Michael Dell, Dell Technologies | David Senra

I've just been obsessed with the stock market, with business since I was in the third grade. And, you know, 60 years later, however old he is, like that obsession has not dulled. We were just in your office and you were showing me one of your new unreleased products that we can't film or photograph. But you were like, I was like, this is like a kid on Christmas. Like, you're still so— It's a super cool product. Yeah, I'm very excited. I told you I'll buy one of this. I think it's cool, too. I'm going to buy one of this as soon as it comes out. But I just love this enthusiasm that is just not dulling.

What do you think—I was just with your son, Zach, last night, and I was talking a lot about his business. It's absolutely ripping. He's super intense, and he's just in it right now, right? And then that was like 95% of our conversation. And he's like, all right, I have some things that you should talk to my dad about. And then it was so good. I was like, shit, he just did the outline better than me. So one of the things, he's like, you need to get on record what motivates him. He's like, it's one of the most fascinating things. He's like, just ask him what motivates him. So what motivates you?

You know, it's all just like fun and interesting and I want to learn. And it's like a big puzzle to solve and understand. And you think about the impact that technology has on the world. What could be more exciting than to be in the middle of that and to figure it out and to help advance it? And it's an infinite game, right? It never ends. Love to win. Hate to lose. and, yeah, it's just like the most exciting thing you could do to be in the middle of a business like this and to see it all unfold and play out. Yeah, that's one of the things. He's like, he's addicted to puzzles. So that's the way you look at it?

Yeah, I mean, it's like the curiosity, solving a puzzle, understanding things, and figuring it out. Yeah, that's – you always want to do that. I mean, I would feel unfulfilled if I couldn't figure out a puzzle, a question. So, yeah, there's like a burning desire to understand things and to figure them out. Puzzles and math have always been important. When did you realize that about yourself? I never really realized it. You just asked me about it. It's just what I did. I just wanted to understand things. And, you know, when I was dealing with physical things, the way I would understand them is to take them apart.

It's like, how can you understand something if you don't take it apart? And my parents would get pretty frustrated, you know, taking apart things in the house. Sometimes I'd put them together. Sometimes they would still work. But it's just the desire to understand things, you know, the curiosity. Yeah, that's just one of your character traits. You have a great story in the book where I think you save up for the Apple II. It was a computer, and it was, you know, relatively expensive, especially I think you were like 12 or something at the time. and then you bring it home and your parents are like, oh, he's going to plug it in and play with it.

It's like, no, I immediately took it apart. I needed to understand how it worked. Well, it's like this machine, it's like it does really cool stuff, but how does it work? It's like what's inside it and how do all those things work? How do they fit together and why did they put these things versus those things? And, you know, sort of getting down to the essence of it. I had a thought when I was reading your book.

And you could literally map out the cost of every chip inside the thing.

There is a book Ken Griffin, the founder of Citadel, recommends reading called Hardball. The subtitle of that book is Are You Playing to Play or Are You Playing to Win? It is a book about extreme winners and some of the best operators in business. There is a line in that book that says, if you have not examined your costs in detail, it is very likely that there exists lurking somewhere in your cost structure, a major opportunity to improve your profits, weaken your competitors and expand your influence. The first move is to drive down your costs faster than your competitors can and use the cost savings to upset their strategies.

That sounds like the author was describing Dell. In his autobiography, Michael Dell says that one way that he was able to outcompete his better funded competitor, Compaq, was with a structural cost advantage. Compaq's operating costs were 36% of revenue compared to Dell's 18% of revenue. More than 40 years later, Dell is thriving and Compaq no longer exists. The best operators in business have this in common. They know their business from A to Z and their costs down to the penny. Ramp makes doing this effortless. Ramp gives your business easy-to-use corporate cards for your entire team, automated expense reporting, and cost control all on a single platform.

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Ramp helps you make this an obsession. Almost all of the top founders and CEOs I know are running their company on Ramp. Go to Ramp.com to learn how they can help your business play to win today. That is Ramp.com. something I don't even know if I've ever like verbalized before but it's in all these biographies that I read what I feel is it's like there's just like a lot of common sense where they just the founder tends to just keep asking more questions and just like going to like an act you just said I think killing an onion there's like yeah just like okay I got that answer what's the next one and then what's the next one and there's something in human nature where we just like we stop at the first question but you have this like infinite curiosity that was very obvious like from childhood, and I think based on what we were just talking about in your office is obviously still present.

But yeah, it's just very fascinating. It's like, it's not rocket science. It's just like keep asking questions and collecting information and thinking about the answers that you're getting. Hey, you want to understand things at a very deep level. And so that's always been a thing for me. Yeah, I think that's what I'm very interested in. It's like if you read the life story of somebody, like I'm very interested in understanding who the person is and like why they're doing what they're doing. And this is the genius line from Charlie Munger. It's just like, well, if you just – it's way more effective to tie the ideas to the personality that developed them.

And the way you tie it to the personality that developed them, it's like you read about their life story. You read about their childhood. You read about what their interests were. I love the part in your book, I was rereading yesterday, where your parents confront you, okay? You've started Dell in your dorm room in the University of Texas, and they're just distraught, which is really funny, given what's occurred over the next four decades. Like, what are you doing, Michael? You're supposed to be, you know, on this path to be a doctor. And I think your mom's crying. You're, you know. She was, yeah.

