Slate Money Podcast: The Big Data Edition

Date: July 23, 2016
Hosts: Felix Salmon, Kathy O’Neill, Jordan Weissman

Main Theme

This episode examines the state of "big data" in 2016—moving beyond the buzzword to how it is concretely transforming business and finance. The hosts use three prominent case studies—Palantir, Dollar Shave Club, and Tesla—to show how data (and the narratives around it) shape value, innovation, and new markets.

Key Discussion Points & Insights

1. Palantir: The Shadowy Data Startup (00:55–13:48)

• What is Palantir?

  • A data analytics firm co-founded by Peter Thiel, mainly serving government and now commercial clients.
  • Notable for its secretive culture, “mission-driven” branding, and under-market salaries to attract “true believers.”
  • 12 years old and still considered a “startup” because it hasn’t gone public and is still unprofitable.

• Salaries and Culture

  • Capped base salaries around $140k–$170k even for talented data scientists in Silicon Valley.
  • Quote: "Honestly, like, it's not that much...in Silicon Valley, in terms of cash...to be able to house your family, it's not that much." – Felix Salmon (04:11)
  • Hiring relies on the allure of postdoc-like “cutting edge” experience rather than compensation.

• Private Valuations & Employee Motivation

  • Discussion over leaked Founders Fund (Peter Thiel’s VC firm) documents that valued Palantir at $12.7 billion (vs. a $20B headline valuation), sparking debate about what these numbers mean.
  • Palantir is notably providing liquidity at official (high) valuations while hiding criticisms with gag clauses.
  • Employees see Palantir as a stepping stone: "They're going to learn the sort of cutting edge data science technology and then they're going to leave and they're going to be very marketable." – Kathy O’Neill (05:58)

• Cash Flow & Client Issues

  • Despite massive reported revenue, only a fraction is actual cash flow; much is bonuses or bookings, raising skepticism about sustainability.
  • Losing some major clients who complain about cultural disconnects between young Palantir staff and traditional execs: “The Palantir millennials going, ‘Oh, they're so old, they don't get us.’” – Felix Salmon (13:00)

2. Dollar Shave Club: New Models, New Data (13:48–23:03)

• Acquisition by Unilever

  • Dollar Shave Club, a quirky razor subscription service, acquired by Unilever for $1 billion—a 6x revenue multiple (industry norm: 2–3x).
  • Quote: "It was kind of an astounding sum...six times more revenue than it made in 2015." – Kathy O’Neill (16:11)
  • Unilever is buying not just razors but a powerful email list, direct-to-consumer relationships, and brand personality.

• Brand & Marketing

  • Built cult status through viral, irreverent advertisements and unique customer engagement (e.g., in-box Bathroom Minutes comic).
  • "Are our razors good? No, they're fucking great." – Quoting the founder’s ad (17:44)

• Subscription Model & Direct Data

  • Sticky subscription, 3.2 million “members,” allows granular understanding of buyer behavior—attribute profiling, personalized marketing, etc.
  • The hosts debate whether a large customer list is really “big data,” agreeing the valuable part is in profiling and personalized outreach.
  • Quote: "Big data is anything that doesn't fit into an Excel spreadsheet." – Kathy O’Neill (21:51)

3. Tesla: Big Data on Wheels, and the Future of Mobility (23:05–36:59)

• Elon Musk’s “Secret Master Plan”

  • Reflection on Musk’s 2006 blog post and his just-released “Part Deux,” where he lays out Tesla’s next 10-year plan: merge with SolarCity, expand into trucks/buses, and create a fleet of autonomous ride-sharing vehicles.
  • Musk’s vision is a vertically integrated clean energy and transportation company.

• Autopilot & Big Data

  • Tesla’s autopilot feature collects vast driving data, feeding machine learning systems and continuously improving through over-the-air updates.
  • Argument over Musk’s safety claims: he asserts autopilot is already safer than humans, though data is thin.
  • Quote: "Autopilot is based on millions and millions of miles of driving data...it is already significantly safer than human beings driving." – Felix Salmon (27:45)
  • Skepticism: "We don't have that evidence...he needs to show us the data." – Kathy O’Neill (29:23)

• Ride-Sharing Vision

  • Tesla owners will eventually be able to send out their self-driving cars as ride-shares when not in use, taking aim at Uber and reforming car ownership economics.
  • "It's like somehow combining Uber and Zipcar." – Kathy O'Neill (30:53)

• Stock Market and Funding Vision

  • Tesla’s story exemplifies using public markets as intended: raising/wielding capital for world-changing investment, even without profits.
  • Quote: "It doesn't matter if you lose money just as long as your share price is going up, people believe in your vision." – Felix Salmon (34:03)

• Dystopian/Futuristic Observations

  • Discussion of a future where people just live or work from self-driving, solar-powered vehicles: “Everyone is going to eventually just live in a car being driven around to the next person they want to see.” – Kathy O’Neill (36:36)

Notable Quotes & Memorable Moments

• "Big data was always a bullshit term." – Kathy O’Neill (01:10)
• "They're not considered subscribers, [they're] considered members of this club." – Kathy O’Neill (21:51)
• "Elon Musk is one of the very, very few people who's using the stock market in the way that God intended, which is to raise money, to invest that money in the future." – Felix Salmon (34:14)
• Kathy’s surreal dream about Peter Thiel and Elon Musk making out onstage at the RNC (23:16) brought comic relief.

Timestamps for Important Segments

• 00:55–13:48: Palantir discussion—culture, valuation, cash flow, client troubles.
• 13:48–23:03: Dollar Shave Club’s acquisition, subscription model, “big data” debate in marketing.
• 23:05–36:59: Tesla’s master plan, the data behind Autopilot, ride-sharing vision.
• 36:59–40:18: Numbers Round—Tampon tax victory, healthcare merger lawsuits, SoftBank’s ARM acquisition.

Numbers Round (36:59–40:18)

• Kathy O’Neill: $10 million—the annual savings for New York women after abolishing the tampon tax (37:08).
• Jordan Weissman: 2—Number of DOJ lawsuits attempting to block major healthcare mergers, signaling a new era in antitrust (37:33).
• Felix Salmon: $32 billion—SoftBank acquisition of ARM, a unique Brexit-era deal (38:47).

Overall Tone and Takeaways

The episode blends irreverence and insight, with hosts challenging buzzwords while highlighting how contemporary companies use data in distinct but powerful ways—whether it’s monetizing analytics for government, redefining customer relationships, or transforming urban transportation. The skepticism of tech hype is balanced by recognition of real, world-shaping shifts in data-driven business.

For listeners seeking the real impact of “big data” in business and finance—the tech, the economics, and the personalities—this is a must-listen episode of Slate Money.