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Modem moguls' paths diverge
One took the money and ran; the other is still searching

By MATT KEMPNER
The Atlanta Journal-Constitution

	JOHN LOCHER / AP Dennis Hayes stopped by a casino in Las Vegas, where he was inducted into a computer industry hall of fame last week. Related: • More photos from Dennis Hayes' career BRANT SANDERLIN / AJC Dale Heatherington, who retired at 36 with a nearly $20 million cash payout, likes to putter around in his home workshop.

Fallen high-tech mogul Dennis Hayes was back in the limelight last week.

Hayes stepped onto a stage near the Las Vegas Strip and accepted congratulations from comedian Bill Cosby and applause from Michael Dell of computer giant Dell Inc. as he was inducted into a computer industry Hall of Fame.

While Hayes reveled in the public recognition -- something he hasn't gotten much of lately -- his former partner, Dale Heatherington, spent another quiet evening at home in Roswell, just a multimillionaire who likes tracking his cat with a homemade radio transmitter.

Hayes was always the one who got the glory. Heatherington was the one who got the money.

Heatherington -- a shy man who at one time owned half of Hayes Microcomputer and had his name on all the important patents -- wasn't mentioned at the ceremony.

Hayes did thank "friends" and company workers in his acceptance speech.

Later he sat on the first row in the audience while an oblivious Cosby joked about how all of the Hall of Fame inductees must be billionaires. Cosby got it wrong.

Hayes has lost almost everything.

He's 53, a business consultant with combed-back silver hair working out of his one-bedroom rental in Manhattan and feeling "underutilized." From his earlier life he has memories and his four children, he says, but not much more.

His company collapsed. His wealth slipped away. His two marriages ended in divorce. The retinas of his eyes degenerated, clouding his vision. He can no longer drive a car. He relies on a magnifying glass to read even on the Internet.

Now, his legacy is fading, too.

Together, Heatherington and Hayes helped develop a PC modem, making it easier for millions of people around the world to connect to the Internet. But they came up in an unforgiving era. Industry-changing devices like the Hayes dial-up modem sink into obsolescence before their inventors hit their 60s.

"That is the nature of technology," says Heatherington, a lean 55-year-old with a lingering mist of red in his gray hair.

"It doesn't bug me in the least. I got my money out of it."

Hayes and Heatherington were twentysomething lunch buddies in the 1970s, working at National Data Corp. in Atlanta. The computer age was still young. Early versions of personal computers were kits hobbyists pieced together.

Over lunch, scribbling on paper napkins, Hayes and Heatherington designed a better modem, one that would hook to the back of computers, allowing people to ditch the clunky acoustic couplers used to connect computers via phones.

Heatherington sank all the money he had -- about $5,000 -- into the venture. They placed ads in Byte magazine, and the orders flowed. Hayes and a couple of other guys would assemble boards for the modems on the dining room table in his house near Oglethorpe University in north DeKalb County. Heatherington would pick up the boards and test them in his basement. They wrapped the modems in foam and shipped them out in what looked like pizza boxes.

By the early '80s, IBM came out with its first PC, and the market for Hayes modems rocketed.

Reliable modems

The patented Hayes modems were good. They worked with all kinds of computers. They had a reputation for reliability. And they came with a new set of commands for better communication between computer and modem.

The commands became the industry standard and the financial backbone of the company. Hayes kept lawyers busy forcing companies throughout the industry to pay license fees to use the commands.

Hayes soon controlled more than half of the modem market, and he told reporters he wanted to run the next IBM or Hewlett-Packard.

While Hayes dreamed of empire, Heatherington dreamed of quitting.

He held the title of senior electronic designer and owned almost half the company. But he wasn't management and didn't want to be. He resisted talking to the press or going to trade shows.

"I was more interested in inventing things," Heatherington says now.

He didn't put in long hours, but he couldn't stop thinking about work.

"Competition was heating up. Technology was moving faster. I just wanted out of the rat race," Heatherington says. "Apparently Dennis enjoyed the rat race, so he stayed."

Heatherington retired at 36. Hayes was shocked. He knew there was more money to be made in the years ahead.

The company was recruiting people with master's degrees and Ph.D.s. Heatherington had a two-year degree from a technical college. "I think he felt funny having that kind of horsepower looking to him for guidance," Hayes says.

Heatherington walked away with a deal that would pay him something approaching $20 million over 10 years.

If he had stayed longer, he might have made more money, Heatherington says. "But how much money do you need? You go through life once. You've got a certain number of years to live."

The two men rarely talk now. It's clear they don't completely get each other.

Heatherington once saw an interview in which Hayes explained why he was passing on an offer to sell his company for $140 million. Hayes said something about how he wasn't sure what he would do with himself if he didn't have his company to run.

"I never understood why he would say something like that," Heatherington says. Heatherington never drew a regular paycheck again but found plenty to do.

Hayes became an Atlanta high-tech celebrity. He and his first wife, Melita Easters, threw lavish parties and sponsored symphony concerts. With their two children they lived in a house in Atlanta worth more than a million dollars. "I remember getting to a point of not having to ask what things cost," he says.

He collected art. "At one time I had the largest collection of Ansel Adams prints east of the Mississippi."

Garry Betty, now chief executive of EarthLink, worked for Hayes as an executive in the 1980s.

"He was on top of the world," Betty said. "Everybody talked in hushed tones about the success that Hayes had. There was a great deal of mystery since the company was private."

"It was amazing the cachet associated with the Hayes name and brand. ... None of that would have happened without Hayes' foresight and attention to detail," Betty says.

