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Tech Entrepreneurs Apply Lessons From Tumble to Fledgling Ventures

In some ways, Sky Dayton hasn’t traveled far from his days back in 1993, when he was scrounging for
$1,000 to start up what is now one of the largest Internet-service providers in the U.S.

Kara Swisher Wall St. Journal

"I was maniacally focused then and I am maniacally focused now," says the founder of EarthLink.

Today, he is trying to launch Boingo Wireless, an attempt to bring order and ease to customers who want to
tap into public wireless at high speeds outside the home and office. It’s a central service for access to
wireless hotspots across the country.

"Over time, I learned that details are the things that really matter when building a business," Mr. Dayton
says.

It’s a common response from entrepreneurs and tech executives when asked what they learned from the
boom years. Their stories about what they are doing now help explain the temper and tone of today’s tech
industry at its most basic and most innovative level — and give us an idea of what the future might hold.

The party-hearty class of 1999 has embraced the notion of slower growth, reasonable expectations and a
return to customer focus. But that does not necessarily mean a lack of innovation or the feeling of newness.
Many are still excited about making sure past mistakes become the stepping stones to the future rather than
load stones.

Mr. Dayton says he is wiser, though not much older (he’s only 30 years old). After EarthLink merged with
another large ISP, Mindspring, he took a less active role in the company. Instead, he raised a pile of investor
money and started an incubator to develop new start-ups.

Though the firm, called eCompanies, fostered many good ideas, few were successful, earning, with other
incubators, the dubious moniker "incinerator," for all the cash lost. "I definitely learned how much having too
much capital corrupts, because people use it to plug holes rather than really fix problems," Mr. Dayton says.

Still, out of those ashes, he pulled out one of the more promising projects. At Boingo, he is applying old
lessons reinforced by new realities. He has purposefully kept the company small and more focused on
customers than on marketing schemes, for example. And he also is more attuned to making sure systems
are in place, rather than growing without thinking first. Most important, he thinks, is making sure he is
offering a product that people need and will pay to have.

James Joaquin is probably the best example of the changing times. Much of his career has been spent as an
entrepreneur. First, he helped to launch an online calendar site, When.com, that was sold to America Online
in 1999 for $200 million. Soon after, he led an online photo business called Ofoto that was bought by Kodak
last year for an undisclosed amount. He serves as president of the subsidiary.

While he misses the rush of a start-up, he says, he likes the current climate a lot better — no pressure to
raise money and no worries about competitors.

"We have closed the first chapter of innovation and growth, which is a bit sad since my career has been
chock full of start-ups," says Mr. Joaquin. "But, for me, especially personally, running a business and being
concerned with customers and profit margins can be just as exciting."

Eileen Richardson says it’s all about focus. That’s what she found after her experience running Napster, the
controversial music file-sharing company, in its first nine months. Formerly a venture capitalist for almost a
dozen years, she started worrying about the dangers of the dot-com boom in 1999. She decided to plunge
into Napster’s heady rise.

"I thought it would be really exciting to take an idea from the dorm room to the marketplace," she says.

That happened in a big way, as Napster soon attracted millions of users. But it also attracted the ire of the
recording industry and legions of lawsuits over the issue of stealing music. Ms. Richardson left in mid-2000
after bringing in new managers.

After almost a year away, she bit again with Infravio, a start-up in the decidedly less exciting arena of
software that manages Web services. Though not as headline-grabbing, she sees the venture as similar to
Napster in that it seeks the best way to create networks to share information.

But it’s an easier sell now that customers want to make existing technology work rather than add on endless
new features. It’s also easier to take, now that the music industry isn’t attacking her and the press isn’t
swarming her. Plus, now she knows how to deal with skittish investors and building a team unshaken by
trouble.

"I think the best companies are created in a downturn or when times are hard," she says, adding that saner
business models and less competition help companies make better choices today. "It gives you a discipline
of focus on the basics of leadership."

How to conduct oneself as a leader was something Michael Robertson, former head of MP3.com, another
battered online music company, learned in the boom.

That company, also subject to a blizzard of lawsuits, taught Mr. Robertson how to handle fights. At his new
company, Lindows, which makes a Linux-based operating system, he says he is front and center in its
current battle with Microsoft over its name.

"There is always a fight, and the only difference is how it manifests itself and how you handle it," says Mr.
Robertson, who says he’d rather spend time on business strategy than lawsuits.

He decided to fund Lindows with his own money: $4.5 million. He says playing with your own money lends a
certain credibility to the venture. It also removes the endless task of fundraising that takes time from more
important issues.

"Too much focus was on funding and so there was always a confusion between tech and capital," says Mr.
Robertson, who raised hundreds of millions of dollars for MP3.com. "Here, it is a lot clearer situation. If the
tech is good, it should work out."

Mike Homer says he has spent most of the $18 million he raised 16 months ago for his digital-media
management company, Kontiki, on technology. That has meant little marketing and lots of focus on making
his product. Most of the 50 people at the company are software programmers and engineers, working on
bringing high-speed content to customers.

The former executive at Netscape, the highest flying of Internet companies during the boom, says he has
learned that with capital harder to come by, the only thing that matters is creating products people will use,
not "shelfware."

Says Mr. Homer: "Now, you not only need a product strategy but a product, not only a product but
customers, not only customers but real revenues — to even get out of the gate."

Write to Kara Swisher at [email protected]

http://online.wsj.com/article/0,,SB1018213083738230040,00.html

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