Michael Dell, Dell Technologies | David Senra

I want to jump right into what we were talking about before we started recording that. You said somebody was, you've been obsessed, you've been running Dell for 41 years. You've been obsessed really since you were like 11 or 12, so you've been running it for 50 years because there was a Dell before a Dell, right? But you were saying somebody was telling you the story about you in middle school. When I was in junior high school in the summers in Houston, there were classes at Rice University for young kids. So you could go to Rice University and take these classes and my mom kind of signed me up and it was great. They had these college professors and they were teaching these classes. The way I would get to Rice University is I would take the bus from my house and it would take you downtown and I was curious, so I was like, "Okay, if I just stand on the bus, it takes me all the way downtown to where the really tall buildings are." So I go down there, it's like really tall buildings, I'm like running around 11 or 12 years old, and I see they've got the stock exchange there and all these tickers going. I'm like, "Wow, that's pretty cool." So I just started learning about the stock market. So anyway, that's just something I remembered and my parents were always talking about financial markets and it just sparked sort of this interest really early in life. There's a great line I've seen from both Ken Griffin and Larry Ellison describing you. They're like, "This guy was manufacturing computers in America at a time when there was like thousands of other people doing the exact – very similar thing and he was the only one that survived." And the reason I just thought about that is because I was watching this talk that Ken gave, I think at Yale, and he says the things, he's like, "For his reasons, I can't explain. I don't know why. I've just been obsessed with the stock market, with business. It's those in the third grade and you know, 60 years later, all these, like that obsession has not dulled. We were just in your office and you were showing me one of your new unreleased products that we can't film or photograph, but you were like, "I was like, this is like a kid on Christmas. You're still a super cool product." Yeah, I'm very excited. I told you I'll buy one. I think it's cool too. I'm going to buy one as soon as it comes out. But I just love this enthusiasm that is just not dulling. What do you think? I was just with your son, Zach, last night. And I was talking a lot about his business, it's absolutely ripping. He's super intense and he's just in it right now, right? And then I was like 95% of our conversation and he's like, "All right. I have some things that you should talk to my dad about." And then it was so good. I was like, "Shit, he just did the outline better than me." So one of the things, he's like, "You need to get on record. What motivates him?" He's like, "It's one of the most fascinating things." He's like, "Just ask him what motivates him, so what motivates you?" You know, it's all just like fun and interesting and I want to learn. And it's like a big puzzle to solve and understand. And you think about the impact that technology has on the world. What could be more exciting than to be in the middle of that and to figure it out and to help advance it. And it's an infinite game, right? Never ends. Love to win, hate to lose, and yeah, it's just like the most exciting thing you could do to be in the middle of a business like this and to see it all unfold and play out. Yeah. That's one of the things. He's addicted to puzzles. So that's the way you look at it. Yeah. I mean, it's like the curiosity, solving a puzzle, understanding things, and figuring it out. Yeah. That's, you always want to do that. I mean, I would feel unfulfilled if I couldn't figure out a puzzle, a question. So yeah, there's like a burning desire to understand things and to figure them out. And math have always been important. When did you realize that about yourself? I never really realized that. You just asked me about it. It's just what I did. I just wanted to understand things. And when I was dealing with physical things, the way I would understand them is to take them apart. It's like, how can you understand something if you don't take it apart? Yeah. And my parents would get pretty frustrated, you know, taking apart things in the house. Sometimes I'd put them together, sometimes they would still work. But it's just the desire, it's to understand things, you know, the curiosity. Yeah. That's one of the character traits. You have a great story in the book where I think you save up for the Apple II. It was a computer. And it was, you know, relatively expensive, especially I think you were like 12 or something at the time. And then you bring it home and you're parents like, oh, he's, you know, he's going to plug it in and play with it. It's like, no, I immediately took it apart. I needed to understand how it worked. Well, it's like this machine is like, it does really cool stuff. How does it work? Yeah. What's inside it? And how do all those things work and how they fit together and why did they put these things versus those things and, you know, sort of getting down to the essence of it? I had a thought when I was reading your book, you know, time you're taking part at IBM. You know, this is, I'm pretty sure before your, your teenager, so this is before you start Dell officially. But it's, you know, and I didn't know this about IBM. I had to go back and look it up. And it's like the most valuable company in the world at the time. It was the first company that ever hit a hundred billion other market cap, which also blew my mind. But you take it apart and you're like, oh, wait, it's just component. This is the biggest company in the world. And this is their product. And if you take it apart, it's just made of components from other companies. This is like, it's implied, or at least this is what I was reading through the lines when I read your book. It's like, well, I can do the same thing. Like, what are they doing here that I couldn't do? Did you have that thought? Yeah, absolutely. I mean, so it's back to, when you open the thing up, you look inside, what's there? Well, there's chips, right? Yeah. And there's wires and there's power supplies and disk drives and all these components. It's like, well, where do those things come from? Who makes those? What's inside those? How do they make those? And so you sort of peel the onion and you understand all the different elements. And when I originally got the first IBM PC, yeah, probably took it apart before I turned the thing on just to see what's inside. And one of the really cool things back then was that you didn't have these sort of application specific integrated circuits, they call them ASICs, right? Or these big sort of chips that nobody really knows what's inside except the designers. All the chips were off the shelf chips. So you could see, you could sort of understand what the logic flow was and what each chip was supposed to do inside the circuit. And inside the IBM PC, none of the chips were made by IBM, right? And none of the disk drives were made by IBM. The power supply wasn't made by IBM. And so, you know, I was also interested in the economics of it. It's like, well, what is this chip cost? What is that chip cost? And you sort of add it all up and then you compare it to the cost that they're selling the thing for and you go, wow, this is, they're really charging an incredible markup for this. It's an incredible insight to have as a teenager though. It's like, figure out what the actual cost of the components are and then go look up. And it sounds like what Elon did with rockets. This is like, the Russians won't sell to me. I'm on the flight bag. These are famous stories in all of the books and I was just like, well, what does a rocket made of? Like, okay. There's a list of components. How much of those components cost? Well, you just said it's like, you just kept asking questions like, oh, I'm going to take it apart. It's like, okay, well, this is all the components, this is what it is. This is like where you get them from. This is the, look, the company name is right here. I can just call them up and find out how much this is. Well, you could go to the distributors and you'd say, you know, okay, how much does this chip cost and they say, well, it's this price for a hundred of them, yeah, right? And you could, you could literally map out the cost of every chip inside the thing. There is a book, Ken Griffin, the founder, Citadel recommends reading called Hardball. The subtitle of that book is, are you playing to play or are you playing to win? It is a book about extreme winners and some of the best operators in business. There's a line in that book that says, if you have not examined your costs in detail, it is very likely that there exists lurking somewhere in your cost structure, a major opportunity to improve your profits, weaken your competitors and expand your influence. The first move is to drive down your cost faster than your competitors can and use the cost savings to upset their strategies. That sounds like the author was describing Dell in his autobiography, Michael Dell says that one way that he was able to outcompete his better funded competitor compact, which is a structural cost advantage. Compacts operating costs were 36% of revenue compared to Dell's 18% of revenue. More than 40 years later, Dell is thriving and compact no longer exists. The best operators in business have this in common. They know their business from A to Z and their costs down to the penny. Ramp makes doing this effortless. Ramp gives your business easy to use corporate cards for your entire team, automated expense reporting and cost control all on a single platform. Ramp's corporate cards are fully programmable. You can set limits so the spending of your team never gets out of hand. Most companies only find out about excessive spending after the fact. With Ramp, you can stop it before it happens. Matt Paulson, who listens to this podcast and who's a founder of Market Beat recently switched to Ramp and this is what he said about it, "Ramp is the best. The amount of money you will save from unwanted renewals and employees who think company credit card equals buy whatever you want will far exceed the best credit card rewards program." Matt is talking about the importance of cost control. Ramp helps you make this an obsession. Almost all of the top founders and CEOs I know are running their