Very emotional. Yeah. And so you were like, okay, in the book you said I caved, which is very unusual because you have a super strong personality from a young kid. But then the very next page, I can see in my mind right now, cold turkey, didn't even look at your computer for 10 days. I tried to take notes in classes, and then I realized, like, no, like, it was like you were compelled. Like, I thought working in computers was going to be thrilling. I'm going to drop out with $1,000. I'm going to take on the biggest company in the world. I think the fact that they put all that pressure on me is the thing that caused me to really reflect on it and decide that, no, this is more than a little hobby or a side thing.

This is just like I have to go do this. Do you feel it was all-consuming even at that age? Because at the time, you're, like, sleeping in the office when you do start. Like, you start – I know we talked about this last time. It's hilarious where somebody asked you. It's like, well, when you start Dell, like, how many hours did you work? And you're like, all of them. Yeah. I mean, I wasn't doing anything else. I mean, there wasn't really anything else that was important to me. And so, yeah, it was totally all-consuming and super exciting and wasn't doing anything else, yeah. Were you more of like before that somebody that just focused on one task at a time?

I would get pretty obsessed with, you know, individual topics and sort of go deep on them. um so yeah i wouldn't consider myself you know generally interested in a bunch of things i was like super deep on certain things that excited me or interested interested me is that still the case today or is it just basically it's to be yeah yeah zach told me he's like he'll call me like 5 a.m and he's like i have an idea like we should do this product or this acquisition or whatever. He's just like, he just can't help himself. And I asked him, I go, what would get him to stop? He's like, you have to kill him. What made you decide to write the book?

You know, we had gone through a whole lot with the going private and buying EMC and VMware. And there had just been so much that happened. I wanted to kind of document it. And it was during COVID, I had some time and started writing the stuff down. And it felt like a logical place to sort of capture everything that had happened. And, you know, one of the main reasons I wrote it was for our team inside the company, because I want them to understand, you know, how we think about the business and where it came from. And, you know, as a business grows larger, it's harder to be able to tell the stories.

directly with everyone. And so it's just a great opportunity to encapsulate all that and share, you know, what happened really, the good and the bad, the things that worked well, things that didn't work well. And, you know, I certainly benefited from reading the stories or hearing the stories of other people and thought it'd be a good idea. I said this on the episode I made about it. It's like a great gift to, like, future generations of entrepreneurs. I actually think that idea of, like, having, like, a singular piece of media, whether it's a book. There's another idea for you for a podcast for people as the company grows to understand, like, this is the decisions that were made.

This is why it was. This is what we've gone through. Spotify has this. Originally, they did Gustav is the head of product at Spotify, and he's the actual one that made this. And originally, I talked to them about this. They were just going to do, it was like an eight-part series. It was going to be a private podcast inside the company, which tells the history of Spotify. So if you come in now, you know, 20 years into its existence, it's like, well, what was like year one in an apartment? You know, we got a server in a closet. And so what they did is they did this beautiful, like, narrative. And they would also include the people that were important in the early days.

Like, you know, some people don't last in the company, but they were really important first two, three, four years. But I listened to the thing like two or three times. And thank God that now it's public. Anybody could just type in Spotify, a product story, I think is the name of the podcast. I'm like, why don't more companies do this? Like, I'm not an employee, but if I was coming into Dell or any other company now, and I could have here, here's eight, you know, eight one-hour episodes. And they say not just this decision was made. It's like, why? These are the constraints we're under. This is what was going on.

Exactly. So, you know, if we walk downstairs right below this room where we are, there's a new class of small business salespeople being trained, okay? And you would love for those team members to be able to understand, okay, how did we get here? What are all the things that, you know, we did right and wrong? And to really deeply understand the culture, the values, the beliefs, and then to be able to build on that with their own contributions. Yeah. Kind of bring them up to speed. And this is the context. I also think there's an additional benefit for it to make it public-facing because humans buy stories.

Money flows as a function of stories. And I've experienced this. It's like if I read, I spend, you know, 40 hours reading about this person that had this idea in their head. They built a company. At the end of that, you're going to have a way better appreciation. I would find out buying their products that I never even would have thought of because now I understand the story. I just reread James Dyson's autobiography, which is one of my favorite books, probably my number one recommendation out of the 400 books I've read so far just because it's like 90% just struggle. The first autobiography is just like I'm failing for 14 years.

This guy is like a mule. He won't give up 5,127 prototypes. But there's an idea in the book that was smart where he understood the power of storytelling. Okay? And so he's like, you're going to walk into the retailer. You're going to see six different vacuum cleaners. His obviously is designed different, so it's going to catch your eye. But he insisted they wrote like a 200-word story on like a little flyer, right? Maybe like a little piece of cardboard, and you could attach it to the handle of the vacuum cleaner. And what happens? if that person, humans, are attracted to stories, they're attracted to people, right?

And so they would read that and then it would increase their sales because they understood who's behind this, why did they make it, how is it different? Like it was a very effective sales tool. So I think like doing podcasts like this, books, anything like this where you can actually tell like why you're doing what you're doing. This is the crazy thing. I've heard from, I don't know, I've probably got thousands of messages about the episode I did on you. And the most common thing was I knew the name. I had no idea. Everybody knows Dell, the brand name, right? But they didn't understand just how crazy your story and the multiple different transformations you've had to make over 41 years.

