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CIA Starts Hi-Tech Venture Capital Firm 69

Posted by Roblimo from the don't-tell-anyone-where-you-read-this! dept.
Your Mama writes "Hoping to insure that the nation's spies have the latest information technology in the rapidly changing Internet age, the Central Intelligence Agency has established a venture capital company to nurture high-tech companies..." The NY Times has the story. The reference to Major Boothryod alone makes it worthwhile to get your free NYT registration if you don't already have one. Isn't that right, Mr. Bond?
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CIA Starts Hi-Tech Venture Capital Firm More

CIA Starts Hi-Tech Venture Capital Firm

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  • Working with goverment. (Score:1)

    by Anonymous Coward

    Having work a bit for the govermetn in the past, let me relate a few stories:

    Tech comes to me for info to help a customer, just before his plane leaves. He can't tell me the customer, but he can tell me they are in Langy VA.

    A different goverment site also wouldn't let us say their name, but we alkso couldn't say what they were. We eneded up picking a different big company in that area to call them by. Everyone here knew when someone was going to see the United account that they were going to the airline but to the gfoverment. United is a big enough company that everyone can belive they would purcase our stuff, and it is very likely that even within United nobody would realise they were not really a customer. This worked for a few years, then some salesmen made a big sale to the real United. Everyone snickered in the way of meaning "Yep, congradulations on the goverment account we all know but don't speak of" and had a tough time being convinced otherwise.

    PS, the above it true storeis, but the names are changed. When I said United airlines, you can bet that it wasn't really United airlines we used as a code name.

  • I'm not sure how this will play out, but I would be weary to let an organization like the CIA own part of my business.

    Do you know anything about venture capitalists? Anything? They are the most ruthless, heartless people in the world. The CIA doesn't even come close.

    If congress makes a mess of crypto legislation, it hardly follows logically that since the CIA is also government, it will mess things up. CIA doesn't do crypto anyway (that's NSA out of the states, FBI and secret service in).

    The CIA isn't a typical venture capitalist (it won't get rid of the founders when the company gets big), so I think it would be a pretty good deal. Otherwise, why would you be on the board if you spent your whole lives making toys!

  • Well they did say that this was for developing non classified stuff. I imagine that the CIA uses a lot of stuff that is not classified too.

    And as you say Money has no Ideology. Maybe this VC firm will fund something great that another didn't. Hell its just going to be one more group trying to spread cash around.
  • A lot of people here are saying a lot of stuff about the CIA -- implying that they are trying to take over Silicon Valley or somesuch.

    It just ain't so.

    Look... The CIA is basically just a bureacracy nowadays. Seriously. They are divided into two groups: operations and analysis. The operations group has grown smaller and smaller over the years, and the analysis group has concentrated more and more on relatively benign sources of information such as satellite imagery.

    So they chose to waste $28Million trying to lam their way into the secret plans of Silicon Valley startups. Do you really think that they will pick the right startups, or that the startups will be inclined to give them the time of day?

    Don't worry about it -- we waste more than $28 Mil every day. Just let them play their games.
  • I read the article in the print edition before seeing this here, but it strikes me that if this were a smokescreen, it'd be done secretly. While I am not saying that the CIA will not benefit from this (and I hope they do, I view this as a brilliant move on their part), I think that the "It's Evil!" flag should only be flown at half-staff on this one.
  • They own the hardware and content you would be using and viewing. They have ever right to track your usage of it. Do you also object to AT&T (or whoever your LD carrier is) tracking to whom you place phone calls? What about your credit card company tracking who you purchase from?

  • Hey, kitten's great marinated. Otherwise it's kind of stringy.

  • Let's face it, no-one trusts the CIA. And I mean no-one on the planet.

