Dell Computers: Michael Dell (2018)

Before it became fashionable to start a tech company in your dorm room, Michael Dell did exactly that. In 1983, he began selling upgrade kits for PC's out of his dorm at UT Austin. A few months later he dropped out of school to focus full time on the PC business. At age of 27, he became the youngest CEO to head a Fortune 500 company. Today, Dell has sold roughly 700 million computers. PLUS in our post-script "How You Built That," we check back with Vanessa and Casey White, who turned their grandfather's pierogi recipe into Jaju Pierogi, hand-made Polish dumplings that are sold across the Northeast. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, and Happy New Year, everyone. OK, now, just for a moment, think of yourself at the age of, say, 21 or 22. Maybe you're just out of college, or you're in the first few months of a new job. You've got a roommate or two, you're trying to save a bit of money, whatever. OK, now, think about Michael Dell. At the age of 21, he was already running a company that was making, like, $60 million a year, which, every time I say this, just still seems crazy to me. I mean, 21 years old, $60 million, and that was just the beginning for Dell Computers. This story of how Michael built his company, it's the kind of thing that makes you feel like almost anything is possible. This episode first ran in January of 2018.

• 0:48Speaker 01

  You know, here I am, supposed to be going to college, and I've got this thriving business in my dorm room. I was buying computers and souping them up with more capability and then reselling them. So I advertised, I bid on state contracts.

• 1:07Guy Raz?

  How did you know to do all that?

• 1:09Speaker 01

  You know, I don't really remember how I figured that out, but I somehow figured it out.

• 1:20Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:31Guy Raz?

  I'm Guy Raz, and on the show today, how a college freshman turned a dorm room side hustle into Dell, one of the biggest computer makers in the world.

• 1:49Guy Raz?

  Long before anyone heard of the tech wonderkins like Mark Zuckerberg, or Evan Spiegel, or Katrina Lake, back before it was fashionable to drop out of college to pursue your startup, even before people used the term startup, Back in the ancient days of the 1980s, the dorm room miracle story you'd have heard of was Michael Dell's. Now, today, the company is enormous. It's beyond enormous, worth billions of dollars. Dell has sold more than 650 million computers since Michael Dell founded it in 1984. And what's amazing about this isn't the money. It's not even the idea. What's amazing about all this is, well, Michael Dell.

• 2:33Guy Raz?

  Because he's not a backslapping sales guy. He doesn't come across as particularly charismatic. He's actually on the quiet side, maybe even a little shy. Michael grew up in Houston in the 1970s. And this was just as digital technology was taking off in that city with companies like Texas Instruments and then later Compaq. His dad was a doctor. His mom was a financial consultant. And the expectation was that Michael would become a doctor, like his dad. But even from a young age, Michael Dell felt pulled in a different direction. He was into numbers.

• 3:10Speaker 01

  I mean, I remember when I was a small child, my dad had this adding machine. It was a Victor adding machine. This is before the electronic calculator. And I was just fascinated that you could add up numbers with this machine and really big numbers. And so, and it would just, and it would make this mesmerizing sound every time it did it. And I just kind of loved that. And then I remember when I was about seven or eight years old, I bought a calculator. It was the first semiconductor-based calculators. And I was fascinated that this small machine could do complicated math problems. So, yeah, I got, I got very interested in this stuff.

• 3:56Speaker 01

  It also turned out that about equidistant between my junior high school and our, and our house, there was a Radio Shack store. And so when I was riding my bike home, I could stop by the Radio Shack store and see the, you know, early forms of the, of the personal computer and hang out there until they kicked me out of the store.

• 4:18Guy Raz?

  And were you, you know, like, kind of entrepreneurial as a kid?

• 4:21Speaker 01

  Yeah, I, I kind of liked business. And I had all kinds of businesses, you know, selling baseball cards. I had a stamp auction. I got a job at a gold coin and jewelry store. And I was to negotiate with people that were selling things and buy those things the lowest possible price because the owner gave me a percentage of the cut.

• 4:52Guy Raz?

  And I read that you also worked for the local paper for, for some time?

• 4:56Speaker 01

  Yeah. So I got this job working for the Houston Post newspaper. It doesn't exist anymore. Now they think they combined with the Houston Chronicle. And my job, along with hundreds of other, mostly, you know, teenagers, was to call random people on the phone and try to sell them a subscription to the Houston Post newspaper.

• 5:20Guy Raz?

  Right.

• 5:21Speaker 01

  And I observed three things. The first thing I observed is that if you sounded like the people you were talking to, they were much more likely to buy the newspaper from you.

• 5:31Guy Raz?

  Like, like you, you put on a Tex, like a heavy Texas accent?

• 5:35Speaker 01

  Yeah, I'm not going to do it for you here, but I think you can, you can use your imagination.

• 5:40Guy Raz?

  Okay.

• 5:41Speaker 01

  So, second thing I observed was that people that were getting married were much more likely to buy the newspaper. And then the third thing I observed is that people that were moving into a new house or residence were also far more likely to buy the newspaper.

