Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG)

From Testosterone Pit:

Keyhole Inc., a venture-capital funded startup, was acquired by Google in 2004. Its product became Google Earth. Its technology filtered into Google Maps and Google Mobile. One of the venture-capital investors? The CIA. It didn’t ruffle any feathers at the time. But now we have NSA leaker Edward Snowden and his media blitz.

Bureaucrats and politicians from all sides explained to us with the patience of the exasperated that the NSA’s surveillance programs Snowden had leaked were for our own good, that they’d prevented over 50 “potential terrorist events” since 9/11, etc. etc. President Obama, while in Berlin, assured Chancellor Merkel and her countrymen that these spy programs had performed miracles in their country, and she too expressed her support for them.

Surveillance of billions of people around the world, grabbing their data, all their data, every last bit, where they went to dinner, who they met there, what they ate, and who they ended up spending the night with – if both have a smartphone – is hard work. But it’s the bread and butter of an entire US industry, a vibrant one that is hiring and creating jobs, with lots of startups, and with companies like Google and Facebook that are loaded with money and can buy some of these startups for eye-popping amounts, in cool laid-back places like San Francisco and Silicon Valley, or in Boston, or anywhere.

These companies are developing technologies to grab more data, make sense of it, combine it, analyze it, “mine” it, and monetize it. Because in the end, data is money. People who aren’t psychotically careful about communications and internet activities, or people who have a smartphone, no longer have any privacy. Instead, their privacy has been transferred to a new asset class that is now swelling up corporate balance sheets [here is my tongue-in-cheek take.... Google Spy Drones For Street View?]

What shook up America (briefly) wasn’t that Big Data knows everything about our lives – we seem to have accepted that – but that the government is getting bits and pieces of it to ferret out the occasional bad guy or use it for undisclosed purposes. Some companies claim to have handed over some of this data only reluctantly. But corporate America and the Intelligence Community have always had a productive relationship. Feeding on the big trough of government is a profitable business. According to the New York Times, unnamed “independent analysts say” that the NSA alone plows $8 billion to $10 billion a year into its Silicon Valley activities. And the CIA even has its own venture capital firm, In-Q-Tel.

Based on the priorities of its “customers,” primarily the CIA, IQT co-invests with private-sector VC firms in startups with “commercially-focused technologies that will provide strong, near-term advantages (within 36 months) to the IC mission.” It’s not shy about its purpose:

IQT was created to bridge the gap between the technology needs of the U.S. Intelligence Community (IC) and new advances in commercial technology. With limited insight into fast-moving private sector innovation, the IC needed a way to find emerging companies, and, more importantly, to work with them.

So, Pure Storage, which develops all-flash enterprise data storage systems, announced in May the closing of “a strategic investment and technology development agreement” with IQT. That’s what these agreements are: two-way streets. IQT funds the company, and the company shares its technologies....MORE