Alarm:clock is a daily news site that evaluates privately-held technology startups in the areas of hardware, software, the Internet, and wireless communications. One industry overview and one company profile by alarm:clock’s editors come to Technology Review every Wednesday by special arrangement.

Traffic Taming
Three startups test distinct approaches to helping drivers avoid gridlock.

As everyone knows, one of the major problems hampering evacuation efforts during hurricanes Katrina and Rita was traffic congestion. Given the number of people fleeing the storms, the gridlock may have been inevitable.

But several startups are trying to alleviate everyday slowdowns by giving drivers real-time information online about the worst congestion points.

One of the leaders in this market, Traffic.com (previously Mobility Technologies), recently announced plans for an initial public offering. And a flurry of other activity may mean this is a corner of the information services market to keep an eye on.

Traffic.com provides real-time traffic information in 24 of the country’s largest metropolitan areas. It owns, and continues to expand, a wireless digital sensor network for collecting traffic and logistics data.

The network currently covers 23,000 lane-miles of roadway, where it relays information about how many cars are on the road and how quickly they’re traveling. The sensors transmit the data over a wireless network to a data center, where they’re warehoused, mined, and aggregated for distribution to customers via Internet, radio, TV, and wireless partners.

Information from the sensors is supplemented by video feeds, aircraft observations, and cell-phone reports from drivers. The company also monitors accident and construction  information; and when it calculates likely delays on common routes, it factors in special events, such as sporting events and conventions.

Motorola recently added Traffic.com data to its Viamoto wireless service, which provides location-based information through subscriptions. Traffic.com also powers the traffic section on Weather.com.

Such syndication deals are the company’s primary revenue source, with radio and TV stations as the most common users. For the first six months of 2005, the company’s revenues were $22.7 million and losses were $11.3 million.

In May 2005, Traffic.com raised $20 million in private backing. The company’s investors have included TL Ventures, Columbia Partners, Pennsylvania Early Stage Partners, and Delaware Valley Community Reinvestment Fund. In its upcoming IPO, the company hopes to raise another $86.3 million.

A less mature but well-connected online traffic company is Seattle-based Inrix, launched in 2004 with technology licensed from Microsoft. The company’s founders and executives are former Microsoft and Expedia executives; CEO Bryan Mistele previously ran the automotive group at Microsoft.

Inrix uses Bayesian machine learning algorithms to make statistical inferences and predictions about traffic, based on variables such as weather conditions, construction schedules, holidays, sporting events, and historical traffic patterns.

The technology is now in use by more than 3,000 pilot customers in the Seattle area, and Inrix says it will roll out its products nationwide by the end of 2006. The company says users will access the technology via partner channels on a variety of devices, including smartphones and personal navigation devices, in-vehicle devices, PC desktop applications, Web portals, destination sites, and fleet applications.

Inrix recently announced it raised $6.1 million in Series A funding from Venrock Associates and August Capital.

Another traffic startup is Palo Alto-based Circumnav Networks. It turns the cars themselves into traffic data-collection devices, which then share the data wirelessly with other Circumnav-powered cars. This creates a “social network” of traffic information that all drivers in the network can use to select their routes. The prototype data-collecting device doubles as a dash-top traffic and navigation system.

Circumnav has raised seed financing and is currently looking to raise venture capital funding.

Alarm:clock is a daily news site that evaluates privately-held technology startups in the areas of hardware, software, the Internet, and wireless communications. One industry overview and one company profile by alarm:clock’s editors come to Technology Review every Wednesday by special arrangement.

Screening Out Malware
Bit9’s system prevents the installation of spyware, malware, and other unauthorized software across corporate networks.

Company: Bit9
HQ: Cambridge MA
Founded: 2002

Management: George Kassabgi serves as president and CEO. He previously held executive positions at Progress Software and BEA Systems. Todd Brennan is chairman, CTO, and co-founder. He sold his previous company, Okena, to Cisco in July 2003, and before that was a researcher in the Satellite Communications Division at MIT’s Lincoln Laboratory. Allen Hillery co-founded Okena and Bit9 with Brennan, and now serves as quality assurance architect for the company.

Investors: Last December, Bit9 raised a $6 million Series A round of venture capital from Highland Capital Partners and Atlas Ventures. They got off the ground in July 2003 with a $2 million federal research grant from the National Institute of Standards and Technology’s Advanced Technology Program.

Business Model: Bit9 keeps hackers, disgruntled employees, and anyone else from installing spyware, malware, and other unauthorized software within corporate networks. Bit9’s Parity server monitors laptops, desktops, and servers via agent software that scans for unauthorized installations across a network. The Parity server maintains a list of files that are authorized by a systems administrator, and unrecognized or suspicious files are blocked by the agent software and marked for review. According to Bit9’s recent funding announcement, the initial version of the company’s software is currently being used by “dozens” of customers.

Competitors: Bit9 faces extensive competition from other startups, including Webroot, SecureWave, and Websense, as well as established players, such as Symantec and Computer Associates.

Dirt: The security software market is crowded – but it has always been something of a meritocracy: if you have good products, you usually get noticed. Bit9 is competing in a dynamic space, where the demand for effective products is being driven by the ingenuity of Net ne’er-do-wells. Bots, viruses, worms, and other malware, in particular, have become increasingly dangerous. Once designed merely to cause disruption, they are now capable of stealing sensitive information. As a result, corporations will spare no expense for a reliable security product.

Given its management’s previous experience in selling Okena to Cisco, we believe Bit9 is a likely acquisition candidate. This sector is known for its consolidating ways, particularly since the big players tend to buy rather than build new products.