Thursday, Jul 24, 2008
Earthlink's founder, Sky Dayton, explains why spending $7.5 million for the business.com domain name was a smart deal.
Sep 18, 2000 | Sky Dayton founded his first company before he was old enough to drink. Next, after having chosen technology instead of college in 1988, the Greenwich Village youth turned California surfer founded Earthlink, now the nation's second largest Internet service provider.
Earthlink is valued at $1.4 billion, so one can assume Dayton is now a very rich man. But the 29-year-old isn't ready for a break quite yet. Even as he continues to be chairman of the board at Earthlink, Dayton is also setting off a stream of new businesses at eCompanies, the Santa Monica incubator that he and former Disney executive Jake Winebaum founded in June 1999.
Dayton says he spends most of his time at his new venture, and one can understand why. The incubator has already founded about a dozen start-ups including Business.com -- which Dayton calls, with perhaps just a touch of over-the-top extravagance, "the Yahoo of business." Last month, eCompanies announced the creation of a wireless division in partnership with Sprint PCS, the cellphone service provider.
Still, so far, eCompanies looks more like a Rumplestiltskin than Warren Buffet. Business.com is best known for paying $7.5 million for its domain name -- hardly something to be proud of -- and none of eCompanies' other investments seem poised for break-out, Earthlink-like success. Dayton himself may be best known in certain sectors of the Web for his affiliation with the Church of Scientology -- and Earthlink's most recent headlines have focused on its entanglement with the FBI's plan to place its Carnivore surveillance software on the Earthlink network.
Dayton was reluctant to talk about Scientology. But he has no problems being optimistic about eCompanies and was also more than willing to discuss Earthlink's run-in with the FBI.
Earthlink spent some time in court trying to keep the FBI from installing Carnivore on its network. What was the problem?
Earthlink felt that the Carnivore process was burning down the house to get the nails. It was too excessive. We had always cooperated with law enforcement officials when they asked us to and it worked pretty well. We wanted that process to continue. When we got an order from a judge then we'd comply. But Carnivore went further. The FBI essentially said we want to set up an office inside your data center, and "oh, we're not going to go through things without getting a search warrant." The network is a very complex thing, where small changes can have dramatic effects. And any time you introduce something new to the backbone -- which is essentially what Carnivore does -- there is a chance that you'll run into problems. So we just wanted them to show us a search warrant and then we'd help.
Are you satisfied with the deal you ended up making with the FBI?
Not necessarily, but it's beyond Earthlink at this point. It's one of those things where we were on the frontier. We have to do what they want whether we like it or not. But clearly the FBI made a mistake choosing the name Carnivore. From a public relations perspective, it was a disaster waiting to happen.
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