• 5:59Guy Raz?

  Well, how did you know who was getting married and who was moving in?

• 6:02Speaker 01

  Well, you talked to them. You strike up a conversation.

• 6:05Guy Raz?

  Do you just call people and say, and ask them about themselves? I guess this was like, at that time, people were perfectly happy to tell strangers personal details, right?

• 6:14Speaker 01

  Yeah, and so I observed this. And what I figured out is that in Texas, when you, as this is true in many states, when you want to get a marriage license, you have to go to the county courthouse.

• 6:28Guy Raz?

  Ah.

• 6:29Speaker 01

  It turns out this is public information.

• 6:31Guy Raz?

  Right.

• 6:31Speaker 01

  And among the information that you give to the county court is the address that you want the license sent to.

• 6:39Guy Raz?

  Mm hmm.

• 6:40Speaker 01

  So with this information, I devised a direct mail program where I sent letters to all of the people that had applied for marriage licenses in a 16 county area surrounding Harris County, which is where Houston, Texas is. And I hired a bunch of my high school pals, you know, to go out to all these county courthouses and type the names into small Apple II computers. And I sent, you know, a massive direct mail campaign to all those people that were applying to get, you know, marriage licenses.

• 7:22Guy Raz?

  Huh.

• 7:23Speaker 01

  And there were also, at that time in Houston, there was a building boom and there were these very large apartment and condominium complexes that were going up. And so I would go to these buildings under construction and sort of figure out who was in charge and say, hey, I'm from the Houston Post newspaper and, you know, we've got this great offer where your new residents can get the paper free for two weeks. And all they need to do is fill out this little form.

• 7:52Guy Raz?

  You were a high school student when you were doing this?

• 7:54Speaker 01

  Yes.

• 7:55Guy Raz?

  How much money did you walk away with?

• 7:57Speaker 01

  I think I was about 17 years old and I made a little over $18,000 that year.

• 8:03Guy Raz?

  This is like freakishly precocious of a, of a high school senior. Like, it's just weird that you would even know to think of doing those things. I mean, don't, don't you think?

• 8:13Speaker 01

  I didn't really think about it like that. I just, it just seemed like, seemed like a good idea. So I was pursuing it and it was working. I did plenty of things that didn't work, but that worked, so I kept doing it.

• 8:27Guy Raz?

  $18,000. What did you do with that money? I mean, that must have been more money than you'd ever seen in your life.

• 8:34Speaker 01

  I bought a BMW.

• 8:38Speaker 01

  Because I wanted, I wanted a BMW.

• 8:41Guy Raz?

  What did the other students think of you? Did you have this reputation as like the business whiz kid in high school? Or like, what did they think about you?

• 8:51Speaker 01

  You know, I don't really know, and I didn't really care. So I was sort of keeping to myself and, you know, I had a few friends, but I wasn't the most social of kids.

• 9:04Guy Raz?

  But you must have been somewhat social because you were going out and selling stuff to strangers.

• 9:10Speaker 01

  Sure. Social enough to make the sale.

• 9:13Guy Raz?

  Yeah. So you were, on the one hand, doing this entrepreneurial stuff, and then I guess you were also just really into computers?

• 9:21Speaker 01

  Yeah. You know, the original computer that I got my hands on at home was the same one everybody else had, which was the Apple II.

• 9:31Guy Raz?

  The Apple II, yeah.

• 9:32Speaker 01

  Yeah. And one of the beautiful things about the Apple II was that all of the circuits were discrete circuits that you could understand. So you could go in and start to, you know, play with those and modify them and reprogram the BIOS and upgrade the system and take it apart, put it back together. So, you know, and something happened here around 1981. IBM introduced the IBM PC. And that was sort of a very important moment because if you dial back the clock to the late 70s and early 80s, you know, this company IBM had a leadership

• 10:17Speaker 01

  of the part of the economy referred to as information technology, unlike any other company at any other time in history.

• 10:26Guy Raz?

  Wow.

• 10:27Speaker 01

  They were by far the dominant company. So when IBM introduced the IBM PC, this to me seemed to be a very important moment. So I tried to understand everything that was going on about that. And so- When you took apart this IBM PC that was selling for about $3,000, as far as I could tell, it was about $600 worth of parts.

• 10:51Guy Raz?

  Wait, you bought one and you took it apart just to check the insides out?

• 10:55Speaker 01

  Sure, yeah.

• 10:56Guy Raz?

  Yeah.

• 10:56Speaker 01

  What else would you do?

• 10:59Speaker 01

  So you gotta, you gotta take it apart. How can you understand it if you don't take it apart?

• 11:05Guy Raz?

  But like, most people buy computers to like, you know, at that time, I guess, to do basic, you know, accounting and word processing. You bought it to take it apart?

• 11:12Speaker 01

  Well, I wanted to understand it. And, you know, to understand it, you have to take it apart.

