Latest Silicon Valley startup is run by CIA
Thursday, September 30, 1999
By TOM RAUM THE ASSOCIATED PRESS
WASHINGTON -- Temporarily forgoing its clandestine ways, the CIA is publicly setting up in California's Silicon Valley to invest in young companies developing technologies with spying potential.
With a whimsical nod toward the beloved James Bond movie character Q, who presides over gadgets, the spy agency named the company "In-Q-It."
Using $28 million in previously classified startup money from Congress, the non-profit company will invest in some high-tech companies and form joint ventures with others to nurture Internet-age projects that could benefit the CIA, said the new company's chief operating officer, Gilman Louie, who comes from the toy maker Hasbro.
"We'll work with outside companies. We'll be as nimble as we possibly can. We're trying not to be a laboratory," Louie said in an interview yesterday.
This means helping the Central Intelligence Agency work more effectively with the Internet and with securer browsers and faster search engines, he said. "We'll get them up to the cutting edge," Louie said.
In-Q-It also will try to support technologies that will let the CIA better organize and use information it already has.
He cited the accidental May 7 bombing of the Chinese embassy in Yugoslavia -- a target picked by the CIA -- as "the manifestation of the worst result that could happen if you don't have all your information lined up."
The company -- the brainchild of CIA Director George Tenet -- quietly was chartered in February. It is just now getting under way, with a board of directors that includes former Defense Secretary William Perry and well-known high-tech figures. Louie said the company will remain small, with no more than 25 employees.
It is negotiating now for an office on prestigious Sand Hill Road in Palo Alto, Calif., joining other venture capitalists, Louie said. The company will keep a small office in Washington, D.C., he said.
The CIA picked a fanciful name for the new company. The "In" stands for intelligence. The "It" stands for information technology. The Q in the middle is in honor of British gadgets expert Q in the Bond movies.
"We do have a sense of humor," CIA spokesman Bill Harlow said.
Louie said he was mystified when, during a job interview, the CIA told him the new company's name.
"I said, 'What does it stand for?' When they told me, I started busting up. It must have been written down on a dinner napkin somewhere."
He said he is not so sure about naming a U.S. intelligence community venture "after a British character, but I think everyone was enamored" of the James Bond connection.
Louie, 39, was chairman of an electronic game company -- MicroProse Inc. -- later bought by Hasbro. He created a popular air-combat simulator game, "Falcon," modeled after the F-16 fighter.
At Hasbro, Louie has been an executive with the toy company's online business group.
Louie said he has no experience in espionage "and I want to keep it that way," although he said he and other top executives will carry a high security clearance.
Both he and the CIA stressed that the venture capital company would deal with unclassified projects, at least initially.
Harlow, the CIA spokesman, said In-Q-It "is clearly tied to us, but they make a big point of being independent."
Harlow said the project "grew out of the recognition here of a need to find new ways to harness the capabilities of the private sector to deal with some of the more difficult problems of information technology."
"This is definitely an 'out of the box' kind of thing . . . not a standard government solution," Harlow said.
Louie said the CIA now is the upstart company's only customer, but direct private-sector clients might be sought at a later time. He said he expected the company to become self-sustaining from its investments, with an eventual budget of about $100 million a year.
The company's board of directors includes Perry; John Seely Brown, director of the Xerox Corporation's Palo Alto Research Center; Norm Augustine, chairman of Lockheed Martin; and former AT&T President Alex Mandl.