I’m sure I’ll come across other people I admire for their business acumen, but after researching Dell for this episode, he’s at the top — one of those people who is just brilliant at business.
At 16, he made more money in one summer than his teachers made all year.
At 18, he was building computers in a dorm room with sales reaching up to $80,000 some months.
By 27, he was the youngest CEO ever to lead a Fortune 500 company. He did it by always thinking about how to consistently eliminate unnecessary steps.
But he’s tough as well — there were big battles with Carl Icahn where Dell comes out on top. And what I really, really love about Michael Dell is he does it all with no ego, no scandal, no politics — just great business. It’s a cracking episode. Enjoy.
Michael Dell was born in Houston, Texas, on the 23rd of February, 1965. His father was an orthodontist; his mother was a stockbroker and financial consultant. He had two brothers — interestingly, his brother Adam has had a very successful career as a corporate attorney, then early tech investor in companies like HotJobs and OpenTable.
Now, in terms of his upbringing, there’s one thing that stands out — Dell’s mother always told her sons to play nice but win — and Dell says that’s something he tried to live by. Indeed, his autobiography was called Play Nice But Win.
By the time he was twelve, Dell had started a small mail-order business trading collectible stamps. He even rented a post office box and began advertising to hobbyists. It was a proper little venture — and he made about $2,000 profit, which was serious money for a kid in 1977.
At fifteen, he bought one of the first Apple II computers.
And the first thing he did after opening the box was take the whole thing apart. “A good thing about the early personal computers,” he said later, “is that they had standardized chips. You could literally see exactly how the thing was working. That was sort of the classroom for me.”
In the summer of 1981, Dell landed a job selling newspaper subscriptions for The Houston Post. He was sixteen, earning five dollars an hour, and supposed to cold-call random people to push new subscriptions. But Dell had his own ideas, and what he did next feeds into that one thing that has driven him from the very start — in his own words: “I’ve been fascinated with the idea of eliminating unnecessary steps.”
In this instance — why waste your time calling people who are not likely to buy? Why not narrow down your list to the people most likely to buy?
So he started analysing data — long before “data” was a buzzword. He discovered that newly married couples and new homeowners were the best prospects. Then he found a way to get their names by accessing public records of marriage licences and mortgages. Next, he gathered lists from sixteen county courthouses, used his Apple II to sort the data, and sent targeted mail offers.
By the end of that summer, Dell had earned over $18,000 in commissions — more than many of his teachers made in a year.
In 1983, he enrolled at the University of Texas at Austin to study pre-med because his parents wanted him to become a doctor. But within weeks, he was spending more time in his dorm room than in class because he’d noticed that local computer stores often discounted outdated or overstocked IBM PCs and components.
So he began buying the excess inventory, upgrading the machines, and reselling them to students and small businesses. He placed ads in The Daily Texan and hobbyist magazines, undercutting retail prices.
By late 1983, he’d rented a condo off-campus to keep up with orders. Some months, his sales hit between $50,000 and $80,000 — and remember, he was still a freshman. But his grades were collapsing, and his parents were not impressed. That Thanksgiving, they sat him down and gave him an ultimatum: shut down the business and focus on school, or lose their support. He agreed to stop — for about ten days.
And it was during that brief pause that Dell made up his mind. As he said himself: “My parents telling me to stop doing it is probably what caused the company to get created.”
In May 1984, he launched PC’s Limited. His idea was simple but radical at the time: sell computers directly to customers and cut out the retailer. Customers called in or sent mail orders; he’d buy stock PCs, upgrade the parts, and deliver them cheaper than the shops.
Orders poured in. In its first month after full launch, PC’s Limited pulled in $180,000 in sales.
By 1985, Dell was assembling his own computers from scratch under a new name — Dell Computer Corporation. The company’s first in-house design, the Turbo PC, sold for a base price of $795 — to put that into context, a base-model IBM cost over $1,500. And instead of going into a computer shop and having to deal with salespeople trying to sell you stuff you probably didn’t want, Dell customers could call a toll-free number, pick their specifications, and have the computer shipped straight to them. It was direct, efficient, and revolutionary for the time.
Now, this was the mid-80s — the PC boom years — and Dell had a business model that was totally different to all the other big manufacturers like IBM, Compaq, and Apple. Dell’s model was focused on building a supply chain. Remember, from the get-go he’d been fascinated with eliminating unnecessary steps. Every computer was built only after an order was placed. Components arrived just in time for production. Orders were tracked in real time. There were no warehouses full of unsold inventory — a problem that plagued his rivals.
And crucially, this model allowed him to deliver better value to the customer while also making a good margin. Within a year, sales went from $6 million to $70 million.
By 1987, when he was just 22, the company went public, raising $30 million. Its market value hit roughly $85 million on day one.
