tv Michael Dell Play Nice But Win - A CE Os Journey from Founder to Leader CSPAN November 13, 2021 10:32pm-11:16pm EST
>> thank you, my booktv.org. just click the afterwards button near the top of the page. >> tells about the book. start at the beginning. why did you decide to write this book? what's the goal? >> so i'd written a book before in the '90s about the first 15 years or so of the company but in the last decade a lot happened. we did the largest private ever in technology. we did the largest merger acquisition ever in technology
and a lot of friends encouraged me to write a book. with some pretty epic battles with carl icahn and i wanted to explain and talk about all that. i also delved back into my child in the origins of the company and really in a very authentic way i think explained everything that happened, kind of childhood forward and never really felt suit for a comfortable doing that in the past but thought it was a good time to do it and hopefully there's some great lessons and things for people to pick up on. >> odyssey i was surprised when a stir to get into the book you truly do talk about your upbringing and your brother and meeting susan. you typically are incredibly private. what made you decide to open up?
>> may be because i've never done it before and kind of felt it was time. i would say, i i talked abouts in the acknowledgment. i think the reason that i became so private is from a pretty young age people were always coming asking me for things. my defense mechanism was just to put up a big shield. i think that created some challenges for me along the way and i've gradually kind of left the shield down a bit. now kind of opening up in a big way and feel more comfortable being vulnerable and transparen
transparent, and hopefully it's helpful to others. >> i have gotten to the whole thing yet but in the parts i've read it is just, it took me back in so many ways. but it changes your approach to business when you have kids and when you have a family. you talk about being nice. what does that mean to you now? what did it mean to you when you're first getting started? we all mature as businesspeople and as individual. how have you changed when you talk about playing nice, play to win? >> as you get older and hopefully a little more mature and reflective you think more about your relationships. i've always tried to operate in an honorable, ethical way, and i think that served me well. takes a long time to build a
great reputation. they can be destroyed in an instant. i've learned that all the good things that you do in life come back to you through all the people that you interact with and touch and work with in some way. people remember those things are really long time. play nice but when is something my parents used to tell us when we would go out in the street and play ball. it's kind of stuck with me as a simple unifying principle that has carried through my whole life. >> i agree with you. i think as i have gotten older you recognize that not everybody plays nice but nice is a virtue. nice help to get further in
business. but before going into that i want to take you back further. because i don't know everybody knows your original history and now you got on that path to be so successful. and you talk about it in the book somebody don't give yourself enough credit. you talk about starting it ut and what that was all about and dropping out and growing out of your dorm room and into the first location in the warehouse and all that. but it was no small feat to get pcs limited started and had to be a moment where you just said i have something here. because every entrepreneur has that uncertainty will this work, will this not work? when did you start to recognize and how did it feel when things really started going for you? >> i was upgrading computers in my dorm room and canada got up
to about $80,000 a month, and certainly seem to me i could can ask that if i got an office and get some people that could help me do it. -- could can ask -- in the first five or ten years i could sort of look forward and see away to get to be ten times bigger. that was enough to keep me going. there certainly are all kinds of obstacles along the way but it was a lot of fun. we very quickly went from upgrading ibm computers to designing and building our own computers. that quickly became pretty much the whole business. we were competing with of course ibm but also compact, and we had
a powerful business model advantage. we were underestimated. they thought were kind of a mail order company, and really we were a direct company. the fact were underestimated kind of helped us. look, we were scrappy as scrappy could be. hired whoever i could hire. it was a pretty high risk operation. i was 19 years old when i started with $1000 in capital. we weren't exactly attracting the top graduates. but we grew 80% a year for the first eight years and we grew 60% a year for for the six years after that, compounded. so you start with any number and you put that in your calculator, you get over 10 billion, now we're over 100 billion so there
you go. >> i got to tell some stories because you're still a give yourself enough credit. are people out there who are think about buying the book let me tell you my perspective of michael because we both were in the pc industry about the same time. i was three or four years older and michael was doing direct to consumer and i was an integrator shall take all that stuff and connect it all together. but michael did something that i thought will go down in history as one of the smartest marketing moves that i've ever seen made, and you are probably 21, 22 at two at the time. there was a magazine called pc week which is kind of the bible for the entire industry. up until michael did this thing, everybody kind of just tried to conserve as much margin as they possibly could. they only sold their own products. ibm sole ibm. compact sold compact. michael started taking ads
