Sky Dayton

Founder of EarthLink

• Born: August 8, 1971
• Place of Birth: New York, New York

Primary Company/Organization: EarthLink

Introduction

Entrepreneur Sky Dayton, at twenty-three, was already the owner of two successful Los Angeles coffeehouses when he founded EarthLink, an Internet service provider, in 1994. A millionaire by age twenty-six, he went on to cofound eCompanies, an Internet start-up incubator; Boingo, a Wi-Fi software and service provider; Helio, a mobile virtual network operator for the youth market. He is also a member of the Warren Bennis Leadership Circle of the Center for Public Leadership at the Kennedy School at Harvard University

Early Life

Sky Dylan Dayton was born August 8, 1971, in New York City. His father is a sculptor, and his mother is a poet. The couple moved to Los Angeles when Dayton was a toddler, and it was in that city that Dayton grew up. His grandfather, an IBM Research Fellow, introduced him to computers when Dayton was nine. He was voted “most likely to succeed” in his fourth-grade class. A window-cleaning business he started when he was still in elementary school signaled his entrepreneurial spirit. He made a few dollars cleaning the windows of his family's apartment but soon realized that his income would increase if he washed more windows. After he distributed flyers under the doors of neighbors, his first business proved successful.

His parents, both Scientologists, sent him to the Delphian School, a boarding school in Sheridan, Oregon, based on the teachings of L. Ron Hubbard, founder of Scientology. He dreamed of being an animator and during an internship helped create the Elephant Man skeleton used in the video of Michael Jackson's Leave Me Alone. In 1988, when his application to the California Institute for the Arts was denied, he decided on a business career. He lied about his computer skills to get a job in the graphics department of a Burbank advertising firm; three months later, he was head of the department. He then moved on to work at a larger ad agency, Mednick and Associates, until he was eighteen.

In 1990, he and a friend opened a coffeehouse, Café Mocha. Six months later, the coffeehouse, with its poetry readings and discussion salons, had become a popular West Hollywood gathering place frequented by the likes of Quentin Tarantino and featured on MTV. Dayton opened a second coffeehouse, Joe. In 1992, he started a computer graphics firm and targeted the entertainment industry. Soon his clients included Fox Television, Disney, Columbia, Sony Pictures, and Warner Bros. By twenty-one, he had established three successful businesses.

Life's Work

In the early 1990s, Dayton wanted to get online. He searched a week for an Internet service provider (ISP) and spent eighty hours trying to set up a working Internet connection after he had chosen one. Deciding there had to be a more effective way, he created a business plan for an ISP. It took him more than a year, but he eventually raised $100,000 from investors. EarthLink was formally incorporated in March 1994, and the first customer signed in July. The company started in a six-hundred-square-foot office in Pasadena, California. It was filled with used furniture; the services ran on ten 14.4 modems, two used Sun workstations, and a two-line phone, one for sales and one for technical support. However, less than a year later, Dayton introduced EarthLink Software, giving customers one of the easiest and most direct routes to the Internet.

EarthLink was still a local business at this point, but in August 1995 the company signed a contract that changed that status. Dayton signed with UUNET Technologies, a company that was already providing Internet backbones for America Online (AOL), AT&T, and Microsoft, and became a national company providing Internet service in nearly one hundred cities. Three months later, EarthLink began offering a flat usage fee, a rare move at a time when AOL, the giant in the ISP forest, was still charging by the hour. Also in 1995, Microsoft agreed to include EarthLink on the Windows 95 desktop.

EarthLink was also establishing a reputation as a customer-friendly company that offered friendly, competent customer service twenty-four hours per day, seven days per week. At a time when Internet usage was exploding, Dayton understood the connection between retention of customers and profitability for his company. In 1999, eight hundred of EarthLink's thirteen hundred employees were supplying technical support.

Dayton's strategies were working. EarthLink was retaining satisfied customers, adding new ones, and becoming the fastest-growing independent ISP in the United States. In October 1997, the company had more than 200,000 customers; less than a year later, that number had almost doubled. In February 1998, a deal EarthLink struck with the long-distance company Sprint added another 130,000 customers and gave the growing ISP $24 million in cash and another $100 million in credit. In August of the same year, Apple Computer announced that it had chosen EarthLink as its ISP for the one-month free Internet access that would be provided with the purchase of each new iMac. By the end of the decade, EarthLink had 1.5 million customers.

