Palantir Technologies: A Problem for Intelware Competitors?

The Palantir Technologies initial public offering is looming. Pundits are excited; for example, “Palantir Has A Long Uphill Battle Towards Customer Acquisition, But Benefits From Stickiness And Contract Expansion” makes clear that the journey to profitability may be like the Beatles observed: A long and winding road. Others are focused on churn; for example, “5 things to Know about Palantir’s Upcoming IPO.” DarkCyber’s response: “Just five?”

The issue is intelware. Many companies have tried to convert selling to law enforcement, intelligence agencies, and regulators into a billion dollar software and services business. There are some success stories; for example, Booz Allen fits the bill. The company sells time. The company has its own software, not much, but it exists. The company cheerleads, which is a nice way to say that for money “experts” will talk about promising products from the competitive marketplace.

Palantir is more like Autonomy than a blue-chip consulting firm. Autonomy played the “secret black box” chip with its neuro-linguistic programming. It worked until it did not. The firm licensed its black box to BAE Systems in the 1990s. The Autonomy marketing machine then generated revenue slowly and steadily. Then Autonomy acquired companies and cranked up its sales machine. At “peak Autonomy,” the well managed outfit Hewlett Packard, grabbed a brass ring with Autonomy engraved on it.  The cost was north of $10 billion and years of legal bills. Autonomy was a publicly traded company, and it had a revenue track record dating from 1996. The HP deal was completed in October 2011. That means that the FY2010 data give us an idea about how much secret black box software can generate with “advanced” software, great marketing, and demanding management. The revenue for Autonomy after 15 years was in the neighborhood of $870 million.

7 graph A

One of Palantir Gotham’s innovations: A right mouse click displays a wheel of choices. The interface is definitely jazzier than that of Analyst’s Notebook, now owned by IBM.

Palantir Technologies opened for business in 2003. The company has been in business for 17 years. Yep, that’s two years longer than Autonomy. And what is Palantir’s alleged revenue for the last fiscal year? $742 million. The company’s advantages were the support of Peter Thiel (a Silicon Valley Thor), secrecy, a method for importing ANB files (if you don’t know what this is, well, what can I tell you in a free blog post?), and okay sales and so-so marketing. (One of Palantir’s innovations was a wheel of choices, not Bayesian methods wrapped in mystery.)

If my math is correct, Autonomy generated $128 million more revenue that Autonomy. If one uses 2011 dollars, not the Rona roiled 2020 dollars, the difference is more like $400 million, give or take $20 million or so. Yep, Autonomy appears to have outperformed Palantir: Less time, more revenue.





Let’s take each question.

First, what? The lackluster performance of Palantir Technologies illustrates the difficulty intelware companies, even ones with great advantages like the aforementioned ANB filter, have making really big money quickly. Remember. To generate less revenue than Autonomy, Palantir required $2.6 billion in funding. DarkCyber thinks that patient investors may be nervous about their investment which could melt away like a real snowflake. You can work out the math. Take 17 years of losses, subtract the revenue generated over 17 years, add in some interest just for spice, and mix into a pressurized container containing the fumes of burning a big cash pile. Read more »


DarkCyber for June 9, 2020, Is Now Available: AI and Music Composition

The DarkCyber for June 9, 2020, presents a critical look at music generated by artificial intelligence. The focus is the award-winning song in the Eurovision AI 2020 competition. The interview discusses the characteristics of AI-generated music, its impact on music directors, how professional musicians deal with machine-created music, and the implications of non-numan music. The program is a criticism of the state-of-the-art for smart software. Instead of focusing on often over-hyped start ups and large companies making increasingly exaggerated claims, the Australian song and the two musicians make clear that AI is a work in progress. You can view the video at https://vimeo.com/427227666.

Kenny Toth, June 9, 2020

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