Very little is known about who Karl is and what happened to him. I have a conspiracy theory that Karl is actually alive and plays an active role in the lives of the dwarves in a way they might not suspect.

First, theories that have not been debunked, According to the wiki

• Karl was a former teammate of the playable dwarves.
• Karl was one of the initial dwarves to descend onto Hoxxes IV.
• Karl is the dwarf all the playable dwarves descend from. (circumstantial evidence)

My theory expands on these based on a few pieces of evidence in the game, and could point toward high drama in the future of Hoxxes.

The evidence

The first piece of evidence is a line spoken when a dwarf drinks a smart stout:

"I......I.......I know where Karl is! It's so bloody obvious! What...uhhh....hmmm....anyone up for playing the hoop game?"

This strongly suggests that the dwarves know that Karl is not dead, but missing, and that there is evidence pointing to his location that would allow a dwarf of sufficient intellect to figure it out.

The second piece of 'evidence' is an off hand comment from the dwarves during missions. I can't find it on the wiki but I have heard it a few times. The dwarf says something like

"One day I'll start my own mining company, show deep rock how it's done."

There is also another reference to this desire in the smart stout voice lines

Hang on… I’m starting to think Deep Rock is exploiting us common working folk…! If we joined forces and founded our own Mining Company instead, we’d be RAKING in the dough! But… We could also just have another round of beer!

The third piece of evidence I am using is a voice line the dwarves will sometimes say when they see a cave leech:

Ten credits say it was one of them tentacly things that got Karl...

The Fourth piece of evidence is that Karl may have been lost in Hollow Bough. A short sentence is included in the biome descriptions that are displayed on loading screens (maybe only in deep dives?)

"This is the kind of place they say we lost Karl."

One final piece of evidence is actually not anything that is said or that shows up in the game, but instead it's precisely what is NOT said in the game. Mission control never makes references to Karl. The whole Karl mythos seems to be entirely the domain of the dwarves rather than coming from a corporate sponsored campaign (think rosie the riveter, uncle sam).

My Theory:

Karl was grabbed by a cave leech during extraction from Hoxxes while operating as part of a team during mining operations. As the pod was extracting the remaining dwarves, through the chain linked door they witnessed Karl free himself from the leech. This could have been done either with Bosco, a BET-C, or Karl being a general badass. It is also possible to kill a cave leech with damage from undersuit armor discharge modules (although not outright, it would need to be damaged first) or with the perk: Heightened Senses.

What the dwarves being extracted did not know, is that Karl intentionally missed the drop pod. Having grown indignant about the exploitation of the dwarves for profit, Karl staged his own abandonment to free himself from his DRG contracts and get a chance at starting his own mining company. Knowing that he would need to subsist on his own for an extended period of time, Karl chose his departure to be in the Hollow Bough biome, since that biome may have been the most well suited for a self sustaining farming operation.

Being one of the original members of the DRG ground crew, Karl was a highly skilled individual who made many contributions to DRG technology, particularly in the departments of hover technology and robotics. Once alone within the planet, he quickly set out salvaging the wrecks and discarded technology of other failed expeditions, establishing a foothold using his own custom engineered robotics and drones.

Eventually Karl was able to implement advanced automated drone replication technology, creating machines that were able to mine, survey, and most importantly: create more machines.

Karl is the founder of the rival mining corporation, and it is headquartered somewhere deep within Hoxxes.

This is why the rival mining corporation doesn't also employ Dwarves. Karl is the only living being of the rival corporation, and thus he is 100% dependent on drones to conduct his operations.

DRG May have become aware of Karl's survival, and may have started sending teams down with the intention of finding him, but the fact that Mission control never mentions him suggests they are not hoping to recover him. Instead, I believe that DRG is attempting to root him out and kill him to ensure his proprietary knowledge of the company does not escape Hoxxes.

During his time deep within Hoxxes, Karl learned things of the aliens there and the planet itself that reinforced his belief that Deep Rock Galactic needs to be undone. He may have found a way to befriend the creatures there and live in harmony with the ecosystem there (we know it is possible to tame individual glyphids). This may be why the rival corporation drones do not fight with the native glyphids. Karl may have also attempted on multiple occasions to contact and recruit existing DRG employees that were sent to Hoxxes.

We can see some suggestive evidence of this if we listen to the voice lines spoken by the Rival Tech Nemesis - but specifically the ones spoken in a dwarf voice:

I'm so lonely.

Why couldn't we be friends?

I've seen things you dwarves wouldn't believe.

Karl is attempting to expose the secrets he has learned about DRG by transmitting data off of Hoxxes to external parties that may be able to aid him, however due to the efforts of the DRG dwarves all attempts at transporting information off of the surface of the planet have failed (apart from the data being appropriated by DRG).

Considering the theory that the DRG Dwarves are clones of Karl, I suspect they have been modified to repress the aspects of Karl's personality that predisposed him to go rogue. Smart stout gives them some lucidity in that regard, but DRG has been very carful to make sure that the dwarves do not act on those ideas. These genetic modifications may have also reduced the dwarves effectiveness in combat, making Karl seem legendary in ability by comparison. It is also possible that the beer itself is the vector for whatever control DRG exercises over the dwarves. Perhaps Karl realized this and weaned himself off the brews leading up to his eventual departure.

I also believe that Karl has learned more about the planet and is now seeking to end all mining operations there (he runs his own out of necessity). It is possible he has discovered some secret or learned of some resource that, if found by DRG, would be destroyed forever for the sake of profit (like the omeran hearthstone).

So anyway, that's my headcannon right now. Eventually the dwarves are going to have to come to terms with the fact that their Hero is actually one of the biggest threats to their mining operation on Hoxxes.

TL;DR:

Karl is a highly skilled but disgruntled ex-DRG employee who staged his own abandonment to escape from his corporate contracts and create the rival mining company. Having found allies with the glyphids, and having created a robot army of his own, he is now desperately trying to expose the DRG company secrets that caused him to leave. Meanwhile, DRG is doing everything it can to destroy Karl's operation and prevent their company secrets from leaving the planet while also capturing information Karl has gathered during his operations there.

Bonus theory:

Karl was the primary designer and creator of Bosco - his specialty being hover technology. This is why most rival tech is flying, and most DRG tech is legged or tracked, with the exception of Bosco.

Additional corroborating evidence:

We never see rival tech outside of the planet. You would think if it was another mining company they would have an orbital presence like DRG. This would make sense if Rival Tech was located within Hoxxes.

This may be why DRG also doesn't allow glyphids back into the station after a mission. Too much empathy with the local wildlife could create another Karl situation. "Once the bugs start to seem like family, it's time to leave!"

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