Invest Like the Best• Mar 10, 2026• 1:29:09Interview

How AI Is Changing Warfare | Palantir CTO

From Invest Like the Best

Sham Sankar•CTO, Palantir Technologies

Executive Summary

The US defense industrial base has dangerously atrophied since the Cold War, shifting from a dynamic, founder-led, dual-use ecosystem to a consolidated, bureaucratic, and financially unattractive monopoly of defense-only specialists.
This industrial decline has eroded America's ability to mass-produce and innovate, directly contributing to a failure of geopolitical deterrence, as seen in conflicts like the annexation of Crimea and the invasion of Ukraine.
A new wave of founder-led defense tech companies, backed by over $100 billion in venture capital, is emerging as a potential solution, with the Pentagon showing increased willingness to partner with these new entrants.
Palantir's core technology, an 'ontology' layer that creates a programmable model of an enterprise, is positioned as a critical tool for both re-industrializing the commercial sector and modernizing military capabilities.

12 quotes

Concerns Raised

The US has lost its manufacturing edge and ability to mass-produce, ceding it to adversaries like China.
Consolidation has made the US defense industrial base bureaucratic, risk-averse, and unattractive to top talent.
The failure of US deterrence has led to multiple global conflicts and increased instability.
Critical supply chains, particularly for pharmaceuticals, are dangerously dependent on China.

Opportunities Identified

A new wave of founder-led defense tech companies, backed by over $100B in VC, is emerging to challenge incumbents.
The Pentagon's perception is shifting, with new entrants now being considered 'Plan A' for critical capabilities.
Software, particularly AI and ontology layers, can provide a significant asymmetric advantage in both industrial production and military operations.
The US's unique ability to rapidly pivot its entire economy and culture remains a key strategic advantage over more rigid adversaries.

Key Themes

The Decline of the American Industrial Base

The episode argues that the US has undergone a profound de-industrialization, particularly in its defense sector. After the Cold War, a 1993 Pentagon meeting known as 'The Last Supper' triggered massive consolidation, shifting from a diverse base of dual-use commercial companies (like GM and Kodak) to a handful of defense-only specialists. This has separated innovation from production, a fallacy that has weakened the nation's ability to scale manufacturing.

This decline directly impacts national security, creating a strategic vulnerability where the US excels at exquisite, low-volume systems while its primary adversary, China, masters mass production.

The Role of 'Heretics' in Innovation

True innovation, especially within large bureaucracies like the military, is driven by obsessive, founder-like figures dubbed 'heretics.' The episode highlights Hyman Rickover, who built the nuclear submarine force against immense internal resistance, as the archetypal example. These individuals succeed by challenging the status quo and maintaining a pathological focus on their mission, often at great personal cost.

This theme suggests that fostering innovation requires identifying, empowering, and protecting these non-conformist figures, as they are the primary source of breakthrough capabilities that institutional processes often stifle.

Geopolitical Competition and a Crisis of Deterrence

The US has failed to deter major conflicts over the last decade, signaling a decline in its perceived power. This is contrasted with China's asymmetric advantage in long-term planning and industrial capacity, and America's own key advantage: its unpredictability and ability to rapidly pivot its entire economy. The discussion highlights critical dependencies, such as the 80% of US generic drugs originating from China, as acute strategic risks.

This underscores the urgent need for the US to rebuild its industrial and technological strength to restore credible deterrence and secure its supply chains in an era of great power competition.

Palantir's Vision for Enterprise and Defense

Palantir's core technology is presented not just as software, but as an enterprise operating system that creates an 'ontology'—a digital twin of an organization. This makes the business programmable, allowing for rapid optimization of complex processes, as seen in their work accelerating Airbus's A350 production. The company's unique culture, described as a 'founder factory,' gives young employees immense responsibility on high-stakes projects.

Palantir positions its technology as a fundamental enabler for both commercial re-industrialization and the modernization of the US military, aiming to provide a software-defined advantage.

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Topics

Palantir Defense Industrial Base Geopolitics US-China Relations Re-industrialization Supply Chain Security Hyman Rickover Military History Innovation Founder Culture Deterrence Theory Venture Capital Defense Tech AI Ontology Government Procurement

Processed Apr 3, 2026 yt-dlp + mlx-whisper + Gemini