And now they're like, oh, this guy, like, I'm so glad you put that in front of me. I think it's like a super important idea. It's all been a lot of fun. And still is. And it feels like we're just getting started, actually, when I think about the business and the opportunities we have. And, yeah, it's all fun. You mentioned earlier that you benefited from studying people that came before you. And this is, you know, you wanted to pass that forward. Like, who are a few of the people that you study, you felt you learned from, or that influenced, like, your thinking about how you're building, how you built your business?

You know, when I was a kid, you would read about entrepreneurs that were starting companies, Charles Schwab or Fred Smith, certainly Sam Walton, some of the early telecom pioneers, people that were doing it right then, like in the 70s. And those stories were just super interesting to me. And I grew up in Houston, which was kind of a boom town. You'd see these new companies being created, and parents were talking about that. And so those stories were always just interesting and compelling. And you want to understand, well, how did they do that? And why did they do that? And, you know, what happened?

And, you know, I never imagined myself doing anything else other than starting a business. You know, the idea just was in my consciousness from a very early age. This great line that Jeff Bezos says, where he's like, we don't choose our passions, our passions choose us. I think there's multiple, like, my notes to myself in the margins, like, oh, he's compelled. It's like, this is coming through him. Like, he's like, he has no choice. This isn't going to happen. But is there anybody in particular that you, like, really, like, honed in on and admired and tried to emulate in some way? I always think you can learn from just about anybody, whether they succeeded or failed.

And so I tried to just understand, you know, as many people as I could that were entrepreneurs that were starting businesses. How did they struggle? What worked? What didn't work? And those were always the compelling and interesting stories. When you were 15, you met, you were, I think, at some kind of conference with, and this is the first time you were in the presence of Steve Jobs. I think Steve was, like, 25 at the time. So was he somebody, like, when you saw him at 15 and you saw, okay, wait, this is a young kid in his 20s building a computer company. Was, like, that a model for you? Or, like, what was your interpretation of, like, that experience, I guess, what I'm trying to get at?

Yeah. So, you know, in the early days of the computer industry, you know, as I knew it, the microprocessor-based computer industry, you know, Apple was a leading company. And Steve was obviously the sort of legendary figure. So, I was in this Apple user group, which was a bunch of, you know, geeky people. It was like get together and, you know. You don't say. Exactly. And, you know, sort of compare, you know, how they had souped up their computers and software they had written and learned from each other. And so, you know, Steve came to speak to our user group. And, yeah. I mean, he, you know, he was like using these incredible, you know, metaphors and you're like listening to him and looking at what Apple's doing and going, wow, that's really cool.

And, you know, you also started hearing about Bill Gates, you know, who's also about the same age as Jobs. And, you know, they're both about 10 years older than I am. and you kind of look at them and go, well, okay, they did something cool. Maybe I've got a shot. Yeah. That's really cool. There was something you mentioned to me when we had dinner that has been rattling around in my head, and I think it's probably the reason that I couldn't sleep. And I don't even think it was like explicit advice. I think you were just making an observation. But you said something along the lines that, you know, You've seen countless different companies and entrepreneurs come and go over, you know, four decades, four-plus decades.

You're kind of going through that now. In fact, I want to read something that you said that was one of the most interesting things. You said it on a podcast, and you made this essentially talk to your entire company, and you said, I'm just going to read this quote. I stood up and told the company that five years from now—I love this so much.

I stood up and told the company that five years from now, we will have a new competitor, and that new competitor is going to be in every business that we are in, except they're going to be faster, more efficient, and more capable, and they're going to put us out of business. And the only way that we're going to prevent that is we are going to become that company. It's gut-wrenching stuff to reinvent and reimagine your business. But if you don't do it, you go out of business. Yeah, exactly.

I mean, think about the story in the book where I think the line that I summarized where you were saying about IBM is like, yeah, the personal computer is, you know, fine. it's going to be a great terminal for the mainframe. And it's just like, oh, you see this over and over again in these biographies. If you're studying, you know, something that's occurring over multiple decades, it's like companies and people cannot envision a future that's different from the present that they succeeded in. So they just kind of like dismiss it or kind of ignore it. I'm trying to think, though, like, so you just said, okay, there's no books.

Like, what you guys are doing right now at Dell, right? You can't just like you're on the cutting edge. There's no books you can read about it. But you have surfed how many different technological revolutions? You did the microprocessor, right? Microcomputer, sorry. The personal computer. Then, obviously, the internet was invented. Client server technology a little bit before you went on. How many? So, like, I got four or five. How many have you successfully navigated and had to reinvent Dell over and over again?

more, you grow more. And that is a pattern that never fails. Visit HubSpot.com today. That is HubSpot.com. I just had a thought listening to you speak tied to something else that you said earlier. It's like basically humans inability to have accurate predictive behavior predictions about the future. It's kind of tied to the importance of iterating and make sure you're doing a lot of experiments and then having that like tight feedback loop to constantly like get information. Oh, that didn't work. Okay. We ran experiment didn't work. Let's try it a different way. Those two things work really well together. It's like we're not going to- predict the future. We're going to create the future through iteration.

