Working World

Michael Dell, founder of Dell, Inc., showed an entrepreneurial bent from an early age. When he was only 12, he created his own stamp auction, getting neighbors to consign their stamps to him and mailing out his own hand-typed catalog. He made $2,000.

A summer job four years later, selling newspaper subscriptions to the Houston Post, taught him the value of niche marketing. Noticing that the most likely people to buy were newlyweds and people moving into new homes, he did some targeted marketing to these high-potential groups and earned $18,000 that year.

Dell entered the University of Texas at Austin in 1984 intending to study medicine. But his business instincts took over and soon he was building and selling personal computers out of his dorm room under the name PCs Limited. Partly because he was “disenchanted” with the experience of dealing with computer stores, he decided to sell customized computers directly to end-users through mail order forms and phone orders, rather than through distributors. This kept the price low and gave him a tremendous competitive advantage.

At age 19 he dropped out of college to run PC Limited. His parents were upset at the time, but they got over it. His decision turned out to be a good one. The company became Dell Computer Corporation in 1988 and went public the same year; by 1992, it was listed in Fortune’s list of the nation’s largest companies. From dorm room to Fortune 500: Nine years. And Michael Dell became the youngest Fortune 500 CEO ever at age 27.

The early days of the company had their challenges: a 1989 inventory management problem that Dell described as a “near death” experience, and plenty of “mismatches in terms of our capability and systems and processes” during times of rapid and tremendous growth. But the company learned from these problems and came back stronger than ever.

Some of his business advice includes, “When you’re thinking about a business, you have to think about what you are going to do that is dramatically better or different than somebody else.” Hardly revolutionary, but certainly true.

Dell Computers expanded its product line to include home entertainment systems and accessories in 2003 and changed its name to Dell, Inc. In 2004, Michael Dell turned over the CEO job to Kevin Rollins while retaining the position of chairman of the board, but he took back the CEO spot in 2007 after a series of lower earnings and falling share prices. The company has greater challenges now in the competitive arena because it is no longer unique in its methods of building or marketing lower-priced PCs, but it is still very profitable.

In 2008, Forbes reported that Michael Dell’s own net worth was $16.4 billion (down from $17.2 billion in 2007). Investments outside of Dell, Inc. now account for most of his wealth, as he has reinvested in equities and real estate through a separate company, MSD Capital. He also established the Michael & Susan Dell Foundation, which focuses on children’s health and education. Recent foundation grants have funded new facilities at the University of Texas, including a pediatric research center, a Center for the Advancement of Healthy Living, and a new computer science building.