John Beatty, cofounder of Bix, moved to San Mateo, Calif., in 1997, fresh from a computer science undergraduate program at Brigham Young University, in Provo, Utah. As a software engineer, he says the only places on his radar screen were Silicon Valley and Redmond, Wash., home of Microsoft. He says he thought Silicon Valley would give him more interesting job options, so he joined Cambridge Technology Partners, a midsize consulting company with a number of offices in San Francisco's Bay Area. In 2001, he joined some friends who were developing Infrasearch, a peer-to-peer file-sharing product; one month later, the company was acquired by Sun Microsystems. Beatty moved over to Sun Laboratories, developing decentralized computing technologies, then joined BEA Systems, in San Jose, working to investigate the future of the Java language. In January, he quit to start his own company.

“I had assumed for a long time that I would start a company,” Beatty says. “Being in Silicon Valley with the dot-com thing going on in the late ’90s made it seem like a fun thing to do. My plan was to get experience, get networked, get a financial cushion, and go start something.”

PHOTO: Bix

Vote Now: Bix plans to enable anyone with a Web site to run a contest in the "American Idol" format, that is, with the outcome determined by viewer votes. Entrepreneur John Beatty, shown on this Web page, joined the founding team shortly after VCs funded the company earlier this year. Bix expects to launch its service in a few months.

For a few months, Beatty worked alone, trying to develop a Web-based service that would apply the model of Amazon’s intelligent recommendations to media in general. For example, the service might recommend local events or movie openings based on a consumer’s taste in books. Beatty dropped that project in April when he met Mike Speiser, now the CEO of Bix, which had just incorporated and raised money—$6.5 million from Trinity Ventures, Sutter Hill Ventures, and smaller investors, including Stanford University.

Bix is developing what Beatty calls a “talent platform” for the Web. It packages the American Idol model of talent competitions with viewer votes to enable anyone to run such contests online. Bix plans to bring in revenue through contest sponsorships, advertising, and consumer downloads.

Bix is testing its service now by invitation only. Its first public announcement was to be made by 1 August. After a few more months, and product iterations, Beatty expects to open the Bix service to the general public.

Photo: Red Seal

Security Alert: Scot Malloy [left], Alain Mayer [center], and Brian Laing founded Red Seal Systems to give computer network administrators an easy way to spot security problems. VCs funded the group in mid-2004, and ships its first commercial products this month.

Scot Malloy, cofounder of Red Seal Systems, got his EE degree from Lehigh University, in Bethlehem, Pa., and worked at a variety of engineering companies in Pennsylvania in the late '80s and early ’90s. He developed hardware and software for hospitals and consulted for the aerospace and petrochemical industries. Then, in 1993, he moved to San Francisco to take a job with Documentum, a start-up in Pleasanton, Calif., that had developed a document-management system—a tool for securely tracking, storing, and backing up information. It was used, for instance, to manage the piles of paperwork involved in the development and approval of the drug Prozac.

“I had always wanted to come here,” Malloy says. “Silicon Valley is where the action is for someone in technology.” At the time, his girlfriend, now his wife, also was eager to move back to the Bay Area.

“It was interesting times,” Malloy said. After a recession in the late '80s, Silicon Valley was starting to boom again. Malloy essentially got a degree in start-ups at Documentum, as the company went through a complete growth cycle, with an IPO in 1995, and then continued growth.

Malloy walked away in 1999 with enough money for a down payment on a house and experience that was priceless. “That sealed the deal for me,” he says. “From that point on, I wanted to do my own start-up.”

In 1999, at the height of the dot-com bubble, he joined Reactivity, a company in Belmont, Calif., that developed secure XML-based infrastructure products, and he did consulting for start-ups. A year later, Reactivity spun out a company called CenterRun, a product that enables customers to rapidly provision, track, and update their networked application services across many network devices, and Malloy went along as its first non-founder employee. But times were getting tough, and after 9/11, they got a lot more difficult. “It was hard to get funding, hard to get customers to spend money on technology,” he says. In 2003, Sun bought the technology, which it now uses to distribute software to server farms.

Back in the early days of CenterRun, Malloy and the chief technology officer, Alain Mayer, had discussed Mayer’s idea of combining information from the various products that make up a network—routers, firewalls, and so forth—to identify problem areas that no network-security package could find using just a part of that data.

After the sale of CenterRun to Sun, Malloy and Mayer spent about a month and a half trying to find out if any other companies were providing such third-party data analysis. They determined that the field was wide open.

Malloy and Mayer met up with Brian Laing, an entrepreneur pitching a similar concept, and they made the rounds of the venture capital community.

“The VCs in 2003 were very cautious. Many were nursing along existing investments and weren’t opening new investments yet,” Malloy recalls. “I kept telling myself that it was the worst time to be doing this, but we were convinced we had a good idea.”

Things started looking up in 2004. In the second half of that year, the company, now called Red Seal, got $14 million from Venrock Associates, Sutter Hill Ventures, and Leapfrog Ventures. For Malloy, the money came just in time.

“I went right up to the edge financially,” he said. “My wife was none too pleased with me at that point, and I was about to step back from it and go out and get a job.”

In the fall of 2004, Red Seal leased office space and began buying equipment and hiring people. The company now has 33 employees, mostly engineers, and is about to add a sales and marketing staff. It came out of stealth mode on 12 June. Red Seal has developed a rack-mounted appliance, essentially a dedicated PC that can be installed in any large computing environment in half an hour. It can analyze the network on demand and spit out visualizations of security issues and suggestions for fixes. The company just started beta testing, and it plans to ship its first commercial products this month.