Yeah. And, you know, it's okay to try to predict it as well. It's just really hard to do. And, you know, you might want to have a lot of experiments. I mean, if you go back and say, okay, let's say you had somebody who was supposed to be really smart or supposed to be an expert at something, right? Ten years ago, how good were they at predicting what was going to happen? That's pretty good. No, terrible. So don't rely too much on that, right? This is why I think entrepreneurs have to, like, study past entrepreneurs too. And it's, like, obviously very valuable. Like, it's no surprise that, like, you were reading about these people.

Like, what I would say is, like, the greats all studied the greats. It was, like, very – like, they were doing it today. They were doing it 40 years ago. They were doing it 200 years ago. If you took, like, an average person in normal society and the way they think about experts, okay, And the way it's discussed in all these biographies, it's like they're very dismissive of experts, right? I just mentioned I was reading James Dyson's autobiography. You know, the whole thing is just like he believes in the Edisonian principle of design, just constant iteration. You learn as you go. You can't predict.

Like you just, you know, change one thing and then test it and see how it goes. And he mentions studying Henry Ford a lot in that book. And then James Dyson wrote an autobiography 30 years after that that he also mentions Henry Ford a lot. And the reason I thought of that is because as you were speaking about, you know, you go and ask an expert from 10 years ago, what's going to happen? Like, they're not going to tell you that chat GPT is absolutely, you know, that my 13-year-old, I use chat GPT all the time, but I'm a nerd. I like to research stuff. I like to read about stuff. She uses like a therapist, a shopper, a friend, like it's an entire ecosystem of them.

There's no way you can predict that. So there's a great line in Henry Ford's autobiography, which was written 120 years ago. This is not a new phenomenon. Human nature does not change. History doesn't repeat, human nature does. And he says, if I ever want to sabotage my competition, I would fill their ranks with experts. Experts tend to know so much, and they're so convinced that they're right, they'd get no work done. Yeah, at the limit, nobody knows anything, right? And it's not a bad philosophy, you know, when you're thinking about the future. It's good to have a hypothesis, though, right? Right. And ideas and experiments and to keep an open mind.

So what was when we go back to that, hey, this they're coming for us.

Yeah, there's a line in Andrew Carnegie's biography. It was really fascinating because, you know, he dabbled in a bunch of different businesses. He was pretty wealthy before he started the steel company. But once he realized that, you know, think about how important steel was at that time. It's like everything – this is the new product that everything – every other product is going to be made out of from bridges to roads and everything else.

Like this is the biggest opportunity in my life. I'm going to go all in on it to the point where he didn't even want any distractions. He sold all of his stocks because he didn't want to find himself looking at the newspaper and wonder like what the price of stock was. Like fully focused on the greatest opportunity of my entire life. He went into an existing business that was run by older gentlemen, right? He had this new way to do steel. I think it's Bessemer Steel that he got from England. So he took that idea from England and imported it into America, which it's kind of weird how often that is in the history of entrepreneurship where it's like, oh, this idea is working in one geography.

Will it work over there? It's like, yeah, because humans are kind of the same everywhere. There's some, you know, cultural differences, but, you know, our core motivations are, you know, very similar. And they were very resistant to change. So they're like, no, that's not the best process. And then they would ridicule him for investing in the newest technology. He was spending a ton of money. Every time there was a better machine, a more efficient machine, he would immediately rip out the old machine and input and put in the new technology of his day. We wouldn't think about his technology today.

It's definitely technology back then. And when you read his autobiography, which, you know, in the public domain, anybody could read it for free. It's an incredible gift to humanity. I remember getting to this part of the biography, which is exactly what you just said. It's like, okay, even if this doesn't give us advantage over our competitors, if we don't do it, like, they will have the advantage. So, even if we're on, like, on the same level and the summary of what Andrew Carnegie was saying, these guys wind up not adopting the technology and they went out of business. So, he says, invest in – this is not a direct quote.

This is me summarizing his idea. He says, invest in technology, the savings compound. It can make the – It gives you an advantage over your slow-moving competitors, and it can be the difference between a profit and a loss. If he didn't do that investment into the new technology that his competitors were dismissing, the stupid young kid with his fancy machine, right? That wound up making his company profitable in a year or two and their company unprofitable. And then slowly and slowly, they just kept losing money, and then they went out of business. It's very fascinating how these, like, themes just keep reappearing.

Yeah, exactly. You don't necessarily want everybody to know what you're doing also. The maxim I have from this I use on the podcast all the time is that bad boys move in silence. And so you mentioned earlier that sometimes there's no book. You're on the cutting edge. And so I remember there's this great line in this biography of Steve called Becoming Steve Jobs, which I actually think is the best biography written about him. And Steve's like, I don't even know what the business model of animation is. And they start partnering with Disney. And he has this great line. He goes, you can't go to the library and check out a book called The Business Model of Animation.

Because there's only one company that's ever done it well. It's Disney, and they don't want anybody else to know how lucrative it is. One thing that was hilarious that your son, Zach, wanted me to ask about was what he calls dad terminal. Yeah. So dead terminal is what he refers to as when he kind of taps in and, you know, wants to talk about a particular topic or has a question. And it's one of my favorite times with Zach because we're talking about solving problems or challenges inside his business. And, you know, I get to share the mistakes I made, mistakes I saw other people make, lessons learned, and hopefully save him some pain and suffering and, you know, steps from, you know, learnings along the way.

