My Conversation with Michael Dell

I have started a new show where I have conversations with the greatest living founders. That show is called David Senra. It will be on a separate podcast feed from Founder. So it is very important that you follow David Center on Spotify, Apple Podcasts, YouTube, or wherever you're listening to this right now so you don't miss future episodes. The first episode.

was with Daniel Eck, the founder of Spotify, and one of the wisest people that I know. That episode spread all over the world, and the response has been greater than anything I could have ever imagined. The next episode is with one of my personal heroes, Michael Dell. A few years ago, Michael was kind enough to send me one of the greatest messages that I've ever received in my life.

He believes in what I'm doing with founders and thinks it's good for the world. And so I was thrilled that he immediately agreed to be one of the first guests. His career is singular and he is one of the most impressive people on the planet today. I am posting our entire conversation on this feed so you know what the new show is like. I hope you enjoy our conversation. And please don't forget to follow the new show, David Senra, now so you don't miss future episodes. Oh, and by the way.

Nothing is changing with founders. I'm still doing episodes every week and will work on founders until I die. I want to jump right into what we were talking about before we started recording that. You said somebody was, you've been obsessed, you've been running Dell for 41 years.

You've been obsessed really since you were like 11 or 12, so you've been running it for 50 years because there was a Dell before a Dell, right? But you were saying somebody was telling you this story about you in middle school. When I was in junior high school in the summers, In Houston, there were classes at Rice University for young kids. And so you could go to Rice University and take these classes. And my mom kind of signed me up.

It was great. You know, they had these college professors and they were teaching these classes. And the way I would get to Rice University is I would take the bus. from our house, right? And it would like take you downtown. And I was curious. So I was like, OK. If I just stay on the bus, it takes me all the way downtown to where the really tall buildings are. So I go down there. It's like really tall buildings. I'm like roaming around. I'm like 11 or 12 years old. And I see.

Like, they've got, like, the stock exchange there and all these tickers going. I'm like, wow, that's pretty cool. So I just started learning about the stock market. So anyway, it's just something I remembered. And, you know, my— My parents were always talking about financial markets, and it just sparked sort of this interest really, really early in life. There's a great line. I've seen from both Ken Griffin and Larry Ellison describing you. Like, this guy was manufacturing computers in America.

at a time when there was like thousands of other people doing the exact, very similar thing. And he was the only one that survived. And the reason I just thought about that is because I was watching this talk that Ken gave, I think at Yale. And he says something, he's like, For reasons I can't explain. I don't know why. 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— It's a super cool product. Yeah, I'm very excited.

I told you I'll buy one. I think it's cool, too. I'm going to buy one 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.

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? Then it was like 95 percent of our conversation. Then he's like, all right, I have some things that you should talk to my dad about. 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, you always want to do that. I mean, I would feel unfulfilled if I couldn't figure out a puzzle, a question. 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. 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? Yeah. 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, 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 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 that 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? 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. You know, time you're taking part in IBM. You know, this is, I'm pretty sure before you were.

You're a teenager, so this is before you start Dell officially. But it's, you know, and I didn't know this about IBM. I had to go back and look it up. It's like the most valuable company in the world at the time. It was the first company to ever hit $100 billion market cap, which also blew my mind.

You take it apart and you're like, oh, wait, it's just components. This is the biggest company in the world. And this is their product. And if you take it apart, it's just made of components from other companies. And it's just like... It's implied, or at least this is what I was reading through the lines when reading your books, like, well, I can do the same thing. Like, what are they doing here that I couldn't do? Did you have that thought?

Yeah, absolutely. I mean, so it's back to when you open the thing up, you look inside, what's there? Well, there's chips, right? Yeah. And there's wires and there's... power supplies and disk drives and all these components. It's like, well, where do those things come from? Who makes those? What's inside those? How do they make those? And so you sort of peel the onion. And you understand all the different elements. And when I originally got the first IBM PC, yeah, probably

took it apart before I turned the thing on, just to see what's inside. And one of the really cool things back then was that you didn't have these sort of application-specific integrated circuits. They call them ASICs, right? Or these big sort of chips that nobody really knows what's inside except the designers. All the chips were off-the-shelf chips. So you could see, you could sort of understand what the logic flow was and what each chip was supposed to do inside the circuit.

