Michael Dell Born in Houston, Texas Michael married Susan Lieberman and had two children with her.

In light of his work he would tell his employees his daughter would say kill the competition. This was always seen with humor among his business relations. Dell sent an inquiry for information on obtaining his High-School equivalency diploma at eight years old. This was a clear sign that he was not an average child but one who was ambitious and eager for success. In his younger years, as a delivery boy, he wanted new customers so he gave a two week free trial and made follow-up phone calls after the two week trial was up this made him a sizable income. Even from his dorm room he was profiting. As a freshman in college he began PCs unlimited out of a storefront. This made him the youngest CEO in history. PCs Unlimited had 30 employees and introduced Turbo PC its own model in 1985. His company was soon bringing in thirty million. Dell Computer was birthed from PCs unlimited in 1987. Sales reached one hundred fifty-nine million within the first four years. After its fifth year, two billion. What made Dell change its strategy was a stock price slump from which a new Dell computer called the Latitude XP Laptop was developed. After the change stocks went from $0.39 to $80.00 a 20,000% increase in shares. Dell did a lot to make sure he did all he could to maintain the security of his company. He hired executives with records that were proven. He reorganized and put Mort Topfer in charge of running Dell. One prized incentive of the company is convenience. By calling a toll free number you can request your made-to-order Dell computer within 36 hours. Most sales of Dell computers are to businesses and enthusiasts instead of first-time users. A lot of their revenue is gained from Toyota. Dell manufactures computer units it has already sold which saves Dell a lot of costs because it does not need a warehouse to stock already made computers in. Dell surpassed his goal to have a billion-dollar-a-year company enterprise. The driving force of computers is Dell Computer, said Fortune magazine. Internet Week reported that Dell had topped twelve billion in Dell revenues. Michael Dell hopes to exceed being a CEO for years to come. If his past replicates his future there is little doubt that achieving this goal will come easily to him. Michael Dell From Wikipedia, the free encyclopedia

Michael Dell

Michael Dell, founder, chairman and CEO of Dell

Born

February 23, 1965 (age 47) Houston, Texas, U.S.

Residence

Austin, Texas

Ethnicity

Jewish

Alma mater

University of Texas at Austin

(dropped out)

Occupation

Chairman & CEO of Dell

Net worth

US$15.9 billion (2012)[1]

Spouse

Susan Dell

Children

Michael Saul Dell (born February 23, 1965) is an American business magnate and the founder, chairman and chief executive officer of Dell Inc. He is 41 on 2012 Forbes Billionaires list, with a net worth of US$15.5 billion as of March 2012.[2] In 2011, his 243.35 million shares of Dell stock were worth $3.5 billion, giving him 12% ownership of the company.[3] His remaining wealth of roughly $10 billion is invested in other companies, and managed by a firm called MSD Capital (named after Dell's initials). [4]

Contents

[hide] 1 Early life and education 2 Career 3 Writings 4 Wealth and personal life 4.1 Philanthropy 4.2 Political contributions 4.3 Criticism 5 References 6 Bibliography [edit]Early

life and education

Michael Dell was born to a well-off, Texan family, on February 23, 1965.[5] The son of an orthodontist[6] and a stockbroker, Dell attendedHerod Elementary School in Houston, Texas.[7] In a bid to enter business early, he applied to take a high school equivalency exam at age eight. In his early teens, he invested his earnings from part-time jobs in stocks and precious metals.[8] Dell purchased his first calculator at age seven and encountered his first teletype machine in junior high, which he programmed after school. At age 15, after playing with computers at Radio Shack, he got his first computer, an Apple II, which he promptly disassembled to see how it worked.[9] Dell attended Memorial High School in Houston, selling subscriptions to the Houston Post in the summer. While making cold calls, Dell observed that newlyweds and people moving into new homes were most likely to buy a subscription. He targeted this demographic group by collecting names from marriage and mortgage applications. Dell earned $18,000 that year, exceeding the annual income of his history and economics teacher.[10] [edit]Career

