Young, Rich, And Seldom Off His Feet
ROUND ROCK, TEXAS
The first thing that strikes you about Michael Dell is that he seems awfully young to be a billionaire. That's billion with a "b." The second thing is his seeming inability to sit down. He even has his computer terminal set on a chest-high stand, so he can answer e-mail while standing up.Skip to next paragraph
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"I don't like to sit down a lot," says the founder of Dell Computer Co., during a recent interview in the wood-paneled board room of his Round Rock, Texas, headquarters. "You think slower when you sit down."
Clearly, a strong work ethic is part of the reason Mr. Dell has become the richest man in Texas, and how his company grew to be the nation's second-largest personal computer maker. The driving force for Dell's success is a single good idea: bypass retailers and sell good, fast computers directly to customers. Through direct sales, Dell has shaken up the computer industry, forcing larger competitors like IBM and Compaq to cut prices and, in some cases, start selling direct, la Dell.
"It's not unfair to say that Dell has changed the face of the industry, especially over the past 12 to 18 months," says Bob Tasker, senior vice president of the Yankee Group, a consulting firm in Boston. "For consumers, he's made tremendously powerful machines affordable." Now Dell has taken his direct model one step further, selling $4 million worth of computers over the Internet each day. "Everyone else is playing catchup, trying to move to the Dell model," adds Mr. Tasker.
Not bad for a thirtysomething college dropout. In 1983, when Dell was a pre-med freshman at the University of Texas at Austin, he used to make extra money by buying old PCs and upgrading them. By that first summer, he had made $180,000.
Dell quickly realized he could take his dorm-room business around the world, providing better technical support and cheaper products than local stores. "Businesses started to say, 'Gee, this is all fine and good that we're buying a PC from our corner computer store." Dell says. "'But you don't understand, we want to buy a thousand of these things ... and, oh, by the way, we're running a business here, so we're going to see who has the lowest price.' "
Dorm-room business no longer
Today, Dell is a $12 billion company, with 16,000 employees in factories in Texas, Indonesia, and Ireland. Still more factories are planned for South America and China.
Dell's confidence about the future was shown this month when company executives announced that they would stop selling their machines at a discount, betting that customers will buy Dell computers for their quality, not just their low prices. In addition, Dell is putting major hopes into the Internet, expecting as much as half of its sales to come from the Web in the next five years.
And while most computer makers are starting to delve more into direct sales, few are prepared to abandon their ties to retailers like CompUSA or Office Depot.
"The problem they have is that essentially they're a prisoner of their own history," says Dell, dispassionately. "Because if you want to sell direct, of course you're immediately alienating all the people who sell your product. This is a very hard transition to make."
In terms of personal style, Dell has always been somewhat of an outcast in the computer world. To friends and coworkers, he's not a techie, he's a driven businessman: aggressive, focused, and no-nonsense.
"He's the quintessential Texas wildcat entrepreneur," says Tasker. "If it were 50 years ago, Dell would be drilling oil wells - and being very successful at it too."