The three members of America - Bunnell, Gerry Beckley
and Dan Peek - were sons of American military service members stationed in England. They formed the band while they were going to high school near London, and stayed in the area when they graduated in 1969 and got a record deal.
This being the height of the Vietnam War, the trio would often encounter soldiers that had seen action and hear their war stories. Bunnell wrote this song based on some of those tales he heard, stories about how when stationed in Vietnam, they were afraid to sleep for fear of attack, so they would stay up as long as they could (sometimes with the help of various substances), since sleep could mean death. The "sandman" represents sleep, which they feared. Thus they were always "running from the sandman."