How Dell Founder Michael Dell Became A Tech Industry Titan
From fixing computers in his college dorm room to building a company that earns $101 billion per year, Michael Dell is a true tech legend.
The world today is awash in entrepreneurs. Ambitious people who are willing to risk their own time and money, motivated to create a successful business and reap the subsequent rewards. But not all entrepreneurs truly possess the entrepreneurial spirit, the inner drive that compels the individual to constantly work towards these goals, an unstoppable force confidently seeking out an immovable object to overcome.
It’s the type of attitude that feeds the birth and growth of the world’s most successful and impactful companies and creates billionaires of their founders and investors. It’s the type of attitude that underpins much of the American Dream. It’s the type of attitude that, in 1973, led a precocious young boy named Michael Dell to investigate potential high school equivalency exams in an attempt to move past school and into the business world he was determined to conquer. He was 8 years old.
Michael Dell was born in Houston, Texas into a family with lofty educational and professional standards. His father was an orthodontist and his mother was a stockbroker, his parents were eager for Michael to complete his education and eventually become a doctor. But Michael wasn’t going to follow this expected path. Before he got close to advanced degrees or medical residency programs, he would find immense success in business and get the insatiable urge to find his marketplace and eventually dominate it.
At twelve, Dell’s business was selling stamps by mail to collectors across the country, earning a few thousand dollars that to most pre-teens would seem like a few million. But this barely scratched Michael’s entrepreneurial itch, and, as if forced by cliché to follow the “paper boy” narratives that form many entrepreneur’s juvenile endeavors, he moved into selling newspaper subscriptions.
It’s here we can begin to see the intellect and business savvy which separated Dell from his future competition and allowed him to become one of the world’s most successful businessmen. The young newspaper salesman wasn’t out peddling from door to door. That method was for the grinding types, the ones who were determined to outwork the competition. While he possessed no lack of determination or ability to put in the requisite sweat equity, Dell preferred to work both harder and smarter.
He used public records to target the demographics he found to be most likely to purchase a subscription, young couples and new homebuyers, increasing his efficiency and profits. An impressive insight for his age, but also one that presaged the type of leader into which the young man would grow.
The boy who once targeted sub-groups of potential customers for newspapers would one day apply the same principles to his domination of the computer industry, not only producing quality products, but marketing and selling them in ways that gave Dell and his company an advantage over his competition. Through these early efforts, a leader emerged that would build the world’s largest PC company and help shape the past four decades of technological advancement and dissemination around the globe.
However, before he could become a dominant player in the global computer industry, Dell first had to navigate the start-up phase of his company. Eager to placate his parents, Dell had enrolled in a pre-med program at The University of Texas at Austin, but had spent most of his freshman year building and fixing computers in his dorm room instead of attending class.
Convinced it was time to focus entirely on his business, Dell informed his parents of his intention to drop out of college. The parental anger that followed was only tempered when Dell promised his parents that if he wasn’t successful in growing the business, he would return to UT at a later date. The first month of the summer Dell sold some $180,000 worth of computers. He never did matriculate to his second year in Austin.
Dell called his company PCs Ltd. and in its first full year in business the fledgling company brought in $33 million. Changing the name to Dell Computer Corp. in 1987, Dell saw his company’s sales rise to $159 million by the end of 1988. The company was an enormous success, and it made Dell a multi-millionaire in the process.
It would be easy to credit the young entrepreneur’s success to a smart, hard-working businessman coming along at exactly the right time, the personal computing revolution. But the truth is that numerous times throughout Dell Technologies’ early years, Dell made crucial realizations and choices that enabled the company to take its place amongst the PC giants like Compaq, IBM and others.
Early on in his fascination with computers, Dell discovered that most PCs were made of relatively cheap parts compared to the retail price for which the full computer was being sold. So he focused his efforts on producing customized computers for clients, able to produce his PCs both at performance and price levels that the large companies couldn’t, or wouldn’t, match. By 1992, Dell Computer Corp. was raking in some $2 billion in sales annually. Soon after the company unexpectedly stumbled and stock prices plummeted. Dell brought in Kevin Rollins, an organizational expert from Bain & Company to restructure the company.