touting pc week and every single week as his prices went down, he kept on lowering the prices. so everybody else in industry was trying to keep the prices high. by the look on your face i don't know you even remember this. >> know, i remember distinctly. what we figured out was that the name of the game was growing margin dollars, not growing percentages. the way you grew margin dollars was you drove the prices down, right, and you offered more value to the cubmaster and you go the volume up. the other amazing thing -- to the customer -- we had almost no inventory. inventory would kind of show up as a got the orders, and so we had fresher inventory than anybody else which was great because almost always the costs were coming down. not only did we have the latest
technology at the best cost, but we delivered it at the best value to customers. so the business just took off and grew rapidly. there were plenty of challenges along the way but i've got to tell you, what happened when you did that is you became the pricing bible for all of the pc industry because i would get my pc week every single week and i would want to know what the prices were. how much was a gwinnett to pay for a hard drive? you literally, pcs limited became the arbiter of pricing. >> any other thing that we loved about pc week which was different than pc magazine and pc world which are monthly magazines was they had this really short lead time. so we could i think at the time we would literally like facts them the ads or something like that or maybe we fedex the ad. but the time for when we gave dm
them to add to when it appeared was supershort, which meant we could have the freshest prices npc week which became a great transactional engine force that was our store basically. >> literally i would get it, check the prices come set my pricing based off of those and because yet inventory when so few others did particularly around dallas i literally remember driving down with one of my friends to austin to pick up equipment and just buy a bunch of drives and motherboards and this and that and then drive back in using them. this was 84 may be and i literally sent you a letter and for a long time i had a copy of it because i kept coming that's back when you typed it all up and i put it in the machine. i had a copy of it and no lie, it said dear michael, this it is
amazing what you're doing. if you really stick to it i think you could have a really huge business. no way you remember that but i know that windows if you you ever got it but i was just so impressed. you took that as a foundation and then you go public. right now here a completely different set of responsibility here what was that transition like leaving a public company? how old were you at the time? >> twenty-three. >> i mean, what were you thinking? this is insane, absolutely insane. that was anytime dash -- ws at? >> 1988. >> that was at a time when stock prices were going up until they didn't. you had to do with everybody being happy with the prize and people being not happy with the price for a time as well. what was at transition like dealing with investors and public shareholders?
>> so we never raised any outside capital and actually the year before we did a private placement because goldman sachs our banker said you were not really read to go public yet,, why do you do this private placement and then go public nine months later? which is what we ended up doing. the biggest problem we had was the year after 1989 we pretty much did a face plant. we made a lot of mistakes and stock went way down and it was embarrassing. i was 24 years years old but boy, we learned so much during that year. that kind of propelled us forward. we kind of learned five years of lessons in about six months.
made some mistakes and inventory planning and we became -- >> i don't even care about the mistakes. i just remember because we all make mistakes. i just remembered thinking this guy is so young and the giving of all this shit, , what the hel do they expect, you know? you took that -- when it comes to taking a company public and in private, what was your thought process? how did that play into it? where was your head out when you made the decision to go private again? >> so advancing 25 years, a quarter of a century and the story to -- >> it's a lot but -- >> it's okay. i just want to make sure our viewers and listeners know that the timeline here. so you fast-forward to about 2012 and the company had had
some really incredible time of success but the world was starting to change and we had invested in a lot of new areas, in cloud and software, security and all sorts of new capabilities. kind of the more we did it, the less the market like it. the market wasn't really giving us permission to transform at the rate that we wanted to. i initiated a process to effectively by the public shareholders out which sort of puts the company for sale, or anybody can buy it, whoever has the highest bid. i wanted that to be me and silverlake and ultimately it was. but it turned out to be of much more difficult process than i imagined. we ended up buying back the
company for $25 billion with, i rolled in all my equity and added some more of my own, silverlake pitched in the billion or so, and the rest was a debt. interestingly enough it went so well, within 18 months our net debt was zero. we just reignited the entrepreneurial engine of the company and started hiring way more engineers, way more salespeople. got super aggressive and it worked. and then we decided to take on an even bigger move and by -- $67 billion. the only problem was we needed $67 billion so we came up with some creative ways to do that with $60 billion in debt and it's worked out great.