    And that's terribly ironic, considering the stuff the DIA, NIS, NRO, FBI, and the NSA can get away with. (And we're a bunch of pantywaists compared to what the Israelis or the Russians might try. Remember when the KGB tried to nail Pope John Paul II?) I suggest that the only thing wrong with the movie Enemy of the State was that rather than a bunch of cinemagenic explosions and stunts happening to and around him, the protagonist would have a tragic accident or quietly disappear altogether.

    The CIA's on a comparatively short leash ever since the Church Commission shone a little too much light on them back in the seventies. They're largely relegated to compiling and producing opinions, or "assessments" as they call them, based on data supplied from outside the agency (see above for dramatis personae). Due to bureaucracy and frank office politics, sometimes conflicting assessments result in minority opinions getting lost before they percolate up to a level where the State Department, the Defense Department, or the White House notices -- anybody remember how we were taken by surprise by the Soviet Union imploding and the Berlin Wall coming down?

    The CIA gathers its intelligence through mostly aboveboard means or through what the law-enforcement community would just call "snitches." As for the people who do the wet work, you'll necessarily never hear much about them. Mostly that's handled thru international proxies for reasons of deniability. The rest is so highly classified that God's probably hazy on the details. (Hint: some of the players went body-surfing in Coronado.) But the CIA's out of that end of the biz, by statute. On screw-up and there won't be a CIA when Congress gets through with it.

  • Christ, you got Seymour Cray waxed? Remind me never to piss you off!

  • Y'know in the Road Runner/Wiley Coyote cartoons, when Wiley's always using some kind of gear or supplies from the Acme Co.? Now I know who Acme really is...

  • is it legal for government agencies to own businesses, even non-profits? i was under the impression (probably from my high school years) that it wasn't.

    i'm aware of government subsidies, legislated/regulated monopolies, and the like...but isn't this where the line is crossed between support, and ownership?

  • As I have predicted [ompages.com] the government will continue to act more and more like a private corporation. It really has no other choice. Privatization is a means of survival in our new world of extremely rapid change. The public too must privatize. There should be family corporations that exist to nurture the family's investments. The corporate form will continue to proliferate at a fast pace. Those who do not take advantage of the benefits of the corporate form will endure increasing liabilities, i.e., privacy intrusions.


  • And obviously, the CIA has a long and distinguished track record of sticking to the letter of the law... (-:

    Seriously, though, as this involves National Security (tm), the letter of the law doesn't necessarily always apply, but that doesn't make it illegal. As long as the proper procedures are followed and Congressional Oversight is maintained, the CIA is probably going to be allowed to bend the rules slightly, as long as the end justifies the means. And the end has and always will be to protect the United States against nasty foreigners like me, no matter what the paranoid conspiracy theorists say.

    D.
    ..is for Deadly.

  • Re:How will they handle immigrants/security/profit (Score:3)

    by The Dodger ( 10689 ) on Wednesday September 29, 1999 @03:18AM (#1650903) Homepage

    I don't think you've grasped this concept. The CIA is going to be investing (indirectly) in hi-tech companies, not actually starting companies itself. What they want is to form relationships with Silicon Valley, so they can gain access to new technologies.

    I'd say it's unlikely that they'll get the companies they invest in to do work directly for the CIA. It's more likely that they'll work out special deals whereby the CIA take the source code, chip designs, blueprints, whitepapers, etc. and hand them over to someone like MITRE, to product the actual stuff that CIA wants.

    I'm not sure how the secret service can use a product that is freely available to the entire world. This is a direct contradiction.

    No it's not, you twonk. The CIA has two sides - Operations (i.e. gathering the intelligence) and Intelligence (i.e. collating and analysing the information gathered). Intelligence officers use a lot of communications and encryption technology. So do a lot of other people. It's just the application that's different.

    The Intelligence Directorate uses computers to store and analyse information. Private companies do the same thing. One of the systems I've set up is a library system which stores and indexes 4 million news stories and up to 70 people can search through the entire 4m. stories via a webpage. You don't think the CIA would have a uses for that sort of technology? You don't think they're interested in the technologies being developed by companies like Inktomi and Verity?

