$19.95 for unlimited access, the first ISP in the country to offer a cheap, all-you-can-eat dial-up plan. Later EarthLink signed a similar wholesale access contract with PSINet, bringing the number of dial-in numbers it offers to 1,100. As part of the Sprint deal, Sprint will become EarthLink's third access provider, adding 200 access numbers.
By 1997 most consumer ISPs had gotten out of the once-novel Internet backbone business and leased capacity from major providers such as UUNET (dossier) or MCI. With high-speed cable modem and digital subscriber line (DSL) technologies around the corner, it now makes more sense than ever for consumer ISPs to be "network agnostic," says Forrester Research analyst Kate Delhagen.
In many ways, Dayton and Betty are opposites. Tall and lank, with close-cropped brown hair, Dayton, now 26, is guarded in conversation and is well known as the company's resident worrier. "I worry about everything," he says. Betty, 41, is more jovial and open.
For the past two years, Dayton has played Mr. Outside to Betty's Mr. Inside. Dayton represents EarthLink on the Internet conference circuit while Betty handles the company's day-to-day operations. One week in April found Betty in his office while Dayton flew to Washington, D.C., to lead the president and first lady through the EarthLink sponsored Webcast of the White House's annual Easter Egg Roll.
"I'm the original user of our service," he says. "I go home at night and use it. I dial in via modem. I use ISDN. I worry about all of the long-term stuff, the high-speed access and R&D stuff."
These days Dayton, whose stake in EarthLink is worth about $100 million, is enjoying the fruits of his labors. He bought himself a silver 1997 Porsche Twin Turbo last fall and recently gave his mom a Toyota RAV4. In February Dayton and his wife, Arwen, a budding screenwriter and novelist, paid $1.9 million for a 6,400-square-foot, 1920s-era mansion in Pasadena, Calif.
But financial success hasn't left much time for hanging out with his old buddies. "A lot of the guys he used to spend time with wonder what happened to him," says Walker, Dayton's one-time business partner. "He's joined the big-business gang. That's one of the sacrifices anyone has to make."
When Betty joined EarthLink in 1996, the company had 30,000 subscribers and was growing at a rate of 15 percent to 20 percent a week. Despite Dayton's best efforts, the frantic pace made for virtually nonexistent financial controls, Betty says.
"They didn't know how much cash they had," he says. "They didn't know how much they needed, how much they owed."
Over the following six months, Betty installed the kinds of accounting and financial systems he'd used to manage larger, public companies like Hayes Microcomputer. The corporate makeover helped EarthLink tap investors for the capital it desperately needed to continue growing.
Betty logged 80 to 100 hours a week and claims he was hooked on the company's pace from the moment he stepped into the company's first office. "I go in to meet Sky, and there's 200 people in this little bitty building, and the electricity is just incredible," Betty remembers. "There's nothing like being in the excitement of a start-up."
Before Betty's arrival, EarthLink had raised $4.4 million from existing and new investors to promote its national status after the UUNET deal. But the company burned through the money in a five-month marketing blitz.
In subsequent private placements, EarthLink raised $22.7 million, including investments from Soros, before its $26 million public offering in January 1997. In September the company raised another $15.4 million in a private placement, with $5 million coming from Soros' investment arm, Soros Fund Management.
To continue its expansion, however, it needed more funding. Betty and Dayton spent the first half of 1997 talking to the Baby Bells about marketing partnerships but came away empty handed. Then, in September 1997, EarthLink director Sidney "Sam" Azeez, asked his friend Carl Peterson, president
