Take Boeing, for example. Last year, Barrons compared Boeing with its rivals Lockheed Martin and Northrop Grumman, and said Boeing was the better bet for investors mainly because of the company’s homeland security work. Only last month, Boeing closed its homeland security division, and is busily laying-off most of the people who worked there. (Take a look in this week’s links for this one –- it is VERY interesting.)
Barrons, Boeing, and all of us were suckered by the homeland security opportunity, which seemed at the time to have infinite funding. Today’s reality says otherwise. The current dearth of funding was probably tipped by Katrina, but it would have come anyway, driven by that age-old imperative of police work, that empires are built of men and women, not computers. I’m not saying it was wrong to do so, but by the time all the new nobility of homeland security got finished hiring their vassals and nephews, there wasn’t much money left over. That was okay, they thought, because the trough was infinitely deep. Only, it really wasn’t.
So it is probably not a good time for homeland security startups, unless, that is, their success doesn’t depend on federal funding. This could all change in an instant, of course, if some terrorist plot succeeds on American soil and federal money flows anew. Let’s hope that’s not the case.