    Come on! Use your head!

    D.
    ..is for Dangerous

  • *Please* read the article with a highly critical mind.

    The author is John Markoff. He has proven his inability to report accurately in the past. Not to mention lack of journalistic integrity. And arrogance. And profiteering.

    With that in mind, I'd also like to point out the spelling mistake on his very first line. Surely he means "ensure".
  • I can't figure out wether to find this amusing or scary. I see why the CIA would want something like this, and I like the fact that it is going to be completely open. Kinda seems like a smokescreen, though.
  • Also remember that many consumer items have come to us from government spending! For example (and yes, some of these are more valuable than others):

    Tang
    Slick 50 (oil treatment- first & still used to lubricate the brakes on the space shuttle)
    Silly putty (a failed plasic explosive)
    Jeeps
    Humvees
    Integrated circuits (Navy funding, I think)
    Computers in general (Navy/Cryptography Intelligence)
    Satellite communications (ok, thank the Soviet gov't for pioneering that one)

    there are a lot more, but I don't have the time (or knowledge) to list them all here. Many of these have offshoots, as well. Satellites led to cell phones and pagers. Heck, you can probably credit the Air Force for creating the demand for a Silicon Valley in the first place! (Those radar installations in Greenland and northern Canada needed lots of advanced components back in the late 50s and early 60's...)

  • Let's face it, no-one trusts the CIA. And I mean no-one on the planet. However, in their time, they've done some interesting things. They were behind a number of foundations that sponsored artists, particularly modern artists (noteably Jackson Pollock).
    Just goes to show there's a little good in everyone. Even Bill Gates probably likes puppies.
  • Hey ! Why was this marked offtopic ? I was only trying to help people to get to the article under discussion without having to go through the hassle of registration at the NYT site.

    Ok, I'll shut up now.

  • Login/Password for NYT (Score:3)

    by Dilbert_ ( 17488 ) on Wednesday September 29, 1999 @01:15AM (#1650911) Homepage
    Try using slashdot_effect/slashdot... I've been using it for months.
  • makes a change from drug smuggling and supporting oppressive regimes, i s'pose.

    pete23 - reality on demand

  • What the F*ck? (Score:4)

    by Black_Macrame ( 23938 ) on Wednesday September 29, 1999 @02:48AM (#1650913)
    Ok, most of us are comp nerds with little knowledge of what the CIA actually does.

    Well, I do. I have been a political activist almost as long as I have been a computer nerd. I've chatted with ex-CIA guys over beers, including a few that have left the 'Company' to renegade against them.

    All I really have to say is, isn't this a wonderful chance for them to insert backdoors into every product hard and soft? Full access to all company data, schematics, code, and so on. It is a BAD idea to do business with the CIA (jezuz, they specialize in destabilizing other countries' goverments). I'm sure some slimey individuals and companies will do business with them, but I hope the marketplace shows that they have no place in the private sector, and they shrivel up and die.

    I will boycott any product produced in conjunction with them, but I fear, what if they strike a deal with chip manufacturers or OS producers?

    Does anyone know any way we can stop this? Is it legal for the govt. to start a private enterprise like this? They are unrestricted in the private sector...

  • If you use a credit card, you accept the conditions that go therewith. *shrug*
  • The NSA has it's own wafer fabs. Why can't the
    CIA have some for itself?
  • Ahem. What's wrong with someone wanting to offer money?

    Just because the CIA decides that it wants to fund some companies, doesn't mean said companies *WILL TAKE* said funding. Heck, the thought that the CIA might even be interesting might spur other VCs to offer money.

    Unlike IPOs/stock market, startups do have the option to not take an investor's money (but usually don't, because they need the money to start up, and probably can't find funding elsewhere).

    Now, if CIA started to buy some Red Hat shares...
  • "OK. Here's the deal. You make a weak-encryption of ProductX for the public and a strong, unhackeable version just for us.

    "No way. We designed ProductX to be absolutely secure for ALL customers."

