Is the Intelligence Community Influencing California Elections?

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Gerry Bello's picture
Photo by Deviant Artist Stocks Effulgent

Old Hat Tricks With a New Money Twist

By Gerry Bello

Two anecdotes, separated by 52 years and a continent, converge to add a new twist to the heated District 17 California State Assembly race to fill the seat of San Francisco progressive stalwart Tom Ammiano. In one Ex-CIA agent, Phil Agee, who was the Edward Snowden of his day, talks of his direct influence in Latin American electoral politics. In another, a tech start-up dumps money into the campaign of a San Francisco board of Supervisors member running for state Assembly. The anecdotes seem disparate until one sees the connection between AirBnb’s venture capital backers and the intelligence community, and those backers direct support of California Assembly candidate David Chiu.

As reported by SFGate on October 15, the AirBnb board member representing venture firm Greylock Capital Partners, Reid Hoffman, put $500,000 behind David Chiu’s Assembly race. SFGate noted this was by far the largest contribution to a small race. In fact, Ammiano won an easy victory for San Francisco progressives in 2012 raising $258,885 in campaign contributions that year, roughly half of what Hoffman has spent in support of Chiu. SFGate focused on the AirBnb angle of the donation, where AirBnb had much to gain from legislation recently passed by the San Francisco Board of Supervisors and spearheaded by Chiu. That much is an election scandal enough.

But who is the venture capital firm Greylock other than the owner of a large stake in AirBnb? The corporate media did not note the connections between Greylock and the intelligence community, or AirBnb’s other investors and the intelligence community.

Reid Hoffman’s seat at AirBnb is not as interesting as his involvement as a partner at Greylock. As previously reported in The Outsider, Greylock’s founder and chairman, Howard Cox, has another interesting board seat. Cox sits on the board of
In-Q-Tel, a non-profit venture capital firm founded and directed by the CIA.

This relationship is not a secret. In-Q-Tel’s website states “We identify, adapt, and deliver innovative technology solutions to support the missions of the Central Intelligence Agency and broader U.S. Intelligence Community.” Reid Hoffman’s most important business relationship is with his boss, and his boss helps run a venture capital firm for the CIA.

The intelligence community has made early investments in candidates for a long time. In the early 1970s when Phil Agee quit he told all, published and went on the run. In one of his books he catalogued  Ecuadorian politicians on the CIA payroll. Many had been under the direction of the agency for years before Agee’s tenure in Quito.

In-Q-Tel, Greylock and the other venture capital firms that operate alongside them bring new technologies to market so that those technologies are available to be purchased and used by the intelligence community.  Their strategic investments stock the cupboard. They are the new money, Democratic party aligned answer to the Republican friendly Carlyle group, which invested in Booz Allen Hamilton, Edward Snowden’s old employer. In-Q-Tel itself was founded during the Clinton Administration in 1999 by then CIA Director George Tennet. It’s board serves at the pleasure of the current director of the CIA.   

Greylock and In-Q-Tel have a deep history of investing together. Both have equity positions in Decru and Cloudera, for example. Greylock has privileged information on what the intelligence community wants, and invests in partnership with
In-Q-Tel in projects that are near guaranteed financial winners.

What used to be done by CIA undercover operatives working clandestinely is now accomplished through direct investment by friendly and pliable capital. Simply invest with the help of private capital in what, or who you want to succeed.

AirBnb’s other backers are also no strangers to joint investment with the intelligence community in start-ups. Greylock’s funding of AirBnb is second to Sequoia Capital’s early backing. Sequoia joined In-Q-Tel in 2009 in investing in FireEye, a company that produces malware detection software. Sequoia partnered with Greylock in backing Open DNS earlier this year. The two firms added $35 million of series B financing.

AirBnb’s other great intelligence community investor is Peter Thiel. Thiel was an early backer of AirBnb, bringing his fortune in line behind the company’s effort. Thiel founded the private intelligence company Palantir with backing from In-Q-Tel. Thiel and Hoffman know each other from their days together as early investors
in Facebook.

These investments by In-Q-Tel, Greylock and Sequoia seem like mere sound judgement, at least individually. But combining Cloudera’s cloud capability with encryption capability formerly held by Decru (which was sold) along with security and malware detection provided by Open DNS and Fireeye and you have a secure cloud built from the ground up by the intelligence community.

On the face of it, an investment by AirBnB in Chiu does not make much sense beyond the return of a favor for backing on the recent local San Francisco AirBnb legislation. But AirBnB has nearly $800 million in capitalization from Greylock, Sequoia and Thiel. They will survive without favorable local legislation in the City of San Francisco. Why is Hoffman, with fellow AirBnb investor and big money Chiu supporter Ron Conway, spending overwhelming sums in a state assembly election?

Is electing Chiu another strategic investment in a start-up? Should Chui beat progressive Assembly District 17 candidate San Francisco District 9 Supervisor David Campos and win the state assembly seat, there is no telling where Chiu’s political aspirations may end. A Senate seat or cabinet post might be a career capstone for Chiu.

The loser of the assembly race will term out of their San Francisco Board of Supervisors seat with no clear path to electoral advancement.

“Fail fast to succeed,” they say in the world of San Francisco tech start-ups. Time will tell how far Chiu will get with help from his “old friend” Reid Hoffman and all of Reid Hoffman’s friends. But Hoffman, Ron Conway and their friends see something they really like in David Chiu, something worth investing in.

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