famous quote
“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.”
Growing
Despite Mr. and Mrs. Dell’s hopes that their son would become a doctor, when Michael Dell was in seventh grade, the boy’s only area of interest was computers. While his classmates were beginning to play under the hoods of classic cars, Dell spent all his time with his Apple II.
Dell showed aptitude for business from an early age. He was making thousands of dollars in mail-order sales to stamp collectors by the age of 12, and through careful planning, he made a staggering $18,000 selling newspaper subscriptions for the Houston Post (with which he bought his first BMW). in his last year. high school year. At 18, Dell began planning the creation of a company that could rival IBM.
Succumbing to the wishes of his parents, Dell began a pre-med course at the University of Texas in 1983. However, all his time outside the classroom was spent buying obsolete computers, upgrading them, and then selling them. for a profit His room became so full of hardware that, out of consideration for his roommate, he finally decided to move his operation off campus. His parents were very disappointed with the news that Dell was dropping out of college, but he promised to return if his company was not profitable by the end of the summer. At the end of one month of operation, Dell had earned $180,000 in PC sales. Needless to say, Dell didn’t go back to school.
starting the business
As Dell planned for the future of its business, it identified price and delivery as the most important aspects of the growing PC business. By purchasing parts and assembling the PC on its own, Dell was able to assemble the machines cheaply. He then decided to sell his computers over the phone to set up brand name companies at a 15% discount, cutting out the middle man and establishing a name for himself. “The direct sales model”, as it has been called, completely changed the way computers are sold.
Dell called his company PCs Ltd., and by age nineteen, his company had become one of the fastest growing in the US The secret to Dell’s success was the emphasis it placed on creating custom computers for meet the specific demands of its customers. Within a year, PCs Ltd. had earned more than $6 million. The company’s name was changed to Dell Computer Corp. in 1987. And a year later, Dell’s sales exceeded $159 million.
building an empire
Dell went ahead and set its next goal to overtake IBM to become number one in the industry. Around that goal, Dell employees worked hard to get sales to exceed $800 million in 1991. Their new goal for the following year was to earn more than $1.5 billion; however, Dell ended up raising nearly $2 million in 1992.
The company was growing at such a rate that in 1993 it began to spiral out of Dell’s control when stock prices fell from $49 to $16 during the first six months of the year, its CFO resigned, and the newest line of computers was phased out because of its low quality.
Dell quickly turned to older, experienced managers—Mortola’s Mort Topfer, Bain and Co.’s Kevin Rollins, and John Medica, designer of the Apple Powerbook—to get its business back on track. A year after these management changes were implemented, profits again began to rise, and by 1995 approached $150 million. Having reestablished his company, Dell worried about how to stay on top. Along with his executives, he made two decisions contrary to the norm; focus solely on high-margin business customers and rely entirely on direct marketing.
Contrary to expectations, the implementation of these policies was successful, with sales reaching $5.5 billion in December 1996. Dell then created a website for consumers to purchase computers directly from the company, one of the few at the time. , and then in just two months of business, sales exceeded $2 million a day, reaching $6 million a day in 1996. In 1998, Dell had total sales of 12.3 billion, outselling IBM and Hewlett-Packard ( a close second behind Compaq). Dell’s breadth of vision, insistence on continuous improvement, and willingness to make decisions that did not conform to industry standards have made him a very rich man and the longest serving CEO in the computer industry.