Now, in terms of what he was like, he was described as being intensely private and notoriously shy. That has changed over the years with encouragement from his wife and some mentors — his wife Susan — and he has cultivated a more approachable public image.
By 1992, Dell was twenty-seven and had become the youngest CEO ever to head a Fortune 500 company. Annual revenue had passed $2 billion.
But it wasn’t all smooth. In 1993, Dell made a push into selling through retailers — a move that went against everything the company stood for. The thinking was to reach more customers. It didn’t work. Margins shrank, and the clarity of the direct model got muddied. Within two years, Dell pulled back from retail and doubled down on its original idea. In his words: “We got confused. We thought we could do both. Turns out, we couldn’t.”
The correction paid off. Through the late 1990s, Dell became one of the most admired companies in America. It dominated the PC market. And in 1996, Dell took the next logical step — the Internet. That year, it launched Dell.com, allowing customers to configure and purchase computers online. Within a few months, the site was bringing in $1 million a day in sales, and by 1999 online sales were at $40 million a day.
To give a sense of how fast that growth was: between 1994 and 1999, Dell’s revenue rose from $3.5 billion to over $25 billion. It was selling a computer every five seconds. And it did so with a structure most rivals couldn’t match — negative working capital. Customers paid before Dell even built their machines, while suppliers were paid later. It effectively made the company self-financing.
But then came the early 2000s. The dot-com bubble burst, and after years of double-digit growth, demand for PCs slowed sharply, and Dell had to cut 10% of its workforce — about 5,000 workers. But it emerged from the downturn better than its competitors and became the number one PC manufacturer in the world.
Then after two decades as CEO, Dell decided to step down in 2004, handing the job to Kevin Rollins, his long-time deputy. Dell remained chairman, but he wanted to focus on strategy.
The company started diversifying into server and storage sales, low-cost printers, and even went into consumer electronics like flat-panel TVs and music players (albeit with limited success).
But in 2006, they started hitting headwinds — a few factors for this.
First of all, HP — which a few years previously had bought Compaq — was now being led by Mark Hurd, and he was doing a pretty good job at improving manufacturing, channel/distribution, and narrowing Dell’s cost advantage.
Lenovo had bought IBM’s PC business in 2005, and it was starting to make inroads.
And of course, we were now seeing the re-emergence of Apple. And while it can be argued that Apple’s market share in PCs was pretty small, its overall influence on the PC market had started as far back as 1999 when Jobs introduced those colourful iMacs. With these, and then with the iPod, iTunes, and the MacBook which came out in 2006, Jobs was changing consumers’ perception of what a “personal computer” meant. He was reshaping the market towards mobility, design, and integrated software/hardware — and this was even before the iPhone came out.
By 2006, Dell’s momentum had begun to crack after several laptops caught fire, including one that burst into flames during a conference in Japan. The images and videos went viral — melted laptops, smoke rising from conference tables — I remember when this happened, it was all over the news. The fault was with the Sony-made batteries, but the image of burning Dell laptops really damaged the company’s hard-won reputation for reliability. Dell was forced to recall 4.1 million batteries worldwide — at that time, the biggest electronics recall ever.
At the same time, performance was slipping. For several quarters across 2005 and 2006, Dell missed Wall Street’s earnings expectations. By the end of 2006, Hewlett-Packard overtook Dell to become the world’s top PC maker.
And to make matters worse, regulators were circling. The SEC had opened an investigation into Dell’s accounting practices, suspecting that the company had been manipulating earnings reports. Later, it emerged that Dell had quietly accepted hundreds of millions of dollars in undisclosed rebates from Intel — payments designed to exclude AMD chips and inflate margins.
Ultimately, the case was settled. Dell Inc. paid $100 million, and Michael Dell personally contributed $4 million, all without admitting fault. It was a black mark — small but significant — one of the few moments when Dell’s own principles came into question. Because in fairness, Dell never courted controversy, rarely said anything to cause offence.
Unless, of course, you’re an Apple loyalist. Because Apple fans will probably never forgive him for a comment he made back in October 1997, when Apple was on its knees. Someone at a tech conference asked Dell what he’d do if he were running Apple. And he said: “What would I do? I’d shut it down and give the money back to the shareholders.”
Now, to be fair, Apple had just posted the biggest losses in its history. The company looked doomed.
But Steve Jobs had just returned as CEO — and his response? “F— Michael Dell.”
Jobs even put a photo of Dell on a slide with a bullseye over his face at one Apple event.
But over the years, Dell and Jobs spoke about potential deals, explored some business ideas, and while they never actually collaborated, they came to respect each other.
But getting back to 2006 — with the SEC investigation, the recall, and HP becoming number 1 — Dell shares had dropped over 40% in 2 years.