A PC's Limited Turbo PC signed by Dell

Michael Dell lecturing at the Oracle OpenWorld, San Francisco 2010 While a freshman pre-med student at the University of Texas at Austin, Dell started an informal business putting together and selling upgrade kits for personal computers[11] in room 2713 of the Dobie Center residential building. He then applied for a vendor license to bid on contracts for the State of Texas, winning bids by not having the overhead of a computer store.[12][13][14] In January 1984, Dell banked on his conviction that the potential cost savings of a manufacturer selling PCs directly had enormous advantages over the conventional indirect retail channel. In January 1984, Dell registered his company as "PC's Limited". Operating out of a condominium, the business sold between $50,000 and $80,000 in upgraded PCs, kits, and add-on components. In May, Dell incorporated the company as "Dell Computer Corporation" and relocated it to a business center in North Austin. The company employed a few order takers, a few more people to fulfill them, and, as Dell recalled, a manufacturing staff "consisting of three guys with screwdrivers sitting at six-foot tables." The venture's capitalization cost was $1,000.[15][16] In 1992 at the age of 27, Dell became the youngest CEO to have his company ranked in Fortune magazine's list of the top 500 corporations.[17] In 1996, Dell started selling computers over the Web, the same year his company launched its first servers. Dell Inc. soon reported about $1 million in sales per day from dell.com.[18] In the first quarter of 2001, Dell Inc. reached a world market share of 12.8 percent, passing Compaq to become the world's largest PC maker. The metric marked the first time the rankings had shifted over the previous seven years. The company's combined shipments of desktops, notebooks and servers grew 34.3 percent worldwide and 30.7 percent in the United States at a time when competitors' sales were shrinking.[19]

In 1998, Dell founded MSD Capital L.P. to manage his and his family's investments. Investment activities include publicly-traded securities, private equity activities, and real estate. The firm employs 80 people and has offices in New York, Santa Monica and London. Dell is not involved in day-to-day operations.[20] On March 4, 2004, Dell stepped down as CEO of Dell Inc. but stayed as chairman of the board, while Kevin Rollins, then president and COO, became president and CEO. On January 31, 2007, Dell returned as CEO at the request of the board, succeeding Rollins.[21] Accolades for Dell include "Entrepreneur of the Year" (at age 24) from Inc. magazine;[22] "Top CEO in American Business" from Worthmagazine; "CEO of the Year" from Financial World, Industry Week and Chief Executive magazines. Dell serves on the Foundation Board of the World Economic Forum, the executive committee of the International Business Council, the U.S. Business Council, and the governing board of the Indian School of Business in Hyderabad, India. He previously served as a member of the U.S. Presidents Council of Advisors on Science and Technology.[23] In July 2010 Dell agreed to pay a $4 million penalty to settle SEC charges[24] of disclosure and accounting fraud in relation to undisclosed payments from Intel Corporation. Dell Corporation and two other company executives also paid to settle all the charges. [edit]Writings Dell's 1999 book, Direct from Dell: Strategies That Revolutionized an Industry, is an account of his early life, his company's founding, growth and missteps, as well as lessons learned. The book was written in collaboration with Catherine Fredman.[25] [edit]Wealth

and personal life

As of 2011, Forbes estimates Dell's net worth at $14.6 billion.[26] Dell resides in Austin, Texas with his wife, Susan, and their four children.[27][28] [edit]Philanthropy In 1999, Michael and Susan Dell established the Michael and Susan Dell Foundation, which focuses on childrens causes. By 2010, the foundation had committed more than $530 million to assist nonprofit organizations serving urban communities in the United States and India.[29] The foundation has also provided $65 million in grants to three health-related organizations associated with the University of Texas: the Michael & Susan Dell Center for Advancement of Healthy Living, the Dell Pediatric Research Institute, and the Dell Childrens Medical Center, as well as funding for a new computer science building on the University of Texas campus.[30][31] In 2002, Dell received an honorary doctorate in Economic Science from the University of Limerick in honor of his investment in Ireland and the local community and for his support for educational initiatives.[32] [edit]Political

contributions

In 2004, Susan and Michael Dell were among 53 contributors of $250,000 (the maximum legal donation) to the second inauguration of President George W. Bush.[33] [edit]Criticism In the April 2011 issue of Mother Jones, a timeline of Michael Dell's life is included in the article American Magnate: Michael Dell: How a homegrown geek outsourced, downsized, and tax-breaked his way to the top. The article juxtaposes the CEO's spending on luxurious homes and private jet travel with his pursuit of tax breaks and tax holidays and Dell Computer's eventual offshoring of jobs overseas after receiving the incentives for setting up shop locally.[34]