    "Fine. We're out of here. Bye now."
    ---

  • Do you know anything about venture capitalists? Anything? They are the most ruthless, heartless people in the world. The CIA doesn't even come close.

    Maybe so, but venture capitalists have a definite interest in spreading your product as far and wide as possible to generate a profit. I think the CIA would be more inclined to make you product disappear off the face of the earth into some big steel vault only they have the keys to. They are in the business of secrecy. Venture capitalists don't want your product to remain a secret; they want everyone to buy it ...


  • Venture capital with strings/chains attached? (Score:3)

    by RNG ( 35225 ) on Wednesday September 29, 1999 @01:43AM (#1650919)
    I'm not sure how this will play out, but I would be weary to let an organization like the CIA own part of my business. It seems that in the current climate, if you have a decent idea/product, you can get venture capital anyways (at least in Silicon Valley that theory seems to hold). So why turn to the CIA?

    Sure the CIA will give you money to fund research/development, but they will also own part of your company for it. Looking at the mess the US government made (and is making) with crypto legislation, I sincerely doubt that the CIA will simply sit on the sidelines. Government institutions often seem rather paranoid and don't want to relinquish control of any worthwhile technologies. I'd rather have to report to venture capitalists who want to spread/sell the technology (or products) then government institutions who classify anything moderateley modern/interesting as a national secret.

  • Is this even constitutional? (Score:3)

    by ajs ( 35943 ) <{ajs} {at} {ajs.com}> on Wednesday September 29, 1999 @06:47AM (#1650920) Homepage Journal
    Here's a few points on which this bothers me:

    1. VC is not like SBIR grants. We're talking about the Federal Government *owning* a piece of some of the best and brightest technology firms in the country (if they invest correctly, which may or my not happen).
    2. VC is notorious for having too much of a hand in company growth. What happens if the CIA decides that companies that they own a stake in should not be "wasting" their money lobbying for pro-crypto laws? Is that even constitutional? Does the spirit of the Consititution even concieve of such a thing? Love the checks-and-balances here.
    3. What happens when the "right thing" for a company to do financially, is open a semi-indepencant European branch in order to interact with their laws (e.g. crypto, patents, etc) which differ from ours? Will this be used as a way to curtail such action?

    This is just off the top of my head. Longer thought will amost certainly yeild further problems with the scheme. Oh my head.
  • Ok, so this company comes along called Transmeta...featuring some pretty talented people, and what...they have some patents, but no product that's been announced...

    Suddenly we hear about the CIA going for VC companies....

    Cooincidence? I think not.

    (note, this was supposed to be a joke, but I'm too tired to be funny...)
  • does anyone know why the cypherpunks NYT login appears to be disabled?

  • It's a shame. Our governments nurture the development of amazing new technology (yay!) and then keep it to themselves so that they can beat the bad guys (boo). It's a sad, unfortunate necessity, but just think how everyone could benefit if we could share these advancements! After all, we pay for our government, so we're paying (to some extent) for these advances.

    Maybe we could have 'security clearance levels' assigned to members of the public, based on how nice they were. Perhaps psychological tests could identify criminal tendencies at a young age to screen out those who would abuse the knowledge they would receive. Perhaps I'm being a complete utopian.

    It just seems like such a sad waste of knowledge, don't you think?

  • 20% of Silicon Valley startups are founded by immigrants, and 33% of valley engineers/programmers are immigrants. CIA projects require security clearance, and it will be difficult to fund a venture that doesn't involve foreigners at some point.

    It may be possible, but it's difficult to populate a startup with exclusively US citizens. I don't think there's a single Silicon valley startup that doesn't employ foreigners.

    Of course, there's also the drug test, which a lot of the notoriously liberal Silicon valley crowd might fail.

    Finally - there's the question of why someone would want to work for a govt. bureaucracy "startup" when there's a shitload of money to be made working for a real company. Money has no ideology.

