Web Warriors Looking for a few good software firms.
By Melanie Warner

(FORTUNE Magazine) – Since Sept. 11, the CIA and the National Security Agency have been scrambling to find companies that can supply software to help fight the war on computer-savvy terrorists.

One such company is Narus, in Palo Alto. Founder and Chairman Ori Cohen says he has had recent conversations with intelligence officials interested in using his products to help track and sort data on the Internet. "The kind of systems we have give you a global view of what's happening on the Internet," says Cohen, whose partners have done technology work for Israeli intelligence. "They tell you who's logging in, at what time, and what they're doing online." Over time such data can be used to build profiles of potential terrorists. "It's all about collecting information from all parts of the network and filtering out the 'good' stuff, so you can get at the 0.0001% that is criminal," Cohen says. "Right now that isn't being done."

Even encrypted data are useful, Cohen points out, because anyone using such technology, as the terrorists allegedly did in their e-mail, would be waving a red flag. They could be profiled by tracking whom they are communicating with and at what frequency, even if what they were saying couldn't be decoded.

Several former intelligence officials told FORTUNE that, in addition to improving its Internet eavesdropping, the CIA needs to do a better job of sorting through all the publicly available data on the Internet. Chat rooms, obscure Websites, and public databases have been largely overlooked by government intelligence officials. But many experts say that if the multitude of so-called open-source Web data is sorted, catalogued, and analyzed using sophisticated technology, it could be a valuable source of information about terrorists and their organizations.

San Diego-based Mohomine organizes "nonstructured data"--e-mail, pages of text, news articles--into structured formats. Intelliseek in Cincinnati makes software that searches through the vast sources of information on the Web that aren't available via popular search engines. Both companies are important to the CIA because they are funded by the agency's venture capital fund, In-Q-Tel, started in 1999 to find technologies that could aid the government in intelligence gathering. Located on Sand Hill Road in Menlo Park, Calif., In-Q-Tel has put money into more than 20 companies in the past 2 1/2 years. Not all will supply technology to the CIA, but companies like Mohomine and Intelliseek seem to be just the corporate allies intelligence agencies need to fight a Web war. Both Intelliseek CEO Mahendra Vora and Mohomine CEO Neil Senturia say they have recently had discussions with the CIA but decline to talk about specifics.

The prospect of a fresh pile of government money earmarked for new technology has given people in Silicon Valley something to feel good about. With tech stocks down to humiliating levels and many corporate IT budgets frozen since Sept. 11, tech startups have been looking for any signs of hope. "In the past two weeks it seems like there's a lot more money in the government sector than in any other area," says Cohen. Jack London, CEO of CACI International, a defense contractor in Arlington, Va., says he believes a "significant percentage" of the $10 billion to $15 billion allocated to the Defense Department last week will be spent on new intelligence technologies, which include not just the effort to track terrorists on the Web but things like next-generation imaging, which can detect chemicals and biological agents from the air, and microelectromechanical systems, which can pick up verbal communications from far away.

--Melanie Warner