How Sky Dayton Thinks About New Opportunities

Sky Dayton is one of those rare tech entrepreneurs who has had mulitple successes. He founded EarthLink in the early-1990s, moved on to Boingo and most recently Helio. Now he's stepped away from Helio day-to-day and is considering his next move. I interviewed Dayton at UCLA Anderson School of Management in front of students and faculty. Video of the interview is here on Portfolio.com. Below is part of our conversation, about the way he thinks about new opportunities.

Q: So what are you doing next?

A: I'm not ready to really say.  I'm looking at it, but I wrote an article back in 2000 called The Internet as Infrastructure, and the idea was if you think back to 2000, the Internet was this new thing, and everybody wastalking about it.

Now you can't live without the Internet.  Everything you do touches the Internet in some way.  So, okay, that's done.  Well, what's next?  I think it's probably more replicating what we already do and doing it faster and cheaper.  I think about something like money, for example.  The idea of walking around with pieces of paper that represent value is kind of silly in the age of the Internet.  That's one idea.  So whatever it is, it's gonna be big.

Q: How do you start to get your mind to go in a direction that might take you there?

A: I think that the best ideas are the most obvious ones.  And for something to be obvious it has to be real to you as an individual.  I came up with the idea for EarthLink after being frustrated about trying to connect to the Internet.  I came up with the idea for Boingo after realizing what Wi-Fi was and using it myself and going, "Wow!  This is gonna be big" - and driving down the street and starting to see Wi-Fi signals popping up everywhere, and going, "Well, somebody needs to go organize all this fragmentation into a single network." 

Helio came about after visiting Korea and seeing how far ahead that country was versus walking down the street in Santa Monica and seeing how people are using their mobile phones.  So what I try to do is I try to use the stuff myself and find - usually it will be a pain-point - something that's frustrating, something that's just so obvious.

Q: Isn't your next thought automatically, "Well, somebody else must've done this?"

A: I don't believe that until I see it with my own eyes, and then I want to see how well they're doing it.  I mean, EarthLink wasn't the only Internet provider.  In fact, we had - in L.A. where we started, we had probably - within six months of starting - easily 100 competitors.  And we just did it better.  Actually, I brought - I was going through my files and I found - I haven't shown this in public since I guess I wrote it. 

This is the original EarthLink business plan, and look at how thin it is.  So whenever they're telling you when you're writing papers and stuff that they need to be long - no.  The best idea is something that you can express on one page.  I was looking - this is my budget.  I have everything I'm gonna buy - how many modems, how many employees, 800 square feet of office space at $1.25 per month.

Q: This is what year?

A: This is 1993 - late 1993 and ultimately started the company in 1994.  Proposal for an Internet service provider - let's see, I've got promotion in here, $5,000, every phone line I'm gonna buy.  Let's see - oh, initial promotion - I have the ads I'm gonna take out.  Ten incoming phone lines - so EarthLink, when I started it, I went to Comp USA and I bought ten modems, and that was my - that's what you could dial into - ten modems.  They filled up pretty quickly.

Q: How much money did you raise with this little document?

A: I raised $100,000.  I was actually driving to meet a potential investor and I stopped at Staples, and I bought this "Confidential" stamp and stamped it on there.  This is interesting - marketing - here's a little section on marketing.  This is it, right here - this big.  And it says, "We will compete by offering the following key points.  (1) Less expensive than existing services.  (2) Wider coverage than existing services.  (3) Faster access than existing services.  (4) Better customer support."

Q: That's it?

A: That's it!  That was the formula.  I mean, to this day that's what EarthLink does 14 years later.  

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