CEO Interview: Michael Dell


Michael skipped his college education and started the company in 1984 with $1000 in his pocket and an extreme passion for gadgetry. Mr.Dell took some time with us to reflect on his strategies for success, his thoughts on implementing a sound economy, and the key characteristic that marks you as an Entrepreneur for life.

Alister & Paine: You, along with many other notable entrepreneurs, opted to leave college to pursue your business idea. What inspired you to take that risk and why couldn’t it wait?

Michael Dell: When I was 19, I saw what I thought was a huge opportunity to change the way personal computers were made and sold. I didn’t have an epiphany…the idea was cultivated over time.

In high school I purchased and took apart one of the very first IBM PCs. I made two interesting discoveries: 1) none of the parts were made by IBM 2) the system that retailed for $3,000 actually cost IBM about $600. I immediately saw this as an opportunity. I started upgrading my own systems, using the same components as IBM, and selling them. The idea grew from there.

Alister & Paine: What obstacles did you face, and how did you overcome them, while building your business?

Michael Dell: We grew about 80 percent a year the first eight years of our business and 60 percent the following six years. Scaling our operations and our team to keep pace with that kind of growth was by far the biggest challenge for us in the early days. Fortunately, there were a lot of really smart people looking to join a high-risk, high-reward venture like ours…and we were always hiring!

Alister & Paine: Technology changes at lightning speed by its very nature. How is Dell keeping pace, particularly in the mobility and cloud computing space?

Michael Dell: You’re right, new technologies and trends—like cloud computing, mobile, and consumerization of IT—continue to change our industry every day. The good news for us is, with each breakthrough, IT becomes even more embedded in business and in life. It’s increasingly the way people connect, products and services are delivered, valuable data is stored and shared, business is done.

For business and organizational customers in particular, the spotlight has shifted from the latest, greatest device to how IT can help them solve problems and achieve their goals. This has fundamentally changed our business strategy, compelling us to evolve well beyond PCs and devices to address the end-to-end IT needs of our customers around the world. We’re a very different Dell today with skills and capabilities in services, data management and security, software and peripherals, cloud and mobile solutions, networking and end user computing.

Alister & Paine: The competition to win and retain consumer business is tough. How is Dell doing and where are you focusing your efforts for the future?

Michael Dell: Today, roughly 80 percent of our business is with businesses and public-sector organizations. Ninety-five percent of all Fortune 500 companies and 100 percent of G20 governments are Dell customers. While we have a strong consumer presence and will continue to compete in that space, it’s important to focus and commercial is where we expect most of our growth will come from.

Ours is a $3 trillion industry and only about $250 billion of it is consumer. We’re laser-focused on the $2.75 trillion opportunity that is commercial. So you’ll see us not only providing devices that generate consumer and enterprise data, but the technology infrastructure that supports, manages, connects and secures it, too.

Alister & Paine: You recently described Dell as a serial acquirer. Can you give us some insight into your thoughts on Intellectual Property and how it fits into your business strategy?

Michael Dell: IP, acquired or organically developed, is a fundamental part of our long-term growth strategy. We’ve acquired about a dozen companies in the last two years. Each acquisition introduced important innovations and expertise into the Dell family that enabled our end-to-end solutions strategy. But we’re also investing in organic innovation. In 2011 we committed $1 billion to R&D. In less than a year, we’ve opened 12 enterprise solutions and cloud centers around the world, with more to come.

These investments mean we now have some of the best storage, security, networking and cloud capabilities around, and we’re addressing the spectrum of IT requirements, from the data center to the desktop and out to the mobile endpoint.

Alister & Paine: After nearly 28-years of leading Dell, what inspires you to keep at it?

The inspiration initially was my own curiosity about technology and what it could do for people. But I had a sense of urgency about it in 1984. Like all windows of opportunity, they eventually close.

Michael Dell: I’ve always been inspired by technology. I remember as a kid being fascinated by my dad’s adding machine. I could type in an equation and out came the answer. It did the tactical work while I thought up the next complex problem for it to solve.

That’s still how I look at technology: as a tool for solving a lot of the big challenges in the world. Just think about all the opportunities in the world around energy, health care, education and solving the unsolved problems in science. More often than not, a computational problem is at the heart of it. Today’s IT, just like my dad’s adding machine, is all about solving those problems. It’s exciting and inspiring to lead a company that is delivering the solutions enabling those discoveries.

Alister & Paine: What changes, if any, do you think America’s next President should implement to restore a sound economy?

Michael Dell: The reality is that emerging countries have fundamentally altered the value proposition of North America. These countries have highly skilled workers, growing economies, and they are aggressively competing to lure foreign businesses and the jobs they create. A truly global economy means incumbent world leaders are losing their economic development advantage.

Our government must adapt and that requires a long-term approach to education and competitiveness. Traditionally, politicians don’t look much past the next election cycle. That must change—the risks to our country’s economic health are too great.

Alister & Paine: What one character trait do you think a person must possess to be a great entrepreneur?

Michael Dell: Curiosity. Without it, human potential is finite; but with it, anything’s possible.

This article is brought to you by NYU Stern’s Executive Education Program as part of Alister & Paine Magazine’s Direct Publishing. NYU offers short courses for executives year round on a variety of essential business topics such as leadership, strategy, business analytics, marketing, finance and risk management.