#534: Michael Dell, Founder of Dell — How to Play Nice But Win | The Tim Ferriss Show

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Key Takeaways

  • Be nice but don’t forget to win
    • Don’t let your niceness handicap you; let your integrity and reputation work for you
    • Being nice always comes full circle if you let it
  • “There’s no such thing as success by itself, failure is always an ingredient of success” – Michael Dell
    • Some of the biggest mistakes result in the most important innovations
    • You’ll never discover true innovation by following all of the rules
  • BET ON YOURSELF
    • When Michael decided to take Dell from public to private, he basically put the company up for sale. Michael bought it because he knew it was worth more than the market thought it was worth.
  • “You learn a lot more from your customers than you do from your competition” – Michael Dell

Intro

Play Nice But Win

  • Play Nice But Win: A CEO’s Journey from Founder to Leader by Michael Dell & James Kaplan
    • The title was inspired by his parents’ advice: play nice, be ethical and respectful in competition but don’t forget to win
    • Michael is very well known in the business community for being incredibly nice and generous
    • He encourages people to take greater risks. There is so much untapped potential because people are afraid to fail.
  • Can being nice be a handicap? Not in Michael’s eyes.
    • Life is a long journey and your reputation & integrity matter
    • Being nice always comes full circle if you let it
  • He wasn’t as comfortable talking about his vulnerabilities and shortcomings in his previous books
    • In the new book, he details entrepreneurial struggles and even getting arrested as a teenager
    • Feels the change is a function of age, the expectations he had as a young entrepreneur forced him to always tough it out and put on a smile

Early Life

  • At age 17, Michael made $18,000 selling newspaper subscriptions
    • He tried to sound like the people he was talking to; he adapted to his customer
    • He noticed trends on who was buying the newspaper and marketed them accordingly
      • New residents would often accept a free trial and continue subscription to stay involved
      • Married couples tended to enjoy subscribing – marriage licenses are public record so he took advantage of that information
  • At the family dinner table, they didn’t talk about the football game, they discussed economics
    • His mother was a stockbroker

Failure

  • “There’s no such thing as success by itself, failure is always an ingredient of success” – Michael Dell
  • Early on at Dell, they designed a new product with an old computer chip which caused major supply chain issues
    • This led to great innovation and excellence in Dell’s Just-in-Time inventory and supply chain management
    • Some of the biggest mistakes result in the most important innovations
  • When Dell was struggling, Michael felt a lot of pressure to be successful because a lot of employees, family members were dependent on it
    • “I’m pretty high on the determination and grit scale” – Michael Dell

How Dell went from Public to Private to Public

  • Growth had started to stall out so they started investing in software, services, security, acquisitions
    • Financial investors didn’t like this, becoming too disassociated from flagship PC product – The public stock was on a negative downtrend
  • Dell decided to go private and buy back their stock from the public shareholders to facilitate a technological transformation
    • When you decide to go private, you’re basically putting the company up for sale. Michael bought it because he knew it was worth more than the market thought it was worth.
  • Started the process in 2012 and completed it in October 2013
    • Led to rapid increases in research and development
      • “Reignited the entrepreneurial spirit of the company” – Michael Dell
      • Being relieved of quarterly reports and stakeholder pressure allowed them to revitalize the company
    • Bought EMC & VMware- creating the largest cloud infrastructure
  • The technological transformation gave them the innovation pathway to be successful in the public markets again, going back public in 2018
    • Dell utilized a Tracking stock strategy to compensate the EMC shareholders
      • Tracking stocks allow a parent company to isolate the financial performance of a high growth segment

Business Advice

  • “You learn a lot more from your customers than you do your competition”– Michael Dell
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    Notes By Drew Waterstreet

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