• 11:18Guy Raz?

  Huh.

• 11:18Speaker 01

  And I remember in 1981, I was 16 years old. I'd just gotten my driver's license and they had this thing called the National Computer Conference in the Astrodome in Houston. And I, you know, as soon as I got out of school, I would rush over there and they had all of the computer companies of note in the world in the Astrodome and they were showing off their computer equipment.

• 11:48Guy Raz?

  I mean, that's an amazing coincidence because you went to that convention, which happened to take place in Houston that year.

• 11:54Speaker 01

  Just happened to be in Houston that year and it just happened to occur like a couple of months after I got my driver's license.

• 12:00Guy Raz?

  Yeah.

• 12:00Speaker 01

  So, yeah, I mean, there's, there's definitely some luck involved here.

• 12:04Guy Raz?

  Right. And that convention, not only were you there, but Rod Canion went there too, who went on to start Compaq. I mean, Compaq and Dell came out of that convention.

• 12:16Speaker 01

  Yeah. Well, and, and I remember in my chemistry class in high school, the guy sitting next to me was telling me that his dad had just left Texas Instruments to go start this new computer company. And, you know, he was one of the early guys at, at Compaq.

• 12:37Guy Raz?

  Yeah, amazing. So you, so you, obviously you graduate high school and then you go to university, to UT Austin, right?

• 12:46Speaker 01

  Yes. I was a pre-med major and, you know, some of this was the programming from my parents because, you know, my father was a doctor, my older brother was a doctor and... I always thought I'd be a doctor and when I started going to school, you know, my parents weren't around all the time, right? Because I'm in Austin there in Houston and you're pretty far away. So you got a lot of free time on your hands. So I start exploring this whole computer thing further. And one of the things that I noticed about the computer business was that it was very inefficient.

• 13:28Speaker 01

  It took a really long time for the technology to get from the people that made it to the people that were buying it. And it was actually rather expensive and slow to occur. And to me, that was sort of frustrating.

• 13:44Guy Raz?

  So you are a student at UT. You're supposed to be doing pre-med training.

• 13:50Speaker 01

  Right.

• 13:50Guy Raz?

  And you start to think, hey, the PC market, like, there's an opportunity here. Is that what you start to think?

• 13:56Speaker 01

  So I was in this mode of buying computers and souping them up with more capability and then reselling them. And it was just sort of a fun thing to do, a way to make some money. I loved the computers. It was actually working out great.

• 14:18Guy Raz?

  What would you do? You would go and find like secondhand computers and take them apart and rebuild them and then sell them to people?

• 14:27Speaker 01

  No, no, I was buying new computers.

• 14:29Guy Raz?

  Okay.

• 14:29Speaker 01

  And I would upgrade them with more memory. And actually, the main business became putting hard drives in those machines. So back then, the original IBM Personal Computers had no hard disk drives. So what I would do is I would buy a couple of these disk drives and buy a controller card and write some software and make some cables and make a hard disk drive system that you would put inside an IBM computer. And then instead of... To 160K or 320K floppy disk drives, it would have a 10-megabyte hard drive, right? Which at the time was something amazing, right?

• 15:12Guy Raz?

  Yeah.

• 15:13Speaker 01

  Sounds ridiculous today, but 10-megabytes then was, that was like unbelievable.

• 15:19Guy Raz?

  How long would it take you to upgrade one computer, for example?

• 15:23Speaker 01

  Oh, it didn't take that long, you know? Depending on what you were doing, maybe 30 minutes, 45 minutes, something like that.

• 15:30Guy Raz?

  Wow, so you could do a bunch of computers every day?

• 15:33Speaker 01

  Oh, sure. Yeah, no problem. In between classes.

• 15:36Guy Raz?

  But you really weren't studying. You weren't, there's no way you were doing your schoolwork.

• 15:40Speaker 01

  I was, I was definitely slacking off on the schoolwork during that time, yes.

• 15:45Guy Raz?

  But who would you, I mean, how did you find customers? There was no Craigslist, there was no, I mean, you weren't 18 or 19 years old, I guess. I mean, how did you even know who to sell these to?

• 15:56Speaker 01

  I advertised in the, in the local newspaper. I bid on state contracts. And it was kind of funny, the, the state office that was responsible for buying computer equipment and everything else was about three or four blocks from my dorm room. So I could just like walk over there. And they, they would give you all the dockets for all the things that the state wanted to buy.

• 16:21Guy Raz?

  How did you even know how to do that?

• 16:23Speaker 01

  You know, I don't really remember how I figured that out, but I somehow figured it out. And, you know, but my, my biggest customers were universities in the area, doctors, lawyers, you know, architects, things like that. Students weren't really buying computers at the time. And most of the students that I knew, they weren't really interested in computers at the time. That sounds like crazy right now, but this is back in 1983, 1984. There weren't very many people that had personal computers at the time.

• 17:00Guy Raz?

