In Hot Pursuit of the Wi-Fi Wave

Can Boingo Wireless, from the founder of EarthLink, turn hot spots into money?

For Sky Dayton, it seems the surf is always up--whether on the beach or on the Internet. Dayton helped pioneer the Web in 1994 when he started EarthLink Inc. (ELNK ), now the third-largest Internet service provider. And five years ago, he learned to ride the waves. "He took the sport up with a vengeance," says business partner Jake Winebaum, a former Walt Disney Co. exec. "He's as intense and fearless in surfing as he is in business." Dayton, 30, often works from 8 a.m. to midnight--yet still breaks off when the surf gets gnarly in Malibu.

He'll need all the intensity he can get as he tries to build a business on Wi-Fi, short for wireless fidelity. Four months ago, Dayton started his new company, Boingo Wireless Inc., to capitalize on the slice of wireless spectrum that allows people to tap into the Net from anywhere to retrieve e-mail and surf the Web at lightning speed.

He launched Boingo's Net access service on Jan. 21, charging from $7.95 for one day of use to $74.95 for a month. Boingo software on notebook computers lets you easily connect to the Web when you're within range of a Wi-Fi hub. The Santa Monica (Calif.)-based company is forging deals with dozens of operators of local Wi-Fi hot spots in hotels, airports, and elsewhere to create a nationwide net. The company splits the proceeds with the network operators.

For Boingo to live up to its buzz as the most promising startup in the Wi-Fi world, Dayton needs to win over a host of partners. He has an audacious plan to boost the number of hot spots that can be reached through Boingo from about 500 today to 5,000 by yearend. Expanding Boingo's reach will help bring in the second set of partners he needs: big phone companies and Internet service providers, which are expected to bundle Wi-Fi with cell-phone or Net-access plans. So far, Boingo has a deal with only one major telco, Sprint Corp. (FON ), which provided some of Boingo's $15 million in startup capital. Meanwhile, Dayton faces competition from the likes of Joltage, a New York startup that launched Wi-Fi service on Mar. 22. Dayton's EarthLink pedigree may have given him a head start in the race, but it doesn't guarantee he'll win. "Boingo's not a slam dunk," says Timothy P. Bajarin, a consultant with market researcher Creative Strategies Inc.

Luckily for Dayton, his track record at EarthLink lands him meetings with just about any potential partner. In December, Dayton inked an alliance with Wayport Inc., an Austin (Tex.) company that had already built more than 400 Wi-Fi systems in Hilton hotels and other public places. His pitch: The two could grow the Wi-Fi market faster together than alone. "Sky has proven himself before, and he lends credibility to Wi-Fi," says Wayport CEO Dave Vucina.

The way Dayton sees it, his confidence as an entrepreneur is a reflection of his free-spirited upbringing near Los Angeles. His mother, a poet, and father, a sculptor, encouraged him to pursue his passions. When they discovered him drawing airplanes on his bedroom wall as a toddler, they didn't yell at him. Instead, they urged him on. "I ended up with a huge airplane mural," Dayton says. He also was raised a Scientologist, which, he says, "teaches you how to shed baggage in your life and see the big picture."

Although Dayton inherited the laid-back manner of his bohemian parents, he always had a competitive streak. "He used to race on skateboards and play racquetball, and he'd work himself so hard he'd pass out trying to win," recalls school pal Adam Walker, now president of DollarWorks Inc., a consumer-finance company. Dayton graduated from high school at 17 and decided to forgo college to try his hand at business. "Being an entrepreneur is like getting several MBAs," says Dayton. Just two years out of high school, he started a coffeehouse and graphic-design firm--both successful--before launching EarthLink.

He might have benefited from some schooling in business basics. ECompanies, the startup incubator he founded in 1999 with Winebaum, failed to turn out hits from the 10 or so companies it launched with a total of $20 million. It's now a holding company for four surviving offspring, including Boingo. Dayton admits eCompanies threw money at half-baked ideas. "What I learned is that just because you have a great idea, that doesn't mean the world's ready for it," he says. We'll soon find out if the world is ready for Boingo.

By Arlene Weintraub in Santa Monica, Calif.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE