Palantir Alum Explains How AI is Used and Bought by the Federal Government

Nick LaRovere spent years at Palantir before co-founding Pryzm with friends, including a Lockheed Martin alum. And in this episode of Founded & Funded, Nick shares his inside account of how AI is actually being adopted inside the federal government, and what it takes to sell technology into that market. Pryzm is an AI-powered intelligence engine for government business development: it aggregates data across CRMs, email, Slack, and public procurement sources to help companies win contracts. Nick's argument is that by the time an opportunity appears on SAM.gov, the deal is already decided. In this episode, Madrona Partner Chris Picardo and Nick cover: why there's still no purpose-built CRM for government buyers, what Pentagon AI adoption actually looked like from the inside (workers hadn't touched an LLM as recently as two years ago), and what forward-deployed engineering at Palantir taught Nick about building close to the customer. If you're selling into government, building for defense, or trying to understand how AI procurement works inside federal agencies, this is a useful map of how the terrain actually works. Full Transcript: https://www.madrona.com/palantir-alum-explains-how-ai-is-used-and-bought-by-the-federal-government (00:00) – Introduction (01:42 – Why the Defense Budget Growing to $1.5 Trillion Matters for Startups (04:11) – Colors of Money: How Federal Budgets Actually Work (06:47) – The Move Toward Colorless, Flexible Defense Spending (10:51) – What Pryzm Does: AI-Powered Intelligence for Government BD (12:21) – Why Deals Are Decided Before They Ever Post on SAM.gov (17:25) – The Government AI Gap: Pentagon Workers Without LLM Access Until Two Years Ago (21:00) – The Digital Thread Problem: Fragmented CRMs and Millions Wasted on Brittle Tools (26:11) – What Nick Learned Watching Elon Sleep on the  @tesla  Factory Floor (27:00) – Palantir's Forward Deployed Engineer and Why It Produces So Many Founders (30:33) – Why Hard Problems Make Better Businesses: TAM, Willingness to Pay, and Moat (32:05) – Hiring Is Harder Than Founders Expect — and More Important