Intelligence Agency Seeds Technology Entrepreneurs

April 2001
By Robert K. Ackerman
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The CIA is looking for a few good companies that can serve its information system requirements.

Faced with rapidly changing information technology needs, the Central Intelligence Agency is serving as a venture catalyst to help fund private sector startup companies with promising technologies. An organization established by the agency seeks new companies with commercially viable products and serves as a facilitator providing the firms with access to capital and markets.

This effort is targeted at small companies with potential innovations in network security, search, analysis, geospatial information, privacy and data protection. Targeted firms are helped with business models, capital generation and market identification. The goal is to produce a commercial product that also can serve vital Central Intelligence Agency (CIA) information technology requirements.

The vehicle for this effort is In-Q-Tel Incorporated, a nonprofit 501(c)3 organization chartered by the CIA in 1999. Based in Arlington, Virginia, with a Silicon Valley office in Menlo Park, California, the company is an independent corporation possessing a contractual relationship with the CIA. Nonprofit In-Q-Tel also has a fiduciary responsibility to execute on its funds, which are appropriated by Congress through the CIA, to solve the agency’s problems. Annual funding runs about $35 million, and the firm undergoes multiple evaluations each year.

“The CIA really needs to have access to the very best information technology to accomplish its mission, and the suppliers of information technology today are a lot more diverse than they were 20 years ago,” says Gilman Louie, In-Q-Tel president and chief executive officer. Louie comes not from an intelligence background but from the commercial high-technology sector. As founder and chief executive officer of Spectrum Holobyte, he is credited with inventing the flight simulator game Falcon. Louie emphasizes that In-Q-Tel is essential for the agency to have access to a lot of the newer, exciting companies as well as the established information technology firms.

Louie explains that In-Q-Tel is designed to go after entrepreneurially driven companies and create a business climate suited to their nature. In-Q-Tel’s venture-style model appeals to many “younger companies” because it is the language that they understand, he says.

Helping adapt and mature a company’s technology for CIA needs works both ways. An information security solution useful for the agency, for example, might also be ideal for a major financial institution. A World Wide Web browser that can surf multilingual multimedia data across trillions of characters of information may lead to the next generation of broadband search engines.

In-Q-Tel does not necessarily go it alone to support a technology firm. Louie says that in many cases, for every dollar In-Q-Tel puts into a piece of technology, another organization invests two or three dollars.

Christopher Tucker, chief strategic officer and one of the founders of In-Q-Tel, explains that the company has many flexible contract and deal mechanisms to engage companies at various points in their life cycles. If a company has technology that could solve one of the agency’s problems, In-Q-Tel will engage it with whatever financial mechanism will serve all parties.

This flexibility is one of In-Q-Tel’s chief assets, Tucker continues. “Working for the government may never enter [company officials’] minds, but when they see that they can further their commercial interests while also serving a public purpose by engaging in this nontraditional government interaction, then they are very happy to play.”

Fueling this technology pipeline requires In-Q-Tel officials to move across a breadth of activities. “One day you may sit down with a spy and try to find out his needs,” Tucker relates. “The next day you could meet with a three-person startup. The next meeting may be with some venture capitalists or investment bankers from New York.”

Tucker continues that In-Q-Tel “operates at the intersection of the agency’s priority problems and commercially valuable problems.” In-Q-Tel helps its partners become “commercially strategically well placed,” which is to all parties’ benefit. If a company with good technology is not commercially viable in the long run, the CIA may find itself with a product that is no longer commercially supported.

Nonetheless, while In-Q-Tel cares about a company’s commercial viability, its primary concern is whether the company’s technology solves a CIA problem. Analysts examine whether a company’s technology is just something it is pitching to In-Q-Tel or whether the technology is strategic to the company’s existence, Tucker says.

Both Louie and Tucker emphasize that In-Q-Tel is not the CIA’s sole vehicle for maintaining technological superiority. The agency has its Office of Advanced Information Technology working on CIA problems that do not fall within the intersection of commercial and agency solutions. The agency’s Investment Program Office invests in several types of technologies, including information systems. Individual directorates have their own internal efforts. And, other internal technology experts focus on more agency-specific technological needs, especially for the covert world.

A key element of In-Q-Tel’s effort is the In-Q-Tel interface center, which is based at the CIA in its Office of Advanced Information Technology. Known as the QIC, this center communicates the agency’s problem set to In-Q-Tel. The QIC also facilitates solution transfer back into the agency.

Tucker notes that this activity impelled the agency, for the first time, to assemble its information technology problem set in a corporatewide unclassified form. Describing this unclassified problem set as comprehensive, Tucker relates that it provides industry with a mechanism for engaging the agency’s problems.

The QIC is proactive in engaging agency customers to understand their problems and needs, Tucker continues. This information is gathered and presented to In-Q-Tel, which in turn performs an analysis of market space and of companies with capabilities that could generate product lines in particular arenas. In-Q-Tel also evaluates movements in the commercial sector that are analogous to the problems facing the agency. The venture catalyst organization advertises its ability to serve as a strategic capital firm that can provide funding to companies able to solve specific CIA problems.

“We will go out to companies that are leaders in a [technology market] space, and we will respond to the small companies that no one even knows about until they disclose themselves by presenting a business plan to a venture capitalist,” Tucker explains. Once In-Q-Tel is engaged with a company, it will work with it “to round out its technology” to improve its chances of commercial success while meeting the CIA’s needs.