    There's also a MASSIVE conflict of interest - a venture capital tries to make a mass marketed product which brings in profits, the CIA tries to make a secret product that only it can use. I'm not sure how the secret service can use a product that is freely available to the entire world. This is a direct contradiction.

    L.
  • Even Bill Gates probably likes puppies

    Yes, he likes them in a light white wine sauce with a side of fluffy little kitten.

    Kintanon
  • Keep in mind that the nicest folks probably ain't gonna be checking IDs. Nice, trusting people have been manipulated time after time...

    The other thing is that there are an awful lot of people who turn out to be more evil older than younger, and vice versa. People change, ergo one-time psych evaluation isn't exactly going to be that reliable.

    Basically, if you let the info out of The Company's hands (pun intended...) -- hell, probably even if they DO try to keep it secret; anybody seriously think that the KGB/FSB, PRC mil. int, etc aren't spying on us now? Yeah, whatever. -- it's probably going to get to all sides, including the less benevolent among us. Crypto, anyone?

  • Why the surprise and fear? (Score:4)

    by Stonehand ( 71085 ) on Wednesday September 29, 1999 @04:21AM (#1650930) Homepage
    The Federal Government has been subsidizing tech for many, many years; for instance, (D)ARPA funds vast amounts of research at universities and other institutions, and a lot of that is for developing technology that is useful for both civillian and military usage. Mobile computing, overhead imagery databases, autonomous highway-capable cars...

    There are just two twists here. One is that it's the CIA (and behaving unusually openly for them, but perhaps there are regulations about companies revealing investors?). The other is that they've picked up on venture capital as a method of funding, in constrast to the old ways of research subsidies, specific contracts and so forth. This means that they can indirectly fund different companies, but not lock either themselves or their beneficiaries into a specific system.

    This means that Joe, Angie and Fred, Inc., a hypothetical new startup, could -- even before having a clear application that's ready to ship and fulfills a specific niche -- be eligible to receive seed money, presumably in exchange for a stake in the company. Then, this stake can be later sold and re-invested elsewhere, if they (the CIA's VC firm) hold to the idea of their being non-profit and self-sustaining. That's the theory, anyway.

    In that regards, the CIA's interests are multiple. One, it gets an idea of who's around. No doubt they're always interested in getting people who can help them analyze the information they bring in, and they get enough that they need automation. Two, it lets them boost domestic tech, which is a Good Thing to stay competitive with other nations that do the same, only often moreso. The CIA would rather not depend upon the graces of foreign governments to import superior tech. Three, it's cleaner-looking than direct contracts and subsidies, and lets people realize that not everybody at the CIA is a spook trying to latch on to informed Muscovites or find-and-forward Saddam's current whereabouts to the Mossad.

    The obvious downsides? One is that they might, if they find particularly nifty tech, try to appropriate it or at least make it non-exportable. It also does raise conflicts of interest questions, but these could be resolved if the VC firm is set up intelligently (read: if it's managed anything like a blind trust. Difficult, 'tho.).

  • This could be a good way for the government to foster the development of encryption products that are more big brother friendly. Or any technology for that matter. I don't like it.

    numb
  • In the late 1980's Craig Fields [nist.gov] was relieved of his responsibilities at DARPA after he attempted to use DARPA money to acquire an equity stake in a gallium arsenide company. The basic reason was that such equity stakes are the sine qua non of national socialism (as opposed to international socialism aka communism), and, indeed fascism.

    PS: I did an April Fools joke on Congress back in the early 90s involving a fake press release from "UIP" that droned on and on in technocrat-babble about "the national transportation vehicle initiative" whereby the Feds would build this enormous fusion powered truck for "national competitiveness". In it, I portrayed Craig Fields as having nothing but glowing praise for "the public private partnership" from his new position as President of gallium arsenide technology leader, Cray Computer Corporation where he had replaced Seymour Cray who, my fictitious story went, "died in a jeeping accident in the Rocky Mountains". This "joke" was sent to every congressional office years before Seymour Cray died in a jeeping accident in the Rocky Mountains [ic.ac.uk]. "Funny" how Cray died shortly after he violated his own historic avoidance of direct architectural service to the spookshops.

