SaaS surrenders to the Palantir playbook

WALL STREET HAS NEVER quite known what to make of Palantir Technologies, a Denver-based software firm. Sales cycles were too long. Gross margins, dragged down by an army of forward-deployed engineers embedded inside customers' offices, looked nothing like a proper software firm's. The average contract was an order of magnitude larger than the seat-based subscriptions that built Salesforce, Workday and ServiceNow. The company, in short, looked like consulting in software clothing. On May 4th, the consulting-in-software-clothing reported its strongest quarter since its 2020 public listing: $1.63 billion in revenue at 85% growth, with US commercial up 133% and a Rule of 40 score of 145%. The same morning, two of Wall Street's loudest critics of the Palantir model launched copies of it.

Anthropic, the AI lab, announced a $1.5 billion joint venture with Blackstone, Hellman & Friedman and Goldman Sachs whose explicit purpose is to embed engineers inside private-equity portfolio companies, build production code on their data, and redesign workflows around its Claude model. Hours earlier, Bloomberg had reported that OpenAI was raising $4 billion at a $10 billion valuation for a similarly structured entity called The Development Company. Anthropic's chief financial officer, Krishna Rao, framed his firm's venture as a response to enterprise demand "significantly outpacing any single delivery model." That is investor-call dialect for: pure software has hit a wall.