Palantir Technologies: Following a Well Worn Path
August 11, 2022
Most intelware vendors are pretty much search and retrieval with a layer of search based applications. I think of these specialized services like an over-priced foam dog bed. The foam is hidden beneath what looks like a rich, comfy, and pet friendly cover. The dog climbs on, sniffs the fumes and scratches the cover. A bite or two and the cover tears and foam shards litter the floor.
When I think of some intelware vendors’ solutions, I keep thinking about that Alibaba-type dog bed. Wow. Not good.
I read “Palantir Stock Skids As Exec Says Downbeat Forecast Is All the More Disappointing Given Opportunities Ahead”, and I saw that dog bed, the torn cover, and the weird pink and green foam chunks in our family room. I know this association is not one shared by those who cheerlead for Palantir or the stakeholders who must look at the value of their “stakes”.
The write up reports:
Government deals “at the billion-dollar range of the contracts that we are working on…have the bug of them taking too long and the feature of, in a highly difficult, tumultuous and politically uncertain world, that you actually get paid and you actually make free-cash flow,” Chief Executive Alex Karp said on the earnings call.
Yep, that’s true.
However, Palantir has been working hard to convince outfits like chocolate companies, big banks, and some pharma companies to rely on Palantir for their information plumbing and intelligence dashboard. (Dashboards are hot, even though many intelware vendors just recycle the components associated with Elasticsearch, a popular open source search and retrieval system, and other members of the species ELK.
If Palantir were closing deals with non governmental entities, wouldn’t that revenue make up for the historically slow and sketchy US government procurement process. For those in the know, FAR is a friend. For those who have racked up a track record of grousing about Federal procurement rules, FAR can be associated with the concept “far outside the circle of decision makers.”
If we accept my assertion of intelware as basic search, indexing and classifying content objects, and output nice looking reports. These reports, by the way, depend upon some widely used numerical recipes. The outputs of competitive intelware systems which use the same test set of content objects is often similar. In some cases, very similar. (In September at CyCon, we will show some screenshots and challenge the audience of law enforcement and intelligence professionals to identify the output with the system generating the diagrams, charts, graphs, and maps. In previous lectures this audience involvement ploy yielded one predictable result: No one could match outputs with the system producing it.
What are the paths available to a vendor of intelware chasing huge contracts for getting close to 20 years? That’s two decades, gentle reader.
Based on my observations and research for my books and monographs, here are the historical precedents I have noticed. Will Palantir follow any of these paths? Probably not, but I enjoy trotting them out in order to provide some color for the search and specialized software sector competitors. What each competitor lacked in applications, stable products and services, and informed and available customer support, the PP (Palantir predecessors) had outstanding marketing, nifty technical jargon, and a bit of the Steve Jobs reality distortion field magic.
- The vendor just gets acquired. Recorded Future is now Insight. Super secretive Detica is BAE Systems, etc. etc. The idea is that the buyer has the resources to make the software work and develop innovations that will keep ahead of open source offerings and pesky start ups. A variation is continuous resales as owners of intelware companies realize there are not enough customers to deliver the claims in PowerPoint decks’ revenue projections. Is one example this sequence? i2 Ltd (UK) —> venture firm –> IBM Corp. –> Harris?
- The vendor hooks up with the government and presents the face of a standalone, independent outfit when affiliated with a government entity. Example: Some intelware firms in China, Israel, and the UK.
- The vendor goes away or turns a few cartwheels and emerges as something else entirely. Example: Cobwebs Technologies doesn’t do intelware; it provides anti money laundering services. I still like LifeRaft’s positioning as a marketing intelligence company.
- Everybody involved with the company moves on, new executives arrive, and the firm emerges as a customer service outfit or a customer experience provider. Rightly or wrongly I think of LucidWorks as this type of outfit.
- A combo deal. The inner workings of this type of deal converts Excalibur into Convera which becomes Ntent and then becomes a property of Allen & Co. Where is Convera today? I heard that some of its DNA survives in Seekr, but I have not heard back from the company to verify this rumor. The firm’s PR professional is apparently busy doing more meaningful PR things.
- Creative accounting. Believe it or not, some senior executives are found guilty of financial fancy dancing. Example: The founder of a certain search vendor with government clients. I think a year in the slammer was talked about.
- The company just closes up. Example: Perhaps Delphis, Entopia, or Stull, among others.
Net net: Vendors selling to law enforcement, crime analysts, and intelligence agencies face formidable competition from incumbents; for example, big Beltway bandits like the one for which I used to work. Furthermore, when selling intelware (event with a name change and a flashy PowerPoint deck) corporate types are not comfortable buying from a company working closely with some of the badge-and-gun agencies. Intelware vendors can talk about big sales to commercial enterprises. True, the intelware vendor may land some deals. But the majority of leads just become money pits: Sales calls, presentations, meetings with shills for the firm’s lawyers, and similar human resources. Those foam chunks from the Alibaba dog bed are similar to some investors’ dreams of giant stakeholder paydays. Oh, well, there is recycling.
Stephen E Arnold, August 11, 2022
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