Michael Dell
Taking The Direct Approach
October 9, 2008| 0

inShare3

Michael Dell
Founder of Dell Computer Corp. Founded: 1984 "You don't have to be a genius or a visionary or even a college graduate to be successful. You just need a framework and a dream."-Michael Dell

Michael Dell wasn't the only young entrepreneur to ride the computer boom of the late 1980s and early 1990s from rags to riches. Like Rod Canion of Compaq and Steve Jobs of Apple, Dell turned a fledging start-up into a multibillion-dollar computer empire. But unlike the ill-fated Canion and Jobs, who lost control of their creations as they grew, Dell has managed to hold on to the

reins of his maverick venture and achieve the unique distinction of being the computer industry's longest-tenured CEO. Following the simple idea that by selling customized personal computer systems directly to customers he could best understand their needs and provide the most effective computing solutions to meet those needs, Dell has made Dell Computer Corp. the world's leading direct computer systems company. Dell's parents wanted him to be a doctor. But by the time he was in junior high, Dell was hooked on computers. While most of his classmates were tinkering under the hoods of old cars, Dell loved to tinker with his Apple IIe. To please his parents, Dell enrolled as a premed student at the University of Texas in 1983, but by then his only real interest was in computers. During his first semester, Dell spent his spare time buying up remaindered, outmoded PCs from local retailers, then upgrading and selling them from his dorm room. He was so successful, that one day his roommate piled his ever-growing inventory up against the door of their dorm room. Dell took this as a sign it was time to move his burgeoning business off campus. His parents were furious when he told them he wanted to drop out of college, so to appease them, Dell agreed to go back to school if the summer's sales proved disappointing. In his first month in business, Dell sold some $180,000 worth of PCs. He never returned for his sophomore year. While looking for ways to expand his fledgling start-up, Dell concluded computers would soon become a commodity, and with commodities, what matters most is price and delivery. Dell saw that the quickest way to achieve both goals was to cut out the middleman. He realized that he could buy components and assemble the whole PC himself more cheaply. Then he could sell each machine over the phone directly to customers at a 15 percent discount to established brands. This technique, which came to be known as "the direct model of selling," would revolutionize the industry and make Dell a multibillionaire in the process. The 19-year-old Dell dubbed his venture PCs Ltd., and the Austin-based company soon became one of the fastest-growing enterprises in the country. Rather than flooding the market with hundreds of thousands of "plain brown wrapper" computers, the company would focus on what it did best-creating customized machines to order. The strategy worked. During its first year in operation, PCs Limited pulled in more than $6 million in sales, and Dell quickly gained a reputation as a "boy wonder." To cash in on his growing fame, he changed the company's name to Dell Computer Corp. in 1987. Sales continued to soar, topping $159 million by the end of 1988. That same year, Dell made an initial public offering which raised $30 million, about $18 million of which went directly into Dell's pocket. For many start-up entrepreneurs, that would have been a pinnacle signaling it was time to move on to the next promising adventure. But in Dell's mind he was just getting started. He now set his sights on overtaking industry leader IBM, rallying his employees by telling them his newborn

daughter's first words were "Daddy, kill IBM." The technique got a response, and Dell's sales leapt to more than $800 million by 1991. In 1992, Dell set a goal of passing the $1.5 billion mark by the end of the year. Always the overachiever, Dell met his goal and then some, as sales rocketed to $2 billion. But in the midst of this success, there were storm clouds gathering on the horizon. The company was growing at a pace that was too fast for the young entrepreneur to handle. By mid-1993, Dell Computer Corp. seemed to be spiraling out of control. Stock prices had plummeted from $49 in January of 1993 to a mere $16 by July. Dell's CFO resigned, leaving a management void. And worst of all, Dell had scrapped all its new lines of notebook computers because of poor production and was forced to sit on the sidelines of the fastest-growing segment of the PC market for more than 12 months. Dell realized he needed to do something-and do it quickly. His solution was to seek out older, more experienced managers to help him regain control of his 9-year-old juggernaut. First he brought in Mort Topfer, a seasoned executive from Motorola, to handle day-to-day operations. Next he tapped the talents of Kevin Rollins, an organizational expert from Bain and Co., to run the American operations. And, perhaps his most important coup, Dell stole Apple Powerbook designer John Medica. Within 12 months the listing company was righted, and the following year profits climbed to $149 million. But even with this amazing turnaround, Dell knew his company's place in the increasingly competitive PC industry was in no way guaranteed. To ensure continued success, Dell and his top executives made a pair of controversial strategic decisions that ran counter to prevailing industry trends. First, instead of initiating a price war in pursuit of greater sales units, Dell chose to focus on high-margin business customers. Second, the company opted to rely exclusively on direct marketing rather than retail. Industry pundits questioned the second move, pointing out that by selling direct Dell was slighting the then sizzling home PC market. But Dell knew better. In an earlier brief foray into retail stores, Dell discovered he could not compete with Compaq's strong brand name and Packard Bell's cutthroat pricing. Selling through retail stores was definitely out. But Dell wasn't about to give up the lucrative consumer market. Instead, he decided to sell fully customized PCs via phone, fax and direct sales to more sophisticated, second-time home computer buyers. Once again, Dell proved his critics wrong. The company's new approach had sales topping $5.5 billion by the end of 1996. But Dell had yet another ace up his sleeve. In July 1996, Dell launched one of the first direct-sale computer Web sites, and in just two months, was averaging Internet sales in excess of $2 million a day (a number that would rise to $6 million a day by 1998). The combination of selling direct via phone and Internet pushed Dell's sales to $7.7 billion by February 1997. Until this time, industry experts and Dell's three main rivals, Compaq, IBM and Hewlett-Packard, were convinced that direct sales would only gain Dell a niche market. But as Dell's direct

