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If you like Michael Dell's story, you might also like:
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Michael Dell
Michael Dell
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Michael Dell Interview (page: 3 / 7)

Founder & Chairman, Dell Inc.

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  Michael Dell

At what point did the customers become not just businesses but consumers? Was it at that Austin fair?

Michael Dell Interview Photo
Michael Dell: We had all types of customers. It's just that the industry really started as a business activity. It was for accountants and architects and doctors and lawyers and people doing word processing and things like that. There wasn't much personal computers in the home like there is now. As we grew, we started to sub-segment the opportunities, and said, "First, there's large customers and small customers." And then we said, "Well, it's a little more complicated than that. There are these public sector customers from the government and education and medicine, and they kind of have different requirements and they buy a bit differently, and that's kind of different than large companies." And then we said, "There's kind of small companies and consumers -- and those are sort of different -- and there's large companies and global companies." Global companies have a whole different set of requirements than national companies, because they want to buy in many countries around the world. We spent 20 years chasing our customers around the world. Really big companies like GE and Toyota and Boeing would say, "When are you going to be in this country?" So every year we would open a few more countries.

Does that mean you opened factories there?

Michael Dell: We had regional factories. In 1987, the company was just three years old, and we launched in the United Kingdom. It's kind of interesting. We weren't a public company, we had very little capital. Let's expand around the world!

How old were you at the time?

Michael Dell: I was 22 years old. And it seemed like a good idea. We actually had a pretty important meeting about seven or eight months earlier.

We went off for a few days with some of the really smart people in the company and a few outside advisors. And we said, "Well, what are we going to do with this company? This thing is really growing fast, but we're in a business that's pretty competitive and expanding rapidly. What do we do?" So we had three strategies that we clued in as our growth path for the future. The first one we said was, "We've got to go outside the U.S., because 96 percent of the people in the world live outside the United States, and it's going to be at least half the opportunities -- outside the United States. You can't just be a domestic company." Second thing we said was, "We really want to go after large companies, because they underwrite their purchase of technology through productivity and they can afford the best tools. That, we know, is going to be a lucrative opportunity and we really want to go after that in a big, big way." Kind of an odd thing for a little company like ours to go after, particularly with IBM and others in the field. The third thing we said was, "Differentiating our business is going to be really key, and the way to do that is on service." You've got to have better service than the competitor. So we invented this idea of on-site service for the PC, which had really never been done before. So with those three strategies we kind of marched forward, and that lasted five or six years.

[ Key to Success ] Preparation

Onsite service, meaning you would send someone to the customer's place of business?

Michael Dell: The way this would work is, let's say you went to ComputerLand -- there used to be such things in the United States, around every street corner -- and you bought a computer and it didn't work. Well, you'd put it back in the car and you'd go there and (say) "Fix this thing," and you'd come back a week or so later and they'd give it to you. So our idea was that you'd call us on the phone and say, "Hey, our computer is not working," and we'd come the very next day and fix it. It turns out there were all sorts of third party companies that had field service networks -- companies like Xerox, for example, who had all these technicians all over the country who were kind of waiting for copiers to fail. So they had this fixed capacity. And so we could buy up that excess capacity at way less cost than we could put it in ourselves, and instantly have way better service. Actually, Xerox is the company we used for quite some time in that.

[ Key to Success ] Vision

So we used them as one of the third party field service providers.

When a customer would call us and say "Hey, something's wrong with my computer," the interesting thing is that about 85 or 90 percent of the time we could solve that problem, actually right on the phone. So we didn't have to actually send the technician. But when we did, we knew exactly what the problem was and we could very accurately fix it the very next day. We've obviously advanced it and now we have two-hour service and four-hour service, for kind of mission-critical installations. Some of our customers say, "Hey, I want to have somebody there all the time, for 24 by seven. (We) do that too. So it becomes many, many different types of service offerings. Service is really an important part of our business that continues to evolve, particularly as we create more and more complicated products. The customer isn't so much interested in all the bits and bytes and how fast is the computer and what does it do. They want to know that this installation of a critical system that they're putting inside their business is really going to work well, so they're looking for a solution. So we have to know a lot about their business, and we have to really be able to consult with them and tailor a solution that meets their needs.

Michael Dell Interview Photo
How soon after you dropped out of the University of Texas was it clear that the business was going to be a success?

Michael Dell: The first couple of years, the business grew tremendously, but it was also a business where it could've gone away at any second, because there were so many things that were fragile and unpredictable and we were doing all sorts of new things. By the time we went public in 1988 and had some capital, it was still a rocket ship, but you could sort of say, "Okay, it looks like you got something here."

Did your parents live to see your success?

Michael Dell: Oh yeah! They're still with us and they're very happy. They're pleased with the way everything's worked out.

I bet they're glad you took that semester off after all.

Michael Dell: Yes.

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This page last revised on Aug 01, 2008 17:53 EST
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