Start-Up Palo Alto Attracts Backers With Fresh Approach

What's got backers so excited is Palo Alto's technology: next-generation firewalls that the company said were designed from the ground up to deal with Web applications such as Skype, instant messaging, video, Software-as-a-Service and other software designed to circumvent traditional firewalls.

"It used to be that an application such as e-mail could be blocked or protected on the network because you knew it came through a specific port on the firewall--say Port 80--but an application such as Skype or an instant-messaging application has really been designed to get around the typical firewall structure," said Lane Bess, president and CEO of Palo Alto, which was founded in 2005 and began shipping its first product in June 2007. Palo Alto's products use deep-packet inspection to offer not only features of traditional firewalls but also capabilities such as policy management, URL filtering, threat filtering and "very granular visibility," Bess added. Jim Vanderzon, president of Arlington, Va.-based solution provider Sun Management, said Palo Alto offers a simpler, more powerful solution than rivals such as Juniper Networks Inc., Sunnyvale, Calif., or Cisco Systems Inc., San Jose, Calif., that are bolting other features onto their legacy firewall technology. "I liken it to attaching a wagon to a Corvette and calling it a pick-up truck," Vanderzon said of other vendors' firewall offerings. "Palo Alto can fully understand the application and make a determination off of that [as to how to deal with the traffic]," he said. Palo Alto has been generating buzz for both its technology and its recent executive appointments. Bess left his role as executive vice president of global sales at Trend Micro Inc., Cupertino, Calif., to join Palo Alto in July. He was followed shortly thereafter by Nancy Reynolds, Trend Micro's channel chief, who left to join Bess at Palo Alto in September. Now Bess and Reynolds are looking to use their extensive channel backgrounds to bulk up the vendor's partner strategy. "My charter is to build a sales and distribution channel that will allow this great technology to find its way to an IPO," Bess said, adding that, despite the current state of the economy, his goal is to take the company public three years from now. Palo Alto sells 100 percent through the channel through a cadre of about 75 partners, Bess said. The bulk of the company's business, which now numbers more than 100 customers, is coming through a group of about 10 to 15 of those partners, a number Bess wants to see grow. Bess hopes that solution providers disillusioned by rivals that offer slim margins and over distribution will turn toward Palo Alto. "Our product is so neat that it provides the opportunity for channel partners to move away from any one of those vendors to our platform and actually take business away," Bess said of competitors such as Cisco, Juniper and Check Point Software Technologies. Bess believes Palo Alto makes a compelling option for security solution providers looking for something fresh. "I'd like to become an exciting, new solution for the channel, and through that, at a time when the economy may be bad, be the bright spot, the exciting technology and in the process welcome them into a really good program," Bess said. "There may not be anything fancy here, it may be a lot of the stuff that we focused on at my past company [Trend Micro] being applied here, but that's OK with me."