By Michael Riley and Ashlee Vance
In the early morning hours of May 24, an armed burglar wearing a ski mask broke into the offices of Nicira Networks, a Silicon Valley startup housed in one of the countless nondescript buildings along Highway 101. He walked past desks littered with laptops and headed straight toward the cubicle of one of the company’s top engineers. The assailant appeared to know exactly what he wanted, which was a bulky computer that stored Nicira’s source code. He grabbed the one machine and fled. The whole operation lasted five minutes, according to video captured on an employee’s webcam. Palo Alto Police Sergeant Dave Flohr describes the burglary as a run-of-the-mill Silicon Valley computer grab. “There are lots of knuckleheads out there that take what they can and leave,” he says. But two people close to the company say that they, as well as national intelligence investigators now looking into the case, suspect something more sinister: a professional heist performed by someone with ties to China or Russia. The burglar didn’t want a computer he could sell on Craigslist. He wanted Nicira’s ideas.
Intellectual-property theft is hardly unheard of in Silicon Valley. Most often, it takes place when a hacker breaks into a network and goes after a widely used product. This was a physical break-in by an armed robber who was after arcane technology that isn’t even on the market yet. Nicira has spent the past four years quietly developing computing infrastructure software for data centers. According to the company’s sparse website, Nicira’s founders came from the computer science departments of Stanford University and the University of California at Berkeley, and the company counts big venture capital names, including Andreessen Horowitz and New Enterprise Associates, as its backers. Nicira also sought a grant from the Defense Dept. to work on networking technology for the military. Nicira declined to comment for this article. (Bloomberg LP, which owns Bloomberg Businessweek, is an investor in Andreessen Horowitz.)
Those familiar with the burglary refuse to talk about it on the record, citing orders handed down by the federal investigators. In private, they share a common concern: Cyber espionage and nation-state-backed hacking incidents appear to be increasing in frequency and severity. What once seemed the province of Hollywood—high-tech robbers with guns; Internet worms that take out power plants—has become real. They fear that online skirmishes and spying incidents are escalating into a confusing, vicious struggle that involves governments, corporations, and highly sophisticated free-ranging hackers. This Code War era is no superpower stare-down; it’s more like Europe in 1938, when the Continent was in chaos and global conflict seemed inevitable.