And so in January 2007, Michael Dell returned as CEO. He wasted no time, brought in new executives, and launched a plan to rethink everything from design to customer service. Dell later admitted that the company had been running “on autopilot,” obsessed with cost-cutting and disconnected from its customers.
His challenge was huge: the world of technology was moving at a massively faster rate. Laptops had become a commodity, margins were thin, and the next wave was already emerging — smartphones, cloud computing, enterprise IT.
Dell not only took the time to see where the company’s future could be, but he also re-energised his employees by using the following tactic: he’d stand in front of his teams and ask them to picture a rival five years down the line — faster, smarter, leaner — the kind of rival that would eat Dell alive. And then he’d say: that’s who we have to become.
It wasn’t about fear for fear’s sake. It was about urgency — turning complacency into competition with themselves. As Dell said: “If you don’t have a crisis, make one — to get people excited, motivated, and to drive the necessary change.”
And he pushed for what he called a “company of owners.” So he gave his executives a lot of space to do their own thing, and in doing so gave them a sense of ownership — and you see, when you have that, you feel like you're building something special. I just think Dell is so, so smart — I get the feeling that in the same way he examines and analyses everything in relation to efficiency and the supply chain, he also, I’m guessing, devours information, books, etc., on how to get the most out of people, and then decides what methods will work best for his company. And it works — he realised that real results aren’t achieved by managing key people; it’s by giving them that sense of ownership.
So from 2009 onwards, Dell started spending aggressively on acquisitions. Over the next four years, he spent more than $13 billion buying companies that could help shift Dell from hardware toward services and software.
The most important of these was Perot Systems, bought for $3.9 billion in 2009. It was founded by H. Ross Perot, the former U.S. presidential candidate who got almost 20% of the vote in 1992. I remember that election, and I remember Perot — there are a lot of really great stories about this guy, so I’m definitely going to do an episode on him. This acquisition gave Dell an instant foothold in IT services, government contracts, and consulting. That same year, Dell experimented with smartphones and tablets — they flopped, and they quickly pulled out of that sector.
By 2012, almost half of Dell’s profits were coming from servers, storage, and services rather than PCs. But the transformation wasn’t happening fast enough. The global PC market was collapsing. The iPad, released in 2010, and the rise of smartphones cut deep into sales. In early 2013, global PC shipments fell by 14% year-on-year — the steepest drop ever recorded.
Michael Dell was frustrated. He believed Wall Street didn’t understand what he was trying to do — that the short-term obsession with margins and quarterly numbers made long-term investment impossible. So, late in 2012, he began quietly exploring a radical option: taking Dell private.
On 5 February 2013, Dell announced that it would go private in a $24.4 billion deal led by Michael himself, alongside the private equity firm Silver Lake.
But not everyone agreed. Southeastern Asset Management, Dell’s largest outside shareholder, called the offer “grossly undervalued.” And then came Carl Icahn. He started buying Dell stock, built a sizeable stake, and declared war on the deal. He promised years of litigation if the deal went ahead. Now, I dug a bit more into this because, you know, it’s Carl Icahn — and anytime he gets involved, there’s always plenty of drama.
In Dell’s autobiography, there’s a great passage where he describes going to dinner at Icahn’s luxurious apartment while this battle was going on — Dell wanted to find out what Icahn’s intentions were if he were to take over the company.
The passage is brilliant because in just a few paragraphs, Dell paints the picture of Icahn as a terrible father, married to a woman who can’t cook and who has very little to say. On the business front, Icahn, according to Dell, isn’t well prepared for the meeting and crucially he’s not able to handle Dell’s directness. He comes across as a fumbling, miserable old man who doesn't have any long-term plans for Dell the company — and he’s basically up to his old greenmailing tricks. In other words, he only invested in Dell so he could be seen as a threat and then get bought out at a higher price and make some easy money.
And so when I first read that passage in Dell’s book, I thought, jeez, Dell was being harsh — but then when you think about it, Dell had put everything he had into this company. He’s quoted as saying: “I will care about this company after I'm dead!” And here was Icahn, threatening to take it over, without any long-term plan, no regard for the company or its employees — I can 100% see why Dell was so mad, and had such a dislike for Icahn.
A few years later at a conference, Dell had the following to say about Icahn: “He is a bad guy. He lies. He has no ethical boundaries. He will say anything, do anything. I have no time for him.”
What is interesting from the book is that Icahn suggests at that dinner that $14 would be the price at which he’s willing to walk away, and as the shareholder vote approached that summer, Dell didn’t have enough support. So he raised his offer to $13.75 per share. The deal was approved by shareholders, Icahn admitted defeat, but Icahn does end up getting very close to what he wanted in the end.