company on Ramp. Go to ramp.com to learn how they can help your business play to win today. That is ramp.com. Something I don't even know if I've ever verbalized before but it's in all these biographies that I read. I feel like there's just a lot of common sense where the founder tends to just keep asking more questions and just going to an app you just said I think killing an onion. He's like, "Okay, I got that answer. What's the next one?" Then what's the next one? There's something in human nature where we just stop at the first question. You have this infinite curiosity that was very obvious from childhood and I think based on what we were just talking about in your office is obviously still present. It's very fascinating. It's not rocket science, it's just like keep asking questions and collecting information and thinking about the answers you're getting. You want to understand things at a very deep level and so that's always been a thing for me. I think that's what I'm very interested in. If you read the life story of somebody, I'm very interested in understanding who the person is and why they're doing what they're doing and this is the genius line from Charlie Munger, where he's just like, "Well, if you're just way more effective to tie the ideas to the personality that developed them and the way you tie to the personality that developed them, it's like you read about their life story. You read about their childhood. You read about what they're interested for. I love the part in your book as re-reading "Eshaday" where your parents confront you. You've started, Dell and you're dormant in the University of Texas and they're just distraught, which is really funny, given what's occurred over the next four decades. What are you doing, Michael? You're supposed to be, you're supposed to be, you know, and just path to be a doctor and I think your mom is crying. You're, you know, she was. Yeah. It's very emotional. Yeah. And so you're like, okay, in this book you said, I caved, okay? Which is very unusual because you're super strong for snouting from my kid. But then the very next page, I can see in my mind right now, like a cold turkey. Didn't even look at your computer for 10 days. I tried to take notes in classes and then I realized like, no, like, it was like, you were compelled. Like, I thought working in computers was going to be thrilling. I'm going to drop out with a thousand dollars and I'm going to take on the biggest company in the world. I think the fact that they, they put all that pressure on me is the thing that caused me to really reflect on it and decide that, no, this is more than a little hobby or a side thing. This is just like, I have to go do this. So you feel it was all consuming even at that age because at the time, you're like sleeping in the office when you do start, like you start, yeah, I know we talked about the last time it's hilarious where somebody asks you, it's like, well, when you start dial, like how many hours did you work? And you're like, all of them. Yeah. I mean, I wasn't doing anything else. I mean, there wasn't really anything else that was important to me. And so, yeah, it was totally all consuming and super exciting and wasn't doing anything else. Were you more of like before that, somebody that just focused on one task at a time? I would get pretty obsessed with, you know, individual topics and sort of go deep on them. So yeah, I wouldn't consider myself, you know, generally interested in a bunch of things. I was like super deep on certain things that excited me and I just interested me. Is that still the case today? Or is it just basically? Yeah, exactly. Yeah. Zach told me, he's like, he'll call me like five a.m. and he was like, I have an idea. Like, we should do this product or this acquisition or whatever. And he's just like, you just can't help himself and I asked him, I go, uh, what would get him to stop? He's like, you have to kill him. What made you decide to write the book? You know, we had, we had gone through a whole lot with the going private and buying EMC and VMWare and there had just been so much that it happened. I wanted to kind of document it and it was during COVID. I had some time started writing the stuff down and it felt like a logical place to sort of capture everything that it happened. And, you know, one of the main reasons I wrote it was for our team inside the company because I want them to understand, you know, how we think about the business and where it came from and, you know, as a business grows larger, it's harder to be able to tell the stories directly with everyone. And so it's just a great opportunity to encapsulate all that and share, you know, what happened really, the good and the bad, the things that worked well, things that didn't work well. And, you know, I certainly benefited from reading the stories or hearing the stories of other people and thought it'd be a good idea. But I said this on the episode I made about it. It's like a great gift to like future generations of entrepreneurs. I actually think that idea of like having like a singular piece of media, whether it's a book, there's another idea for you, for podcasts, for people as the company grows to understand like, this is the decision they were made, this is why it was, this is what we've gone through. Spotify has this. Originally, they did, Gustav is ahead of product at Spotify and he's actually on the made this. And originally, I talked to them about this, they were just going to do, it was like an eight part series, it was going to be a private podcast inside the company, which tells the history of Spotify. So if you come in now, you know, 20 years into its existence, it's like, well, what was like a year one in an apartment, you know, we got to serve on a closet. And so what they did is they did this beautiful like narrative. And they would also include the people that were important at the, in the early days, you know, some people don't last in the company, but they were really important. Right. Right, right, right. But I listened to the thing like two or three times and think God, now it's public, anybody could just type in Spotify product story, I think is the name of the podcast. I'm like, I don't more companies do this. Like, I'm not an employee, but if I was coming into Dell or any other company now, then I could have here, here's eight, you know, eight one hour episodes. And they say, not just, this decision is based, I think why these are the constraints we're under. This is what was going on. Exactly. You know, if we walk downstairs, right below this room where we are, there's a new class of small business salespeople being trained, okay. And you would love for those team members to be able to understand, okay, how did we get here? What are all the things that, that, you know, we did right and wrong? And to really, deeply understand the culture, the values, the beliefs. And then to be able to build on that with their own contributions. Yeah. Kind of bring them up to speed. And this is the context. I also think there's an additional benefit for it to make it public-facing, because humans buy stories, money flows as a function of stories. And I've experienced this. It's like, if I read, I spend, you know, 40 hours reading about this person that had this idea in their head, they built a company. At the end of that, you're going to have a way better appreciation. I find out buying their products that I've never, even would have thought of, because now I understand the story. I just reread James Dyson's autobiography, which is one of my favorite books, probably my number one recommendation, out of the 400 books I've read so far, just because it's like 90% just struggle. The first autobiography is just like, I've been failing for 14 years. This guy is like a mule. He won't give up 5127 prototypes, but there's an idea in the book that was smart, where he understood the power of storytelling, okay. And so he's like, you're going to walk into the retailer, you're going to see six different vacuum cleaners. He's obviously designed different, so it's going to catch your eye. But he insisted they wrote like a 200 word story on like a little flyer, right? Maybe like a little piece of cardboard, and that you could attach it to the handle of the vacuum cleaner. And what happens? If that person, humans or the stories are attracted to people, right? And so they would, they read that, and then they, it would increase their sales, because they understood who's behind this, why do they make it, how is it different? Like it was a very effective sales tool. So I think like, giving podcasts like this, books, anything of this where you can actually tell like why you're doing what you're doing. This is the crazy thing. I've heard from, I don't know, I've probably got thousands of messages about the episode I did on you. And the most common thing was I knew the name, I had no idea. When we knew it was Dell, the brand name, right, but they didn't understand just how crazy your story and the multiple different transformations you've had to make over 41 years. And now they're like, oh, this guy, like, I'm so glad you put that in front of me. I think it's like a super important idea. It's all, it's all been a lot of fun, and still, and still is, and, and it feels like we're just getting started. Actually, when, when, when I think about the business and the opportunities we have, and, yeah, it's all fun. You mentioned earlier that you benefited from studying people that came before you. And this is, you know, you wanted to pass that forward. Like, we're a few of the people that you study, you fell you learn from, or that influence like your thinking about how you're building, how you built your business. You know, when I was a, when I was a kid, I, I, you would read about entrepreneurs, you know, that we're starting companies, Charles Schwab or Fred Smith, certainly Sam Walton, some of the early telecom pioneers, people that were doing it right then, like in the 70s. And those stories were also, were just super interesting to me. And I grew up in, in Houston, which was kind of a boom town. You'd see these new companies being created and parents were talking about that. And so those, those stories were always just interesting and compelling. And you want to understand how did they do that? And why did they do that? And, you know, what happened? And, you know, I never imagined myself doing anything else other than starting a business. You know, the idea just was in my, in my consciousness from, from a very early age. There's