Editor’s note: If your company was approached by the CIA (through its investment arm called In-Q-Tel) as an investor, would you take the money? Phillip Rhodes, founder and CEO of Fogbeam Labs, didn’t even respond to a letter of inquiry. The Chapel Hill firm focuses on parsing data from multiple sources to help clients make better informed business decisions. It’s a startup. And startups need funding. But Rhodes refused to even talk to In-Q-Tel. He explains why in this column provided to WRALTechWire.

In-Q-Tel has made investments in the Triangle. It is an investor in Durham-based Semprius and also backed Nextreme Thermal, a spinout from RTI International, which was recently sold.

Having Integrity – Why We’ll Never Know If the CIA Would Have Funded Us

CHAPEL HILL, N.C. - Last week I received the kind of email that would have many startup founders jumping for joy – a cold pitch from a fairly well known VC firm, inquiring if we would like to have a conversation with them about possible funding. In addition to funding, there was hinting about help getting some high-profile customers onboard as well. As a (currently) self-funded startup which is fairly under-capitalized, it’s hard not to find something like that exciting. Surely in any sane universe I should have immediately replied to say “Yes, call me right now”.

I didn’t.

I never replied to the email at all, and I don’t intend to.

What I didn’t tell you yet, is that the “well known VC firm” is an outfit named In-Q-Tel, and the reason they are well known is because they are affiliated with the CIA. It’s a weird sort of shadowy public/private partnership thing, and I’m not familiar with all the technical details of the relationship, but for all practical purposes, you can think of In-Q-Tel as “The VC branch of the CIA”. And the “high profile customers”, of course, would be the CIA and other members of the alphabet-soup club which make up the intelligence community.

Now, you’re probably shaking your head, thinking “Phil, you’re nuts. Why wouldn’t you call and talk to them at least”? And the answer to that question is what I really want to talk about.

Of course, my personal political status as a “government hating Libertarian” is well known around the Triangle. The most visible sticker on my truck reads “Legalize Freedom / Outlaw Government”. I have never shied away from being vocal about what I believe in, and I even ran for Lieutenant Governor of NC back in 2008 as the Libertarian candidate. A number of you probably voted for me back then.

But, now, running a business, you would think that I would put politics aside and just do the expedient thing, right? Well, hold on a minute…

When I first founded Fogbeam Labs, even before Sarah or Eric had joined on as co-founders, one of the first things I did was write out a “Mission and Values Statement.” I was inspired to do so by reading Jim Collins’ Built To Last, and I really bought into the idea of building a bedrock foundation of core values for the company. This was not a marketing exercise, or a “positioning” maneuver, but a sincere statement of what our values would be, mainly based (at the time) on my personal principles. Later, as co-founders joined, we reviewed the Mission and Values statement and made small tweaks here and there, but the essence of it has remained much the same for a couple of years now. We like to think we actually do live and work according to these principles.

So, what values do we claim? Glad you asked. You can read our entire Mission and Values positions at http://www.fogbeam.com/company.html, but here’s an excerpt:

We favor. . .

  • Transparency and openness… over secrecy and information hiding … in our relationships with each other, our partners, the F/OSS community, and our local communities.
  • Critical thinking, logic and reason … over … superstition, blind adherence to dogma, and groupthink.
  • Respect for the individual and their freedom of choice … over … herd mentality, conformance for the sake of conformance, and fear of what we consider different.
  • Courage and the willingness to commit to our principles … over … knee-jerk reactions, conformance to peer pressure, and compromise of our fundamental values.
  • The long view and building for the future, while not sacrificing the present … over … short-sighted compromise of our vision and values in order to achieve a tactical objective today.
  • Being Good … over … Being Evil.

“We’re the Good Guys”

So that’s what we claim to represent, or at least what we wrote down a few years ago. More recently, we were doing some work on “positioning messages” and got into a discussion about different things we could try to be: “The Anti Microsoft” or “The Anti IBM” or “The Company That Fights For The Users”, etc. During that discussion, one simple phrase emerged, and it resonated with every member of the team – “We’re the good guys”.

Fundamentally, underlying everything else, that’s our message. We’ve made the same point when we’ve been vocal about defending the Open Web, and we’ve backed that position financially by donating money to local 501(c)3 nonprofit organizations like Splatspace.

In the end, this discussion comes down to this: we have made a claim that we value “being good over being evil”, that we value openness and transparency over secrecy and information hiding, and that we value respect for the individual and freedom of choice. And in our considered opinion, implicitly endorsing the status-quo in regards to the activities of our national intelligence community, would be inconsistent with those principles.

We’ve also claimed to have the courage to actually stand by those principles. So the decision we face is this: Do we demonstrate the integrity to actually be who we say we are, and to actually live by the principles we claim? And simply put, the answer is “Yes. Yes we do.”

Are we taking a big risk by simply publishing this? Yes. We risk that potential customers and/or investors or partners will disagree with our position, and will shy away from working with us as a result. We risk remaining under-capitalized and not having the resources to get to the next level indefinitely. We risk having a competitor step in, do a deal with the intelligence community and use the money to kick metaphorical sand in our faces. And that’s OK. Having integrity entails taking risks sometimes. And sometimes the consequences are severe. Other individuals have suffered severely for their decisions in recent months… people have been exiled from the homes, businesses have been shuttered, and reputations have been damaged. For us, however, we choose to remain true to ourselves and our principles, consequences be damned.

In today’s society, it is trendy to mock companies for choosing to maximize financial returns over all other considerations. Many people no longer believe it is even possible for a company to have principles, or at least any principle beyond “make as much money as possible at any cost”.

Clearly we believe differently.

Companies can have principles that go beyond profit maximization, and as you might guess, I believe that all companies should do so. If you haven’t done it yet, I would invite you to sit down and ask yourself what principles your company is operating by. If you don’t know, find out. If nobody knows, then get the team together and decide. Write them down, publicize them widely, and – most importantly – stick to them. Maybe you’ll make less money as a result. Maybe you’ll make more money as a result. More likely, you’ll never actually know. But you’ll feel better either way.