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GreatLeadersSeries:MichaelDell,FounderofDellComputer|Inc.com

The Great Leaders Series: Michael Dell, Founder of Dell

Computer
Michael Dell founded one of the world's most well-known computer companies from
his college dorm room.
BYKASEY WEHRUM

Courtesy company

In his commencement address to the University of Texas at

Austin's 2003 graduating class, Michael Dell urged the assembled
students to take a look at the world around them and "then build a
vision of how it could all be better and work like hell to make it
happen. " Two things stand out about that speech. The first, and
most obvious, is the irony of Dell, who dropped out of UT after only
a year to pursue his eponymous computer company, being chosen
as the distinguished speaker. But look further and you realize that
Dell quite succinctly articulated the business model that helped
him transform an industry and build a company that topped $61
billion in sales this year alone.

The son of an orthodontist and a stockbroker, Dell spent much of his Houston childhood
hanging out in computer stores. At age 15, he famously broke down a brand new Apple II
computer and rebuilt it, just to see if he could. His contribution to the computer world,
however, was born not from his technical background, but from his ability to see that what
needed improvement was not just the computers themselves, but the way in which they were
sold.
In 1984 at the age of 19, Dell launched his computer company, first named PC's Unlimited,
from his freshman dorm room. With $1,000 in start-up capital and the novel idea of selling
custom-built computers directly to customers, Dell quickly seized on the formula that would
form the basis of his company. As he explained during an interview with Inc. in 1990, "Let's say
that you buy a computer from a retail store and you pay $4,000. The retailer sends $2,500 of
that back to the manufacturer and keeps $1,500. The question I asked myself was, what was
the retailer doing to earn his $1,500? Was he adding $1,500 worth of value to that machine for
me, a knowledgeable computer buyer? The answer was no."
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GreatLeadersSeries:MichaelDell,FounderofDellComputer|Inc.com

So Dell dropped out of school and with a loan from his family, set out to pursue the
rechristened Dell Computer full time. By 1985, the company had produced the first computer
of its own design, the Turbo PC. Within three years, Dell went from zero to $69.5 million in
sales. By Year Four in 1988, Dell went public through an IPO that raised $30 million. By the
tender age of 24, Dell was named Inc.'s inaugural Entrepreneur of the Year.
Since that time, Dell has seen his fair share of turbulence. Among the more notable missteps in
Dell's history: the company's recall of four million laptop batteries after a series of reports of
those batteries catching fire; and stiff competition from Gateway in the mid-1990's. However,
Dell's successes far outweigh its setbacks. The company's entry into the printers and servers
market was seen as a huge gamble. It has been a notable win for Dell. As the entrepreneur
explained in his commencement speech, "You will learn from your mistakes and the mistakes
of others, for there is very little learning in success."
In 2004, Dell stepped down as CEO of Dell but remained chairman of the board. The company's
lackluster performance led to him to return as Dell's CEO in January of 2007. Despite the tough
economy, Dell continues to thrive. In the first quarter of 2009, Dell shipped 3.9 million PC's in
the U.S., and 8.7 million PC's worldwide. On average, Dell ships 140,000 systems per day
that's more than one every second.
When not running his company, Dell has focused much of his philanthropic efforts on
improving the lives of children living in urban poverty through health and education programs.
Through the Michael & Susan Dell Foundation, he has committed more than $530 million to
nonprofits assisting children throughout the U.S. and India.
Twenty-five years have since passed since Dell started his company by sifting through stacks of
computer parts, but he is no less involved today in running the business than he was back in
1984. Some might see that as a fault, but doing things his own way has managed to work out
pretty good for Dell so far. As he told his University of Texas audience, "The first thing you
should do is throw away that store-bought map and begin to draw your own."
Back to the Greatest Leaders

Links:
Michael Dell on Setting Priorities
America's Most Fascinating Entrepreneurs: Michael Dell
The Entrepreneur of the Year, 1990: Michael Dell
PUBLISHED ON: DEC 9, 2009

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