this great line that Jeff Fezos says, where he's like our passion, we don't choose our passions, our passions. Shoes us. I think there's multiple mark, like my notes myself in the margins, like, oh, he's compelled. He's like, this is coming through him, like, he's like, he has no choice. This is going to happen. But is there anybody in particular that you, like, really, like, honed in on and admired and tried to emulate in somewhere? I always think you can, you can learn from just about anybody, whether they succeeded or failed. And so I tried to just understand, you know, as many people as I could that were entrepreneurs that were starting businesses, how did they struggle, what, what worked, what didn't work. And those were always the compelling and interesting stories. When you were 15, you met, you were, I think, at some kind of conference with, and this is the first time you were in the presence of Steve Jobs, I think Steve was, like, 25 at the time. So when, was he somebody, like, when you saw him at 15, and you saw, okay, wait, this is a young kid in his 20s building a computer company, was like that a model for you or, like, what was your interpretation of, like, that experience, I guess, what I'm trying to get at? Yeah, so, you know, in the early days of the computer industry, you know, as I knew it, the microprocessor-based computer industry, you know, Apple was a leading company and Steve was obviously the sort of legendary figure. So I was in this Apple user group, which is a bunch of, you know, geeky people who would like get together and, you know, exactly. And, you know, sort of compare, you know, how they had souped up their computers and software they had written and learned from each other. And so, you know, Steve came to speak to our user group. And, yeah, I mean, he, you know, he was like using these incredible, you know, metaphors and they're like listening to him and looking at what Apple's doing and going, wow, that's really cool. And, you know, you'd also started hearing about Bill Gates, you know, who's also about the same age as Jobs, and, you know, they're both about 10 years older than I am, and you kind of look at them and go, well, okay, they did something cool, maybe I've got a shot. Yeah, that's really cool. There was something you mentioned to me when we had dinner that has been rattling around in my head, and I think it's probably the reason that I couldn't sleep. And I don't even think it was like explicit advice, I think you were just making an observation. But you said something along the lines that, you know, you've seen countless different companies and entrepreneurs come and go over, you know, four decades, four plus decades. And you said something that terrified me, how did it actually, that most of the entrepreneurs and founders that you've known were never taken out by competition, that they sabotaged themselves. Can you say a little bit about that? Yeah, I mean, I think, I think you could make the argument that they made mistakes along the way that we're fatal, and ultimately, the companies didn't succeed. But it's all of their own doing, right? You have to make the right choices in order to continue on and survive and ultimately thrive. What do you think are some of the causes of mistakes? You have obviously smart, talented, competitive people, right? Charlie Munger has this great line where it's like intelligent people are taken up by three things. Ladies, liquor and leverage. So, like, what have you seen any common, like, causes for somebody to sabotage themselves or to not live up to what they should have? Charlie's right about those three things, you know, we stay away from those. I sort of go back to understanding things and curiosity, and it's like you've got to know why something is working or not working. And if you're in the middle of a super competitive endeavor, and you don't really completely understand what's going on, well, you're going to make mistakes, right? And so, you know, when I look at the competitors that are no longer around, yeah, they they had either overzealously expanded or made, you know, design, you know, errors or they fail to understand the competitive landscape, I mean, there's lots of ways to fail, right? You have a great example of one in the book with Adam Osborne, where he had a very successful one. I think the Osborne one was, well, it's at least successful, right? Yeah. Okay. And he's like, all right. Now, we're coming out with Osborne 2. It's even new and approved and it's great. And you make the point. It's just like, yeah, maybe. But it didn't ship in time. And so now you just made this big announcement where you're like, we have this great new product. It's even better than one. What are you telling to the market? The Osborne fact. I don't think people talk about it so much anymore. But back then, the Osborne fact was the thing where you introduce a new product that's better than your first product and nobody buys your first product anymore and you're out of business. And so, you know, yeah, don't want to do that. So go make some mistakes nobody's ever made before. Try to make them in small increments, fix your mistakes as fast as you find them. And you actually want to make mistakes. You just want to make them small and, you know, iterate and fix them quickly. I mean, one of the things when you're, when you're creating a new business in an area that has never been done, or with some new technology, new business model, there's no playbook. There's no like book you can read, says, here's how you do it, right? And, and if you hire the people from the adjacent, you know, industry companies and ask them to go do it, well, they're just going to go do what they were doing before, right? And so, that's not going to work. So you need a lot of creativity and you need to sort of intuit your way to the answer by experimenting. It's like, okay, here's a theory that we think will work. Let's try it, right? And, and, and, and, you know, does it work? Great. Okay. Let's do two X that. Okay. Let's do 10 X that. Let's do 100 X that. Doesn't work. Okay. Restart, come up with another theory and just keep experimenting until you find the answer. You're kind of going through that now. In fact, I want to read something that you said that was one of the most interesting things. You said it on a podcast and you made this essentially talk to your entire company and you said, I'm just going to read this quote. I stood up and told the company that five years from now, I love this so much. I stood up and told the company that five years from now. We will have a new competitor and that new competitor is going to be in every business they we're in, except they're going to be faster, more efficient, and more capable. And they're going to put us out of business. And the only way that we're going to prevent that is we are going to become that company. It's gut-wrenching stuff to reinvent and reimagine your business. But if you don't do it, you go out of business. Yeah. Exactly. So, you know, when, uh, chat GPT came out in November of 22, or so looking at this and going, wow, this is a big deal. This is, this is pretty interesting. And you started to see the rate of improvement in the LOMs. And you, you know, in technology, you can, you can sort of look at the, the rate of improvement and the learning curve and you can sort of plot, well, where's this thing going? Right? Where's it going to be in a year or two years or three years? And you look at, okay, we're going to, uh, have agents and multi agent systems and we're going to be able to reason over incredible amounts of information. Well, what does that actually mean for the way knowledge work it's done and the tools that humans are going to have? So you think about that and you go, wow, this is a big, big deal here. We need to totally reset how we're thinking about the business and reimagine it, reframe it and understand what the processes are going to look like in five years. And so you do, you do all that and you say, uh, if we keep doing what we were doing before, we're going to be in serious trouble because some new companies are going to come along. And yeah, they're going to have all these new tools. They're not going to have this legacy of crap from the past, right, and all ways of doing things and they're just going to do it the new way. And so we have to change or we're going to go out of business. You know, I also believe in this idea that, uh, if you don't have a crisis, make one, right? You know, you get people excited, motivated and to drive the necessary change. I mean, in one, in one sense, this is not a technology problem. The technology is there, whether you use it or not. It's a, it's a question of how do you organize the team and people to actually go and get this thing done? How do you motivate them? How do you give them the right tools? How do you structure, uh, you know, the, uh, ways people work together so that you can do it quickly. And it's very hard for people to, you know, if you've been doing something for 10 years or 20 years or 30 years, the same way and all of a sudden, it's like some new thing comes along. Like, no, I don't want to do that. You know, people don't like to change, but you have to. And so that's what we've been doing. Yeah. This is excessively rare. I mean, think about the story in the book where I think the line that I summarized what you were saying about IBM's like, yeah, the personal computers, you know, fine. It's going to be a great terminal for the mainframe. And it's just like, oh, you see this over and over again in these biographies. If you're studying something that's occurring over multiple decades, it's like companies and people cannot envision a future that's different from the present that they succeeded in. So they just kind of like dismiss it, dismiss it or kind of ignore it. I'm trying to think that like, so you just said, okay, there's no books. Like, what do you guys are doing right now, right? You can't just like, you're on the cutting edge. There's no books you can read about it. But you have served how many different technological revolutions you did, the microprocessor, right? The microprocessor, sorry. The personal computer, then obviously the internet was invented. Client server technology. How many? Yeah. So I got four or five. How many have you successfully navigated and had to reinvent Dell over and over again? How many of these, like, huge shifts do you think you've navigated? Yeah, there's probably been six or seven of them. So if you've done that six or seven times