But Dell — who had invested $4 billion of his own money — emerged owning about 75% of the company.
So we’re in 2014 and Dell's plan is to double down on enterprise technology while protecting the PC base. And there were signs it was working. Dell’s PC shipments in the U.S. had grown nearly 20% that quarter — five times the industry rate — and it was the company’s seventh consecutive quarter of market-share gains.
Then, early in 2015, Dell reached out to Joseph Tucci, the long-time CEO of EMC — the Boston-based storage giant — about a potential merger. The two men met privately at the World Economic Forum in Davos that January to discuss it.
Now, to put that meeting in context, EMC was under serious pressure. Activist investors were demanding that EMC be broken up because EMC had a huge cloud storage business called VMware and a host of subsidiaries like RSA and SecureWorks.
Dell believed a combination of EMC and Dell could create a full “end-to-end” tech company at a scale no one else could match, covering everything from laptops to cloud storage to data security.
The discussions stayed secret for months. Negotiations went back and forth. And then, in October 2015, it was official: Dell was buying EMC for $67 billion — the largest tech acquisition in history at that time.
Dell and his backers contributed just $3 billion, and the rest came through debt financing. Dell was now the largest privately controlled tech company, serving 98% of Fortune 500 companies, but with close to $50 billion in gross debt, a lot of critics felt that Dell would struggle to innovate under that weight.
By 2018, three years after going private, Dell was thriving — but that mountain of debt still hung overhead. The private equity guys wanted their payday, so Dell decided to take the company public, but in a roundabout way. Instead of a traditional IPO, he’d buy out the VMware tracking stock he’d issued in the EMC deal.
So here’s what that really meant: when Dell bought EMC, it created a tracking stock — basically a shadow share that mirrored VMware’s performance but didn’t give investors any real ownership of VMware itself. By 2018, instead of doing a big, flashy IPO, Dell decided to buy those tracking shares back — pay the holders in cash and new Dell stock — and in doing so, relist the whole company on the market without going through the whole IPO roadshow.
The deal valued that VMware stock at $21.7 billion. Everything was going smoothly until — you guessed it — Carl Icahn crashed the party. He’d built up an 8% stake and called Dell’s offer “a 42% discount.” After a tense few months and an extra $5 billion sweetener to keep shareholders happy, Dell finally got his way. By the end of 2018, Dell Technologies was public again.
VMware was still 81% owned by Dell, and it was performing very strongly. So, in 2021, Dell spun VMware off, cutting Dell’s debt by about a quarter, and by early 2022, its credit rating was finally upgraded to investment grade — a symbolic moment for a company once written off as overleveraged.
Then came the AI wave. In 2023, Dell teamed up with NVIDIA to build what they called “AI factories” — prebuilt stacks that let companies train and run their own AI systems. Those sales hit about $10 billion by year’s end, with forecasts doubling by 2026. And as if that weren’t enough, Broadcom swooped in and bought VMware for $69 billion — and even after the spin-off, Dell personally held 39% of VMware — so he made about $27 billion from that deal.
When we look at Michael Dell’s overall wealth, what I found remarkable as well is that Dell’s personal stake in the business is worth between $40–$50 billion, and then you also have the $27 billion from the VMware sale — but his net worth is $150 billion. So the remaining $70 or $80 billion comes from DFO Management — this is the family office that manages his personal wealth. And it has a huge array of investments, from Four Seasons Resorts, to Endeavor (the company behind WWE and UFC), to PVH Corp., the apparel company that owns brands including Calvin Klein and Tommy Hilfiger.
And this diversification — the fact that most of his wealth isn’t tied to his main company — really tells you everything about Michael Dell. He really thinks things through. He steps back and gives a lot of thought to how to do things better. He’s done that throughout his life.
And what I really loved about this story is that while there is plenty of business drama, there wasn’t any scandal — not really — no politics, no ego. Now, just to be clear, there’s nothing better than a story that has one or all of those elements.
But I also love business, and what I love about Dell’s story is that it’s just all about the business and about how he navigated his way through so many difficult times in the PC market, how he outthought and outfought sharks like Carl Icahn, and how he did it by more or less staying true to his mother’s maxim of Play Nice But Win.
And look, he’s made mistakes — plenty of them — but in the grand scheme of things, I think he’s probably one of the best and most admirable business people. It’s what makes Dell such a great business story.
And with that, we come to listeners’ emails — and this one is from John, who I assume is from Ireland, I could be wrong — and he asks if I could do a story on Michael O’Leary, the very, very colourful boss of Ryanair. And John, rest assured, O’Leary is on my list, and thanks for the kind words and the suggestion.
And remember, if you have any comments, any corrections, or any story that you’d like us to cover, email us at: info@gbspod.com
All the best folks.