  Okay, I'm hoping that I don't sound like a broken record. But I'm just thinking, Michael, like, here you are. You are an 18-year-old kid. I mean, you probably looked like a baby and you were going around hocking computers. So, like, why would these architects or businessmen or lawyers have taken you seriously?

• 17:20Speaker 01

  Well, I guess they figured I knew what I was talking about. Nobody ever said, "Well, I'm not going to buy from you because you don't look the part" or something. So I think the early adopters of computers were sufficiently technical and geeky that I was able to relate to them in a way that resonated. And so I didn't have any problem.

• 17:45Guy Raz?

  And how much money were you making at the time?

• 17:48Speaker 01

  I was doing about $50,000 to $80,000 a month-

• 17:54Guy Raz?

  Wow.

• 17:55Speaker 01

  -in business when I was in my dorm room.

• 17:57Guy Raz?

  That, I mean, that's just an insane amount of money. I mean, did you tell your parents that you were making this much money?

• 18:06Speaker 01

  Uh, no. No, I didn't. Now, they eventually, going back to late '83, you know, they became very upset with me and said, "You have to stop this and focus on your studies. You've got to get your priorities straight. What are you doing with your life?" And all that stuff. And, you know, I agreed to do that. It was like going cold turkey or something. It just, it lasted about 10 days and I actually realized that this was more than a hobby or a nice way to make some extra cash on the side while I was going to school, but actually something I was very passionate about.

• 18:49Speaker 01

  So during those 10 days, I sort of mapped out, you know, the beginnings of how I was going to, you know, finish up my freshman year, but then launch this as a real official business. And- You know, I eventually made a deal with my parents that if it worked out, I would continue, and if it didn't, I'd go back to school.

• 19:12Guy Raz?

  I mean, I can just imagine how exciting it was. You're 18 and you're selling, you're starting a company, basically, without even realizing it, I guess. What was it that was more exciting? Was it all this money that was coming in, or was it just that you were just selling a bunch of computers?

• 19:29Speaker 01

  Well, it was probably a little bit of everything. I mean, the opportunity for what became Dell Computer Corporation was more and more apparent. And while you couldn't see out three or four years, you could see far enough out that you keep going.

• 19:49Guy Raz?

  So you were, I guess, for the first couple of years, or at least for the first two years, you were just buying off-the-shelf computers and making them better?

• 19:58Speaker 01

  That's right. Well, we started upgrading other people's computers, and then we started making these hard-disk-drive upgrade kits. That became the main business of the company, selling hard-disk-drive subsystems and memory kits to upgrade the computers.

• 20:17Guy Raz?

  When you say, Michael, when you say "we," who were the "we"? I mean, you started this by yourself in your dorm room, and then who did you bring on to help you?

• 20:25Speaker 01

  Well, I always say "we" because that makes it sound like there's more of us. But when I started, "we" was just me. But I hired about one person a week, every week, for the first year or so, and then it became more and more.

• 20:41Guy Raz?

  Yeah.

• 20:42Speaker 01

  And I remember one time, we had this customer who wanted to come visit us. It was Martin Marietta, which is now part of some much bigger company. And the guy wanted to buy like 150 of these kits, which was, for us, a pretty enormous order. And he wanted to come to Austin and see our factory, right, operation.

• 21:06Guy Raz?

  Yeah.

• 21:07Speaker 01

  And so this was a little bit scary because it sort of looked like a massive dorm room.

• 21:14Speaker 01

  It wasn't the most put together place.

• 21:17Guy Raz?

  This is, this was not an actual dorm room, right? Like, you had, by this point, rented out an office space.

• 21:24Speaker 01

  Yeah, yeah, we were growing quickly. And so we, you know, we tried to clean this space up and put on some semi respectable business attire.

• 21:34Guy Raz?

  Yeah.

• 21:34Speaker 01

  So the guy's going through and we're showing him, here's how we format the hard drives and here's how we, you know, ensure the quality controls. And we're sure we can meet your demand for this order for 150 units. And he says, well, what are those? And I said, well, those are the computers that we have to format the hard drives. And by this time, we'd actually been assembling our own computers just to format the hard drives because it became too expensive to buy them from other people. And he said, well, why don't you sell those? And I was like, oh, that's a great idea. I should have thought of that.

• 22:16Speaker 01

  We were so busy making these hard disk drive kits that we hadn't really thought to make our own computers.

• 22:26Guy Raz?

  When we come back in just a moment, how that idea launched Michael down a path that would make Dell one of the biggest computer companies in the world. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.

• 22:52Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So normally, at this point in the show, we start to talk about the slow and steady growth of a business and the early struggles and all the hard work that went into getting it off the ground. But in the mid 1980s, pretty soon after Michael hired his first engineers to start making the first Dell computers from scratch, they were selling so many computers so fast that they started to compete with the biggest name in computing, IBM.

• 23:26Speaker 01

  IBM at the time had a 6 MHz 286 computer that they sold for $3,995.

• 23:34Guy Raz?

  Yeah.

