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Posted at 10:08 AM ET, 05/24/2012

Silicon Valley’s data gurus lure Defense customers

Silicon Valley’s biggest names are betting on data gurus to analyze the fire hose of information on the Web — and it turns out that military and federal government agencies are looking to them for answers too.

Recorded Future and Quid are among a new crop of start-ups mining vast quantities of data on the Internet (as well as classified data) to help the Defense Department and security officials predict civil unrest, terrorist activity and political upheavals.

Recorded Future on Thursday came out of “semi-stealth mode,” and announced it has raised $20 million from Google Ventures, In-Q-Tel, Atlas, IA Ventures and Balderton. The Boston-based firm counts the Defense Department and other government agencies as clients who use their predictive analysis and data mining algorithms. The firm couldn’t comment publicly on their clients’ activities, but the firm said by culling information social networks, government documents and public records, it can provide a better sense of whether Syria will experience an uprising like that of Tunisia or Egypt.

Financial firms use their software to comb securities exchange filings, executive speeches and other information on the Web to predict downturns or upturns in businesses.

“You can already search for documents, navigate the Web. But the next frontier is to turn all this into predictive signals that can be turned into intelligence,” said Christopher Ahlberg, founder of Recorded Future.

Quid, founded by Oxford physicists and funded by PayPal founder Peter Thiel, says the Defense Department counts for 10 to 20 percent of their business. Social networks also use their software to understand how a Facebook user can best be targeted by advertisers. That user’s friends, his or her preferences for products and activities could help a sports label predict that the user may start up a new sport and want to buy athletic shoes, for example.

Government agencies are turning to these private start-ups — many from Silicon Valley — because physics and mathematics experts are only now turning their research into business ideas, experts say.

Those minds had for years gone straight into government jobs in the early 2000s, then to Wall Street hedge funds in the mid-2000s. Now they are seeking start-up gold.

Sean Gourley, co-founder of Quid, said data scientists are now able to take open Web information to stay ahead of drug violence in Mexico among other geo-political issues.

But the big question is if that science can be applied to Facebook.

“Facebook will be the case in point," Gourley said. “If Facebook succeeds it is because it is good at targeting ads.”


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By  |  10:08 AM ET, 05/24/2012

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