Yeah, he says instead of typing in the – I was like, why is it called – I was like, why is it called Dat Terminal? I didn't understand what that was. And he's like, well, Bloomberg Terminal. He's like, you know. Exactly. Yeah. Yeah. He's like, you subscribe, you log in, and you have a question, and then, like, you type it, and you get this really advanced answer. He's like, I don't use Bloomberg. I use that terminal. And I was like, give me an example. Like, what's the last query into that terminal? And he goes, supply chain. He said it, like, it was, like, obvious. It was like, I don't have a supply chain.

I run a podcast. I read books. Like, explain it to me. He's like, there's a handful of things. Not even a handful. He's like, there's a bunch of things my dad is world class at. And he's just like, one of them is supply chain. And I'm curious as like why you think you're – why other people describe you as really good at that. Is supply chain just related back to how we started this discussion? Is it just like another puzzle for you to like direct your curiosity to? It's definitely an important puzzle and a critical puzzle. I mean, I think if we had not figured out how to do our supply chain well, we would not be here today.

It's as simple as that. So it's a fundamental thing that is just super important in our business. So it's just you've thought more about this area? Yeah, and made a ton of mistakes and learned a ton of lessons and sort of, you know, figured out what works and what doesn't work. Yeah, there's a line in the book, I think the first time you realize, hey, I don't like these, your whole thing is eliminating middlemen and like getting as close to the source as possible. And I think you're like 90, you might be 20 years old at the time, but you're taking your... first trip to China, if I'm not mistaken?

Well, so that would have been 1985. It really wasn't—you couldn't really go into mainland China at that point. There was nothing really to do there. They weren't making anything. So you were going to Asia? You were going to Asia. So, yeah, I went to Japan, Hong Kong, Taiwan, and South Korea. Yeah, but what I love is just, like, how excited you were. Oh, yeah. Because it's like something you said earlier. It's like you got a deep love for your business. And then now you get to keep peeling back the onion and getting closer and closer to how now it's like, oh, I'm like spending 16 hours a day. I'm sleeping in my office.

I'm working. We have customers. We have our hiring employees. We have revenue growth. But now I'm getting like deeper and deeper, deeper understanding. And like so as I read these biographies to people, I try to like build like, you know, I think I have a good sense of like how you think and like what's important to you. And what I realized is like that instinct that you had as a 20-year-old man or however old you were at that time, it's like that has not – it's never been alleviated. It's just like this constant like keep going lower and lower and lower to like seek more – a deeper understanding of like the world around you but also how your business like fits in that world and how you can build technology to like enhance everybody else around you.

Yeah, of course. I mean that's what you're supposed to do, right? You're supposed to understand things, right? You say, of course. Like, this is the fun. This is another thing I told you when we had dinner. How else would you do it? I don't know. But to you, this is why I think, like, writing a book and having a conversation like this is important. Because, like, there's so much shit in your head that is so unusual. And, like, just it's so valuable, like, getting it out and putting it, like, out into the world. Because I remember, like. I wouldn't know any other way to do it. I know. Because you don't understand how abnormal you are.

So we were – halfway through our dinner, I looked at you and I was like, dude, I have this paradox in my head that I cannot reconcile between like your – the crazy career that you've had. It's like I study uncommon people for a living. You are uncommon amongst uncommon people, right? You have this – so the paradox I couldn't reconcile is between this crazy ride that you had that's described beautifully in your book, this four-decade, you know, mission that you've been on. that you've relentlessly given a lot of your life energy to and just how normal you are. Like, you're, like, not, I'm talking about, like, your affectation, your personality, like, you're very polite and calm and measured.

But it's just, like, you understand how rare this is. No. I know. Because you're like, of course you would. It's like, this is what I love. It's like. Just wake up every day and go do the thing. This is why you're great. This is why, but that's why you're great. So, like. Seems pretty normal to me. there's nobody that reads this book like this guy's normal no it's not at all so there's what i love about this and this is why it's so important because um and i mentioned this on the episode i made on you but there's this uh this engineer turned and uh turned uh founder uh sydney harman you know the the company harman carden yeah sure yeah yeah so he has a great line he said that the founder is the guardian of the company's soul that it's impossible to separate you know the the the creation from the creator and i think over time like the i resemble that god damn right you do this is also again how abnormal you are i used to say it's like you need to build a business that's authentic to you and then in this book lee was you know talking about he was only able to last four years i think um and he's just like you know we're fighting at IBM, we don't have any money, and he's like, my back's hurting, I'm losing my hair,

like I can't sleep, and he's just like, Michael's ecstatic. He's like tap dancing to the office every day, and he said a line that changed. It really made me think about things. He built a business that was natural to him. Of course, it's not abnormal to you because you built a business that's natural to you. Yeah, and if you've been doing it every day for 41 years, it seems pretty normal, right? On the last episode during my conversation with Daniel Eck, he said one of the most important ideas that I've heard. He said, I'm not obsessed about time. I'm obsessed about energy management. If you have time, but you have no energy, you're not going to accomplish anything anyways.