• 23:35Speaker 01

  So we introduced a 12 MHz

• 23:40Speaker 01

  286-based computer and we sold it for $1,995. So our computer was twice as fast and was half the price.

• 23:50Guy Raz?

  How were you able to do that?

• 23:52Speaker 01

  Well, we still made a decent margin selling them. And I think one is we had some clever engineers. And we had this great supply chain that we created. And so when we would sell, let's say, 200 computers in a day, you know, we would give that signal back to our suppliers, who would every day or every few hours deliver parts to our factory.

• 24:21Guy Raz?

  Yeah.

• 24:22Speaker 01

  And then we would, you know, ship those computers out to the customer. So we had a unbelievably efficient supply chain that we created out of necessity because we had no capital. That also meant that we had the freshest parts at the best cost. And as the cost of the materials were coming down, we benefited from that. And we could get the latest technology to the customer faster than anybody else.

• 24:47Guy Raz?

  And you didn't, you were direct to consumer company. You didn't, retail shops were not selling Dell computers, right? You had to call Dell or fax Dell and order a computer.

• 24:58Speaker 01

  At the time, that's right, except most of our business wasn't to consumer.

• 25:03Guy Raz?

  It was to business.

• 25:04Speaker 01

  It was to businesses.

• 25:05Guy Raz?

  Right.

• 25:05Speaker 01

  But that's, what you just said is actually a common misperception. A lot of people thought, oh, only consumers buy from Dell.

• 25:11Guy Raz?

  Yeah.

• 25:12Speaker 01

  That's actually not what was happening. We were selling to all sorts of companies and governments and small and medium-sized businesses. And that was most of our business, even from the beginning.

• 25:24Guy Raz?

  And at that point, like the late 80s, what did you have in mind for the future? Like what was, what were your ambitions for the company?

• 25:33Speaker 01

  Well, we had some pretty big aspirations. The first one was we said we want to expand globally. It was pretty clear to us that, you know, if you were only successful in the United States, that wouldn't be good enough. The second was that we had to go after selling to big companies. Because if you didn't sell to the really big companies and the biggest governments in the world, well, you weren't gonna be a relevant company.

• 26:05Guy Raz?

  Yeah.

• 26:06Speaker 01

  And then the third one was, we said we had to differentiate on the basis of service. And we created this thing called onsite service. And today, it would be a very common thing, but back then, you know, if your computer broke, you had to put it in the trunk of your car, take it back to the computer store.

• 26:26Guy Raz?

  Huh.

• 26:27Speaker 01

  And then they would take it, and then they'd ship it off somewhere, and you'd wait weeks and weeks, and you'd supposedly get it back. And so, we came up with this program where you'd, you know, call us on the phone, this is before the internet, and if you had a problem, we'd help you resolve it on the phone. And if we weren't able to resolve it on the phone, we'd send a technician with parts to your location to fix your computer onsite. And we did that all across the United States. And, you know, we thought, the minute we announced this, our sales will double, you know, because it was like so much better than what we were doing before. And they didn't double instantly, but after about three months, they doubled. So...

• 27:09Guy Raz?

  Wow. I wanna, I wanna put this into perspective, because, you know, we, we think about, like, really young entrepreneurs, and we think, many people think Mark Zuckerberg, or the guys who made Instagram. You're 21 years old. I mean, you're, at that time, Dell was already doing, like, multiple, like, what, 10, 20, 30 million dollars in sales a year?

• 27:33Speaker 01

  I think it was 66 million that, that year. And I was, I was 21.

• 27:39Guy Raz?

  66 million dollars. I mean, just for a moment, you know, have an out-of-body experience for a moment. And, and don't think about you, but think about this 21-year-old named Michael Dell, who's running a 66-million-dollar company. I mean, it is... Unbelievable, right? I mean, it's almost implausible to imagine that happening.

• 28:01Speaker 01

  Yeah, certainly some, but I was more focused on the future and thinking about, how do we become three times larger or 10 times larger? What new products are we going to launch into? Do we have the right talent? How do we expand and get more salespeople?

• 28:22Guy Raz?

  What was your lifestyle like at that time? I mean, did it change? Were you still living like a 21-year-old? Or all of a sudden, did you buy a giant mansion? And how did it change the way you lived?

• 28:34Speaker 01

  You know, I wouldn't say massive changes. I did buy a nice house. I wasn't wanting for things, but I didn't really have a lot of time to consume things. And wasn't really focused on that.

• 28:50Guy Raz?

  I mean, it sounds like you were so busy that you were just, your whole, everything that you were doing was this job. And I mean, I'm assuming you didn't even have a personal life at that time, probably. You were just working all the time.

• 29:02Speaker 01

  Yeah, that's a valid assumption. I did, a couple of years later, take a little time off and managed to find a fantastic partner and get married and have kids and all that. And that's been an amazing part of my life. And I was actually motivated to do this in part by Steve Jobs and Bill Gates.

• 29:28Guy Raz?

