Virtualization enables datacenter operators to safely run computations that belong to untrusted tenants. An ideal virtual machine has three properties: a small memory footprint; strong isolation from other VMs and the host OS; and the ability to maintain in-memory state across client requests. Unfortunately, modern virtualization technologies cannot provide all three properties at once. In this paper, we explain why, and propose a new virtualization approach, called Alto, that virtualizes at the layer of a managed runtime interface. Through careful design of (1) the application-facing managed interface and (2) the internal runtime architecture, Alto provides VMs that are small, secure, and stateful. Conveniently, Alto also simplifies VM operations like suspension, migration, and resumption. We provide several details about the proposed design, and discuss the remaining challenges that must be solved to fully realize the Alto vision.