onslaught began to increasingly cut into their market share, all three competitors adopted the direct model of selling, but unlike Dell, continued to offer their machines through retail stores as well. Whether or not Compaq, IBM and Hewlett-Packard's revamped strategy will eventually recapture the market share lost to Dell remains to be seen. But by being first, Dell definitely has the advantage, as the numbers clearly show. While the PC industry grew by a paltry 5 percent in 1998, Dell grew at an incredible pace of more than 50 percent, achieving sales of $12.3 billion. By January 1999, Dell was outselling both IBM and Hewlett-Packard and was poised to overtake the number-one computer maker, archrival Compaq. While he has yet to completely silence his critics, Michael Dell has proven that he has the flexibility, the stamina and the vision to remain at the top of the country's most competitive business, even through the bumpiest of times. As Internet sales rocket skyward ($30 million a day in July 1999), Dell continues to baffle his competitors, astound analysts and enthrall stockholders.

If It Ain't Broke.Fix It Anyway

One of the reasons Dell Computer Corp. has remained so successful is Michael Dell's firm belief in constantly rethinking his company's operations. Case in point: Although the company's computers have always boasted some of the highest quality ratings in the PC industry, in 1997 Dell became obsessed with finding a way to reduce his machines' failure rate. Convinced that the key to achieving this goal lay in reducing the frequency hard drives were handled during assembly, Dell insisted that the number of "touches" be dramatically cut down from the existing level of more than 30. After extensively revamping the company's production lines, the number of touches was trimmed to fewer than 15. The result? The rate of rejected hard drives fell by 40 percent and the overall failure rate for Dell PCs dropped by 20 percent.

Business In His Blood

Michael Dell has often been quoted as saying, "I always knew I wanted to run a business someday." Indeed, it does appear that Dell was born a businessman. At the age of 12, he was making thousands of dollars in mail order sales to stamp collectors. During his senior year in high school, he made $18,000 selling newspaper subscriptions for the now defunct Houston Post and bought his first BMW-paying in cash, no less. Obviously no ordinary paperboy, Dell had figured out that the most likely subscribers were newlyweds or families who had just moved in. So using sources such as the city marriage license bureau, he put together a targeted mailing list on his first computer-an Apple IIe-and sent out personalized mailings offering special subscription deals. By age 18, Dell was telling people his life's ambition was to compete with IBM. Ironically, today a lot of folks at IBM have the ambition of competing with Dell.