And inside the IBM PC, none of the chips were made by IBM, right? And none of the disk drives were made by IBM. The power supply wasn't made by IBM. And so I was also interested in the economics of it. It's like, well, what does this chip cost? What does that chip cost? And you sort of add it all up, and then you compare it to the cost that they're selling the thing for, and you go.

Wow, this is—they're really charging an incredible markup for this. It's an incredible insight to have as a teenager, though. It's like— figure out what the actual cost of the components are, and then go look up. And it sounds like what Elon did with rockets. It's just like, the Russians won't sell it to me. I'm on the flight back. These famous stories in all of the books. And I was just like, well, what is a rocket made of?

Like, okay, well, there's a list of components. How much do those components cost? What you just said is, like, you just kept asking questions. Like, oh, I'm going to take it apart. It's like, okay, well, this is all the components. This is what it is. This is...

Like, where you get them from. Look, the company name is right here. I can just call them up and find out how much this is. Well, you could go to the distributors and you'd say, you know, okay, how much does this chip cost? And they'd say, well, it's this price for 100 of them. Yeah. Right? 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.

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. Ramp's corporate cards are fully programmable.

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Something I don't even know if I've ever verbalized before, but it's in all these biographies that I read. What I feel is there's just a lot of common sense where the founder tends to just keep asking more questions.

And just like going to like an, you just said, I think, peeling an onion. It was 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 child.

from childhood. And I think based on what we were just talking about in your office, it's obviously still present. But yeah, it's just very fascinating. It's like, it's not rocket science. Just 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, and you're dormant 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, he said, I caved, which is very unusual because he has a super strong personality from a young kid. But then the very next page, I can see it 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. I know we talked about this last time. It's hilarious where somebody asked you, it's like, well, when you start Dell, 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.

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... individual topics and sort of go deep on them. So, yeah, I wouldn't consider myself generally interested in a bunch of things. I was like... super deep on certain things that excited me or interested me. Is that still the case today?

Or is it just basically? Yeah, it tends to be, yeah. Yeah, Zach told me, he's like, he'll call me at 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, uh. What would get him to stop? He's like, you have to kill him. What made you decide to write the book? We had gone through a whole lot with—

The going private and buying EMC and VMware, and there's 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 one of the main reasons I wrote it was for our team inside the company because I want them to understand how we think about the business.

where it came from. And 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 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 this is the decisions that were made, this is why it was, this is what we've gone through. Spotify has this. Originally, Gustav is the head of product at Spotify, and he's actually the 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 were we what was like a 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 for the 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'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 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 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. 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, they'd read that and then they'd 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 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, I'm so glad you put that in front of me. I think it's 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 you wanted to pass that forward. Who are a few of the people that you study, you feel you learn from, or that influence your thinking about how you built your business? 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.

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 yeah the idea just was in my in my consciousness from from a very early age this great line that

Jeff Bezos says, 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. He's like, this is coming through him. Like, he has no choice. This is 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 when, 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 that a model for you? What was your interpretation of that experience, I guess, what I'm trying to get at? Yeah, so... In the early days of the computer industry, as I knew it, the microprocessor-based computer industry, 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 don't say. Exactly. And, you know, sort of compare. Yeah. how they had souped up their computers and software they had written and learned from each other. And so, Steve came to speak to our user group. Yeah, I mean, he was, like, using these incredible metaphors and, like, listening to him. And...

looking at what Apple's doing and going, wow, that's really cool. And you also started hearing about Bill Gates, who's also about the same age as Jobs. And they're both about 10 years older than I am. And you kind of look at them and go, well, OK. They did something cool. Maybe I've got a shot. Yeah. That's really cool.

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. And you said something that terrified me unintentionally.

that most entrepreneurs and founders that you've known were never taken out by competition, that they sabotaged themselves. Can you say a little bit about that? Yeah, I mean— I think you could make the argument that they made mistakes along the way that were fatal and ultimately the companies didn't succeed. But it's all of their own doing, right? You have to make the right choices in order to...

to continue on and survive and ultimately thrive. What do you think are some of the causes of mistakes? You have obviously smart, talented, competitive people, right? Charlie Munger has this great line where it's like intelligent people. are taken out by three things, ladies, liquor, and leverage. So have you seen any common causes for somebody to sabotage themselves or to not live up to what they should have?

Charlie's right about those three things. You know, we stay away from those. Yeah. I sort of go back to understanding things and curiosity, and it's like you've got to— You've got to know why something is working or not working. And if you're in the middle of a super competitive endeavor, and you don't really completely understand what's going on, well, you're going to make mistakes, right? When I look at the competitors that are no longer around, yeah, they had either

overzealously expanded or made, you know, design, you know, errors or they fail to understand the competitive landscape. I mean, there's. Lots of ways to fail, right? You have a great example of one in the book with Adam Osborne, where he had a very successful, I think the Osborne one was relatively successful, right?

Yeah. Okay. Yeah. And he's like, all right, now we're coming out with Osborne 2. It's even new and improved, and it's great. And you make the point. It's just like, yeah, maybe, but... it didn't ship in time and so now you just made this big announcement where like we have this great new product it's even better than one what are you telling to the market the osborne effect i don't think people talk about it so much anymore but back then the osborne effect was a thing where

You introduce a new product that's better than your first product, and nobody buys your first product anymore, and you're out of business. And so, you know, yeah, don't want to do that. So go make some mistakes nobody's ever made before. Try to make them in small increments. Fix your mistakes as fast as you find them. And you actually want to make mistakes. You just want to make them small and, you know.

iterate and fix them quickly. I mean, one of the things when you're creating a new business in an area that has never been done or with some new technology, new business model, there's no... There's no, like, book you can read. Here's how you do it, right? And if you hire the people from the adjacent, you know, industry companies and ask them to go do it.

Well, they're just going to go do what they were doing before, right? And so that's not going to work. So you need a lot of creativity, and you need to sort of intuit your way to the answer by experimenting. It's like, okay. Here's a theory that we think will work. Let's try it, right? And does it work? Great. OK, let's do 2x that. OK, let's do 10x that. Let's do 100x that. Does it work? OK, let's stop.

You know, restart, come up with another theory, and just keep experimenting until you find the answer. 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.

wrenching stuff to reinvent and reimagine your business. But if you don't do it, you go out of business. Yeah, exactly. So, you know, when ChatGPT came out in November of 22, or sort of looking at this and going, wow, this is a big deal. This is pretty interesting. And you started to see the rate of improvement in the LLMs. And in technology, you can...

You can sort of look at the rate of improvement and the learning curve, and you can sort of plot, well, where's this thing going, right? Where's it going to be in a year or two years or three years? And you look at, okay, we're going to... have agents and multi-agent systems, and we're going to be able to reason over incredible amounts of information. Well, what does that actually mean for the way knowledge work gets done and the tools that humans are going to have?

So you think about that and you go, wow, this is a big, big deal here. We need to totally reset how we're thinking about the business and reimagine it, reframe it. understand what the processes are going to look like in five years. And so you do all that and you say, if we keep doing what we were doing before. we're going to be in serious trouble because some new company is going to come along and yeah, they're going to have all these new tools. They're not going to have this legacy of...

crap from the past, right? And old ways of doing things. And they're just going to do it the new way. And so we have to change or we're going to go out of business. You know, I also believe in this idea that if you don't have a crisis, make one, right? You know, you get people excited, motivated, and... to drive the necessary change. I mean, in one sense, this is not a technology problem. The technology is there whether you use it or not. It's a question of how do you...

organize the team and people to actually go and get this thing done? How do you motivate them? How do you give them the right tools? How do you structure? you know, the ways people work together so that you can do it quickly. And it's very hard for people to, you know, if you've been doing something for...

10 years or 20 years or 30 years the same way. And all of a sudden, it's like some new thing comes along. You're like, no, I don't want to do that. People don't like to change. But you have to. And so that's what we've been doing. Yeah, this is excessively rare. I mean, think about the story in the book where I think the line that I summarized where you were saying about

IBM's like, yeah, the personal computer's, 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 are you guys are doing right now though, 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 the internet. How many? So, like, I got four or five. How many have you successfully navigated and had to reinvent Dell over and over again? How many of these, like, huge shifts do you think? Yeah, there's probably been six or seven of them. So if you've done that six or seven times, and then I think in the book, you know, obviously you say, we did really great on this one.

Not good on this one, but we've fixed that. You're not going to be perfect over that many decades. But do you see like... Is there like an echo between all of these that you can apply? Like certain ideas you can take away and like form a structure? It was like, oh, that's kind of similar to what we had to do when we had to reinvent for X. Yeah, there are. Although the time...

frames that these things occur tend to be shrinking. Say more about that. So if you think about the internet, you know, when, you know, first you had the internet and you had the World Wide Web. And websites started popping up in the mid-'90s. But it took like a decade before there was really... a boom in things like e-commerce. And I mean, it was going on in the late 90s and early 2000s, but it really didn't. It took a long, long time. So now...

Maybe it's like five to 10 times faster, you know, if you look at the growth in the usage of these tools. And part of it is that each successive... wave of technological improvement is built on the prior foundations, and so they're able to go faster. So if you have 5 billion people connected with all kinds of devices, well, now they can use these tools and that just goes way faster. I think you have to have this idea in your head that any new thing has...

some chance of succeeding, right? Say more about that. So, there's a lot of wild ideas out there. And if you dismiss them all... you're going to miss some things. So, you kind of have to hold this idea in your head that any of these wild ideas has a chance of succeeding. And let's... sort of understand what do all these things mean and figure out what is the point of intersection, right? You know, what should we be doing about this? And when is it actually?

relevant, interesting, valuable, and it sort of, you know, hits escape velocity. And if you're sort of stuck in a particular paradigm or you're like dismissing things, you're going to miss them. Yeah. And so, you know, you need to be open-minded enough to consider all possibilities. But your ability to do that is so counter to human nature. Because we're habitual creatures. It's like, oh, I found what I want, or I found what I like to do, and this is the best. If you look at what...

what music people listen to, for example. It's like music you listen to when you're in high school and college, and maybe you've added a couple, but you're kind of just stuck on that, where... You are just, like, completely open, maybe addicted to, you know, new technology and new ways to think about or new ways to solve, like, old problems. Yeah, I love the stuff. But how do you not squash new ideas? Like you just said, like, you know.

Those are great lines. Like, any idea can work now. Everybody's connected, and they can grow faster than you can possibly imagine. So how do you, like, do you have a process for, like, how do you not, you know, new ideas are fragile. And, you know, they need some kind of protection and some time to grow. Like, but most people just like kind of snuff them out or dismiss them immediately. Well, you know.

Sometimes it's a good idea, but it's the wrong time. Sometimes it's a good idea, but it's the wrong company. Sometimes it's just a bad idea, right? And so, but... There's no absolutes here. You just have to be open-minded and consider the possibility that things are changing fast enough that some... some new thing comes along. If you took the top computer scientists and researchers in AI or just broadly,

five years ago, and you said, okay, this is what's going to happen with LLMs in the next five years, probably 99 out of 100 would say, no, no, that's not going to happen, right? And so... That's a pretty good example in contemporary period where you just need to be open to the possibility that...

things are going to change. And there's also this thing where about every 10 years or so, something comes along and just completely expands the opportunity set for the industry. And that's... part of the fun the excitement the super interesting aspect of what we get to do every day the best leaders in business are able to spot patterns but you can't spot patterns if you can't see your data

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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 like those two like those two things work really well together it's like

going to predict the future, we're going to create the future through iteration. Yeah, and it's okay to try to predict it as well. It's just really hard to do, and 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?

Not very 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 obviously very valuable. It's no surprise that you were reading about these people. What I would say is the greats all studied the greats. 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. 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. You just change one thing and then test it and see how it goes. And he mentions setting 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 ChatGPT is absolutely, you know, that my 13-year-old, I use ChatGPT 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. 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 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? And ideas and experiments and to keep an open mind. So what was when we go back to that, hey, They're coming for us. They're going to be faster, more efficient, more capable, and they're going to put us out of business. And we're not going to let that happen because we're going to transform. We are going to be that business. Right. What was your hypothesis back then? Do you remember?

Oh, it's pretty simple. It's that it will be possible to dramatically improve the way we do things in all the core processes of the business. from software development to support to sales to every major function, our supply chain, everything can be improved in a dramatic way. That's what we're doing, and we're finding as we take our data, as we reimagine the processes and simplify and standardize them, we can make them way more effective.

An example would be in support. We have incredible amounts of data. We have telemetry data that the machines are giving us all the time. soft errors and all these things that are going on inside the usage patterns from customers. We have warranty data. You know, we have previous call logs. We have all these knowledge bases. We have JIRA databases. It's like millions and millions of documents. No human could ever interpret all this. And so we created this tool called Next Best Action.

which takes all this data and understands what problem the customer's trying to solve, and it helps either the customer or the agent that's trying to help the customer. get to exactly the best way to solve that problem in the fewest possible steps. And so the person helping them feels like...

wow, I'm way better at my job than I used to be because now I got this genius on my shoulders telling me exactly how to solve this problem. The customer's way happier. The problem's solved way faster. And the tool summarizes. So that saves a ton of time. And so everything gets way better. So you can take that same example and, you know, software development with coding assistance.

Our sales teams have access to incredible tools. And so we're doing this all over our business. And of course, our customers are doing it. And what is this doing? It's unlocking the power of data. using compute and using all these models, which also happens to be, you know, we're in the business of compute and storage and networking, so it's an enormous...

opportunity for Dell itself to be able to help all of our customers unlock the power of their data. You couldn't predict like the actual tools that were going to be invented. You just knew that now we have this new, there's this new technology that it will transform every single process inside the business. We won't be able to predict like all the tools, but we just know that they're coming. If we didn't do that.

and our competitors did, we'd be finished. And so we're not going to do that. And even if we did it and our competitors did it, let's say... It just neutralizes. You have to do it. You have no choice. 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.

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.

the new product that every other product is going to be made out of, from bridges to railroads 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 wondering, like, what the...

that 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 cultural differences, but our core motivations are very similar.

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's 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 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. It says invest in technology, the savings compound. It gives you an advantage over your store-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 wind up making his company profitable in a year or two and their company unprofitable. And then slowly and slowly, they just... They kept losing money, and then they went out of business. It's very fascinating how these 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.

He's 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 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 steps from learnings along the way.

Yeah, he says, instead of typing in, I was like, why is it called? I was like, why is it called Dat Terminal? I don't understand what that was. And he's like, well, Bloomberg Terminal. He's like, you know. Exactly. Yeah. He's like, you subscribe, you log in, and you have a question, and then you type in, 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. What's the last query at your dot terminal? And he goes, supply chain. He said it like it was obvious. It was like, I don't have a supply chain. I run a podcast. I read books. 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. He's just like, one of them is supply chain. 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 just like another puzzle for you to direct your curiosity to? It's definitely an important puzzle and a critical puzzle. 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?

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. 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. 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 of 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 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. This is another thing I told you when we had dinner. How else would you do it? I don't understand. This is why I think writing the book and having conversations. 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 the crazy career that you've had. It's like I study.

uncommon people for a living. You are uncommon amongst uncommon people, right? 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 been 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. This is what I love. Just wake up every day and go do the thing. This is why you're great. But that's why you're great. He's 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...

And I mentioned this on the episode I made on you, but there's this engineer turned founder. Sidney Harmon. You know the company Harmon Cardin? Yeah, sure. 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 creation from the creator.

