US DoD Signals Silicon Valley's Importance in CyberWar

51657-1.jpg

In one of the most overt displays of the federal government's growing dependence on Silicon Valley, the Department of Defense late last month announced it will start providing venture capital funding to valley startups that can help the Pentagon develop more advanced cybersecurity and intelligence systems to fend off nation states and hackers targeting everything from top-secret military correspondence to public power grids.

"When it became clearly apparent that dealing with information warfare and cybersecurity and online protection was going to be a big defense issue, and that was a domain that the military was going to have an active part in, then it became impossible not to be involved in Silicon Valley," said Kim Taipale, founder and executive director of the nonpartisan think tank Stilwell Center for Advanced Studies in Science and Technology Policy in New York.

The Pentagon's program marks the first sustained investing in tech startups by a federal agency outside the nation's intelligence complex. The investments will be made through In-Q-Tel, a nonprofit strategic investing firm the Central Intelligence Agency created 16 years ago, and which has backed valley companies such as Keyhole, which helped create Google Earth. It means more government money will flow into the valley, though the Defense Department will not disclose the amount, and startups with bleeding-edge technology will strike deals with one of the biggest customers out there - the federal government.
"It's way past time," said Mark Siegel, managing partner at Menlo Ventures. "The days of thinking that all the tech innovation that the government needs is going to come out of federal agencies themselves or in federal labs are over."

Silicon Valley tech firms are building microsatellites and drones, pioneering big data and biotechnology, and exploring 3-D printing and robotics - technologies the military says it wants - with speed unseen in Washington and at a fraction of the cost.

"Much of the expertise necessary for generating breakthrough innovations now resides in the nondefense commercial sector," a senior Defense Department official, who spoke on the condition of anonymity, said on a recent call with reporters. "More and more, these technologies reside in small businesses and startups, not just blue-chip corporate laboratories."

This isn't the Defense Department's first push into Silicon Valley. During the 1960s and '70s, the valley was dominated by aerospace and military contractors such as Lockheed Missiles, which put up factories across the area, and FMC, which built and tested military combat vehicles in San Jose.

But this new effort focuses more on software and less on hardware. And the Pentagon's program, announced by Defense Secretary Ashton Carter in a Stanford University address - the first visit to the valley in nearly 20 years by a secretary of defense - signals a deepening of the relationship between Silicon Valley and Washington, two hotbeds of intellect and power that have sparred bitterly but also grown closer in recent years.

"We're going to see an ever-increasing relationship and understanding between Washington and Silicon Valley," said Jon Callaghan, founder of True Ventures and chairman of the National Venture Capital Association. "Every year it gets stronger as companies grow up and realize that many times Washington can be a friend, not just a foe."

Also as part of the program, the Pentagon will open its first office in Silicon Valley, an outpost staffed with active-duty military and civilians who are charged with "scouting emerging and breakthrough technologies and building direct relationships to DOD," the senior defense official said.

"You're not going to see someone doing something interesting in a garage if you're sitting in the Pentagon waiting for someone to bid on a $500 million contract," Taipale said.

The Department of Homeland Security is also opening an office in the valley "to strengthen critical relationships" with the tech sector, the agency's head said recently.

But the new defense push comes amid lingering animosity stoked by the Edward Snowden revelations, which showed the National Security Agency - an arm of the Department of Defense - broke into the communication links that connect to Yahoo and Google data centers around the world to collect information from user accounts, and intercepted networking products developed by Cisco for export overseas and secretly put in place data-tracking technologies. President Barack Obama in February gave a speech at Stanford to drum up support for tougher cybersecurity laws, but the CEOs of Google, Facebook and Yahoo chose not to attend, a move widely seen as a snub because of the tension over privacy issues.

Against that backdrop, some entrepreneurs might be looking at a partnership with the Pentagon and wondering, "How might this come back to bite me?" said Bob Ackerman, founder of Allegis Capital and a cybersecurity expert.

Skeptics aside, many VCs and technology experts say the Pentagon's new program will give more opportunities to entrepreneurs building technology for data gathering and cyber defense but struggling to get funding because they don't have the consumer appeal of companies such as Uber.

As the Pentagon's liaison to the valley, In-Q-Tel is tasked with identifying and investing in technology to serve the Defense Department's needs. The potential to sell to the agency opens up an enormous revenue stream for startups, and In-Q-Tel will help companies adapt their technology to fit the Pentagon's requirements and facilitate the deal with the government.

"It's going to be an opportunity for startups who haven't worked with the intelligence and defense communities to understand what their needs are," said Enrique Salem, a Bain Capital Ventures partner who worked in technology security for two decades.

