Michael Dell
The 39-year-old computer mogul on stepping down as CEO of the company he founded, why he doesn't play footsie with the press (hey!), and the product line he should have launched years ago.
Did you ever imagine the day would come, or come this quickly, when you wouldn't be CEO of the company you founded?
When you start a company, you get all the jobs. You're the chief operating officer, you're the president, you're the CEO, you're the chairman. I've been gradually giving up my titles. But, you know, [chief operating officer and soon-to-be-CEO] Kevin Rollins and I have run the company together now for a long time, and we'll continue to run it, so it's not really much of a change in terms of my day-to-day activities.
If there's no material difference to how you're going to live your life, then why give up the title?
It's a recognition of Kevin's achievements and what he's bringing to the company. We want to make sure he's well known and well regarded out there. But while it raises his star, it doesn't lower mine. It's good for the company and it's good for Kevin, but it doesn't hurt me.
No one would blame you, after as many years as you've put in, starting at an early age, for wanting to slow down.
[Laughs] No, I'm not retiring. I'm continuing to work on a full-time basis. I'm not in any way reducing my commitment to the company. That's not what this is about.
Looking back over the twenty years since you started Dell, has the experience of being a CEO changed dramatically?
Not only in terms of all the people being paraded in front of the cameras with raincoats over their handcuffs—I've never had that experience, fortunately.
—but in a larger sense. Is running a major company different than it used to be?
We're so used to change on a massive scale that the change you're talking about might be more subtle. If I think back to what it was like for us ten years ago, we were a much smaller company. The change we see in our own business is actually greater than the change externally.
Give me an example of a change that we might not be able to see from the outside but that on the inside is momentous.
Yesterday we had a town hall meeting for our small-business group, which sells to small businesses in the United States. We were congratulating them on the wonderful things they did last year. And I was pointing out to them that if their group was a company all by itself, it would be, like, number 250 on the Fortune 500 list, and it would be the same size as all of Dell about six or seven years ago—the whole company. So we've got a lot of areas in which the magnitude of change is pretty big.
Is there a point at which you can have too much growth?
There have certainly been times when we've moved too fast. In the early nineties we experienced a bit of that. You know that's happening because you see the infrastructure falling apart and people aren't developing as quickly, or maybe financial results are coming apart. On the other hand, we never stopped growing. The dollar amount of growth we'll experience this year is greater than that of any year in the history of the company. Our growth this year is about the same size the whole company was in 1997. You couldn't have had that happen unless you'd built the kind of engine and framework I'm talking about.
You'd think that after twenty years the people who are in the same business as you are would have caught on to your secret and come close to catching up to you.
We're sort of unusual in that the technology industry is famous for companies that are product-focused, but what you find at Dell is that we're customer-focused. We develop products—products are important—but we think a lot more about what the customer needs. And, of course, because we own our own distribution and customer relationships, we're a mix of a manufacturer and a retailer. There are certain retailers, Wal-Mart being the most prominent, who've sort of figured out how to grow at pretty impossible rates over a long period of time. There don't appear to be tremendous limits to that if you expand geographically, as they have. So, with an $800 billion market and a 5 percent market share, we see enormous opportunities for growth.
When you grow market share, do you go after someone else's piece, or do you go after new people—people who are not using anybody's products at all—and turn them into customers?
The way we think about it is, How can we deliver value to customers? Any number of things can happen when you do that. It could be that you attract a lot more customers to buying some product or service than used to buy it. It could also be that you attract only the customers who were buying it, but they were buying it from somebody else. The real focus is, Is it a big market, a growing market? Is it a market where customer relationships can play a role? Is it adjacent to what we already sell? For example, if you're selling computers, well, how about printers? I mean, printers are attached to computers, and you can't print unless you have a computer, so that's a pretty logical one. In fact, we're sitting around right this minute going, "We should have done that, like, ten years ago."
It's nice to know that even you are still learning.
We make mistakes all the time.
What's a big mistake you've made in the past twenty years—one you think back on and say, "Boy, I can't believe we did that"?
There are several that I've talked about in the past. We entered the retail channel—I want to make sure I draw the distinction between going into the retail channel and selling to consumers—
You're talking about opening stores.
That was a bad idea. It was a distraction. It was confusing to our people.
But you had the sense to pull the plug on it.
Yeah, it didn't last long. We don't really have any mistakes that went on for a long time.
What about misperceptions about the company or you personally? I mean times when you hear or read something and think, "God, people just don't get us."
There are quite a few, but they don't really bother me. In fact, I think misunderstandings and misperceptions greatly work to our advantage.
How come?
Well, if everyone understood exactly what we were doing, then they would go do it themselves or they'd come up with a strategy to prevent it. In fact, if you look at the history of our company, you can say that there's been a repeated phenomenon where people have underestimated or have not understood what we were doing and the result was that we were able to launch into new markets and gain a lot of success very, very quickly. I can cite ten examples of that.
Cite one.
Servers. When we entered the server market in the mid-nineties, Compaq had a big lead. Even the financial analysts questioned whether it made sense. I think there's value to this kind of skepticism. Some people say it's a bad idea, some say it's a good idea. Fine. If everybody thinks, "Oh, you're gonna succeed at that too," then our expectations go through the roof. So we entered the server market, and our market share went from zero to 35 percent and we now lead the market in the U.S. for servers. The market's grown tremendously, and we've changed the competitive dynamic in a positive way.
Cite another.
International expansion. In 1987 I started going to new countries, opening new markets. I probably did thirty different country launches. In '87 we opened the U.K. I was 22 years old, and there we were in the U.K., launching our business. "Well, you know, this won't work here. This is a different country. You need to go back to America." That didn't really bother us. The phone was ringing off the hook. "Sorry, I can't talk to you about how this isn't going to work. I have to sell all these computers." So we go to Germany, we go to France, we go to Sweden—same exact thing. We go to Japan—same exact thing. We go to China: "Oh, well, it worked in Japan, it worked in Canada, it worked in France, it worked in Mexico, but it won't work in China." Well, it worked in China. Every country, the same thing. Now we've got people saying, "Oh, printers, that's not going to work." Bull.
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