Entrepreneurship - success of Michael Dell

Entrepreneurship
The 'modern' entrepreneur selected for this paper is Michael Dell because he changed the way people buy computers. He also changed the way computers are marketed. He started with very little and two decades later, Dell is the #1 computer in the United States. Sales in 2006 total $55,908 million, a 13.6 percent increase over 2005. Net income was $3,572 million, an increase of 17.4 percent. The number of employees increased by 18 percent (Lower, 2006). Michael Dell founded the company in 1984 and continued in his role as chief executive officer and chairman until 2004; he is still the chairman of the board. He had $1,000 and an idea - if you sell directly to the customer, you will have a far better idea of what the customer wants and expects. Every system ordered is built to the needs of each customer. This approach also allows the company to offer customers the latest technology nearly as soon as it is developed (Dell, 2010). The company expanded internationally quickly. In 1987, they opened a subsidiary in the United Kingdom and in 1990; they opened in Ireland. In between, in 1988, they took the company public with an initial price of $8.50 per share. Global expansion continued in 1993 with subsidiaries in Australia and Japan and in 1996, they expanded to Malaysia. At this time, sales were primarily by telephone but in 1996, products were offered through Internet transactions. It was also in 1996 that Dell reached the one-million computer systems benchmark (Dell, 2010). Between 1998 and 1999, more subsidiaries were opened in the Americas, Europe, China, and Brazil. Each was strategically located to serve the largest possible consumer base in the region. The option to purchase Dell's products from their Web site, of course, meant they could receive orders from anyplace in the world. As can be seen from the selected fiscal data reported, Dell continues to increase sales each year. In fact, in Q4 2006, Dell shipped more than 10 million computer systems in just that quarter (Dell, 2010).

Throughout those years, Dell opened more manufacturing and service plants across the United States. They also dramatically increased the number of products they sell (Dell, 2010). Entrepreneurship was not new to Michael Dell; he established a "mail-order stamp trading business" when he was just 13 years old. His gross receipts exceeded $2,000 per month within just a few months. When he was 16 years old, he began selling newspaper subscriptions. A year later, he bought a BMW. He was a successful entrepreneur before he even considered computers (Hoover's, 2006). His initial plan was to become a doctor and he enrolled in pre-med studies when he entered college. He began another business from his dorm room "selling random-access memory (RAM) chips and disk drives for IBM PCs". At that time, IBM was requiring any retailer who wanted to stock IBM products, to purchase large quantities of PCs. They were willing to sell the products at their cost to Dell just to get rid of the inventory. Dell advertised in magazines and newspapers at 10-15 percent below the going retail price. Between the fall of 1983 when Dell enrolled in college and spring of 1984, Dell's sales exceeded $80,000 per month (Hoover's, 2006). That kind of money convinced Dell to leave college and focus on business, which is exactly what he did). He then started building IBM clones and selling them under the name of PCs Limited. He continued to sell his products directly to the end-customer. The approach allowed Dell to sell his machines for less than half the cost of an IBM. Dell renamed his company Dell Computer and that's how this company was established (Hoover's, 2006). Although there were attempts to sell the products through retail outlets: Soft Warehouse, which is now CompUSA in 1990, Staples Office products in 1991, and Xerox who sold the products in Latin America, Dell returned to exclusive direct sales by 1994 (Hoover's, 2006). This also reflected Dell's original idea that direct-selling to the consumer lowers the price for the customer and allows the company to make changes faster than other companies in the industry. Entrepreneurship has certainly become more difficult and more complex over the last few centuries. Early entrepreneurs, for example, the grocery market or the apothecary, had little if any competition. They settled in a town and were the first to open a store. The greatest entrepreneurs in the early days of this country were also inventors who knew how to commercialize a product or who had a product that needed very little commercialization, think of the telephone and electricity. This is true for the early days of advanced information technology. The beginners like Gates and Jobs created something or they teamed up with the creators or they bought certain creations. What they had was foresight and brilliance in their fields and in marketing the products or services. Obviously, the time for an entrepreneur is at the beginning of an era, like the information technology era. They face very little competition as long as they are willing to work 24 hours a day, seven days a week. The obstacles entrepreneurs face today have to do with the advanced nature of the society. As suggested in the previous paragraph, early entrepreneurs had carte blanche, there was little competition. This is true in any historical period. The later a budding entrepreneur enters the field, the more obstacles there are, especially in terms of competition. Law and regulations represent another obstacle for today's entrepreneur. There are far more regulations, especially in some industries, than there were even 50 years ago. As an example, Miller in 2004 reported that in that year, more regulations were passed and more regulations proposed regarding the technology industry than ever before. The issue of taxing the internet was an issue as was if the Internet should be regulated. Legislation regarding privacy was proposed and some passed along with recommendations for security. The U.S. Small Business Administration (SBA) reports that half of all new businesses fail in the first year and 95 percent fail by year five (SBA, 2010). Reasons for failure, which can also be viewed as obstacles to success, include: not enough experience, not enough start-up money, and poor inventory management, spending too much on fixed assets, using business revenue for personal use and even having the company grow faster than expected. In some cases, the business is not located in the right place. Other reasons include poor management