and then I think in the book, you know, obviously you say, we did really great on this one, not on this one, but we've probably tried to have to fix that. You're not going to be perfect over that many decades. But do you see like, is there like an echo between all of these, like that you can apply, like certain ideas you can take away and like form a structure? It's like, oh, that's kind of similar to what we had to do when we had to reinvent for X. Yeah. But the time frames that these things occur tend to be shrinking. I would say more about that. So if you think about the internet, you know, when, you know, first you had the internet, you had the worldwide web, right? And websites started popping up in the mid 90s. And then, you know, but it took like a decade before there was really a boom in things like e-commerce. I mean, it was, it was going on in the late 90s and early 2000s. But it really didn't, it took a long, long time. So now, maybe it's like five, 10 times faster, you know, if you look at the growth in the usage of these tools. And part of it is that each successive wave of technological improvement is built on the prior, what, you know, foundations. And so they're able to go faster. So if you have five billion people connected with all kinds of devices, well, now they can use these tools and that just goes way faster. But I think you have to have this idea in your head that any, you know, new thing has some chance of succeeding, right? And say more about that. So there's a lot of wild ideas out there. And if you dismiss them all, you're going to miss some things. So you, you, you kind of have to hold this idea in your head that any of these wild ideas has a chance of succeeding. And let's sort of understand what do all these things mean and figure out what is the point of intersection. Like, you know, what should we be doing about this? And when, when is it actually relevant, interesting, valuable and it's sort of, you know, it's escape velocity. And if you're, if you're sort of stuck in a particular paradigm or you're like dismissing things, you're going to miss them. Yeah. And so, you know, you need to be open-minded enough to consider all possibilities. But your ability to do that is so counter to human nature because we're habitual, like we're habitual creatures. You know, it's like, oh, I found what I want or I found like what I like to do. And like, this is the best. You know, like, if you look at like what people, what music people listen to, for example, it's like, music you listen to when you're like, I just go to college and maybe you read it a couple of, like, you're kind of like just stuck on that where you are just like completely open, maybe addicted to, you know, new technology and new ways to think about or new ways to solve, like, old problems. Yeah. I love the stuff. But how do you not squash new ideas? Like you just said, like, you know, those are great lines. Like, any idea can work now. Everybody's connected. And they can grow faster and you can possibly imagine. So how do you like, do you have a process for like, how do you not, you know, I, new ideas are fragile. And you know, they need some kind of protection and some time to grow like, but most people just like, it's kind of snuff them out or dismiss them immediately. Well, you know, sometimes it's a, it's a, it's a good idea, but it's the wrong time. Sometimes it's a good idea, but it's the wrong company. Sometimes it's just a bad idea, right? And so, but there's no absolutes here, right? You just have to be open minded and consider to the possibility that things are changing fast enough that, you know, some, some new thing comes along. If you took the top computer scientists, you know, and researchers in AI or just broadly, you know, five years ago, and you said, okay, you know, this is what's going to happen with L.M.'s in the next five years, probably 99 out of 100 would say, no, no, that's not going to happen, right? And so, that's a, that's a pretty good example in contemporary period here, you know, where you, you just need to be open to the possibility that things are going to change. And, and there's also this thing where about every 10 years or so, something comes along and just completely expands the opportunity set for the industry. And that's part of the fun, the excitement, the super interesting aspect of what we get to do every day. The best leaders in business are able to spot patterns, but you can't spot patterns if you can't see your data. And most businesses are only using 20% of their data because 80% of your customer intelligence is invisible hidden in emails, transcripts, and conversations. Unless you have HubSpot, HubSpot is where all of your data comes together so you can see the patterns that matter. Because when you know more, you grow more, and that is a pattern that never fails. Visit HubSpot.com today, that is HubSpot.com. I just had a thought listening to you speak tied to something else that you said earlier. It's like basically humans inability to have accurate predictive predictions about the future. It's tied to the importance of iterating and make sure you're doing a lot of experiments and then having that tight feedback loop to constantly get information, "Oh, that didn't work. Okay. We ran experiments in work. Let's try it a different way." Those two things work really well together. It's like, we're not going to predict the future, we're going to create the future through iteration. Yeah, and it's okay to try to predict it as well. It's just really hard to do, and you might want to have a lot of experiments. If you go back and say, "Okay, let's say you had somebody who was supposed to be really smart or supposed to be an expert at something," right, 10 years ago, "How good were they at predicting what was going to happen?" Not very good, right? So, don't rely too much on that, right? This is why I think entrepreneurs have to study past entrepreneurs too, and it's obviously very valuable. It's no surprise that you were reading about these people, what I always say is the greats all studied the greats. They were doing it today, they were doing it 40 years ago, they were doing it 200 years ago. If you took an average person in normal society and the way they think about experts and the way it's discussed in all these departments, it's like they're very dismissive experts, right? I just mentioned I was reading James Dyson's autobiography, you know, the whole thing is just like he believes in the Edison principal design, because it's constant iteration. You learn as you go, you can't predict, like you just, you know, change one thing and then test it and see how it goes. And he mentions setting Henry Ford a lot in the book. And then James Dyson wrote an autobiography 30 years after that, that he also mentions Henry Ford a lot. The reason I thought of that is because as you were speaking about, you know, you go and ask an expert from 10 years ago, what's going to happen? They're not going to tell you the Chachee PT is absolutely, you know, that my 13 year old, I use Chachee P.O. time, but I'm a nerd. I like to research stuff, I like to read about stuff. She uses like a therapist, a shopper, a friend, like it's an entire ecosystem of them. There's no way you can, you can predict that. So there's a great line in Henry Ford's autobiography, which was written 120 years ago. It's not a new phenomenon. Human nature does not change. Henry does repeat human nature does. And he says, if I ever want to sabotage my competition, I would fill their ranks with experts. Experts tend to know so much, and they're so convinced that they're right, they'd get no work done. Yeah, at the limit, nobody knows anything, right? And it's not a bad philosophy, you know, when you're thinking about the future, it's good to have a hypothesis though, right, and ideas and experiments and to keep it open mind. So what was, when we go back to that, hey, they're coming for us, they're going to be faster, more efficient, more capable, and they're going to put us out of business. And we're not going to let that happen because we're going to transform. We are going to be that business. Right. What was your hypothesis back then, do you remember? It's pretty simple, it's that it will be possible to dramatically improve the way we do things in all the core processes of the business, from software development, to support, to sales, to every major function, our supply chain, everything can be improved in a dramatic way. And that's what we're doing, and we're finding, you know, as we take our data as we reimagine the processes and simplify and standardize them, we can make them way more effective. So, you know, example would be in support. We have incredible amounts of data, we have telemetry data that the machines are giving us all the time, right, about, you know, soft errors and all these things that are going on, you know, inside the usage patterns from customers, we have warranty data, you know, we have previous call logs, we have all these knowledge bases, we have GERA databases, it's like millions and millions of documents, no human could ever interpret all this. So we created this tool called next best action, which takes all of this data and understands what problem the customer is trying to solve, and it helps either the customer or the agent that's trying to help the customer get to exactly the best way to solve that problem in the fewest possible steps. And so the person helping them feels like, wow, I'm way better at my job than I used to be, because now I got this genius on my shoulders telling me exactly how to solve this problem, the customer's way happier, the problem solved way faster, and the tool summarizes the call. So that saves a ton of time, and so everything gets way better. So you can take that same example and, you know, software development with coding assistance, our sales teams have access to incredible tools, and so we're doing this all over our business. And of course, our customers are doing it, and what is this doing? It's unlocking the power of data using compute and using all these models, which also happens to be, you know, we're in the business of compute and storage and networking. So it's an enormous opportunity for Dell itself to be able to help all of our customers unlock the power of their data. You couldn't protect like the actual tools that were going to be invented. You just knew that now we have this new, there's this new technology that it will transform every single process inside the business. We won't be able to protect like all