  • I think the AC is overstating it when he says the CIA doesn't even come close ;)

    However, you are definitely swimming with the sharks when dealing with a VC. They are rather notorious for stacking the board with their own people, then pushing you out. The classic Silicon Valley story is Cisco, and how the founders got tossed after bootstrapping the company from the days when they made routers in their living room. Sure the VC wants everyone to buy the product...they just don't want to give any of the money to you.

    If you're that enamored of giving away your labor and ideas, why not just write free software? Otherwise, watch your back.
  • last time I checked, the CIA was just an information gathering organization and is strickly forbidden to gather info or spy on american citizens and on the united states. I think you mean to say that you'd boycott anything created in conjunction with the NSA, the FBI, and any unknown government organizations... but the CIA is just info gathering so stop with the paranoia that's completely unfounded.
  • Does anyone know why the US government is allowed to own part of a private company? Is there any way in hell this is ethical, moral, or even legal? (Of course, they're the government. Nothing's really illegal for them.) Does this not represent a conflict of interest?
  • Do you also object to AT&T (or whoever your LD carrier is) tracking to whom you place phone calls? What about your credit card company tracking who you purchase from?

    Yes and yes. Don't you? That's why I use EMail over long distance whenever possible and only own a credit card for emergencies and use cash otherwise.

    Of course, that all just means I'm a privacy wacko because I don't want Globalmegacorp, Inc. building a profile of me on to whom I talk on the phone and when, what I buy and at what stores I shop, what size shoes I wear, who I'm dating at the moment, where I live, how much money I make, what I'm doing at 6:30pm tomorrow night and so on, because "normal people" don't worry that they have highly detailed profiles built on them by huge corporations who will only take advantage of every bbit of data they can gather on you to make more money from you and deny you any little bit of privacy in your actions they can as long as they can make money from it.

    This is getting seriously offtopic now.

    -=-=-=-=-

  • hey, if any companies take them up on this, please tell me so i know who not to buy things from...i don't want any potential back doors in anything, especialy not that the government can play with.

    bsDaemon
    --dfree@inna.net
  • The CIA isn't a typical venture capitalist (it won't get rid of the founders when the company gets big)

    Since we're talking about the CIA, the phrase "get rid of" is kinda scary. =)

    If you come up with a tech that they really like (which I would assume is the point of this whole, er, venture), and they really don't want anyone else to have access to it, seems like it would be in their interest to prevent you from marketing it. Is that the kinda of VC you> want?

  • I entirely agree, as someone who found it very helpful to use the login. To be charitable, I think someone misunderstood the use of "slashdot_effect" above.

    Please, someone, give this chap his karma point back (and perhaps even a bonus one, because it was a useful post).

    Anyway, thanks

    jsm

  • Talk about Big Brother... Thats even worse than the CIA part. Suppose that the school bully takes you lunch money just before your test, and so you go in angry, and hungy to boot, and so therefore slightly anti-social, and take this test that determines your fate as a geek for the rest of your life? Yikes, not for me. Also, what happens when people other than the CIA start to _find_ this info? creepy super-villan music/manicial laugh/

    Hey guys, why does it filter out 's when you don't use a character entity? Could be hard to write 2 1 in plain text! (seems like the have to be matched, as well. Not only that, but previewing jacks them up.

  • Not being a US-citizen myself I find I quit amusing to see how the governement of the land of "the free" and "the entrepreneurs" is buying firms, turning them into "governement companys". This is especially amusing if you know that under communist regime ALL the firms are owned and controlled by "the people" (read: the authorities). This is indeed a dangerous evolution. I hope for you (the inhabitants of the US) that this doesn't go to far (even just economically speaking, we all now how good fed's are at management)

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