it's been a lot of fun. now we are public again. the entrepreneurial engine is running very strong and then private, been public, then private again, now back to public. >> but it wasn't always giggles. where did carl carl icahn o all this? what happened with carl? what is your relationship with him now? >> he's a pirate basically. for the period up to february of 2013 he didn't own any of our stock. i talked to him on the phone a couple times. he called and asked me about this company or that company. i'm sure i'll talk to you, whatever. i was being nice and so he studied the documents and found
a way to kind of weasel his way in and cause a bunch of trouble. he went on national television, lied many times. i detail all that in the book. he bought up a bunch of stock all at a price higher than the deal price. and was trying to get other parties interested, trying to get me to pay more. ultimately i confronted him and i start the book out with his relatively dramatic story where i'm at his house having dinner with income his wife's meatloaf of all things. i can find them and i say what is your plan? what your strategy? what are you going to do next i can tell right then that he had no plant was all just a big poker game to him and he didn't really care about the company. did know whether we made french fries for nuclear reactors. didn't care about anything.
to me this is much more than a poker game. i care about the people here i care about the impact we have on the world and believe in what we're doing is really important. i said to him look, i don't think you have a plan. if you want to buy the company, pay more than unwilling today, the right ahead. you're going to screw it up and i will go to hawaii, lose 20 pounds, come back and bite back from you for a lot less. i could see this panic and fear in his eyes that may be i might do that and he would be left holding this company which he doesn't really know anything about. but it was an epic battle. he was like the zombie, one of those zombies, you can't kill them. >> that's carl. >> just keeps coming back.
but the media really ate it up and loved it and they loved putting him on tv because he's entertaining and he gets abuse even though his investment track record is way overrated if you go look up his stock and compare to the s&p 500 over any period in the last five or seven years you will see it has done all that well but that -- >> let him have, michael, let him have it. >> those are just facts. but ultimately we prevailed and we were able to accelerate the transformation and come out the other side and then go on to kind of tripling or quadrupling down with his even larger transaction. that's been an enormous amount of fun. >> tell us about your vision now.
here you are enormous company, having an impact in just any number of industries and changing again in so many ways. where you want to take it? when you talk about play nice but win, , what is the when goig forward? this popular technology people here. your view of the technology and how all that plays into it. in the industry you are in you have to have the vision not just for the company but where technology is going and how you play, what your role is in that path. i'd be curious and know a lot of people would be curious to read that as well. >> right picky look at all the things happening in technology, whether it's autonomous transportation or blockchain crypto currency or ai discovery of drugs or whatever new thing you want to talk about, the common denominator of all these is and was about of data. that data requires computing
infrastructure that exists in the sort of multi-cloud world. so we're hoping our customers build all that. it turns out to be an enormous business, the size of the market is many hundreds of billions of dollars. we had more than 50 billion in revenues in the first six months of this year, grew 15% in the second quarter. when you think about what is just around the corner, every single thing in the world is becoming intelligent and connected. what i mean by that is small microprocessors and microcontrollers are being embedded in just about everything you can imagine. technology is no longer the id department. it's the fulcrum of progress in every organization. that's expanding even further.
you're at all that together, creating a platform for digital transformation for all the organizations out there. it's an enormous business and enormous opportunity for us to continue to grow and serve our customers. >> with all these new technologies, i'm asking because i'm curious, how is ai in particular change how you run a company? you mentioned data being the key. i guess it is not just about an i.t. department 16 16 thingse software applications being introduced. it's a whole new game with ai. how fast that change your business and how you run an egg project things out? >> first of all we have to recognize the a in artificial intelligence is artificial, it's not real intelligence. it's not wisdom or knowledge.
