• United States

Where’s the war dividend?

Jul 07, 20034 mins
NetworkingVenture Capital

Every time the U.S. goes to war, there always seems to be a “peace dividend” – a commercial spinoff from the Department of Defense spending that flows to the private sector. Because we needed a better way to gauge where artillery shells would fall, the U.S. Army invested money in computer technology during World War II. The spinoff was the early Univac and IBM computers that primed the pump for the first generation of commercial computing.

Next came the Cold War. Out of this came Tang and embryonic networking. Vietnam produced the idea of fail-safe networks, which could withstand nuclear attack. Peace dividend: the Internet.

The U.S. government now has made enormous pronouncements about massive spending because of Sept. 11. With the communications sector in a long-term funk and the commercial market moribund, I want to back any company that might grab some of the supposed spending by producing a technology that might morph to a real market in the industrial sector. But where? Yes, certainly there is an interface between government short-term needs and industry’s long-term needs, but is that security? Security is a hard sell in the industrial world because it really doesn’t create opportunities; it just forestalls some potential problems. In short, security is an expense, not a revenue-driving technology.

One way to look at the world is in terms of Big Customers . . . and no single customer is as big as the U.S. government. In the world of IT spending, government accounts for 21% of all spending. I’d like to find out just where the government is spending in computing and networking now, and to find those technologies and companies that could “slipstream” into those applications that are cost-effective and tamper-proof. I’m not the only one with this idea; every company and every venture capitalist wants part of that government goodie bag.

The problem is that what the government says it is going to do and what it actually does are not the same thing. Will the government back up its broad pronouncements about the cybersecurity threat with hard dollars, or will it do as little as possible as loudly as possible here and put most of the money into physical security and knock cybersecurity down to fifth or sixth on its agenda?

I would like to see the money go into authorization/authentication, identity management, Web application security, and intrusion detection and prevention. Each area represents a problem for the U.S. government now and an area where companies could benefit on an ongoing basis.

For example, the Army wants to outfit 50,000 troops with a program called Objective Force Warrior with more gizmos than even Hasbro Toys could think up. All of which will require . . . batteries. Even today, the modern U.S. soldier goes into battle with 65 batteries on his person and his weapons. I have invested in a company called A123, which is working on the problem of more battery power and lighter weight. Other investors include Qualcomm and Motorola. If this technology could be developed, it would quickly find its way into cell phones, laptops and power tools.

Maybe I should look at this from the other direction. Maybe I should be evaluating what companies need and then just treat the U.S. government as a corporation that has been supersized. The cutting edge is the area of collaborative computing – where two or more organizations combine to solve a problem for a common set of customers. In this situation, you have to give some access to your network to your collaborative partners but build some level of accountability and control. If you make it too difficult, then you can solve the security problem – except you kill collaboration. If you make the system too easy to vault the walls, you expose your company and your company’s partners to intrusion.

These are the areas into which I would love to invest money and areas where I’m certain the U.S. government must address first. I would like to offer my services for the first product: new and improved Tang.