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They, like, misunderstood it, which was fantastic. How is that? It's like you don't want them to understand what's going on. You don't want to explain it. But how do you explain their inability to? Now you can explain it.

Yeah. But back then, you don't want them to know what's happening. You just want them to maybe not even see what's going on. So I have a funny story about this, and then I want to get back to Compact and IBM. So I had dinner with one of the wealthiest people in the world. He's 76 years old. He's been in the family business. He's the second generation of this privately held, like, dynasty. And he started working in the business since he was six. And it was, like, crazy stories. started on the shipping. They own one of the largest privately held shipping companies in the world. And he's a raconteur. He's like super charismatic and just like, I was, it was an incredible dinner. But I had found out, same reason where you're like, hey, I'm writing this book because I want, you know, people to come to Dell to understand the history. They had commissioned, the family had commissioned a real author, right? I have some of these books in my house, not from this guy, where these family businesses or, you know, these people at brokerage companies, they have, they'll hire, you know, an actual author, pay them whatever, a million dollars, write the book, and then they'll print it just like this, but there'll be no ISBN number on the

back because it's not available for sale. So I have a couple of these in my home library that people have given me because of the podcast. But he was telling me the story. He's like, yeah, we commissioned a biography of the patriarch who passed away a long time ago, and then we did one for me. And I was just like, dude, give me those books. And I leaned in. I was like, I want those books. I was like, I'll crush the episodes. The episodes would be great. Like, because he had so many crazy stories. And he, without hesitation, goes, absolutely not. I was like, why? He goes, I have no desire to educate my competitors.

Yeah. So that, you just nailed it. It's like, obviously, if you have an edge, shut up about it. This is what I don't understand. So maybe IBM and Compaq are the two people, two main companies that are not understanding the advantage that you had at this time, right? IBM is a big old stodgy company. Okay, that makes somewhat more sense. Compaq was run by its founder. How do you think he deliberately misunderstood? Like, how is that possible? For him to not be able to accurately analyze, do you think he was just dismissive of you? You didn't think you were a threat? Like, what was going on there?

He's still alive. You can go ask him. You know, I... I, you know, I think, I think when you're, you know, you're in a bubble, you know, people tell you things are working and maybe you just don't want to believe that there's alternate information and so you dismiss it. Did you read the new biography of Jensen Wong called the NVIDIA? It's actually, it's a history of NVIDIA, but he's heavily featured in NVIDIA way. I haven't read the whole thing. Okay. No. I did an episode on it. I'll send it to you. Yeah. Um, but he has this whole thing where the threat comes from below and his, I think he, he reduces everything to maximums.

He's like a really good communicator. And so he's saying, he's like, we're going to ship the whole cow because the threat goes from below. And I think I mentioned this in the episode I did on, on your book where it's just like you at the time came out with a, you just beautifully described, like you're just stacking one advantage on another advantage on another advantage. They're like, okay, we have the latest technology. We have way better supply chain management than you. We are putting out, I think you put out a computer that outperformed Compaqs, which you sold direct to the consumer for $795, if I remember correctly.

It was faster than theirs. And they sold a worse computer for $1,500, and it was only through retail stores. It's like that exact, the manifestation of all these advantages you had, you could just look at the market and be like, Like, it's very curious to me how this founder could be like, hey. Yeah, and, you know, you kind of hope that they don't even see it. Yeah. I mean, I think there's a human instinct to say, hey, look at me. I'm doing this great thing. Isn't this cool? Right? But actually, in business, it's better if the competitor doesn't understand or doesn't see you. So, because you weren't in stores, the only way they would know that is if they were ordering directly from you.

And they probably weren't doing that. Yeah, or if they were sort of paying attention, you know, but you kind of hope they don't notice and don't pay attention. I think this is tied back to the importance of following, like, your natural star and something you're just obsessed with. Because I didn't know that part where you take these things and see, oh, this is the 42nd week of the 96th year. That's insane. There's a line in the book, though. It's not that hard. The numbers are right there. It's not that hard to you. The numbers are just sitting there. It's like they're just staring at you. They're talking to you.

I 100% agree with you. It's like, but this is the difference between somebody that's obsessed and somebody that's not. Like, that guy wasn't taking apart computers compulsively. There's a story in the book, and no disrespect to him. I'm not trying to throw any shade at anybody. There's a story in the book where you guys are doing, I think, the private placement of the IPO, and Black Friday happens. And I think Lee Walker walks in your office to tell you that, oh, shit, there may be some trouble. There's trouble brewing in the capital markets at this point. And he said Michael was in his office taking apart another computer.

That's what you do. That's what you do. That's exactly. I think that's the biggest thing, man. It's like it's an unfair advantage if you can direct your energy at something that you – there's no – we talked about this at dinner. We have a mutual friend and Sam Hinckley. And one of the things that's interesting about Sam is if you analyze who he keeps around him, they have different interests. You know, it's like this podcaster dude, this investor guy, this entrepreneur, this like athlete. And he's like, what I'm drawn to, what all these people have in common that may not be obvious to you, David, is that there's no end.