but the amount of data that is being created, there is no in the world that humans can interpret it. you could have a stadium full of phds, still no chance. and so ai and machine learning and all these associated technologies are fundamental to any problem related to data. if you take a company like ours, with over 1000 projects that involve ai in some regards. if somebody buys one of our high-end cloud storage infrastructure products, it does billions of calculations every single day dates on the workloads that a thrown at it. it kind of magically tunes itself is on all of the things that are happening around it. the idea here is really this
trend towards autonomous operations of everything. think about how you operate the computing infrastructure in an autonomous way where it is self-healing and self tuning and it adjusts itself based on what's actually happening. that saves a lot of labor. he used to be if you had 10,0000 servers can you at 10,000 people babysitting those servers. now you have software. you might have five people and the systems are super efficient, and thus not just an in hyper scale. that's inside large organizations. it's in this distributed edge world that is being created right now and all that requires a lot of new investment. >> one of the things i been impressed with, shifting gears a little bit, you've always had a purpose in your life and what
you've done personally but also in your businesses. i think just as important what you done with the city of austin. when you really first started it was a country town known for its music and it has changed a lot. i would like to say that you grew up with austin but the reality is austin grew up with you. tell everybody a little bit about where things started with austin, the impact you had angrily what is your vision for corporate accompany her size recs i know you a lot of different places but how companies can purchase of eight with cities and have go and become smarter in support their citizens, the residence even better. >> i would thought they giving credit to those that came before me because back in the '60s when i was running around in diapers, ibm set up here and then it was texas instruments
and amb and motorola kind of in the '70s. i came along in the '80s and there was also the mcc, microelectronics and computing consortium and sematech. these were two federally organized consortium that were intended to fight off the japanese. many people don't remember this in the early '80s through the late '80s the japanese were supposed to take over everything and own all the technology and we were scared to death in america of that happening. a number of things were set in motion. but austin is fantastic. university of texas is here. but not just that. now we have about 420,000 students within 100-mile radius
of austin. it's got natural beauty. it's got tremendous population of young people who want to stay in the area. the city has been a good job protecting the natural spaces. look, i think austin is a kind of place where people move o if they can live anywhere. tons of people moving here maybe a few too many possibly. it's interesting. the city has doubled in size every decade for four decades. >> crazy. >> which is probably a challenge going forward but it looks like it's continuing. we have been happy and thrilled to support the city in its
development and i would say mostly thoughtful development about where to put, where to put things and how to protect the protected spaces. i grew up in houston which was a little bit less of -- did not as good a job, let's say as austin has done. we all want to protect that balance with nature and the outdoors and the natural beauty that we love here. >> now you have achieved all the success. everything you could ever possibly dream of. great family, wealth. what is it that drives you now? >> you know, we have little say at our company that's kind of pleased but never satisfied. i did write a book about what happened but i'm really not a
fantastic historian. i do spend most of my time thinking about the future and any opportunities ahead. again when i think about all of these trends that are occurring in technology, while the last several decades have been super fun and interesting, i think it's all just a pregame show for what's about to happen and with 5g and everything connected i think every industry will be upended in some way. this has always been a kind of change or die quickly dead sort of sector. and i think that is now happening across so many sectors where the role of technology is finding its way into everything. it's also creating hopefully a more equitable world. you have been super involved in
crypto and decentralized finance. let's say for the sake of argument that it is successful. if it's successful it's going to bring way more of the 7.5 billion people the world into the financial system. and if you think about all the people of the world that don't have the skills or the access to enable them to be successful, as we bring more and more of them into the economy, the potential for the economy just continues to expand. i think there will be challenges for sure. for every 99 people to come up with something great to do with technology there's that one guy that's going to come up with some devious plot, ransomware or