  Really?

• 29:29Speaker 01

  Yeah, and the reason I was motivated to do it because of them was because they were not married. And they were about 10 years older than I was. And having had the experience that I had as a child with my family, that's what I wanted. I wanted that family. I wanted that experience. And I didn't want to be... A single guy in his 30s or beyond that didn't have that.

• 29:59Guy Raz?

  What would stress you out at that time? Because it seems like you're so even keeled that you don't actually sound like you get stressed out. But I have to imagine there were things that would stress you out.

• 30:09Speaker 01

  Oh, we had plenty of stresses. I mean, I remember one time we got this letter from something called the Federal Communications Commission.

• 30:19Guy Raz?

  Uh huh.

• 30:20Speaker 01

  The FCC. And apparently, you know, computers fall under something called the Federal Communications Commission Class B Device, which means they have to be approved by the FCC. So I did not know this. You know, they basically said, you have to stop making these things.

• 30:40Guy Raz?

  Wow, when was this?

• 30:41Speaker 01

  This was back like in 86, 87. So if we had followed their instructions, you know, we wouldn't be on this podcast today.

• 30:50Guy Raz?

  You'd be out of business, yeah.

• 30:51Speaker 01

  Yeah, so fortunately, I had some pretty smart, you know, guys who sort of said, well, what you need to do is call this lawyer in Washington and he's going to help you fix this. So I called up this guy and he'd been one of the prior commissioners of the FCC. And he said, okay, here's what you need to do. You need to go down to this test range. You need to test your computers immediately and you need to submit an application right away. And make sure they comply, by the way. And so we did all that. And then he went to the FCC and said, hey, you know, these guys are honest, forthright people. They just didn't know. And now they filed their application. They want to do the right thing and here's what we're doing.

• 31:36Speaker 01

  And we were able to work through it. So, yeah, I mean, in the first three, four, or five years, there were actually several things like that. I remember there was a thought at the time that, oh, wow, IBM is going to take back this whole idea of the personal computer and it won't be an open ecosystem anymore. And, you know, we could all, you know, poof, be out of business. Well, that didn't really materialize.

• 32:05Guy Raz?

  So you guys decided to go public, I guess, in 1988. You do an IPO and raised tons of money. And why did you decide to do that, by the way? Because at that point, you, I guess, owned the entire company.

• 32:18Speaker 01

  Well, we needed the capital. We were growing at like 80% per year. And the company was only four years old. And we were expanding into all sorts of new countries. We were expanding into new product lines. And we also wanted to be more of a peer with our customers. And being a public company somewhat enabled us to do that because customers could look and see that we were a real legitimate company. That was helpful at the time.

• 32:52Guy Raz?

  Well, here's what I think is hard for lots of people to wrap their head around, which is you were expanding by an order of magnitude every year. There was huge amount of revenue coming in, but yet that wasn't enough cash and capital for you guys to expand.

• 33:08Speaker 01

  Sure, all the revenue is not profit. We weren't a software company. And so we did need some capital to finance the growth of the business and hire more people, open new offices, open new factories, build IT systems. We absolutely needed some capital.

• 33:27Guy Raz?

  And by getting that money, were you able to say, "Okay, now we're going to beat IBM. We're going to be bigger than IBM"?

• 33:33Speaker 01

  Well, we definitely wanted to be the biggest. And I would say it changed a little bit in that timeframe to competing with Compaq. And one of the things I think I learned along the way was that if you obsess on the competitors, you could be making a really bad mistake.

• 33:57Guy Raz?

  Huh.

• 33:58Speaker 01

  And I think that was definitely true in the case of those two, in the sense that... We had a better business model and if we were trying to, you know, just look at them, we would miss opportunities by not listening to our customers. And how did we get from a company that started in a dorm room to having a half a billion dollars in sales? Well, we did it because we listened.

• 34:24Guy Raz?

  Yeah.

• 34:25Speaker 01

  And we learned.

• 34:26Guy Raz?

  So I guess by the year 2000, end of 2000, so 2001, Dell Computers PCs becomes a number one brand by sales, by market share, more than Compaq, more than IBM.

• 34:41Speaker 01

  Yes.

• 34:42Guy Raz?

  What did you, do you remember finding that out?

• 34:45Speaker 01

  Yeah, you know, we sort of have this celebrate for a nanosecond, you know, sometimes a little longer, but you know, we were focused on how do we keep growing? How do we expand into servers and storage and services and software? And how do we solve the next unsolved problems? And 2001, we would have been thinking a lot about China, you know, and India and the emerging markets and.

• 35:15Guy Raz?

  Yeah.

• 35:16Speaker 01

  So there wasn't a lot of dwelling on any particular success.

• 35:20Guy Raz?

  So, I mean, the company, you know, the story of Dell is just pretty remarkable because it seems like from the moment you started selling PC's out of your dorm room until 2001, it's just success after success after success. Like there was no moment of failure. There was no, there was no real struggle. Is that true? Is that, is that right?

