for parasitic. Correct. I get your data. I get it into something you can't get rid of. The thing turns into something I can sell to everybody else who then can't get rid it. And de facto, your multiple goes down and my multiple goes up and all of us are happy and at some point you realize you're sad. Hopefully after it's too sticky. And okay, so that's how you get, we couldn't get finance because I kept telling people, no, we're going to make special operators more lethal, and we're going to bring them home. And they're like, but where's the parasite? I'm like, no. We're not doing the parasitic thing. And then if you look at the stack of what we're doing, Foundry will bring all your data together and protect it granularly. So you could share the data and not share what you don't. Well, you get to decide what you share and what you don't share with Foundry. Yeah. And then the application layer on top of it will allow you to do the same thing with open weight models or closed weight models I mean closed weight models you need to get them to post train but either way you are not going to be seeping your alpha to everyone else and so at every stack every part of the stack you augment what's particular about your business without losing that particularity by giving it to somebody else who's anti polled with that and that that for those of you who are like VCs and others who besmirch us We don't let VCs in the room. In any case, I get along with them now that I'm standing on their head. But it's, who are basically, they just want to finance it. Someone comes to Pounder for two days, they'll give you like $10 million, start a business, like planning plots. But in any case. The radical thing here is the obvious nature of this. Right. And by the way, just to, why did we do this? We did it because we knew we could not win on popularity. so that if you can't win on popularity you better win on alignment and and what I was literally just going to take exactly what you're saying to the next level one of the things I love so much about the elegance you come over to my family I'm not used to this love I'm sorry I'm Not used to when did I get all this love? I can I can give you shit later I promise. Yeah please please do I won't believe you if it's positive exactly the this really sits inside of your entire concept of forward deployed engineers from the way I see it like we have your FTEs in our office every day working with our FTE well there's this concept I mean another reason we couldn't get financed and every single person made fun of us as we were like okay to extend the unique nature of the enterprise into our product and into the enterprise itself, we have to send in people who are highly technical and understand our product, and then understand your enterprise so that we can augment our product specifically for you. But that's so different for a software company. Like, we pivoted a huge part of our business to follow you guys on this, because it's so freaking efficient. Yeah, it well it also gets you again it allows you to basically bespoke build what we have to exactly who you are and and then over time we're training your people like we're not a body shop so we want to train your people to be your own FDs and we do that but we have 4,500 people we're not going to have 50,000 people so we we need this is where we need we need partners because we have to work through you because we have, we're an artist shop. We manage a certain kind of person very well. That's what I do for a living. It's not just a certain kind of person. You manage an extraordinary group of people. I mean, the more time I have spent with people like Elias and all of the other people on your team, the more impressive it is, the people who are there. Yeah, we had a long, dark period, by most standards, 17 years. uh and uh and in the desert of everyone making fun of us every day um and and especially people who are the most knowledgeable but um the one thing everyone would always say is yes but they have the best people and it's still true in fact it's even more true now we've had our recruiting for whatever reason we're just getting well i think your success is probably helping um you know this obviously success always helps but it's you know we had it's interesting it's it really is that it's more and more clear to engineers why you would want to power a sovereign stack why that's good for clients why it's good für society why it is what is it's the thing that will transform America and hopefully the rest of the world and so at like every part of our stack it has become much more charismatic and so we've had we've always been working at the way way and high end of talent but even for like we have different we have different vintages it's like your wine like we vintage like vintage 2008 is different than vintage 2012 is it by the way eight is much better in burgundy but not as good in california no and it's very similar interestingly because we have difference roles and like but right now we are crushing it on and by theway anyone here has a precocious person they you want like recruiting we manage uniquely shaped i'm dyslexic which i is the only next you're you're stealing my next topic so well in any case because i am too yeah well i i was is the only thing i was ever in the closet about and i was super and then any case but we manage highly uneven essentially brilliant people and then we slot them and grow them and pound here's not everyone's cup of tea, but for some people, and ex-Palantirians who are missing the Palantir vibe, they'll tell you. In fact, the best references for us tend to be people who stormed out the door. They're like, another crazy lecture from Carp stormed out the door, and now they're unhappy with the shagging of their current business, and they want to come back, but it's hard to come. I mean, it's emotionally hard to go back, but they're our best reference. We're not for everybody, but for a certain kind of person we are the only place and we I spend a lot of time actually my favorite times besides of course hanging out with you oh there we go hanging out on the factory floor with they all you know these by the way you live that like your office is in the middle of the factory floor yeah no I I but I it's what I enjoy it's like you know it's funny one of the great luxuries I have is I mostly get to do not always but I really do get to be a part of it and I to do mostly what I enjoy and what the thing I like most about my thing is just hanging out with my fellow Palantirians and working on things and fixing things and being frustrated and you know and then and they say the crate you know I just I really enjoy it. I always look back on our first conversation so we're both very dyslexic we both from come from similar backgrounds we both I think have a big chip on our shoulder from not getting financing and not being seen at least for me it was as a kid not being scene and then we couldn't raise money for our business either everybody thought we were nuts until a few big park for platforms like you know botany house and actually you're a funny guy i think in private comedy gets me it's uh i think i'm not the least unfunny guy i think you're very so in it goes like in private it's you're funny here too but you guys have no idea what you're dealing with here. In private, it's a different level. You're laughing pro forma, some of these jokes, and I am too. But in private, you really laugh. By the way, put that on my tombstone. He said I'm funnier in public, in private. No, but in all seriousness, we had our first conversation. We were supposed to be together 10 minutes. 