the tools, but we just know that they're coming. If we didn't do that, and our competitors did, we'd be finished. And so we're not going to do that. Even if we did it and our competitors did it, let's say it just neutralizes, you have to do it. Do you have no choice? Yeah. There's a line in Andrew Carnegie's biography, it was really fascinating because, you know, he dabbled in a bunch of different businesses and he was pretty wealthy before he started the steel company. But once he realized that, you know, think about how important steel was at that time. Like everything, this is the new product that everything, every other product is going to be made out of. From Prudges to Roboids and everything else, like this is the biggest opportunity in my life. I'm going to go all in on it. To the point where he didn't even want any distractions, he sold all of his stocks because he didn't want to find himself looking at the newspaper, wonder what the price of stock was. Like fully focused on the greatest opportunity of my entire life. He went into an existing business that was run by older gentleman, right? He had this new way to do steel. I think it's best and more steel that he got from England. So he took that idea from England and imported into America, which it's kind of weird how often that is in the history of entrepreneurship, where it's like, oh, this idea is working one geography. We'll work over there. It's like, yeah, because humans are kind of the same everywhere. There's some culture differences, but, you know, our core motivations are, you know, very summer. And they were very resistant to change. So they're like, no, that's not the best process. And then they would ridicule him for investing in the newest technology. He was spending a ton of money. Every time there was a better machine, a more efficient machine, he would immediately rip out the old machine and input and put in the new technology of his day. We wouldn't think about his technology today. It's definitely technology back then. And when you read his autobiography, which you know, in the public domain, anybody could read it for free. It's an incredible gift to humanity. I remember getting to this part of the biography, which is exactly what you just said. It's like, okay, even if this doesn't give us advantage over our competitors, if we don't do it, like they will have the advantage. So even if we're on point, like on the same level and the summary of what Andrew Carnegie was saying, these guys wind up not adopting this technology and they went out of business. So he says, invest in this is not a direct quote. This is me summarizing his idea, says invest in technology, the savings compound. It can make the, it gives you an advantage over your store moving competitors and it can be the difference between a profit and a lost. If he didn't do that, the investment into the new technology that his competitors were dismissing the stupid young kid with his fancy machine, right? That wind up making, making his company profitable in a year or two and their company unprofitable and then slowly and slowly, they just, they kept losing money and then they went out of business. It's very fascinating how these like themes just keep reappearing. Yeah, exactly. You don't necessarily want everybody to know what you're doing. Also. The maximum I have from this I use on the podcast all the time is that bad boys move in silence. And so you mentioned earlier that there's no, sometimes there's no book, you're on the cutting edge. And so I remember there's a great line in this biography of Steve called becoming Steve Jobs, which I actually think is the best biography written about him. And Steve's like, I don't even know what the business model of animation is. And they start partnering with Disney and he is this great line. He goes, you can't go to a library and check out a book called the business model of animation. There's only one company that's ever done it well. It's Disney and they don't want anybody else to know how lucrative it is. One thing that was this hilarious that your son Zach wanted me to ask about was what he calls dad terminal. Yeah, so dad terminal is what he refers to as when he kind of taps in and wants to talk about a particular topic or has a question. And it's one of my favorite times was Zach, because we're talking about solving problems or challenges inside his business and I get to share the mistakes I made, the mistakes I saw other people make, lessons learned, and hopefully save him some pain and suffering and steps from learnings along the way. Yeah, he says, instead of typing in, I was like, why is it called dad terminal? I didn't understand what that was. And he's like, well, Bloomberg terminal. He's like, you know, yeah, yeah, he's like, you subscribe, you log in and you have a question and then like, you type in, you get this really advanced answer and he's like, I don't use Bloomberg. I use dad terminal and I was like, give me an example, like what's the last query and just dad terminal and he goes supply chain. He said it like it was like, obvious, it was like, I don't have a supply chain. I run a podcast. I read books like explain it to me. He's like, there's a handful of things and a handful, he's like, there's a bunch of things my dad is world class at and he's just like, one of them is supply chain. And I'm curious, it's like, why you think your, why other people describe you as really good at that? Is that is supply chain just related back to how we started this discussion is just like another puzzle for you to like direct your curiosity to? It's definitely an important puzzle and a critical puzzle. I mean, I think if we had not figured out how to do our supply chain well, you know, we would not be here today. It's as simple as that. So it's a, it's a fundamental thing that is just super important in our business. So it's just you've thought more about this area over and made and made a ton of mistakes and learned a ton of lessons and sort of, you know, figured out what works and what doesn't work. Yeah. There's a line in the book. I think the first time you realize, hey, I don't like these, your whole thing is eliminating middlemen and like getting as close to the source as possible. And I think you're like night, it might be 20 years old at time, but you're taking your first trip to China, if I'm not mistaken. Well, so that would have been 1985, it really wasn't, you couldn't really go into mainland China at that point. There was nothing really to do there that they weren't making anything, so you were going to Asia. So, yeah, I went to, I went to Japan, Hong Kong, Taiwan and South Korea. Yeah, but what I love is just like how excited you were, because it's like, it's something you said earlier. It's like, you got a deep love for your business. And then now you get to keep peeling back the onion and getting closer and closer to how it now. It's like, oh, I'm like spending 16 hours a day. I'm sleeping in my office and working. We have customers. How are hiring employees? We have revenue growth. But now I'm getting deeper and deeper, deeper understanding. And like, so as I read these barriers to people, I try to build, I think I have a good sense of how you think and what's important to you. And what I realized is that instinct that you had as a 20-year-old man or however old you were at that time, it's like that has not, it's never been alleviated. It's just this constant, keep going lower and lower and lower to see more, deeper understanding of the world around you, but also how your business fits in that world and how you can build technology to enhance everybody else around you. Yeah, of course. I mean, that's what you're supposed to do, right? You're supposed to understand things, right? You say, of course, this is another thing I told you when we had dinner. How else would you do it? I don't know. I don't know what to put to you. I don't understand. This is why I think writing a book and having conversations like this is important, because there's so much shit in your head that it's so unusual, and it's so valuable, getting it out and putting it out into the world, because I remember, I wouldn't do any other way to do it. I know. Because you don't understand how I normally are, so we were halfway through our dinner. I looked at you and I was like, dude, I have this paradox in my head that I cannot reconcile between the crazy career that you've had. This is like, I study uncommon people for living. You are uncommon amongst uncommon people, right? So the paradox I couldn't reconcile is that you've changed this crazy ride that you had, that's described beautifully in your book. This four-decade mission that you've been on, that you've relentlessly given a lot of your life energy to, and just how normal you are. I'm talking about your affectation, your personality. You're very polite and calm and measured, but it's just like, you understand how rare this is. No. No. Because you're like, of course you would be like, this is what I love. It's like, just wake up every day and go do the thing. This is why you're great, but that's why you're great. So, like, do you think it's pretty normal to me? There's nobody that reads this book, like this guy's normal. No, it's not at all. So what I love about this and this is why it's so important because, and I mentioned this on that episode, I made it on you, but there's this engineer turned founder, Sidney Harman. You know the company Harman Carden? Yeah, sure. Yeah. So, he has a great line. He said that the founder is the guardian of the company's soul, that it's impossible to separate, you know, the creation from the creator. And I think over time, like the, I resemble that, goddamn right you do. This is also, again, how abnormal we are. I used to say it's like, you need to build a business authentic to you. And then in this book, Lee was, you know, talking about, he was only able to last four years, I think. And he's just like, you know, we're fighting IBM. We don't have any money. And he's like, what, back's hurting? I'm losing my hair. Like, I can't sleep. And he's just like, Michael is ecstatic. He's like tap dancing to the office every day, and he said a line that changed, like really maybe think about that. He's like, he built a business that was natural to him. Of course, it's not abnormal to you because you built a business that's natural to you. Yeah. And if you've been doing it every day for 41 years, it seems pretty normal, right? On the last episode, during my conversation with Daniel Ack, he said one of the most important ideas that I've heard. He said, I'm not obsessed about time. I'm obsessed about energy management. If you have time, but you have no energy, you're not going to accomplish anything anyways. I signed up for function long before they were a sponsor of this podcast. And when you sign up, they ask you what your health goals are. And my response in all caps was maximum energy. All of the founders, CEOs and extreme winners I have studied have excessively high energy levels. And going to be the best at what you do, you need to maximize your energy and output. And that is why I've partnered with function. 