Saturday, August 24, 2013

The Pentagon as Silicon Valley’s Incubator

In the last year, former Department of Defense and intelligence agency operatives have headed to Silicon Valley to create technology start-ups specializing in tools aimed at thwarting online threats. Frequent reports of cyberattacks have expanded the demand for security tools, in both the public and private sectors, and venture capital money has followed. In 2012, more than $1 billion in venture financing poured into security start-ups, more than double the amount in 2010, according to the National Venture Capital Association.

For years, the Pentagon has knocked on Silicon Valley’s door in search of programmers to work on its spying technologies. But these days, it’s the Pentagon that is being scouted for expertise. Entrepreneurs and venture capitalists are finding it valuable to have an insider’s perspective on the national security apparatus when trying to find or prevent computer vulnerabilities or mine large troves of data.

“They have unique insights because they’ve been on the front line,” said Matthew Howard, a former intelligence analyst in the Navy and now a managing partner at Norwest Venture Partners, referring to former military and intelligence operatives who have hatched start-ups. He has invested in several such companies. “Now they’ve got commercial desires. The lines are blurring.”

One of the start-ups is Synack, which promises to vet an army of hackers to hunt for security vulnerabilities in the computer systems of government agencies and private companies. The company’s co-founders, Jay Kaplan and Mark Kuhr, met in Fort Meade, Md., in the counterterrorism division of the National Security Agency. They left the agency in February after four years there, and later decamped to Silicon Valley. Within weeks, they had raised $1.5 million in seed money; they are now working with their first customers and pitching their experience in the spy agency.

“Doing things on a classified level really opens your eyes,” Mr. Kaplan said. “The government is doing a lot of interesting things they don’t disclose. You have a unique perspective on what the adversary is doing and the state of computer security at a whole other level.”

Morta Security, another of the start-ups, was founded by Raj Shah, a former F-16 fighter pilot for the Air Force in Iraq. He described himself as “a policy adviser” to the N.S.A. before moving to Silicon Valley to establish the company this year with two former analysts. Morta’s work is in such “stealth mode,” in valley parlance, that the company has said nothing about what it is working on. Nor would Mr. Shah describe fully what his two co-founders were doing at the agency before they formed the company.

“There are very sophisticated threats that are able to steal data from corporations and government,” is all Mr. Shah would say. “Our guys’ background — they just have a deeper understanding of that problem.”

Though Silicon Valley sees itself as an industry far removed from the Beltway, the two power centers have had a longstanding symbiotic relationship. And some say the cozy personal connections of ex-intelligence operatives to the military could invite abuse, like the divulging of private information to former colleagues in the agencies.

“They have enormous opportunities to cash in on their Washington experience, sometimes in ways that fund further innovation and other times in ways that might be very troubling to many people,” said Marc Rotenberg, executive director at the Electronic Privacy Information Center in Washington. “Both sides like to maintain a myth of distant relations. The ties have been in place for a long time.”

The ties are more than personal; the National Security Agency is among the few organizations in the world, along with companies like Facebook and Google, with a cadre of engineers trained in mining big data.

By working at the N.S.A., “you get to be on the bleeding edge, not just the cutting edge of what’s possible,” said Oren Falkowitz, who left the agency last year to start Sqrrl, a big data analytics company based on technology developed at the agency. Mr. Falkowitz has since left Sqrrl, which is in Boston, and is considering moving to Northern California to start working with a big data company.

Last year, Sumit Agarwal left his post as a deputy assistant secretary of defense to join Shape Security, a Mountain View company that offers what it calls “military grade” security solutions against botnets, groups of infected computers used for attacks.

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