40 minutes later, they're pulling us out of the room. We start with philosophy. We move on to wine and watches. And then you looked at me and said, so why are we doing this? And I said, Alex, because you've spent 20 years solving the world's biggest problems and we can help our clients to solve one of their biggest problems that you don't have a current solution set for. And you just looked up, you're like, oh great, let's do it. That's true. Yeah. Is that how you make all decisions? Like, I mean, um, well, I would say if I, I asked, I sometimes ask people like, cause I, it's very hard to know. It's very hard to perceive yourself so I ask people I work with like well what is it like the people you know what I've worked with them a long time and we're we have pretty we have a very honest relationship so it's not like they're telling me things I want to hear in fact I often tell them could you tell me something I want here please by the way it sounds like my conversations with my kids yeah please something but um um and I I'm a very precocious person and he's like look we prepare for hours, and then you kind of have a bias pretty quickly, minutes. And I would say I have a kind of, I probably think they'd have this for my mom, but maybe in a different way for my dad. I have an aesthetic idea of what could work and what won't work. And then I just, that's what I do all day. It's like, okay, well, this could work, that couldn't. Everyone does this, it won't work. No one does this. It could. And then about once a month, I have some idea that I think is important. And I know it's important when everyone tells me we could never do that. By the way, exactly the same. Like DPO or Sovereign or AIP or a lot of other things. Foundry famously, Ted, who's a wonderful person who runs U.S. Commercial, famously said, please stop talking to your Palantirians about how big Foundry is going to be. It's depressing and everybody knows you're out of touch. Well, I would tell you. And he was right. I had to stop talking to people for like six months. But it worked. I know, I know. When I first sort of came up with the idea for Athena, normally I go into Steve Gerber's office, who's my partner, and he looks at me and he says, all right, David, that's great. Let's keep that just between us. We're not going to go talk to other people about that because you're going to freak everybody out and I brought him Athena I had been I had decided to take my three older kids we went over to Africa for the weekend because I'm an idiot and we did like a safari and I was trying to squeeze everything in and nobody slept for days and I came back and I go into a very manic state which I did a lot more when I was younger than I do now that I'm old but and I sort of came out with Athena and I went in and Steve was like you know, that's actually a really good idea. It was the first one I'd gotten in many, many years. But let's, once again, I like, you're so smart and you're so sort of open. I want, though, to go a little myopic for just one second. If you're talking to the CEOs in this room, of which there are many, other than signing up with Palantir today, which is, we believe, the absolute best decision they could make today, what's the one thing that every CEO in this room, what's the one decision they should make today before they go home? In your mind's eye, what is the thing in your business that makes it special that is not quite understood? And how do you get complete vision from the factory floor, pre-factory floor distribution all the way up to cost of goods in front of you immediately. And every single person who's crucial at each one of those points, like in total granularity where you impose this thing up and down the stack and make every single... And there's a tech version that you would need to do this, but that's the business thing. And then how do you get AI to enhance that without a model company or your competitor understanding exactly what that is and that's what I would it's what i focus on but but the thing is the thing about the shortest version of ai is it just makes it it makes the real things 10 times more real so you have to get them right there's no room for fucking up the way there was and this is an advantage for america because corporate leaders in America are on the front line and there's no chillaxing vibe like you know basically. This is not a chillax week. No this is so like I had a very a really talented somebody I admire a lot a European CEO and he's like he was saying and I'm going to provide references for him but he's look no one will hire me in America. The headhunter said there's no point. And that's a problem, but it really is because we are at, because it's more like, it's like a war environment. Like, so you have to get that right. And if your person down the street gets it right, even if they're inferior to you, just like the missile, they will outperform you on, not just on margin. It's not just, it's not this like the classic of private equity. You strip out the costs this is enhanced product and strip out the cost and that's a rare thing and also the timeline is different so but the way to begin everything's speeding up right the yeah the nature of time is it's one of the things i feel like i feel very proud of the thing they got right the one of things i didn't understand is and i it's just time is excel like time isn't time time in this country in business is like just, it's like 5x what it was five years ago. Everything is, and you can make these things. The other thing I would say, which is a derivative of it, the tactics of this are shorten the timeline of execution. Anything that's taking too long, it is because there is something in the stack that is parasitic. We say time is the enemy of everything at this point. it just, you have to move faster. And pen test, it's a very important way to pen test because there are complicated things that take time, obviously. So maybe there's some important regulatory thing. But if you just say, if you make a list of on that stack of things, what is taking too long, you'll pretty much articulate wrong person, wrong part of the stack, wrong technology with a high degree of reliability. And why is this important? Because most people running companies are not tech people or don't inherently trust their tech intuition. So, but this will give you a way to pen test your actual intuition, which is business intuition against a tech problem. Because if you can't understand what the tech is doing and it's taking too long, there's definitely something wrong. Ladies and gentlemen, Dr. Alex Karp. We'll be right back.