skills and ineffective marketing programs. Sometimes, entrepreneurs have no idea how much time and energy is required to build a successful business. Williamson suggested five qualities or characteristics are needed to establish a successful business. These are: a strong desire to succeed, maintaining a positive attitude in the face of the challenges and obstacles, making a total commitment to success, being patient and not expecting the business to pay off in a year, and persistence to keep going (Williamson, 2010). If we compare the reasons businesses often fail to the qualities and characteristics, we can see a correlation. Consider the characteristics of Michael Dell. He was a successful entrepreneur at age 13 and by the time he was just 19, he was grossing over $80,000 each month. All he did was buy parts at wholesale and sell them at a price that was less than retail. Then, when he started building IBM clones, he sold them at about 40 percent of the average price. All he did was advertise in newspapers and industry magazines. He had an idea at the right time in history and courageously pursued his theory that selling direct to the consumer was the only way to sell computers. The importance of entrepreneurship such as a small business cannot be overstated. Less than 1 percent of businesses are classified as large, 99.7 percent of employers are small businesses (Longley, 2010). They employ about half of all workers in the country and they "create 75 percent of the net new jobs in our economy". They represent 97 percent of all American exporters and account for almost 30 percent of the value of exports from this country. The fact is that the economy would seriously stall except for small businesses, i.e., entrepreneurs. As already stated, it is more challenging to become a successful entrepreneur today than it was in the 1700s and 1800s but it is still possible. There were fewer regulations 200 years ago and there was less competition. In October of that year, Dell, IBM and Hewlett-Packard released a collaborative policy for social responsibility. They called it the Electronics Industry Code of Conduct and it "applies to all suppliers in the global supply chain" (Emigh, 2010). The code addressed numerous issues, such as child labor, discrimination, ethics, labor and employment, and protecting the environment. It does not matter where the company is located; the standards apply to them if they deal in any way with these companies (Emigh, 2010). For example, suppliers to their suppliers are accountable. Inc.com reported that companies who have strong ethics programs realize numerous benefits. They can avoid the possibility of fines, for one thing. Research finds that employees have a stronger commitment to these companies and customers are more loyal (Inc.com, 2010). Brand image is enhanced among consumers. If anything is reason enough for companies to be ethical and to demonstrate social responsibility, the bottom line is typically higher in companies with strong codes that they enforce. Dell is very involved in corporate social responsibility programs. In fact, it jumped to number 9 in the 2010 list of Business Ethics magazine list of the "100 Best Corporate Citizens". It was at number 71 in 2005. Some of the reasons for that placement are their equal opportunity policies, which exceed any laws and regulations. The diversity of the workforce along with having a strong code of conduct for all employees were mentioned as was their support and sponsorship for the Energy Star program, which is involved in reducing greenhouse gases. They also have a free recycling program for customers - the company will pay to pick up old Dell computers from the customers' homes. Corporate social responsibility is essential for all companies, large and small. It is a way companies give back to the communicates that support them and keep them in business. The most compelling consequences of companies in today's society acting irresponsibly are: fines for violating regulations and a loss of customers. Consumers are smarter today and they want to spend money with companies that demonstrate responsibility, integrity and strong ethical codes.

During which historical time period entrepreneurship was most important is debatable. It is always important. It was easier for people with good ideas and the drive to work for them to succeed decades ago but it is still possible today. We witness this every day. Sometimes, it is the small store that opened a couple years ago in our neighborhood and sometimes it is someone like Gates, Jobs, Steward or Dell. Clearly, the economy would not survive without entrepreneurs and their subsequent small businesses. Michael Dell is a good example of a modern entrepreneur. He exhibited the qualities of success at a very young age and those characteristics never left him. Although Dell Inc. did have some challenges in the early 1990s, the company rebounded and has become even stronger.