And I think over time, like the— I resemble that. Goddamn 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. And he's just like, you know, we're fighting 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, like 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. It's natural to you. Yeah, and if you've been doing it every day for 41 years, it seems pretty normal, right?

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Again, that's functionhealth.com forward slash Senra. Lee Walker, tell me how important like that was finding a person because you were relatively persistent in recruiting him. And you were like 21, I think, at the time? 21, yeah. And he was 45 or something like that. Yeah. Like, what's the role that you feel he played at that point in Dale's history? Well, yeah, the company was—

I mean, it's like our rocket had sort of taken off, but, you know, it was pretty fragile, right? And, you know, we had some good ideas, but there was a lot of missing pieces. And Lee helped fill in those missing pieces and sort of organize the uncontrolled chaos and helped us sort of really.

you know, scale up the business in like operations? Like, what do you think? Yeah, I mean, it was, well, first of all, we were growing so fast, we just didn't have... the balance sheet or the capital to support our growth and so he helped us you know get some uh credit lines and you know that that you know freed up capital and then sort of organized some of the operations and stuff I didn't really know about or have a great...

interest in you know because it wasn't the technology or or uh the customers yeah and so he helped sort of get all that stuff on the right path and then as we as we needed even more capital, you know, with a private placement and going public. You know, he helped sort of get all that going. And, you know, just basically, how do you scale this thing up to get it ready for 10x or 100x growth?

One thing that was very fascinating that Lee Walker said, right, is you got to the point where, you know, you had that negative cash conversion cycle, but you were selling to, like, individuals. So individuals are like, oh, I want a computer, Michael. Okay.

Give me your credit card. You're like, great, I got this money, which we'll talk about in a minute. But now you've moved up, and now you're doing enterprise. And some of these companies are huge, like Texaco, like these giant companies. And I remember at one point in the book, it was something you'd be doing like,

$60 million a year in revenue, and you had like $200,000 in your bank account. There's just no cash there. And what was smart is he went to the banks, and I was curious. It sounds like he had relationships with the bankers. And I always have this maxim that relationships run. He did. Okay. So relationships run the world. You see that over and over again. And so Lee had relationships with these bankers that I assumed in the book, and you just verified.

But then what I thought he did was really smart. They're like, listen, we trust you, Lee, but we don't know this kid. And his whole point is like, you don't have to even trust me or the kid. He's like, look at all the purchase orders. Like, do you think Texaco is going to pay us or not? And using the, like, the brand and the prestige and the, you know, essentially the value. Like, Texaco's not going out of business. They're going to pay them.

pay this kid that you say you don't know, lend us against our receivables. Yeah. It's a really good idea. Yeah, it was receivable-based financing. The problem was that, you know, as a 21-year-old... Starting a business with really no capital infusion from the beginning, $1,000, right? Yeah. A banker looking at it.

with no one known inside the business to trust, would sort of, their general reaction would be, I think I'll go do something else, right? Yeah. But, you know, Lee had those relationships. He was trusted. And he was able to kind of explain it to them. And that helped sort of break open that log jam. And that gave us some of the capital we needed to continue to grow and expand.

Can you explain how you stumbled upon the negative cash conversion cycle and why that was so powerful? Yeah, so we didn't have any capital, right? And so... What we figured out was that if we could dramatically shrink our inventory and get paid from our... customers faster and maybe not pay our suppliers instantly, pay them a little bit later, then if you're growing and you have a negative cash conversion cycle,

you actually generate a lot of cash. And so, you don't need as much capital to raise to be able to grow the company. You have a high return on capital. So, we started looking at the business that way. And, of course, we also, there was this, really interesting thing where our competitors, who didn't really understand what we were doing, they had these elongated supply chains. They had... distributors and dealers and so they would have you know like 90 days of collective inventory from

the time that they actually made the product to when it actually got to the customer. And you could actually understand this because if you opened up the computers, the... chips had dates on them that showed the weeks they were made. Whoa. So, you know, it would say like 42-92. And that meant it was... That ship was built in the 42nd week of the 92nd year. And so you could literally date how old the inventory was by opening these things up. But anyway, so they had like 90 days.

