The late 1980s and early 1990s was a time in America full of new revolutionary technology and thriving energy from Silicon Valley. The computer boom was an interesting time in America, and while many associate Steve Jobs of Apple and Bills Gates of Microsoft as the faces of that era, one man is less talked about. Michael Dell is one of the most important entrepreneurs of the 20th century, completely shaping how the world uses and buys computers.
Early on, Dell found that he had a passion for computers, and before he even left college he was a successful entrepreneur. Dell began tinkering with PCs at college when he would buy used pcs from local retailers and rebuild and upgrade them, then sell them out of his dorm room. Almost immediately there was real interest in what Dell was doing, and he decided to start a business and drop out of school. In the first month of summer following his freshman year, Dell made $180,000 selling PCs. Based on high interest in his business, Dell concluded that PCs would soon become a hot commodity. Before Dell, computers were mostly sold and assembled through middlemen, and were far too expensive for the average household. Dell decided that instead of following this business model, he would create his own. Dell found that by buying the parts separately and assembling the computers himself, he could make a computer much cheaper than a manufacturer. He would then sell the computers at a 15% discount direct to consumers versus what established brands were charging to consumers.
This technique came to be known as the “direct model of selling,” and helped make Michael Dell a multi-billionaire. Dell officially named the business PCs Ltd. Instead of creating one computer model that would be mass produced, Dell focused on creating customized personal computers and selling them directly to consumers. In the first year of business, the company pulled in $6 million in sales. In 1987, Dell changed the name of the company to Dell Computer Corp. By the end of 1988, Dell’s sales exceeded $159 million, and Dell was rapidly becoming one of the most popular names in America. At the end 1992, Dell saw sales of over $2 billion, and was a true and solidified force in the computer industry.
As Dell grew rapidly, the entrepreneur began to face many challenges. A sharp decline in Dell stock, the departure of the CFO, and poor production of its new computers all found the company within a few years. Facing a decline in business, Dell was forced to rethink many aspects of the company. He first decided completely revamp the executives, bringing in former computer and technology designers and CEOs from big name brands to help straighten Dell Corp. Dell also decided to stick with his direct to consumer approach, a risky move in the highly competitive PC market. Within a year Dell was back to normal and enjoying healthy profits.
I admire Dell for his perseverance and creativity. Dell completely re-imagined the PC market through direct to consumer selling and customized computers. Dell faced many hardships throughout his life, and instead of backing down from challenges he innovated and fought for his business until he prevailed.
Love this, Michael. Way to highlight a great entrepreneur!
Great piece Mike. I cannot believe that the creator of Dell dropped out of school and became so successful. The fact that he made 180,000 in his first year is mind blowing. He really is in the same category as Bill Gates and Steve Jobs.