Joe Lonsdale ’04, co-founder of Palantir and Addepar, spoke on campus last Wednesday on the subject of “the coming transformation” in technology, in a talk that also featured Lonsdale’s own career experiences across the financial and technology sectors.
Lonsdale opened the talk by recalling how, as a computer science major with a strong interest in finance, he had worked as intern with PayPal. He framed the connections established through that experience as a critical factor in his subsequent success.
“Twelve years ago, PayPal was a company that attracted some of the best talent in Silicon Valley,” Lonsdale said. “Working with these guys before many of them were famous really taught me a lot.”
Lonsdale noted that he developed a close relationship with PayPal co-founder Peter Thiel ’89 J.D. ’92, an association that led to a position at Thiel’s multi-billion dollar hedge fund Clarium Capital.
However, in an effort to leverage his prior experience at PayPal, Lonsdale, along with a handful of colleagues, began working in 2004 on a project that would ultimately spawn Palantir, the Palo Alto computer software and services company that is currently valued at $9 billion.
Lonsdale remembered how daunting the undertaking had seemed at the time, joking that he and his four colleagues thought of themselves as just “kids trying to be spies.”
“One of the challenges we faced early on at PayPal was dealing with fraud,” Lonsdale said. “At one point, we were losing seven million dollars a month. So a few of us [at Clarium] decided to take what we learned at PayPal solving fraud problems for the FBI and CIA, and scale it into something bigger.”
Lonsdale framed his more recent work in the financial sector as reflecting a desire to improve efficiency and transparency in the way that resources are allocated.
“In theory, [finance] should be very data driven, like here’s what we own, here’s what possible, here’s how it fits in with what we are doing,” Lonsdale said. “And one part, stocks and bonds – the part that everyone sees – is in fact data driven. But the vast majority of it is still very relationship driven, which to me says that the system is broken.”
Drawing parallels to the military industrial complex, Lonsdale said that inefficiency, nepotism and, in some cases, outright corruption within the financial sector have come to characterize the way business is done, and argued that technology could have a curative effect in the decades to come.
“When you look at how to make an impact, most people focus on the obvious areas like education and healthcare, which are valuable,” Lonsdale said. “But I think that there are a few other systems that have as big if not a bigger impact, like energy, government, and especially finance.”
More recently, Lonsdale applied his experience in system optimization to the local government sector, co-founding OpenGov, a start-up designed to make government budgets and financial data more easily accessible.
“It’s hard because governments are more stubborn than anyone else about modernizing and changing,” Lonsdale explained. “But I think it’s much easier to fix things when there’s metrics that are comparable. There are tens of thousands of cities and municipalities, so you can look and say okay, this city is doing well in these five areas but in these 10 areas, it’s spending twice as much relative to these metrics.”
The event was part of an ongoing lunchtime series hosted by the Business Association of Stanford Entrepreneurial Students (BASES).
Contact Stephen Cobbe at scobbe “at” stanford “dot” edu.