• 35:43Speaker 01

  No, that's not right at all. There were plenty of struggles and certainly if you go back and look at the history there, you'll find all kinds of missteps along the way and dead ends and mistakes, you know.

• 35:58Guy Raz?

  What was the dumbest mistake you did, you made? Because it doesn't, I mean, Michael, I'm being honest with you. It doesn't sound like you made any mistakes. It sounds like you were preternaturally gifted as a high school kid to understand business. And then you understood computers and then you just started this successful company. So what was a, what was a mistake you made?

• 36:17Speaker 01

  Okay, so 1989, we created something called Dell Unix.

• 36:23Guy Raz?

  Which was a, which was a software?

• 36:25Speaker 01

  Yeah, yeah, you know, this, this was sort of prior to the whole Linux wave.

• 36:30Guy Raz?

  Yeah.

• 36:30Speaker 01

  And Unix was a well-used operating system in mid-range computer systems. You know, turns out we were really early at that and that was, that was a really bad idea. And it was a kind of a horrible misadventure.

• 36:46Guy Raz?

  Did it cost the company money? Did it affect the stock price?

• 36:50Speaker 01

  Sure, yeah, all that. You know, around the same time, we also had a wildly ambitious engineering program that our team had cooked up. And it was too big of a technical leap.

• 37:04Guy Raz?

  Yeah.

• 37:04Speaker 01

  And the project failed. It was a project called Olympic. We had problems with our inventory control early on. You know, we had all kinds of mistakes. Fortunately, none of them were fatal. And one of the things I learned a long, long time ago, you know, when you find a problem, fix it as fast as you find it. And look, when you're pioneering in a new area with a new business model, there's no playbook. There's no, you know, you, you have to just learn by doing. And you have to intuit and experiment your way through the problem.

• 37:42Guy Raz?

  I'm curious about 2004 because you, you stepped down as the CEO of Dell. I mean, you, the company is just, it's a, obviously a Fortune 500 company. It's been already for more than a decade. Huge revenues. Did you just think, okay, I've made it. I'm 39, time to move on and start a different phase of my life?

• 38:02Speaker 01

  Not really. You know, I didn't really think about it as stepping down. I had this partner in the company, Kevin Rollins, who was the president of the company. He and I were running the company together. And I decided, okay, you be CEO for a while. I'll be chairman. I'll still be very involved. And after about two years, you know, the industry started changing pretty rapidly. And the board, you know, came to me and said, you know, hey, we think you should go back to being CEO.

• 38:34Guy Raz?

  Yeah, I mean, I mean, what what happened during that time? Because by all accounts that I've read, there was a decline. I mean, 2004 Dell starts to lose market share. And then a couple of years later, HP becomes the number one PC seller. And then you come back in 2007. So what was going on in those three years?

• 38:55Speaker 01

  Well, I think the market was changing. I think there were new things starting to emerge. The cloud, you know, what people call the cloud today, you know, was starting to show up. I think we weren't being aggressive enough in changing the business, given the shifts that were happening.

• 39:15Guy Raz?

  Yeah.

• 39:16Speaker 01

  You know, it's a change or die business. It's a quick or dead business. And the board asked me to come back into the CEO role and I was happy to do it.

• 39:26Guy Raz?

  But I've read that, that like around that time, the the quality and the service of Dell was was in decline. Like, the company was getting a lot of heat. And I'm sure you saw that criticism. So how did you, how did you deal with that?

• 39:40Speaker 01

  Look, I think, I think you can, in any anecdote, you know, extrapolate. But there were definitely some areas where we could have been investing more in innovation. And we, you know, changed the focus of the company, starting around 2007, to understand, you know, what we needed to do to be, you know, an important and relevant company in the future. And so, look, I felt then and feel now a deep sense of responsibility and commitment to the company. And I'll care about the company after I'm dead.

• 40:18Guy Raz?

  What does that mean? I'll care for the company after I'm dead?

• 40:21Speaker 01

  It means that, you know, this is a lifelong pursuit for me in terms of, you know, helping the company reach its full potential. And, you know, certainly, my dream is that the company persists well beyond my lifetime, which. You know, I'm still a pretty young guy, so I think that's many years away.

• 40:40Guy Raz?

  I wonder, Michael, how much of your success has to do with, you know, your hard work and your brains and, you know, intuition? And how much of it is luck?

• 40:52Speaker 01

  Good question. I don't really know.

• 40:55Speaker 01

  I'm sure there's some, you know, element of luck there. I've probably been lucky a lot. You know, I feel like I was really lucky to be born in the United States. That's probably the biggest stroke of luck right there. Because I think in the United States, when you're 20 years old and you show up and you want to sell something to somebody, you know, they don't look at you too funny. So I think that was my biggest stroke of luck, was just being born here in this country and having the opportunity and the freedoms that that's afforded me.

• 41:32Guy Raz?

