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THE CUTTING EDGE

EarthLink's in the Clouds, but a Few of Them Are Angry

Cyberspace: Critics of the Internet service provider's 'boy wonder' founder question his religious ties, firm's viability.

May 20, 1996|AMY HARMON | TIMES STAFF WRITER

It's hard to navigate Southern California's corner of cyberspace these days without tripping over the terrestrial tendrils of Sky Dylan Dayton's EarthLink Network.

The precocious 24-year-old entrepreneur founded the Internet service provider two years ago, and since then it has enjoyed a rise that can only be described as, well, meteoric.

While other fledgling providers have stumbled because of technical problems and lack of capital, Pasadena-based EarthLink is now the third-largest Internet-only consumer access provider in the nation, with more than 100,000 customers--about half in the Los Angeles area.

Nos. 1 and 2, Netcom Communications Inc. and Performance Systems International, both turned to the stock market to finance their growth, raising $140 million and $134 million, respectively, in recent offerings.

EarthLink's expansion, however, has so far been privately funded by an eclectic mix of investors, including El Dorado Ventures, a venture capitalist firm; Warren Musser, president of Safeguard Scientific; and National Media Corp., an infomercial production company.

Dayton, a graduate of the Delphi Academy, which is run on principles set out by Church of Scientology founder L. Ron Hubbard, started his first business when he was 18. He co-founded Cafe Mocha, a West Los Angeles coffee shop, in 1990 and launched a graphics design firm in 1992.

With his latest venture, Dayton has been seized upon as a high-tech boy wonder. He's been hailed as a "Mover and Shaker" by the trade publication MicroTimes, as one of "50 Players to Watch" by Variety, and he's done a stint on KCRW's "Which Way L.A." and made the Los Angeles Business Journal's local list of "Who's Who in High Technology."

Earnest and astute, polished without being slick, Dayton addresses life with a certain equanimity, whether describing the cup-holder arrangement in his new Range Rover or overseeing the swelling of his staff, now numbering about 400.

"To tell you the truth, it's hard to keep track," Dayton said in a phone interview. "There's an orientation group walking by my office right now. Guess I'll wave."

Earlier this year, EarthLink's board of directors, which now includes former AT&T multimedia chief Robert Kavner and Ingram Micro Chairman Chip Lacey, installed some more experienced managers to help keep the firm in stable orbit.

As chief executive, though, Dayton still runs the show. Last month he threw a party to celebrate the firm's move from cramped offices in Los Feliz to cavernous new headquarters in Pasadena, addressed the local Kiwanis Club, and made arrangements so that attendees of the Cannes Film Festival could check their e-mail via EarthLink's network.

But the company has its critics. Earlier this year when EarthLink fell behind customer demand, irate subscribers posted messages with headings such as "Why EarthLink Sucks." Many industry analysts doubt that firms such as EarthLink have much to bring to a business that will ultimately be dominated by giant telephone companies.

And Dayton's involvement in the Church of Scientology--he is listed in a recent issue of the church's Celebrity magazine as having completed one of its management courses--has attracted the attention of church critics and Netizens monitoring a high-stakes legal battle involving dissemination of copyrighted church documents over the Internet.

Discussions on Internet news groups such as la.general and alt.religion.scientology and a World Wide Web site have focused on Dayton's affiliation with the church--and on the actions of another Earthlink employee in battling church critics on the Internet. The global computer network has become an important battleground in a long-running war between the church and critics who say they're exposing the fallacy of its doctrines.

Dayton acknowledges that at the beginning, a large portion of EarthLink employees were Scientologists. With the company's growth, though, the proportion has fallen to a small fraction, he says.

Earthlink also used Hubbard management techniques in its early days. Dayton says the Hubbard methods are secular and have nothing to do with the religion of Scientology, and that in any case they are no longer in use at the company. Dayton vehemently denies any links between the church and Earthlink and says his private religious beliefs are irrelevant to his business.

He has a lot of other things on his mind. He wants to turn Pasadena into a model Internet city. He wants to continue to add customers. And he wants to prove to the world that smaller access providers such as EarthLink can actually benefit from the onslaught of giants such as Pacific Bell and AT&T. To that effect, he has written a strategy paper that is winning praise from analysts.

"They're focused on building a strong value-added type of service with personalized and community content," said Aimee Pamintuan, an analyst at Jupiter Communications in New York. "And they know they need to work on distribution channels."

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