Like you can't get to the end of what they're interested in. You think he used the analogy of like a cup. He just pour and pour and pour. It's like it just keeps going. Like they can never get to the end of their curiosity. And I think you're a perfect example of that, where if you look at other founders that are doing things for fame or status or whatever the case is, it's like Jerry Seinfeld has a great line. He goes, if you just do it for the money, you're only going to go so far. Yeah, when it's like a passion or an obsession, there's no way. into it. Yeah. And you're, you're taking apart chips and analyzing like, oh, I have a 90 days advantage over here. And I'm not worried about the capital markets because we're just going to keep serving our customers. And like, eventually that is going to change. It's not going to be a depression forever. So what can I focus on? I can just focus on understanding what I'm working on, what's in front of me, and then following this deep curiosity, you know, and, and, and actually taking the curiosity that comes from your head into like an actual product that makes somebody else's life better it's like the miracle of entrepreneurship you got it so we were just

talking about the fact that compact and ibm they were almost like essentially you got fuel from being underestimated you've mentioned in the book that like you found it i think you said something that's like a powerful motivate motivating force you recall why you felt that way you know it was It was just like, okay, wow, this is going to be a multiplier for us because they underestimate us. They don't understand what we're doing. And so they didn't see us coming because they were underestimating us. You know, I think the CEO of Compaq, you know, would refer to us as a mail order company or, you know, garage operation or whatever, you know, and you'd hear that and you'd go, oh, wow, this is great.

It's like they have no idea what we're doing. All that was motivating. You know, anytime, you know, there was sort of a setback and the conventional wisdom or even whatever interpretation was, okay, you know, they're going to fail. They're going to go out of business. All that, incredibly motivating. Is it still like that today? Of course. Yeah. Yeah, absolutely. I love that everything is of course and of course it is. Yeah. I mean, if it wasn't, I'd probably be dead. And still caring about the company, even from the grave. It's a common, I think, misconception, I'm curious to get your take on this, where people are like, well, you know, if you don't raise all the money at the beginning and your competitor does, like, you're automatically dead.

And I hear that a lot. And I was like, I don't know, like, Compaq raised $75 million, $100 million, and you had $1,000. in a dorm room. Do you feel that, like, it is actually different today? Like, if you were advising, like, a younger entrepreneur? I think it's very situation-specific in terms of the company industry, et cetera. So, I don't think you could give generic advice there. Yeah. That's why I think, like, the generic advice is you have to do this or you're dead. I'm like, Like, I don't, I'm pretty sure that's not the case. I don't think, you know, like I was saying earlier, I don't think there are ever these absolutes.

I think you always have to hold out the possibility that somebody is going to figure out some clever, interesting way to do something that nobody's ever thought of that is different. And, you know, that's just going to happen. Yeah, that's actually an interesting area to go down where it's like who else – you figured out by accident like because necessity is the mother of all inventions. Like I don't have capital, so how do I get money? Well, I'll just ask my customers for the money. And then you accidentally discovered all these advantages and had a deeper understanding as you went along. Are there any other examples of like entrepreneurs or businesses that you've studied where it's like, wow, that's like a really clever way to do something effectively and expensively?

Well, I mean, you think about some of the retailers, you know, like, you know, Walmart and Costco. Amazon obviously came up with super clever ways of winning in that space by, you know, doing things inexpensively, taking out all kinds of costs. Yeah. The other one that came to mind was Sam Zemuri, the Banana King. He essentially, you know, builds the second largest banana empire and at the time, then later on overtakes the first largest, which is United Food Company. But I guess, like, one thing that he figured out, and he was actually your same age. He was 19 years old. He had no money, and he was trying to figure out a product to sell.

And so what he did, he's just like, well, I was working the docks down, I think, in Alabama at the time. And he's like, all these fruit companies, they have these things called ripes, which are the bananas that are going to go bad in, like, two days from now. And they just take them off the boat and throw them in the garbage because they can't get it fast enough to the store. And his idea is like, well, I can use this new technology today, which is the railroad. road, and I can buy this for almost nothing because they're not getting anything anyways, and I'm going to put their ripes and get on the railroad with it and then sell it at every single stop.

And then he was generating so much cash, and then he could start working down the line all the way to when he had his own banana plantations. Just like that idea. It's like it starts out with like this little nugget of like, oh, this is like an interesting opportunity. And not understanding as you pull and pull and pull and pull, it gets more and more like you keep stacking these advantages one on top of another. um yeah i gotta find i should organize and like look into like more examples of like is there another example of like what you had at the beginning of dell because i think that's the key like i think some degree it's like the easier more path is just go and like sell part of the company or raise more money or find essentially like solve the problem with money where you solve with, like, creativity and hustle and, like, intelligence.

Those ideas are, like, excessively fascinating to me. IKEA is another one where he, you know, same thing, where he was just selling mail order. He's a mail order company. And he has a great line in— Yeah, there's that mail order thing again. I know. I think it's, like, still— He has that great line where he's, like, expensive solutions to any problem are signs of mediocrity. So he was, like, you have to be more creative. We had this whole thing in the 80s, and we called it Beat the Mail Order Stigma. Really? It was sort of like as we were establishing our brand, you know, sort of the conventional wisdom was a mail order company, which was sort of like a…

Pejorative. Like an insult. Yeah. Okay. It's like, okay, it's a mail order company. And it's sort of like a stereotype. It's like, oh, you can dismiss it because it's a mail-order company, right? And all the press, you know, for years, they were like, mail-order company Dell, you know, mail-order company Dell introduces server. You know, it was like, what? It's like, okay, we have 30,000 patents. When are we not a mail-order company? What is this mail-order thing? So anyway, we had to, like, get rid of that. How did you beat it? Just kept doing our thing. You know, and eventually people go, I guess it's not really mail.

