AFTER THE BOOM
If Washington is going to thrive in an era of lean budgets, it will need to build an economy that is less dependent on federal spending. To see what that future might look like, meet William Crowell. More important, meet the people he’s betting on.
Crowell, 72, spent decades at the National Security Agency, where he rose to be the deputy director. When he retired in 1997, there were plenty of defense contractors waiting to pay him big bucks. Instead, Crowell accepted an offer from former defense secretary William J. Perry, an old friend, to join him in Silicon Valley, where he was teaching at Stanford University.
Perry helped him land a job as chief executive of Cylink, an early cybersecurity company.
“There is no way to describe how energizing it is to be around people who are always trying to invent something,” Crowell said.
In the years that followed, he served on the boards of a half-dozen other start-ups, including one that Hewlett-Packard acquired in 2010 for $1.5 billion. Crowell was suddenly wealthy.
Today he’s back in Washington, where he helps run a $100 million venture-capital fund that invests in start-up cybersecurity and big data analysis companies. Crowell was drawn back to Washington by one of the byproducts of the boom years: a smart, highly educated workforce — the foundation for most of the world’s successful economies.
Many of the coders at Crowell’s companies spent the past decade building top-secret systems to detailed government specs. They were like sous-chefs following someone else’s recipe. Now Crowell’s job is to help them build something innovative that the rest of the world wants to buy.
This is Washington’s problem in microcosm: The region started the 2000s with the nation’s best-educated workforce and added college grads at a faster clip than any major metro area. But it ranks a paltry 57th among major metro areas in patents per worker, according to an analysis by the Brookings Institution. As the government-related boom fades, Washington will need to improve on that score. Economists have found that two factors matter more than anything else when it comes to economic growth: high levels of patent production and of college graduates.
On a warm day this fall, Crowell checked in on two of his cybersecurity companies. His first stop was Lookingglass Cyber Solutions, a 30-person start-up. The company’s technology scans the Internet, collecting real-time intelligence on the most aggressive cyberattackers, and feeds the information to clients. Most of Lookingglass’s software engineers are refugees from big defense companies, where they earned significantly higher salaries. Lookingglass offered stock options and the promise of more creative work.
“It’s ponderous at the big companies,” said Jessie Link, 35, who started at General Dynamics. “You are locked in a box with no windows, building systems on behalf of the government.”
Lookingglass’s office resembles a messy college dorm room or a typical Silicon Valley start-up. There’s a drum set, stacks of video games, posters of teeny-bopper stars and, in the kitchen, a kit for brewing homemade beer.
Even at Lookingglass’s off-site board of directors meeting, Crowell is the only one wearing a tie. “I probably should have worn a T-shirt with something obscene on it,” he joked.
William Crowell, an NSA retiree, helps run a $100 million venture capital fund that invests in start-up cybersecurity and big data analysis companies. (Michel du Cille/The Washington Post)
Steven Rogers sits in Centripetal Networks' lab in Reston. The company's board meetings draw former top officials from the CIA, NSA and Defense Intelligence Agency as well as Silicon Valley Investors. (Michel du Cille/The Washington Post)
Crowell’s other start-up cybersecurity company, Centripetal Networks, manufactures a device that filters the Internet, blocking attackers after they’ve been identified, ideally by Lookingglass. His goal is to get the companies to work more closely together.
Crowell rushed from Lookingglass to a Centripetal board meeting. Centripetal got its start with about $1 million of research money from the Department of Homeland Security. Now the company is trying to sell its device, which packs the computing power of about 60 laptops, to big Internet service providers and the financial services industry.
Around the table at the Centripetal board meeting were traditional Washington players: former top officials from the CIA, the NSA and the Defense Intelligence Agency. There were also some newcomers, including the former chief executive of a Fortune 500 financial services company. The Centripetal chief executive, Steven Rogers, flashed a slide showing the results of a recent pilot his company ran with a global financial institution. A menacing red dot hovered over a map of China. “This dot represents 258,000 packets of data flowing out of the bank’s network to known bad guys,” he said.
For the next hour, the board debated how to convince skeptical executives that the threat posed by the red blob was real. “These are people who don’t want to know they have a problem,” Crowell said. He suggested giving away a free version of the Centripetal technology that would alert companies to attacks but wouldn’t block them.
“I prefer that when you give something away for free you get a taste, but that it doesn’t solve your problem,” Crowell said. Everyone agreed.
Crowell’s goal is to turn one of his start-ups into a “fundmaker,” a company that he can sell for more than $1 billion.
There are no guarantees that Washington can produce those kinds of wins. In the late 1990s, a surge of optimism spurred by the growth of Northern Virginia’s America Online failed to produce lasting growth. If the current government budget cuts don’t stick, the lure of easy federal contracting money could quash Washington’s nascent entrepreneurial spirit.
But there are signs of change: Washington is among the country’s leaders in venture-capital deals. The region’s business dynamism — a measure of how many new companies start and fail each year — is on the rise, suggesting a more entrepreneurial culture. One other sign is Crowell, a short man with neatly parted white hair and a $100 million investment fund, prowling Northern Virginia’s office parks, looking for a spark of innovation. He’s sure it’s there.
Julie Tate and Ted Mellnik contributed to this report.