In September 1999, the news of a $4 billion merger between EarthLink and another ISP, MindSpring, broke. The merger was completed in February 2000. The new company took the name EarthLink, but company headquarters would be in Atlanta, MindSpring's home base. The move not only allowed the new EarthLink to jump ahead of Internet access providers CompuServe, Microsoft Network, AT&T WorldNet, and NetZero with its free Internet access offer; it also made Dayton's company the country's number-two ISP, behind AOL. After the merger, Dayton stepped down as acting chief executive officer (CEO) but remained a company director.

Dayton and Jake Winebaum, who headed Disney's Internet businesses, had been talking for years about starting a business together. In June 1999, they founded eCompanies, an idea company that would launch other companies. They had no difficulty raising capital. Within two months, they had raised $130 million from investors, who included both EarthLink and Disney. However, most of their start-ups performed poorly. The exception, Business.com, a business search engine and web directory that proved moderately successful, was nevertheless a subject of mockery because of the exorbitant amount (reportedly $7.5 million) that Dayton had paid a cybersquatter for the domain name.

Just as frustration with ISPs led Dayton into EarthLink, frustration with wireless connections led him into his next venture. He founded Boingo in December 2001. Boingo aggregated Wi-Fi “hot spots” into one access point for subscribers. Dayton's $15 million budget was insignificant in comparison to the high dollar capital he and Winebaum had raised for eCompanies, but it was enough for him to provide short-range, high-speed Wi-Fi connections in airports (including some in Texas and California), hotels (including some in the Hilton, Marriott, and Sheraton chains), cafés, and other places people were likely to seek Wi-Fi connections. The subscription service was set up with a cut going to the hot spot. By January 31, 2002, there were four hundred such places in the network. When the company went public in 2011, the network had almost nineteen thousand hot spots in the United States alone and thousands more globally. The company became one of the largest Wi-Fi networks in the world.

In 2004, on a visit to Korea, Dayton became aware of cell phones on which people were listening to music, watching videos, and playing games. In 2005, Dayton became CEO of Helio, a joint venture of EarthLink and SK Telecom, Korea's leading wireless carrier, to bring these phones and the services they require to the United States, targeting the large youth market and other early adopters of the latest technology. He resigned as chairman of EarthLink when he accepted the CEO position, although he remained as a director. Virgin Mobile USA acquired Helio in 2008.

Dayton stepped down from Boingo's board of directors as chair and a board member in 2014 in order to focus on other ventures. He joined Age of Learning, a digital learning company, as an investor and board chair in 2014, and has also joined the boards of companies such as Diffbot and Artsy. His investments include Ring, a video doorbell maker, which was acquired by Amazon for $1 billion in 2018, and Swarm Technologies, a micro-satellite start-up that was acquired by SpaceX in 2021.

Personal Life

Almost as well known for his love of surfing and snowboarding as for his entrepreneurship, Dayton first took surfing lessons in 1998. He was immediately hooked on the sport. He has been known to steal away from work to surf in Malibu, the Channel Islands, and Santa Barbara and admits to owning six Channel Island boards. He has also surfed in Fiji and Baja. Surfparks, a company that has developed wave-riding facilities in Florida and California, asked Dayton to serve as adviser, which he did. However, he is still a purist and prefers the real thing. He started snowboarding in the early 1990s, but he wrote on his blog in 2010 that after fifteen years of snowboarding, he was switching to skiing. He is a member of the board of trustees of the U.S. Ski and Snowboard Team.

Dayton is married to science-fiction novelist and screenwriter Arwen Elys Dayton. Like her husband, she is a Scientologist who attended the Delphian School. The couple have three children: a son, born in 2001, and two daughters, born in 2002 and 2006.

Bibliography

Ankeny, Jason. “Sky Dayton's Next Big Thing (Again).” Wireless Review Mar. 2005: 44–49. Print.

Caulfield, Brian. “Sky Dayton.” Internet World. 1 Apr. 2000: 94–98. Print.

Junge, Stefan. "Sky Dayton: Founder of Earthlink." IdeaMensch, 17 Aug. 2023, ideamensch.com/sky-dayton/. Accessed 8 Mar. 2024.

Lee, Alfred. “Connecting: Boingo Wireless Chairman Sky Dayton Cites Communication as a Guiding Factor in His Artistic Pursuits and His Internet Business Career.” Los Angeles Business Journal 31 May 2010: 12–13. Print.

“News of the Week: Sky Dayton of Helio LLC Will Step Down.” Los Angeles Business Journal 4 Feb. 2008: 4. Print.

O'Shea, Dan. “Sky Dayton Is Smarter than You, Richer than You and Younger than You. (But He's Very Sorry about That.).” Wireless Review 1 Apr. 2002: 48–57. Print.