Founded in 1999, In-Q-Tel was a $30 million experiment spearheaded by mostly women in the CIA who, as science and technology advisers to the agency and among the first women rise to senior ranks in the intelligence community, "had the idea to take the risk" on a project that was vehemently opposed by some in Washington, said Gilman Louie, founding CEO of In-Q-Tel from 1999 to 2006. Since then, the firm has proved its ability to identify revolutionary technology early on. It made early investments on behalf of the CIA into big-data companies such as Cloudera, which has grown into a $4.1 billion company, and Palantir, which at $15 billion is one of the valley's most valuable companies.

"If you could solve a very knotty problem that a US intelligence agency had, you probably had the best-in-class stuff," Louie said. "You had the Good Housekeeping stamp of approval."

In-Q-Tel doesn't back companies alone, but rather relies on traditional venture firms to partner and contribute the lion's share of the funding, so having valley VCs on board is crucial for the program's success - and why Carter paid venture capital firm Andreessen Horowitz a visit during his trip last month.

"He's one of us, he understands our language," Margit Wennmachers, a partner at Andreessen Horowitz, said of Carter. "He's trying to make the walls between Silicon Valley and the DOD a bit more porous. That's just a really smart way to go, because the next big thing in security will likely come out of a startup, not a big company."


Ein News:  

« Why Use Bitcoin?
ISIS In The Dark Web Amidst Bitcoin And Crime »

Infosecurity Europe
CyberSecurity Jobsite
Perimeter 81

Directory of Suppliers

Practice Labs

Practice Labs

Practice Labs is an IT competency hub, where live-lab environments give access to real equipment for hands-on practice of essential cybersecurity skills.

LockLizard

LockLizard

Locklizard provides PDF DRM software that protects PDF documents from unauthorized access and misuse. Share and sell documents securely - prevent document leakage, sharing and piracy.

Directory of Cyber Security Suppliers

Directory of Cyber Security Suppliers

Our Supplier Directory lists 7,000+ specialist cyber security service providers in 128 countries worldwide. IS YOUR ORGANISATION LISTED?

MIRACL

MIRACL

MIRACL provides the world’s only single step Multi-Factor Authentication (MFA) which can replace passwords on 100% of mobiles, desktops or even Smart TVs.

Clayden Law

Clayden Law

Clayden Law advise global businesses that buy and sell technology products and services. We are experts in information technology, data privacy and cybersecurity law.

Advanced Resource Managers (ARM)

Advanced Resource Managers (ARM)

ARM provide specialist recruitment services for technology and engineering including cyber security.

Howden Broking Group

Howden Broking Group

Howden provides a range of specialist insurance solutions to clients around the world including Cyber Liability insurance.

Packet Ninjas

Packet Ninjas

Packet Ninjas is a niche cyber security agency with specialized expertise in the use of digital intelligence to strengthen cyber security.

SISA

SISA

SISA is a global forensics-driven cybersecurity solutions company, trusted by leading organizations for securing their businesses with robust preventive and corrective cybersecurity solutions.

California Cybersecurity Institute (CCI) - Cal poly

California Cybersecurity Institute (CCI) - Cal poly

The CCI provides a hands-on research and learning environment to explore new cyber technologies and train and test tactics alongside law enforcement and cyberforensics experts.

Securepoint

Securepoint

Securepoint is the market leader in the development of professional “Unified Threat Management” solutions in Germany.

101 Blockchains

101 Blockchains

101 Blockchains is a professional and trusted provider of enterprise blockchain research and training.

Zacco

Zacco

Zacco offer a 360° perspective on intellectual property: From patent filing and trademark registration to software development, digital brand protection, cyber security and portfolio management.

Evolution Equity Partners

Evolution Equity Partners

Evolution Equity Partners is an international venture capital investor partnering with exceptional entrepreneurs to develop market leading cyber-security and enterprise software companies.

Silent Sector

Silent Sector

Silent Sector is a cybersecurity services company that specializes in providing a wide range of managed security services.

Silent Quadrant

Silent Quadrant

Silent Quadrant delivers incomparable cybersecurity consulting, digital transformation, and risk management within our purpose-driven clients - empowering them to be the most resilient entities.

Threatsys Technologies

Threatsys Technologies

Threatsys’s Integrated cyber security process helps your organizations to ensure that it’s secure from any fraudulent attacks.

OpenAI

OpenAI

OpenAI is an AI research and deployment company dedicated to ensuring that general-purpose artificial intelligence benefits all of humanity.

OutKept

OutKept

OutKept offers the highest quality phishing simulation campaigns, supported by a community of ethical phishers, to build awareness, and maintain alertness.

at-yet (@-yet)

at-yet (@-yet)

at-yet are an interdisciplinary team of experts. We are all about achieving results, whatever the situation – an acute incident, risk minimisation, safeguarding or data protection.

Health Sector Cybersecurity Coordination Center (HC3)

Health Sector Cybersecurity Coordination Center (HC3)

HC3 was created by the US Department of Health and Human Services to aid in the protection of vital, controlled, healthcare-related information.