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Senra right now function is offering a hundred dollar credit to the first thousand people who sign up for a function membership to get this hundred dollar credit. Just visit function health dot com forward slash senra again that's function health dot com forward slash senra Lee Walker tell me how important like that was finding a person because you were relatively persistent in recruiting him and you were like 21 I think at the time. 21 and he was 45 or something like that. Yeah. What's the role that you feel he played at that point in Dell's history? Well, you know, the company was was, I mean, it's like our rocket had sort of taken off. But, you know, it was, it was pretty fragile, right? And, you know, we had some good ideas, but there was a lot of missing pieces. And we helped fill in those missing pieces and, you know, sort of organize the uncontrolled chaos and helped us sort of really, you know, scale scale up the business in like operations. Like, what do you think? Yeah, I mean, it was, well, well, well, first of all, we were growing so fast, we just, we just didn't have the balance sheet or the capital to support our growth. And so he helped us, you know, get some credit lines and, you know, that, that, you know, read up capital and then, you know, sort of organized some, you know, some of the operations and stuff I didn't really know about or have a great interest in, you know, because it wasn't the technology or, or the customers. Yeah. And so he helped sort of get all that stuff on the right path. And then as we, as we needed even more capital, you know, with a private placement and going public, you know, he helped help sort of get all that going. And, you know, just basically, how do you, how do you scale this thing up to get it ready for 10X or 100X growth? One thing I thought was very fast thing that the Walker said, right, is you got to the point where, you know, you had that negative cash conversion cycle where, but you were selling to like individuals. Like, oh, I want a computer, Michael, okay, give me your credit card. You got great. I got this money, which we'll talk about in a minute. But now you've moved up and now you're doing enterprise. And some of these companies are huge, like Texaco, like these giant companies. And I remember one point in the book, it was something you were doing like 60 million a year in revenue. And you had like 200 grand in your bank accounts or something. It's like, there's just no cash here. And what was smart is he went to the banks and it was curious, it sounds like he had relationships with the bankers, and I always have this maximum, that relationships. He did. Okay. So relationships were on the world. And you see that over and over again. And so Lee had relationships with these bankers that I assumed in the book and you just verified. But then what I thought he did was really smart. They're like, listen, we trust you, Lee, but we don't know this kid. And his whole point is like, you don't have to even trust me are the kid. He's like, look at all the purchase orders. Like do you think Texaco is going to pay us or not? And using the like the brand and the prestige and the, you know, the essentially the value, like Texaco is not going out of business. They're going to pay them, pay this kid that you say, you don't know, lend us against or receivables. Yeah. It's a really good idea. Yeah. It was receivable based financing. Yeah. The problem was that, you know, as a 21 year old, you know, starting a business with really no capital, you know, infusion from from the beginning, you know, $1,000, right? Yeah. You know, a banker looking at it with no one known inside the business to trust would sort of their, their general actually would be, I think I'll go do something else, right? Yeah. But, you know, Lee had those relationships. He was trusted and he was able to kind of explain it to them and, you know, that helped sort of break open that log gem and that, you know, gave us some of the capital we needed to continue to grow and expand. So can you explain how you stumbled upon the negative cash conversion cycle and why that was so powerful? Yeah. So, you know, we didn't have any capital, right? And so, you know, what, what we, what we figured out was that if we could dramatically shrink our inventory and get paid from our customers faster and, you know, maybe not pay our suppliers, you know, instantly, paying them a little bit later, then if you're growing and you have a negative cash conversion cycle, you actually generate a lot of cash and so that you don't need as much capital to raise to be able to grow the company and you have a high return on capital. We started looking at the business that way and of course we also, there was this really interesting thing where our competitors who didn't really understand what we were doing, they had these elongated supply chains. They had distributors and dealers and so they would have, you know, like 90 days of collective inventory from the time that they actually made the product to when it actually got to the customer. And you could actually understand this because if you opened up the computers, the chips had dates on them that showed the weeks they were made. Well, so, you know, it would say like 42, 92 and that meant it was, that chip was built in the 42nd week of the 92nd year and so you could literally date how old the inventory was by opening these things up. But anyway, so they had like 90 days in their collective supply chain and we figured out how to have like five days, I mean, it was crazy, it was like a massive advantage. Now the other reason this is important is because it turns out that the price of electronic components generally goes down, right, and you know, it's a pretty predictable thing. And so if our components are five days old and the competitors components are 90 days old, well, there's costs a lot more than ours do, right? And so now you've got this structural competitive advantage. Now, another element of this is that you also have the freshest and the newest and the best technology. You're not selling the 90 day old fish or bananas, right? You're selling the new chip, the latest capability. And so now you've got even another advantage, right? And so, and then you've got this feedback loop because you're getting signal from the customers of, oh, I like this, I want that, change this. And so you're able to, you know, create this dynamic feedback loop. So that was what we created and it worked and we kept iterating it and evolving it. The competitors, you know, they, they kind of dismissed it and one of the best things was they, they distant understand it, like they like misunderstood it, which was fantastic. How is that? So I, it's like, I said, you don't want them to understand what's going on. You, you don't want to explain it, but how do you explain, how do you explain their inability to now? Now you can explain it. Yeah. But back then, you don't want to, you don't want them to know what's happening. You just want them to maybe not even see what's going on. So I have a funny story about this and then I want to go back to compact and IBM. So I had dinner with one of the wealthiest people in the world. He's 76 years old. He's been in the family business. He's the second generation of this privately held, like dynasty. And he started working the business since he was six and it was like crazy stories. I started on the shipping, they, they owned one on the largest privately held shipping companies in the world. And he's just rack and tore. He's like super charismatic and just like I was, he was an incredible dinner. But I had found out the same reason when you were like, Hey, I'm writing this book because I want, you know, people to come to Dell to understand the history. They had commissioned the family had commissioned a real author, right? I have some of these books in my house, not from this guy, where these family businesses or, you know, these people bookery companies, they have, they'll hire, you know, an actual author, Pam, whatever, a million dollars, write the book. And then they'll print it just like this, but there'll be no ISVN number on the back because it's not available for sale. So I have a couple of these in my phone library that people have given me because of the podcast. But he was telling me the story. So yeah, we had, we commissioned a biography of the patriarch who passed away a long time ago. And then we did one for me. And I was just like, do give me those books. I'm like lean dead. I was like, I want those books. I was like, I'll crush the episodes, the episodes would be great like, because he had so many crazy stories. Without hesitation, it was absolutely not. I was like, why? He goes, I have no desire to educate my competitors. Yeah. So that you just nailed it. It's like, obviously, if you have an edge, shut up about it. This is what I don't understand. So maybe IBM and Compact are the two people, two main companies that are not understanding the advantage that you had at this time, right? IBM is a big ol' stodgy company. Okay, that makes somewhat more sense. Compact was run by its founder. How do you think he deliberately misunderstood, like, how is that possible for him to not be able to accurately analyze? Do you think he was just dismissive? Maybe he didn't think he was threat? Like, what was going on there? He's still alive. You can go ask him. But I think when you're in a bubble, people tell you things are working, and maybe you just don't want to believe that there's alternate information. And so you dismiss it. Did you read the new biography of Jensen Wong called the New Video? Actually, it's a history of it in video, but he's heavily featured in video-way. I haven't read the whole thing. Okay. I didn't episode on it. I'll send it to you. But he has this whole thing where the threat comes from below, and I think he reduces everything to