I mean, it's internet and it's not mail order. I was like, nobody orders stuff in the mail. What is it? I think you just may realize something that I didn't understand when I read the book.

How soon into Dell were you starting to sell, like, targeting institutions over individuals? You know, it's really interesting. If you go back to the very, very beginning, like the first full year, like over 80% of the business was to businesses. OK. So it's sort of like doctors and dentists, right? Or lawyers were some of your first. But they were using it for business purposes. An individual doctor or dentist, I would think of them as more like an individual. But. Well, first of all, let's level set here. So, if you look at all technology spending, roughly 75% to 80% of it is businesses, not consumer.

And so, that's kind of been the thing for a long time. So, within the first year, you got the same, similar percentages. Similar percentage, yeah. You know, there were companies, universities, they were buying 5, 10, 20, 50 machines at a time. One final thing that I want to talk to you about that I think is like one of the most important ideas in your book, especially when you're trying to like push these stories down the generations. So, like, I see it in a lot of the biographies, and I think it's, like, another misconception how we just talked about the misconception machine. Like, entrepreneurs know, be wary of experts and, like, how they can kill new ideas where, like, a normal person would revere them, right?

So, there's, like, this difference of understanding each other. Another one that I would say is, like, the importance of ego and self-belief and self-confidence. And my, you know, general society might say, you know, you should generate evidence and then be confident. And I hear this a lot, which is perplexing to me because in the books, this is, no, you have that direct, completely backwards. Belief comes before ability. And so I would go back to this part in your book that I think is super important when you're 19 years old and your dad's like, what do you want to do with your life? And you're like, I want to compete with IBM.

And you sit there and like, again, I don't think you should be reading these books quickly. This is like, there's no test at the end, like sit with the ideas and really think about what's happening on this page. And I think it's one of the most important pages in the book. I can actually see the page in front of me. And what you realize you say on that, that page where it's just like, was I a little full, you know, the idea is like, I have a thousand dollars. I'm in UT dorm room. I'm going to take on the biggest company in the world. And you said, was I a little full of myself at 19? Sure I was. I think you have to be to do anything important. Can you explain that mindset? Yeah, I think it's a combination of naivete, right? Which is an important element.

It's like, you don't know enough to know that maybe this won't work. Okay. And confidence. But, you know, you never sort of want to go over into the arrogant zone, because that's really, I think, a dangerous place to be. So, it's like, OK, I have not been in this industry for a long time. And so, you know, all these reasons why it won't work are unknown to me. OK, so that's the naive part, right? And that can actually be sometimes a good thing, Because you're not sort of bound by those conventional thinking that maybe are no longer as relevant or maybe you come up with some clever new way of doing it.

And then, you know, the confidence piece is, all right, I'm going to go make it work. I'm going to go figure it out, right? um but you know there's always that little voice in your head it's like well what if it doesn't work and you know what about this what about this and so you know you never want to sort of assume okay this is absolutely going to work no matter what because then you're going to ignore those little voices about well what about this what about that so so yeah it's sort of i think a combination of naivete, being real here, and confidence. I think a perfect illustration of that would be your reluctance, initial reluctance, to name the company after you, because it was a piece.

PECs Limited, right, at the very beginning. It was officially Dell Computer Corporation doing business as PECs Limited, right? Yeah, but then you realize, like, why don't we just do Dell? And then that's when I thought of the Osborne thing, because you're like, wait a minute, this guy, he named his company after that. Like, there's no way to go. Yeah, what if it doesn't work? Yeah, but it's interesting, because you just said, it's like, yeah, I have a lot of confidence I'm going to do this, but the doubt never goes away. Yeah, and, you know, fear. Thank you. That's actually the last thing I want to talk to you about.

When we, one of the first things when we saw each other last month, we talked about, we were like walking around Zach's office. And I don't know how it came up, but it came up almost immediately. And it wasn't a surprise to me because I feel the exact same way. But your fear of failure, in my experience, from studying all these histories of this entrepreneurs, but I think you said the same. It's just, like, the fear of failure to this day is a bigger motivator than, like, the love of success. Yeah, totally, 100%. Yeah, you know, you don't want to fail, although failing is how you learn. You know, pain is the best teacher.

And so, you know, you have to have some little failures along the way. But that fear of, you know, you can't have it paralyze you where you don't want to make any decisions because you're afraid to fail. Has that happened to you? Not really. No. You know, what you want to do is sort of be incremental. And again, it's back to iterating. It's like, okay, we're not sure if this is a good idea. Let's try it, right? Let's experiment. Let's get started. We'll figure it out. And we're not betting the whole company on this decision. We're just experimenting. And if it doesn't work, great. We learned something.

We move on. That's perfectly sent. Thank you for writing the book. Thank you for the time. I really appreciate it, Michael. Thank you, David. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.