in their collective supply chain. And we figured out how to have like five days. I mean, it was crazy. It was like a massive advantage. Now, the other reason this is important is because It turns out that the price of electronic components generally goes down, right? And, you know, it's a pretty predictable thing. And so if—

Our components are five days old, and the competitor's components are 90 days old. Well, theirs costs a lot more than ours do, right? And so now you've got this structural competitive advantage. Now, another element of this is that you also have the freshest and the newest and the best technology. You're not selling the... 90-day-old fish or bananas, right? You're selling the new chip, the latest capability. And so now you've got even another advantage.

And then you've got this feedback loop because you're getting signal from the customers of, oh, I like this, I want that, change this. And so you're able to create this dynamic feedback loop. That was what we created, and it worked. And we kept iterating it and evolving it. The competitors, you know, they... kind of dismissed it. And one of the best things was they just didn't understand it. 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.

I have a funny story about this, and then I want to get back to Compact and IBM. 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 dynasty.

And he started working in the business since he was six. And it was like crazy stories. It started on the shipping. They own one of the largest privately held shipping companies in the world. And he's this raconteur. He's like super charismatic and just like. It was an incredible dinner, but I had found out, same reason when you're like, hey, I'm writing this book because I want people to come to Dell to understand the history. They had commissioned, the family had commissioned a real author.

I have some of these books in my house, not from this guy, where these family businesses or these people at brokerage companies, they'll hire 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. I leaned in. I was like, I want those books. I was like, I'll crush the episodes. The episodes will be great. Because he had so many crazy stories. Without hesitation, he goes, absolutely not. I was like, why? He goes, I have no desire to educate my competitors. 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? 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 he was a threat? Like, what was going on there? He's still alive. You can go ask him.

I think when you're in a bubble, 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? Actually, it's a history of NVIDIA, but he's heavily featured. NVIDIA way? I haven't read the whole thing, no. I did an episode on it. I'll send it to you. Yeah. But—

He has this whole thing where the threat comes from below. And I think 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. I think I mentioned this in the episode I did 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. You'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, it's very curious to me how this founder could be like, Hey. Yeah, and 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? All 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 it's 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 dinner we have a mutual friend and sam hinkey 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. You can't get to the end of what they're interested in. You think you use the analogy of a cup. You just pour and pour and pour. It just keeps going. 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 You just – there's no end to it. Yeah, and you're taking apart chips and analyzing like, oh, I have a 90-day 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? Can I just focus on understanding what I'm working on, what's in front of me, and then following this deep curiosity, you know, 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 you found it. I think you said something that's like a powerful, motivating force. Do you recall why you felt that way? You know, 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. I think the CEO of Compaq.

you know, would refer to us as a mail order company or, you know, garage operation or whatever. And you'd hear that and you'd go, oh, wow, this is great. I have no idea what we're doing. All that was motivating. Anytime there was sort of a... 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 obvious. Of course it is. Yeah. I mean, if it wasn't, I'd probably be dead. I mean, I... 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, $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.

Yeah. 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, 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.

You know, that's just going to happen, right? Yeah, that's actually an interesting area to go down where it's like, who else? You figure it out by accident. Like, because, you know, 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. Is 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 like Walmart and Costco and 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 Zamuri, 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 of the day, which is the railroad, and I can buy this for almost nothing because they're not getting anything anyways, and I'm going to put their ripes.

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. It's 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 now 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.

Yeah, I should organize and look into more examples of like, is there another example of what you had at the beginning of Dell? Because I think that's the key. 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 it 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. Mail order company Dell introduces server. I was like, what? It's like, OK, we have 30,000 patents. When are we not a mail order company? What is this mail order thing? So anyway, we had to 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.

understand when I read the book, when you were talking about how important it is to like not squash ideas and that, you know, ideas can come from anywhere and they can like, you know, they seem small, but they can have a huge impact. I think Dell was like one of the first. companies to sell on the internet, right?