maximums. He's like a really good communicator. And so this thing is like, we're going to ship the whole cow because the threat goes from below. And I think I mentioned this in the episode I did on your book, where it's like, you at the time came out with a, you just beautifully described, like, you're just stacking one advantage on another advantage on another advantage. You're like, okay, we have the latest technology. We have way better supply chain management than you. We are putting out, I think you put out a computer that out-performed compacts, which you sold direct to the consumer for $795 for Remember Correctly. It was faster than theirs. And they sold a worse computer for 1,500 and it was only through retail stores. It's like that exact, the manifestation of all these advantages you had, you could just look at the market and be like, it's very curious to me how this founder could be like, hey. And you kind of hope that they don't even see it. Yeah. Right. I mean, I think there's a human instinct to say, hey, look at me, I'm doing this great thing, isn't this cool? Right. But actually in business, it's better if the competitor doesn't understand or doesn't see you. So because you weren't in stores, the only way they would know that is if they were ordering directly from you. And they probably weren't doing that. Yeah, or if they were sort of paying attention, but you kind of hope they don't notice and don't pay attention. I think this is tied back to the importance of following like your natural star and something you're just obsessed with because I didn't know that part where you could take these things and see, oh, this is the 42nd week of the 96 year that's insane. Is that the heart of the numbers are right there? It's not that hard for the numbers. You're just sitting there. It's like they're just staring at you. They're talking to you. I 100% agree with you. It's like, but this is different. You need somebody to be obsessed and somebody's not like that guy wasn't taking apart computers compulsively. There's a story in the book and no disrespect to him, I'm not trying to throw any shade to anybody. There's a story in the book where you guys are doing, I think, the private place when I have the IPO and it is Black Friday happens. And I think Lee Walker walks in your office to tell you that, oh shit, they're way a piece of trouble. There's trouble brewing in the capital markets at this point. And he said, Michael was in his office taking apart another computer. That's what you do. That's what you do. That's exactly. I think that's the biggest thing, man. It's like, it's an unfair advantage if you can direct your energy. It's something that you, there's no, we talked about this dinner, we have a mutual friend and Sam Hinky. And one of the things that's interesting about Sam is if you analyze who he keeps around him. They have different interests. You know, it's like there's podcaster dude, this investor guy, this entrepreneur, this like athlete. And he's like, what, what, what I'm drawn to, what all these people have in common, they may not be obvious to you, David, is that there's no end to, like you can't get to the end of what they're interested in. You think you're using it now just like a cup, because you just pour and pour and pour and pour, it's like it just keeps going. Like they can never get to the end of their curiosity. And I think you're a perfect example of that, where if you look at other founders that are doing things for fame or status or whatever the case is, it's like Jerry Sanfano's a great line. He goes, if you just do it for the money, you're only going to go so far. Yeah. When it's like a passion or a recession, there's, there's, you just, there's no end to it. Yeah. And you're, you're taking your chips and analyzing like, oh, I have a 90 days advantage over here. And I'm not worried about the cap on markets because we're just going to keep serving our customers. And like eventually that is going to change. It's not going to be a depression forever. So what can I focus on? I can just focus on understanding what I'm working on, what's in front of me. And then following this deep curiosity, you know, and, and, and actually taking the curiosity that comes from your head into like an actual product that makes somebody else's life better. It's like the miracle of entrepreneurship. You got it. So we, we were just talking about the fact that compact and IBM, they were, they were almost like, essentially, you got fuel from being underestimated. You mentioned in the book that like you found it, I think you said something that's like a powerful, motivate motivating force. You recall why you felt that way? Yeah, it was, it was just, it was just like, okay, wow, this is going to be a multiplier for us because they underestimate us. They don't understand what we're doing. And so they, they didn't see us coming because they were underestimating us, you know. I think the CEO of Compact, you know, would refer to us as a mail order company or, you know, garage operation or whatever, you know, and you hear that and you go, oh, wow, this is, this is great. But I was like, I have no idea what we're doing. All that was motivating, you know, anytime, you know, they were sort of a set back and the conventional wisdom or even whatever interpretation was, okay, you know, they're going to fail, they're going to go out of business, all that incredibly motivating. Is this still like that today? Of course. Yeah. Yeah. Absolutely. I love everything is, of course, and I'm, of course today. Yeah. I mean, if it wasn't, it would probably probably probably be dead, I mean, I mean, and still caring about the company, even from the grave, it's a common, I think, misconception I'm curious to get your take on this, where people are like, well, you know, if you don't raise all the money at the beginning and your competitor does, like, you're automatically dead, and I hear that a lot. I was like, I don't know, like compact raised 75, 100 million, and you had $1,000 and a dorm room. Do you feel that, like, it is actually different today? Like, if you were advising, like, a younger entrepreneur? I think it's very situation-specific in terms of the company industry, et cetera. So I don't think you could give generic advice there. Yeah. That's why I think, like, the generic advice is you have to do this or you're dead. I'm like, I don't, I'm pretty sure that's not the case. I don't think, you know, like I was saying earlier, I don't think there are ever these absolutes. I think you always have to hold out the possibility that somebody is going to figure out some clever interesting way to do something that nobody's ever thought of that is different, and, you know, that's just going to happen. Yeah. That's an actually an interesting area to go down, where it's like, who else, you figured out by accident, like, you know, necessity is the mother of all dimensions, like, I don't have capital, so how do I get money? Well, I just ask my customers for the money, and then you accidentally discovered all these advantages and how to deeper understanding as you went along. Are there any other examples of, like, entrepreneurs or businesses that you've studied, where it's like, wow, that's like a really clever way to do something effectively and expensively? Well, I mean, you think about some of the, some of the retailers, you know, like, you know, Walmart and Costco and Amazon obviously came up with, with the super clever ways of, of winning in that space by, you know, doing things inexpensively, taking out all kinds of cost. Yeah. The other one that came to mind was Sam's and Murray, the Banana King. He essentially, you know, builds the second largest banana empire, and at the time, then later on overtakes the first largest, which is the United Fruit Company. But I guess, like, one thing that he figured out, and he was actually your same age, he was 19 years old. He had no money, and he was trying to figure out a product to sell. And so what he did, he's just like, well, I was working the docs down, I think, in Alabama at the time. And he's like, all these fruit companies, they have these things called Ripes, which are the bananas that are going to go bad in like two days from now. And they just take them off the boat and throw them in the garbage because they can't get it fast enough to the store. And his idea is like, well, I can use this new technology today, which is the railroad. And I can buy this for almost nothing because they're not getting anything anyways. And I'm going to put their ripes and get on the railroad with it and then sell it at every single stop. And then he was generally so much cash, and then he could start working down the line all the way to when he had his own banana plantations. It's just like that idea. It's like it starts out with this little nugget of, oh, this is an interesting opportunity. And not understanding as you pull and pull and pull and pull, and it gets more and more, you keep stacking these advantages one on top of another. Yeah, I got to, I should organize and look into more examples of, is there another example of what you had at the beginning of Dell? Because I think that's the key. I think some degree, it's like the easier, more path is just to go and like sell part of the company or raise more money or find essentially like solve the problem with money where you solve it with like creativity and hustle and like intelligence, those, those ideas are like excessively fascinating to me. Ikea is another one where he, you know, same thing where he was just selling mail order. He's a mail order company. And he has a great line. No, there's that mail order thing again. I know. I think it's like still, so by you, he has a great line where he's like expensive solutions to any problem or a science of mediocrity. So he was like, you have to be more creative. We had this whole thing in the 80s and we called it beat the mail order stigma, really? And it was sort of like as we were establishing our brand, you know, sort of the conventional wisdom was mail order company, which was sort of like a, like an insult, it's like, okay, it's a mail order company and it's sort of like a stereotype, like, oh, you can dismiss it because it's a mail order company, right? And all the press, you know, for years, like mail order company Dell, you know, the mail order company Dell introduces server, you know, like what, like, okay, we have 30,000 patents. When are we not a mail order company? It's like, what is this mail order thing? It's like, so, so anyway, we had to like get rid of that. So how did you beat it? Just kept doing our thing, you know, and and eventually people go, I guess it's not really mail. I mean, it's internet and it's not mail order, I was like, nobody order stuff in the mail. What is it? You just made me realize something that I didn't understand when I read the book. When you were talking about how important it is to, like, not squash ideas and that, you know, ideas can come from anywhere and they can, like, you know, they, they seem small to the kind of huge impact. I think Dell was like one of the first companies to sell on the internet, right? Yeah, well, so we, we were selling direct, right? You know, like people, we call us on the phone and we used to have these rooms with, like, you're selling in fax machines and they would send us the orders on faxes. It was crazy. And they had catalogs, right? And so then, you know, the worldwide web comes along and you websites, you know, like, oh, you mean we can create a website and people can go on there and like the catalog is there and they get like press a button order to think that's the coolest thing ever. We got to do that, right? And so in my first book, you know, it's on every page at the bottom. It said, WWE, WWE, I don't like, I'm sorry, I read that other, I'm just like obsessed with getting people to the website because it just became like the easy way to interact with people. And that book came on 97, right? 