  That's Michael Dell. And if you still think of a Dell computer as the nerdy John Hodgman character in those PC versus Mac commercials, Dell computers have actually been used by the good guys in the Jason Bourne movies and Spider-Man, Captain America, even Mission Impossible. In fact, a few years ago, in 2016, Dell was the number one brand featured in movies, more than Sony, more than Mercedes-Benz or Adidas, and yes, more than Apple Max.

• 42:11Guy Raz?

  Hey, thanks for sticking around because it's time now for How You Built That. And today, we're updating a story that first ran about a year and a half ago about two sisters in Lynn, Massachusetts, who had perfected a family recipe.

• 42:23Speaker 02

  I make the stuffings.

• 42:25Guy Raz?

  That's Casey White.

• 42:26Speaker 03

  And I make the dough.

• 42:27Guy Raz?

  And that's her sister Vanessa. And the dough and the stuffing, they are for pierogies, those Polish dumplings filled with cheese and potatoes, sometimes sausage. Their grandfather used to sell them at the family deli in western Massachusetts.

• 42:41Speaker 03

  In middle school, I would go there on Saturdays and help pinch pierogies. And we always had them in our freezer, kind of like our Kraft macaroni and cheese, except we just had frozen pierogies.

• 42:52Guy Raz?

  And when Vanessa and Casey went off to college, their mom would bring them coolers full of pierogies from the deli. And by the time they graduated, they were still eating them, and their friends were too. And sure, they could get pierogies at Trader Joe's or wherever, but who wanted those?

• 43:08Speaker 03

  There wasn't really anyone making pierogies like family used to make. And we finally said, it was one of those ideas where you're like, someone's definitely going to do this. And then we realized after a while that no one was really, maybe we should do it.

• 43:22Guy Raz?

  Maybe they should make pierogies and sell them. OK, so at this point, it was 2015, and Vanessa and Casey's grandfather was no longer alive. But he had written all of his recipes out by hand. So they went to the deli, and they got them.

• 43:38Speaker 03

  We brought them back to my house and caked my table in flour.

• 43:44Guy Raz?

  And so began the pierogi making. For 10 hours every Sunday, Vanessa would do the dough.

• 43:50Speaker 03

  It should be not too thick, not too chewy.

• 43:53Guy Raz?

  And Casey would do the fillings.

• 43:55Speaker 03

  It started with three flavors, potato and cheese, the pineapple and cheese, and sweet potato caramelized onion.

• 44:02Guy Raz?

  Wait, I do not believe they grow pineapples in Poland.

• 44:05Speaker 03

  It is very strange.

• 44:07Guy Raz?

  Yes, definitely not something you would find back in the old country. But it actually was one of their grandfather's recipes. Anyway, every weekend, Casey and Vanessa would make the pierogies, freeze them, and then sell them at the farmer's market in Melrose, Massachusetts.

• 44:21Speaker 03

  We went to our first farmer's market with about 50 boxes and sold out in an hour and realized that there was a market.

• 44:27Guy Raz?

  And one reason they were selling so fast?

• 44:30Speaker 03

  I think dumplings are the ultimate comfort food, whether it's ravioli, or it's empanadas, or it's Asian dumplings.

• 44:36Speaker 02

  Dumplings. It's a very nostalgic food.

• 44:39Guy Raz?

  So anyway, all that year, Vanessa and Casey would make and sell pierogies on the weekend and then go to their office jobs during the week.

• 44:46Speaker 02

  But there was a point where we had to go to the next step because we were just making only, you know, we could only make so much in that, that long 10-hour day. We couldn't grow it unless we kind of took the leap of faith. So we quit our jobs.

• 44:59Guy Raz?

  And after taking that leap, the sisters moved their pierogi operation from Vanessa's house to a commercial kitchen in Gloucester, Massachusetts. They hired a few people to help them make more pierogies, but Vanessa, she is still doing the dough.

• 45:14Speaker 02

  Stretching it out, running it through the dough sheeter, and then cutting those circles, thousands of circles a day for the rest of our staff to fill and pinch.

• 45:23Guy Raz?

  Vanessa and Casey call their company Jajiu Pierogies. Jajiu is the Polish word for grandfather. And since we last talked to them, they've shifted their business from retail to wholesale, which means they're focusing on large distributors like stadiums and grocery stores. In fact, they're about to launch in their first grocery stores next month, with fingers crossed on a possible contract with a stadium coming up. And by the way, that pineapple and cheese stuffing, they no longer make it.

• 45:51Speaker 02

  Apparently, people don't like pineapple with their cheese. Like, we went to Poland a few years back, and neither of us saw pineapple on any menu.

• 46:00Guy Raz?

  If you want to learn more about Jajiu Pierogies, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at [email protected]. And if you want to send a tweet, it's at how I built this or at Guy Raz. Our show was produced this week by Rund Abdelfatah, with music composed by Runtin Marablooey. Thanks also to Candice Lim, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Sequoia Carrillo. I'm Guy Raz, and you've been listening to How I Built This.