In-Q-Tel constantly seeks companies with potential technologies useful to the agency. At the same time, it has an open-door policy to firms that approach the organization with their own technologies to offer. Many companies “have just shown up at the front door,” Tucker relates. Some of these are responding to In-Q-Tel’s Web site, which posts nine broad technology areas of interest.

Recently, In-Q-Tel adapted technology from a small company in Las Vegas that provides the gaming industry with systems helping casinos counter customer fraud and other crime. Tucker notes that this technology has great implications for the national security community as a whole.

Underlying the technologies on In-Q-Tel’s wish list is security. This encompasses both secure products and security products.

Louie states that any technologies that give the CIA safe and secure use of the Internet in day-to-day operations are high on the list. So are technologies that secure the agency’s own information architectures. In addition, the agency must be able to work with legacy systems and virtual networks that have evolved over the decades.

“How do you take an agency that is nearly 60 years old and architect a new model without abandoning all the capital investments made over the prior period? That is a CIA need,” he emphasizes.

No architecture or implementation even enters the CIA unless the agency deems it secure, Tucker points out. Many effective commercial search technologies, for example, are not secure in the least. Some well-known commercial software, including a widespread e-mail program, are not allowed on top-secret networks in the intelligence community because they are so vulnerable. Industry has only begun to address this vulnerability, Tucker relates, and many of the agency’s problems are the same as those of the private sector.

In-Q-Tel has a team that can resolve some technologies’ security problems to enable their CIA use. The organization will partner with companies to help them understand the problem and work solutions into their production process.

Foremost among security needs is identification and authentication “that is just not spoofable,” Tucker states. This includes managing the need to know across the enterprise “in a fairly automated way,” he adds, emphasizing, “Nothing slows down decision making like being told ‘I’m sorry; you are not allowed to know this; call so-and-so. Whoops, so-and-so is not in today. Sorry.’”

Search and retrieval is a challenge that is growing with the vast amount of open source data awaiting intelligence community exploitation. While this can be some of the most valuable data in the world, the CIA must be able to locate and extract meaningful content from the vastness of cyberspace. Tucker cites pre-processing technologies that allow more effective search and data browsing—“extraction and categorization-type technologies”—as a key In-Q-Tel activity. Performing intelligent pre-processing of data also is important.

A related area is data management. Performing sophisticated analyses of vast amounts of data in a time-compressed manner is a vital concern at the agency. Effective open source analysis is essential for the agency to amass intelligence.

The CIA needs technologies for dealing with an enterprise that has massive amounts of geospatial or geospatially oriented data assets. Locating individual foes and adversary groups involves tracking them through locations, which requires bridging the chasm between geospatial assets and database text in real time, according to Tucker.

Privacy also is essential to the CIA’s collection efforts. Agents surfing the Internet for open source information do not want their efforts detected or tracked. Not only could this alert an adversary to agency sleuthing, but mid-level computer experts also could put together a profile of CIA areas of interest and data collection patterns.

A sleeper area that may have broad ramifications is the elimination of administrative overhead. E-business has streamlined U.S. business processes to increase efficiencies and reduce overhead on individuals. Being able to replicate this effect on agency personnel, especially case officers in the field, could provide significant gains.

Automated foreign language processing affects both information collection and processing. The agency needs software that can handle the many languages that are represented on the Web.

Tucker relates that In-Q-Tel is working with Graviton Incorporated on its microelectromechanical system (MEMS) technology. Some of these devices can provide sensing and content evaluation that the CIA would find especially useful, he notes.

In-Q-Tel maintains in-house experts on security, search and retrieval and analytics. When it lacks the necessary technical expertise in a vital area, it contracts with consultants to fill in the gaps for evaluation or support.

Louie states that In-Q-Tel has given the CIA a new view of information technology. The agency now has a greater understanding of how to manage risk portfolios in information technology. “Doing three- to five-year information technology programs at tens of millions of dollars apiece may be suitable for a few activities, but it doesn’t necessarily give you the same sort of yield,” he charges. “The biggest problem with information technology is that it moves so fast that, the longer your program is, the higher the degree of risk of failure. Introducing the agency to real applications of spiral development really has helped it realize that it cannot operate if its ingestion of technology is on the order of six to 24 months for each piece of information technology—especially with the shelf life of information technologies running only six to 18 months.” He emphasizes that, to use commercial off-the-shelf technologies, the agency must get into their development early or else face incompatibility problems.

Louie adds that it is a major challenge to have the CIA incorporate the technologies that In-Q-Tel delivers into its business practices. The agency must allow these technologies and practices to evolve the nature of the organization. “If the CIA wants to be a 24/7 real-time information service, rather than just a publisher of intelligence products, then making those technologies lead to the kinds of changes the agency wants will be a big cultural challenge,” he declares.

In-Q-Tel could have its greatest effect in changing the relationship between the intelligence product and the customer, Louie offers. This encompasses the dissemination of the finished intelligence with analysis to the user. Another change would result from new technologies that reduce the time of data and information processing. This could be the biggest benefit emerging from technical capabilities, he suggests.

Louie believes that the In-Q-Tel model could work for other government agencies as well. It should be part of a portfolio of activities encompassing acquisition and research and development. The model works best when information technology needs have commercial equivalent, he says.

Additional information on In-Q-Tel is available on the World Wide Web at

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