99. I think 98. Yeah. Yeah. Yeah. But, you know, we started, we started, you know, with, with one of the first websites. And there weren't many websites. I mean, I remember when there, it was a small number. I remember when you could like go to all the websites, like in the whole world. Yeah. I've done it for the day. Like, there's no more websites. And it's like, kind of, it sounds crazy now, but there, there, there used to be not that many websites. And you could like go to them and like, okay, I'm done, like, there's nothing else to see. That obviously changed quickly. So how the hell do you even build a store? Like you were collecting, do they have to like call a number in? Because I remember like taking credit cards online, maybe not 90. If you were doing, do you remember what year you launched the site? 97, probably 96. I think it was probably 96, 96, 99, and 95, 96, and we had to build the whole thing. Okay. Yeah. Yeah. It's funny. I forgot about the fact that Dell.com is on the bottom of every page. But what's fascinating is if you read Bezos' shareholder letters, it's not, he never refers to it as Amazon. Every single shareholder letter up until, you know, you don't have to do it anymore. And then every single interview, it's Amazon.com, Amazon.com, Amazon.com, then it turns it to Amazon. You just like push you guys to this new thing called the internet where you can buy things. It's such a fascinating like thought, like how novel it was. But you kind of saw it, like right away, like, let's just, we should just do this because it's cool. We had experimented with how do you create an electronic version of the catalog, even like we're going to send you a floppy disk or a CD wall, and you put it in your computer and you loaded up and the catalog is there. Yeah. Right. Those were some of the ridiculous things that happened before the internet or before the World Wide Web. Did you set that? Yeah. Yeah, we did. So you just, kind of like, remember AOL and they just met, like essentially carpet bomb the entire country. Yeah. We did do it like that. Okay. But we were more targeted. Yeah. But, you know, you wanted to make it easy for the customer to understand your offerings and then the World Wide Web just made that, you know, kind of infinitely accessible to anyone. Yeah. The idea of just mailing out a floppy or a disk of a catalog is just like a hilarious idea. But then people were surprised when people started ordering computers online. And I remember, you know, we sold like a server for $50,000 online. People were like, no way. You know, it was like, it didn't happen as fast as some of the things that were happening now. Yeah. But obviously for a business that was selling directly to businesses and, you know, individuals, you know, all of the world, it was just total rocket fuel. How soon into Dell were you starting to sell, like targeting institutions over individuals? You know, it's really interesting. If you go back to the very, very beginning, like the first full year, like over 80% of the business was to businesses. Okay. So it's certainly like doctors and dentists, right? Or lawyers or some of your first, but they were using them for business purposes. An individual doctor, I would think of them as more like an individual, but, well, first of all, that's the level set here. So if you look at all technology spending, roughly 75 to 80% of it is businesses, not consumer. And so that's kind of been the thing for a long time. So within the first year, you got to do the same, similar percentage. Similar percentage. Yeah. You know, there are companies, universities, they were buying 5, 10, 20, 50 machines at the time. One final thing that I want to talk to you about that I think is like one of the most important ideas in your book, especially when you're trying to like push these stories down the generations. So like I see it in a lot of the biographies and I think it's like another misconception how we just talked about the misconception, which is like entrepreneurs know, beware of experts and like how they can kill new ideas, where like a normal person would revere them, right? Like this difference of understanding each other. Another one that I would say is like the importance of ego and self-belief and self-confidence. And my, you know, general society might say, you know, you should generate evidence and then be confident. And I hear this a lot, which is perplexing to me because in the books, this is no, you have that direct, completely backwards. Belief comes before ability. And so I would go back to this part in your book that I think is super important when you're 19 years old and your dad's like, what do you want to do with your life? And you're like, I want to compete with IBM. And you sit there and like, again, I don't think you should be reading these books quickly. Because it's like, there's no test at the end. Like sit with the ideas and really think about what's happening on this page. And I think it's one of the most important pages in the book. I can actually see the page in front of me. And what you realize, you say on that page where it's just like, was I little full, you know, the ideas, like I have $1,000 and then UT, dorm room, and we take on the biggest company in the world. And you said, was I a little full of myself at 19? Sure I was. I think you have to be to do anything important. Can you explain that mindset? Yeah, I think, I think it's a combination of, of, uh, naivete, right? Which is an important element. It's like, you don't know enough to know that maybe this won't work, okay? And confidence, um, but, you know, you never sort of want to go over into the arrogance zone because that's really, I think a dangerous place to be. So it's like, okay, uh, I did not bend in this industry for a long time. And so, uh, you know, all these reasons why it won't work are unknown to me, okay? So that's the naivete part, right? And that can actually be sometimes a good thing, right? Because you're not sort of bound by those conventional thinking, uh, that, that, that maybe you're no longer as relevant or maybe you come up with some clever new way of doing it. And then, you know, the confidence piece is, all right, I'm going to go make it work. I'm going to go figure it out, right? But, you know, there's always that little voice in your head. It's like, well, what if it doesn't work and, you know, what about this? What about this? And so, you know, you never want to sort of assume, okay, this is absolutely going to work no matter what, because then you're going to ignore those sort of voices about, well, what about this? What about that? So, so yeah, it's sort of, I think, a combination of naivete, being real here, confidence and confidence. I think a perfect illustration of that would be your initial reluctance to name the company after you, because it was PC's limited, right, at the very beginning. And it was, it was, it was officially Dell computer corporation doing business as PC's limited, right? Yeah, right. Yeah, but then you realize, like, why don't we just do Dell? And that's when I thought of the Osborne thing, because you're like, wait a minute, this guy named his company after that, like, there's no word of it, it doesn't work. Yeah, but it's interesting, because you just said, it's like, yeah, I have a lot of confidence I'm going to do this, but the doubt never goes away. Yeah. And, and, you know, fear. Thank you. That's actually the last thing I want to talk to you about. When we, one of the first things when we saw each other last month, we talked about, we were like walking around, uh, Zach's office, and I don't know how it came up, but it came out almost immediately. And it wasn't surprised to me because I feel the exact same way. But you fear a failure, in my experience, from setting all these issues to get such players. But I think you said the same. It's just like, the fear of failure to this day is a bigger motivator than, like, the love of success. Yeah. Totally. Yeah, you, you know, you don't, you don't want to fail. Although failing is, is how you learn, you know, pain is the best teacher. And so you, you know, you have to have some, some little failures all on the way. But that, that, that fear of, uh, you know, you can't have it paralyze you where you, you, you don't want to make any decisions because you're afraid to fail. Has that happened to? Not really. No. I, you know, um, you know, what you want to do is, is, is sort of the incremental. And again, it's back to iterating. It's like, okay, uh, we're not sure if this is a good idea. Let's try it. Let's, let's experiment. Let's get started. We'll figure it out. And we're not, you know, betting the whole company on this decision, we're just experimenting. And if it doesn't work, great. We learned something. We move on. It's perfectly sad. Thank you for writing the book. Thank you for the time. I really appreciate Michael. Thank you, David. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review and make sure you listen to my other podcast founders for almost a decade. I have obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.