He also snatched away designer John Medica from rival Apple to help with the product lines. Most significantly he brought over Mort Topfer, a Motorola executive who would both handle day-today operations as well as serve as a mentor to the young Dell. Topfer, who took the job under the impression it would be a short-term gig, stayed with the company as vice chairman until 1999, helping Dell in creating and executing his groundbreaking business model. Dell’s humility had allowed him to seek help, not just saving the company but eventually propelling it to new heights.
Dell, with help from Topfer and others, structured the sales side of the company very differently than his competition. While Compaq and others would dominate the shelves of electronics stores and other retail locations, Dell could cut out the middleman and sell directly to his customers. At first, this was made easier by selling largely to high-profit margin customers like businesses, but eventually was carried over to the consumer market as well. He brilliantly alleviated original concerns from customers weary of buying a computer remotely by offering unprecedented return options and levels of customer service.
This plan truly came into its own with the spread and advancement of the internet. The Dell website was the ideal way to reach customers without a middleman, and Michael made sure that the company bearing his name leaned heavily into this world-changing technology. E-commerce became a major part of the company’s business model, and remains so, even as the company has shifted from focusing solely on desktop PCs to laptops, servers, and numerous other technologies.
In 2001, Michael Dell achieved his long-held goal of topping Compaq, making his titular organization the largest PC company in the world with a 12.8% market share. Today, Dell Technologies, boasts revenues of $101 billion a year and employs over 130,000 people around the world. Clearly the model works.
The scale of Dell’s growth seems almost infinite. In 2013, backed by some of the biggest financiers and tech firms in the industry, Michael Dell took his company private. This alone was earth-shaking as a private acquisition of one of the world’s biggest tech companies, but Dell was just getting started. In 2015, Dell truly swung for the fences and executed one of the largest financial deals in history, the acquisition of storage, software, data and cloud services companies EMC Corp. and VMware, paying more than $67 billion by the time the deal was completed the following year.
Dell hadn’t retaken control of his company as a private entity to simply maintain the status quo. The purchase of EMC and VMware, and the pivot of Dell into the profitable areas of big data and cloud storage, show that the company is far from content with its current state. It will continue to evolve, develop and reevaluate itself, just as its founder has over the past four decades. Where some names from the early days of PCs have disappeared from the market (Commodore, DEC, etc), it seems like Dell not only survived the wild west of the PC industry’s early days, but has emerged as a tech giant helping lead the way into the cutting edge fields of the 21st century.
Finally, in 2018, Dell Technologies bypassed the traditional IPO process and rejoined the New York Stock Exchange as a publicly traded company. Being a primary shareholder of the company, Dell is today estimated to be worth more than $48.2 billion, solidifying him as one of the wealthiest entrepreneurs on the planet. But that fortune won’t remain idle for long if Michael and his family have their way.
In 1999, Michael and his wife Susan founded the Michael & Susan Dell Foundation. With the mission of transforming the lives of children living in urban poverty, the foundation provides resources and opportunities in education, health and family economic stability, helping both children and their families. They work both domestically in the United States as well as in India and South Africa. That might be Michael Dell’s greatest achievement. The man who defines the entrepreneurial spirit using his personal wealth to enable the next generation of builders and creators, collaborators and yes, entrepreneurs.
Maybe the next Michael Dell will rise from one of these programs, ready to create the next great technology or tech company. But even if that should happen, providing further competition for the company that still bears his name, one gets the sense that Michael Dell would respond simply. He’d take pride in helping the youngster’s achievement, laugh at the irony of the situation, evaluate the new competition and insist to that young man or woman, “I welcome the challenge, bring it on!” After all, that’s the entrepreneurial spirit.