Trouble in wings

But trouble loomed.

Glenn Sirkis, who now runs a business that sells digital equipment to TV stations, was an executive vice president for Hayes in the early days until, he says, Hayes ousted him.

Sirkis says he saw problems early on. Hayes wasn't expanding beyond modems fast enough; he wasn't interested in taking the company public, Sirkis says. As the company grew, Hayes insisted on running the business on a daily basis, and that exceeded his management skills, he says.

Hayes tried to sell database software. It was a bust. He tried to market equipment to Internet service providers. But on his watch, modems were all that ever truly hit.

Competitors were catching up, making cheaper and faster modems. Computer makers built modems into their equipment, bypassing the market for external modems. By the mid-'90s, Hayes was churning out more units, but profit margins were shrinking. Short of cash, the company took refuge in bankruptcy court.

	Dennis Hayes' first wife, Melita Easters, got about 9 percent of Hayes Microcomputer in a divorce settlement.

By then, Hayes had divorced his first wife in what was then the largest divorce settlement in Georgia history. Melita Hayes got about 9 percent of the company and backed a competing plan for getting Hayes out of bankruptcy.

Hayes Microcomputer emerged from bankruptcy; Melita Easters Hayes sold her shares and Hayes kept control of the company. But his power shrank and he had to bring in outside management.

"Dennis was a very, very bright guy. Hardworking guy. Control freak," says Joe Formichelli, a former IBM executive who was chief executive at Hayes for a year and a half. "He was in on everything. He could never let go: The color of boxes, how many security guards you had. How many secretaries."

Formichelli, now executive vice president of operations at Gateway, says he quickly became convinced that the company might not survive and questioned Hayes.

"He had a lot of emotion tied into this thing. He's the founder," Formichelli says. "He said to me one day, 'When your name is above the door, it's a lot different.' "

"He was a visionary to the industry but maybe not to his very own company," Formichelli says. If early on he had taken the company public and brought in professional managers, "the guy would be a billionaire today."

Eventually, Hayes merged with another business and took the company public, but he lost virtually all influence with the company's board. The company peaked in the mid-'90s with sales of nearly $250 million a year as it spat out 4 million modems annually. Its market share was shrinking fast.

In 1998, Hayes was back in bankruptcy, setting the stage to close the company.

Ex-partner busy

While Hayes Microcomputer grew and then imploded, Heatherington found other projects.

He bought a house in Roswell and more than doubled its size to 7,000 square feet. He put up a ham radio tower, to the horror of some neighbors. He built algorithms to improve his success in the stock market but dropped the strategy after realizing he did no better than the S&P 500.

He and his wife, Ann, a former computer scientist at Georgia Tech, don't have children and they don't travel much. He spends hours a day in his workshops. She paints and volunteers at a local hospital.

They do all the yardwork and housework.

Heatherington, a man with a wry sense of humor, tinkers. He designed a radio transmitter collar to track the whereabouts of his cat. The setup hasn't been problem-free. "A cat's neck is an extremely hostile place for electronics," he says.

He uses sensors to monitor when the mail is delivered. On a computer he tracks the temperature and humidity inside and outside his house, incoming phone calls and how much energy he's using daily -- $2.63 worth by one recent midafternoon.

Building robots

But his real passion in recent years has been building robots for competitions. His Suckmaster II is a champion in local vacuum robot contests. His assorted battle robots smash others in competitions. His smallest -- a "one-pound mass going at 60 inches per second" -- often prevails. Some competitors outfit their robots with gruesome-looking weapons with circular saw blades. But Heatherington's strategy comes straight from his days at Hayes. "Make your 'bot reliable so it does not fail," he says.

Hayes, meanwhile, is trying to build a new life.

He lived in metro Atlanta most of his adult life but moved to New York City, where he can get around without a driver.

His vision began deteriorating 15 years ago because of a disease that causes progressive degeneration of the retina, affecting night vision and peripheral vision. There is no cure.

His peripheral vision has deteriorated, and at 6 feet 2 inches, he bumps his head on things he used to be able to see. Otherwise he can move around in well-lighted areas without apparent disability.

After the modem company closed, Hayes opened a Buford Highway bar called Whiskey Rock. It lasted no more than a year. He was named chief executive of a small, struggling e-commerce company in California, but he left after a few months and it's not clear whether the company is still in business.

He volunteers as chairman of a group called the U.S. Internet Industry Association that lobbies lawmakers about issues such as limiting taxes on the Internet.

He spends most of his time consulting for small businesses, helping executives organize and set strategy. He's working for three or four companies, he says, and exploring possibilities with others.

He says he enjoys consulting, but it's a dramatic change from his former life. "There are a lot of dead ends," he says. "I'm only working about half the time. I've got plenty of capacity to offer my clients."

He isn't a millionaire anymore, he says. "I get by, but money is tight."

Several years ago he was divorced from his second wife, a former Hayes executive named Mina Chan. Court papers indicate he agreed to a $6 million divorce settlement.

Neither of Hayes' former wives would be interviewed. But Chan's attorney, Jimmy Deal, said Hayes is months behind on child support payments for the couple's two children.

Hayes says only, "I feel like whatever is between me and my family is personal." Later he adds that he would pay child support if he had the money.

Hayes says he doesn't have any big regrets.

Every once in a while he runs into a former employee who wishes the company was still in business.

"I tell them, 'Don't worry about that. Just be proud of what we accomplished because we changed the world.' "