whatever. but mostly i think it's going to be great. i'm super excited about the role of technology and that keeps me energized and excited. >> since you brought up crypto. one, are you going to take doge coin to buy dell products? just kidding. more serious subject. what role do you see crypto playing? like you said who knows for sure how ingrained it will be and how it will platform? but do you see similarities between the innovation that is happening with crypto platforms more than currencies that is analogous to what happened in the '90s with the internet? >> yeah, i , i do think theree analogies there with the way the blockchain is being used. we will see. as i said if it works it will be
a great democratization of finance and opportunities for billions of people around the world and ultimately that's a great thing. >> when someone reads this what you wanted to take away from it? let me say i guess i'm not all the way to but it is an easy read. even when you get into some of the technical side of it and the details of dell, it get any business interest at all you're going to breeze right through it and it makes, it's easy to go through. what's the take away that you want people to feel when they read this book? >> i have a belief that people generally are to what into a lot of the conventional wisdom and don't take enough risks. there's a lot of potential that's left on the table because people are too afraid to fail and are looking for the perfect
plan. i mean, i wasn't an exceptional student in high school. i was okay but i wasn't speeded i'm not buying that, michael. i'm not buying that at all. you might have diverted your attention do not buying the bad student thing. >> but the point is that there are a lot of people out there who are just too hesitant and not, don't have the risk appetite. hopefully somebody reads the book, or more than one, and gets an idea to go take some more risk. i think look, to do what you have done, to do what i've done, mark, you have to be a bit of a
deviant. you can't be following all the rules all the time. you are not painting within the lines. you are not following instructions all the time. that's where the breakthroughs come from. we need more of that and we need fresh ideas from young people. if i can encourage some of that, share some lessons that i've had along the way, then it will be a success. >> you absolutely do, and anybody who's interested in learning and being inspired and wants an aspirational book to see how far you, and all the things you've accomplished, "play nice but win" is a great read. but i've not been with you yet because this is fireside chat. this is a unique interactive platform but this is not the
first time that you were breaking on a new interactive platform. do you remember in 1999 doing breakfast with the dell on broadcast.com? >> yeah, yeah, i remember breakfast with adele, absolutely. yeah, yeah. >> people don't realize back in 99 in 99 when we broadcast.com we were starting the whole frame industry was just getting started it was even called streaming at the time. michael was so forward thinking he q1 to connect with his customers in office when the no one es reaching them so we worked with dell corp. and my client and interactive meeting and video show where we take questions interactively online 1999. here we are doing it again. >> that was a great experience. the internet opened up this opportunity to have a persistent connection with customers, which
turns out to be just massively valuable because you are able to gain incredible insights and building that connection is just what it's all about. >> without question. michael dell you're amazing. i've always looked up to you from the day i drove down to austin even though you were younger than me, , you've always been breaking down barriers and selling the way for a lot of us. thank you very much again and i encourage everybody to buy the book. >> thank yous much, mark. great to be with you. >> absolutely. >> thank you. >> thank you both for a fascinating discussion. and you mentioned inspiration of his book but i'd be remiss if that same michael is donating all of his proceeds from the book sales to the dell foundation. michael would you like sicu words about that?
>> sure. so i i guess it was the same r i was doing the broadcast.com stuff with mark, 1999. susan and i set i set up our foundation and after having four kids looking at her kids and saying wow, this got to be some kids that are less fortunate than these kids. so we thought pretty deeply about where we wanted our philanthropy to concentrate. there's lots of things you can decide to do but we decided to focus on children in urban poverty. and so that led us to focus on education and health care and family economic stability and really proud of how we been able to use data and facts and drive results. if you go to dell.org you can learn about some of the work we have been doing their over the
last 22 years. while i'm still fully dedicated to running dell, i hope to be spending more time on philanthropy in the future as my wife does now. >> that's fantastic. when people buy a copy of the book that only do they get inspired by the journey which are making a donation to a great cause. you can head over to our website to purchase a copy. if you want to do more from michael oher even mark, me or any fireside amazing content created all you have to do is click on the icon you see on the screen and you can follow it was right then and there. who knows, perhaps michael be interested in hosting his own fireside program. >> plenty of time. >> thank you all for joining us today. we will see you at our next fireside chat on october 22 h new times best-selling author heidi callahan as she discusses