Yeah, well, so we were selling direct, right? You know, like people would call us on the phone, and we used to have these rooms with like a gazillion fax machines, and they would send us orders on faxes. It was crazy. And we had catalogs, right? And so then, you know, the World Wide Web comes along, new websites, you know, like, oh, you mean we can create a website and people can go on there and, like, the catalog is there?

and they can press a button to order the thing, that's the coolest thing ever. We got to do that, right? And so in my first book, You notice on every page at the bottom, it said www.dell.com. I read that book too. We're just obsessed with getting people to the website because it just became like the... easy way to interact with people. And that book came out in 97, right? 99? I think 98. 98, yeah. So, yeah, you were. But, yeah, we started, we started.

you know, with one of the first websites. I mean, there weren't many websites. I mean, I remember when there— It was a small number. I remember when you could, like, go to all the websites, like, in the whole world. Yeah, I'm done for the day. Like, there's no more websites. It sounds crazy now, but there used to be not that many websites. You could go to them and like, OK, I'm done. There's nothing else to see. That obviously changed quickly.

So how the hell do you even build a store? Like you were collecting, do they have to like call a number in? Because I remember like taking credit cards online. Well, maybe not 90, if you were doing, do you remember what year you launched the site? 97, probably 96. I think it was probably 96, 95, 96. You had to build all the stuff custom. We had to build the whole thing. Okay. Yeah.

Yeah, it's funny. I forgot about the fact that Dell.com is on the bottom of every page. But what's fascinating is if you read Bezos' shareholder letters, he never refers to it as Amazon. Every single...

Shareholder letter up until, you know, you don't have to do it anymore. And then every single interview, it's Amazon.com, Amazon.com, Amazon.com. Then it turns into Amazon. It's just like we've got to push you guys to this new thing called the internet where you can buy things. It's such a fascinating thing. thought, like how novel it was. But you kind of saw it right away. We should just do this because it's cool. We'd experimented with how do you...

create an electronic version of the catalog. Even like, we're going to send you a floppy disk or a CD-ROM, and you put it in your computer, and you load it up, and the catalog is there. Yeah. Right? Those are some of the ridiculous things that happened before the internet, before the World Wide Web, I should say. Did you ship that? Yeah, yeah, we did. So you just, kind of like, remember AOL? They just, like...

essentially carpet bomb the entire country? Yeah, we didn't do it like that, but ours was more targeted. But, you know, you wanted to make it easy for the customer to understand your offerings, and then the World Wide Web just made that. you know, kind of infinitely accessible to anyone. The idea of mailing out a floppy or a disk of a catalog. It's just like a hilarious idea. But then people were surprised when people started ordering computers online.

And I remember, you know, we sold like a server for $50,000 online. People were like, no way. You know, it's like it didn't happen as fast as some of the things that are happening now. Yeah. Obviously, for a business that was selling directly to businesses and individuals all over the world, it was just total rocket fuel. 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. Okay, so it started with like doctors and dentists, right? Or lawyers were some of your first, but they were using it for business purposes.

An individual doctor, Dennis, 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 to— Same, similar percentages. Similar percentage, yeah. You know, there were companies, universities, they were buying 5, 10, 20, 15 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 to generations. I see it in a lot of the biographies, and I think it's another misconception how we just talked about the misconception between entrepreneurs know, be wary of experts, and how they can kill new ideas, where a normal person would revere them, right? So there's like this...

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.

It's just 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 $1,000, I'm in the 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 all these reasons why it won't work are unknown to me. So that's the naive part.

And that can actually be sometimes a good thing, right? 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? You know, there's always that little voice in your head that's like, well, what if it doesn't work? And, you know, what about this? What about this? And so...

You never want to sort of assume, okay, this is absolutely going to work no matter what. Then you're going to ignore those sort of voices about, well, what about this? What about that? 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 PCs limited, right, at the very beginning. It was...

Officially, Dell Computer Corporation doing business as PCs Limited. 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. What if it doesn't work? 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. 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 entrepreneurs, but I think you said the same. It's just like...

The fear of failure to this day is a bigger motivator than 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 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...

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. 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.

searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.