From the Archives - Michael Dell

Building a Better Computer

In 1992, computer entrepreneur Michael Dell was the youngest CEO running a Fortune 500 company. He and his wife, Susan, formed the Michael & Susan Dell Foundation in 1999, now

with an endowment of more than $1 billion. Dell stepped down as CEO in 2004. But the companys fi nancial growth and overall customer satisfaction began to decline, and in 2006 competitor Hewlett-Packard surpassed Dell as the largest seller of PCs worldwide. The following year, Michael Dell returned to the helm. Since then, Dell has been remaking its production process and has seen gradually increasing operating profits. As the cover story for the January 1999 issue of SUCCESS, Dell shared the secret of how he built his billion-dollar empire. Michael Dell was speaking to an entrepreneurship class at the University of Texas business school when a bold student stood up and asked the young multi-billionaire why he still kept going to work. Youve got so much money, he blurted. Why dont you just sell out, buy a boat and sail off to the Caribbean? Dell stared at him and said, Sailings boring. Do you have any idea how much fun it is to run a billion-dollar company? Few people could actually answer that question. But more important than the answer is what Dells question reveals about the founder and CEO of Dell Computer Corp. and how this megaentrepreneur was able to achieve so much, so fast. In 1984, Dell started his company with $1,000 and the premise that he could beat his competitors by building computers to order and selling them directly to consumers. It was a simple, radical idea, and it shook the computer world to its foundation. Fourteen years later, Dells direct model guides an estimated $18 billion global corporation. How did he do it? By keeping his mind fi rmly focused on doing business as opposed to making money. Walk into the hushed executive suite at Dell Computer Corp.s headquarters in Round Rock, Texas, and youll see a man standing behind a podium desk, both absorbed in and invigorated by his work. Michael Dells office has chairs only for visitors. Dell works standing, appropriately enough for the CEO of a manufacturing company that has slashed inventory turnover to an astonishing seven days, compared with 80 days or more for much of his competition. (In the computer industry, inventory loses 1 percent of its value every week that it sits on the shelf; Dells world-beating inventory management is thus critical to the companys bottom line.) Society expects visionaries and innovators to be eccentric. Consequently, Michael Del l s sheer normality is a bit deceiving. To put it mildly, Dell is not a wild or crazy guy. He is dark, softspoken and reasonably handsome, with the slightly puffy look of one who puts in long hours running a multibillion- dollar company. He lives in an enormous house in Austin Hill Country, guards the privacy of his wife, Susan, and their four young children and gives generously to

various charities. He is not especially keen on small talk; his only discernible quirk is that he is particular about his necktiesor so say sources close to Dell. Its easy to marvel at Dells success, but its more important to understand the strategy that took him from the dorm room to the executive suite. When he talks about his beginnings as a University of Texas computer wonk, you realize that it all started with the basic entrepreneurial act of spotting a market niche. At the root of it, I was probably just opportunistic, Dell says. I had and still have a great interest in computers. There was a business opportunity [with] this product that I really liked, and it all kind of lined up together. I saw that youd buy a PC for about $3,000, and inside that PC was about $600 worth of parts, he continues. IBM would buy most of these parts from other companies, assemble them, and sell the computer to a dealer for $2,000. Then the dealer, who knew very little about selling or supporting computers, would sell it for $3,000, which was even more outrageous. The Power of Mass Customization When asked whether he understood at 19 how he was revolutionizing the marketplace, Dell responds, Well, we started the company by building to the customers order. And, interestingly enough, we didnt do it because we saw some massive paradigm in the future. Basically, we just didnt have any capital (to mass produce). So Dell caught a lucky break in the beginning, but he hardly abandoned his business model once he got a few nickels together. Instead, he expanded it on a mass scale, using information technology to customize millions of computers individually. Today, business pundits have anointed mass customization the industrial paradigm of the next century, just as mass production was the paradigm of the 20th century. And while many companies are turning to mass customization (anybody can now order made-to measure jeans from Levi-Strauss or a personalized car from BMW), Dells brilliant and, more important, consistent, execution of this model sets the computer apart from the crowd. One hundred years ago, Thomas Alva Edison told SUCCESS magazine that the first requisite of success was the ability to concentrate on a single problem. If you get up at 7 and go to bed at 11, you have put in 16 good hours, and it is certain with most men that they have been doing something all the time, Edison said. The only trouble is that they do it about a great many things, and I do it about one. Dell and Edison are kindred spirits in this regard. For the past 14 years, Michael Dell has concentrated on building better computers and selling them at a lower price. While he may not be a world-altering inventor like Edison, Dell has managed to reinvent his industry, build a world-class company, and enrich thousands of employees and shareholders along with himself. For a 33-year-old college dropout, thats not too shabby.