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A $70,000 check from Peter Thiel
Two Interns and a List
Joe Lonsdale and Stephen Cohen were interns at Thiel's hedge fund, and Thiel's rule for starting anything was to write down on paper the smartest people to hire. Their fraternity brother from Stanford, Garry Tan, was working at Microsoft, and they wanted him on the list. Joe and Stephen flew him down for dinner with Thiel.
The Offer
Thiel was sure it was the right thing for him and offered a check for 70 grand, which was exactly what Microsoft paid Tan at the time. Tan thanked him and answered that he might get promoted to level 60 that year. He did.
The Cost of No
By now that no looks like a $2 billion to $4 billion mistake. It repeated the move that had sent him to Windows Mobile instead of the web he knew: he worked backward from the map, from what was cool and what a good investor would approve. Looking down at the territory would have shown him that Joe and Stephen were among the smartest people he had ever met, and that they were taking what computer scientists in Palo Alto could create to governments and three-letter agencies, which had no access to it.
How did PayPal's fraud fighting lead to Palantir?
PayPal lost heavily to fraud in its early years, and a team led by Max Levchin built software that paired automated detection with human analysts who reviewed flagged accounts. Peter Thiel, who co-founded PayPal, started Palantir in 2003 to apply that approach to other kinds of data. Joe Lonsdale and Stephen Cohen were among its early founders. The company took its name from the seeing stones in J.R.R. Tolkien's The Lord of the Rings.
Why did the CIA start a venture firm?
In-Q-Tel was created in 1999 as a nonprofit venture firm funded by the CIA. Intelligence agencies found that much of the fastest-moving commercial technology was being built by startups that rarely sold to the government. Government contracting rules and long purchasing cycles made those startups reluctant to try. In-Q-Tel invested in them and acted as a bridge, and it was an early backer of Palantir.
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