Dell Computers: Michael Dell

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 gave up his plan of being Pre-Med, and dropped out of school to focus on the PC business. At age of 27, he became the youngest CEO to head a Fortune 500 company. Today, Dell has sold more than 650 million computers. PLUS for our postscript "How You Built That," how Hannah England turned a common parenting problem into Wash. It. Later. — a water-tight bag for soaking soiled baby clothes before they stain. 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.

• 0:01Guy Raz?

  Hey, really quickly, before we start the show, some of you have been asking about our Columbus, Ohio show coming up on February 8. That's supported by American Express Open. That show is with Jenny Britton Bower, the founder of Jenny's Splendid Ice Creams. The show was sold out, but good news, we're going to be releasing a few more tickets. You can get them at nprpresents.org. All right, here's the show.

• 0:28Speaker 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.

• 0:50Guy Raz?

  How did you know how to do all that?

• 0:53Speaker 01

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

• 1:03Guy Raz?

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

• 1:15Guy 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.

• 1:31Guy 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.

• 2:16Guy 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.

• 2:52Speaker 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.

• 3:35Speaker 01

  So, yeah, I got, I got very interested in this stuff. 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.

• 4:00Guy Raz?

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

• 4:04Speaker 01

  Yeah, 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.

• 4:34Guy Raz?

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

• 4:38Speaker 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. My job, along with hundreds of other, mostly teenagers, was to call random people on the phone and try to sell them a subscription to the Houston Post newspaper.

• 5:03Guy Raz?

  Right.

• 5:04Speaker 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.

• 5:14Guy Raz?

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

• 5:17Speaker 01

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

• 5:22Guy Raz?

  Okay.

• 5:23Speaker 01

  So, second thing I observed was that people that were getting married were much more likely to buy the newspaper.

• 5:31Guy Raz?

  Huh.

• 5:32Speaker 01

  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.

• 5:41Guy Raz?

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

• 5:45Speaker 01

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

• 5:47Guy Raz?

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

• 5:56Speaker 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.

• 6:10Guy Raz?

  Ah.

• 6:11Speaker 01

  And it turns out, this is public information.

• 6:13Guy Raz?

  Right.

• 6:14Speaker 01

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

• 6:21Guy Raz?

  Mm-hmm.

• 6:22Speaker 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.

• 7:04Guy Raz?

  Huh.

• 7:05Speaker 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.

• 7:34Guy Raz?

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

• 7:36Speaker 01

  Yes.

• 7:37Guy Raz?

  How much money did you walk away with?

• 7:39Speaker 01

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

• 7:45Guy Raz?

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

• 7:56Speaker 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, but that worked, so I kept doing it.

• 8:10Guy Raz?

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

• 8:16Speaker 01

  I bought a BMW.

• 8:21Speaker 01

  Cause I wanted, I wanted a BMW.

• 8:23Guy Raz?

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

• 8:34Speaker 01

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

• 8:46Guy Raz?

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

• 8:53Speaker 01

  Sure. Social enough to make the sale.

• 8:56Guy Raz?

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

• 9:03Speaker 01

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

• 9:13Guy Raz?

  The Apple II, yeah.

• 9:15Speaker 01

  Yeah. And one of the beautiful things about the Apple II was that all of the circuits in the Apple II 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, when you would take apart the, 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

• 9:58Speaker 01

  late 70s and early 80s, you know, this company IBM had a leadership of the part of the economy referred to as information technology, unlike any other company at any other time in history.

• 10:13Guy Raz?

  Yeah.

• 10:14Speaker 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.

• 10:38Guy Raz?

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

• 10:42Speaker 01

  Sure, yeah.

• 10:43Guy Raz?

  Yeah.

• 10:44Speaker 01

  What else would you do?

• 10:45Guy Raz?

  Yeah.

• 10:46Speaker 01

  So you gotta, you gotta take it apart.

• 10:49Guy Raz?

  Yeah.

• 10:50Speaker 01

  How can you understand it if you don't take it apart?

• 10:52Guy 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?

• 10:59Speaker 01

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

• 11:05Guy Raz?

  Huh.

• 11:06Speaker 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.

• 11:35Guy Raz?

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

• 11:41Speaker 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.

• 11:47Guy Raz?

  Yeah.

• 11:48Speaker 01

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

• 11:52Guy Raz?

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

• 12:03Speaker 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 Compaq.

• 12:24Guy Raz?

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

• 12:34Speaker 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, you know, a lot of my cousins were doctors. And I always thought I'd be a doctor. And, and when I started going to school, you know, my parents weren't around all the time, right? Because I'm in Austin, they're 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.

• 13:19Speaker 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.

• 13:34Guy Raz?

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

• 13:39Speaker 01

  Right.

• 13:40Guy Raz?

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

• 13:46Speaker 01

  So I was in this mode of buying computers and souping them up with more, you know, 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. And it was actually working out great.

• 14:09Guy 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?

• 14:18Speaker 01

  No, no, I was buying new computers.

• 14:20Guy Raz?

  Okay.

• 14:20Speaker 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 two 160K or 320K floppy disk drives, it would have a 10 megabyte hard drive, right? Which at the time was something amazing, right?

• 15:03Guy Raz?

  Yeah.

• 15:04Speaker 01

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

• 15:09Guy Raz?

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

• 15:14Speaker 01

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

• 15:23Guy Raz?

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

• 15:25Speaker 01

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

• 15:28Guy Raz?

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

• 15:32Speaker 01

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

• 15:37Guy Raz?

  But who would you, I mean, how did you find customers? There was no Craigslist. There was no, I mean, you were 18 or 19 years old, I guess. I mean, how did you even know who to sell these to?

• 15:49Speaker 01

  I advertised in the, in the local newspaper. I bid on state contracts. And it's 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.

• 16:14Guy Raz?

  How did you even know how to do that?

• 16:16Speaker 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.

• 16:52Guy Raz?

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

• 17:14Speaker 01

  Well, I guess they figured I knew what I was talking about. You know, I, 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, in a way that, that resonated. And so, I didn't have any problem.

• 17:38Guy Raz?

  And how much money were you making at the time?

• 17:41Speaker 01

  I was doing about $50,000 to $80,000 a month in business when I was in my dorm room.

• 17:50Guy Raz?

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

• 17:59Speaker 01

  Uh, no. No, I didn't. Now, that, you know, they, they eventually, going back to late 83, you know, they became very upset with me and said, "You have to stop this and, and focus on your studies." Said, "You gotta get your priorities straight, you know, what are you doing with your life?" And all that stuff. And, you know, I agreed to do that. You know, 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.

• 18:43Guy Raz?

  Huh.

• 18:43Speaker 01

  So during those 10 days, I, I sort of mapped out, you know, the, 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 I would do that. And if it worked out, I would continue. And if it didn't, I'd go back to school.

• 19:08Guy Raz?

  I mean, it, it, I can just imagine how exciting it was. You're 18 and you're selling, you're, you're starting a company, basically without even realizing it, I guess. What, 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?

• 19:25Speaker 01

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

• 19:46Guy Raz?

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

• 19:54Speaker 01

  That's right. You know, 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, and memory kits to upgrade the computers.

• 20:12Guy Raz?

  When you say, Michael, when you say we, who, who, 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?

• 20:21Speaker 01

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

• 20:37Guy Raz?

  Wow.

• 20:38Speaker 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, you know, for us, a pretty enormous order. And he wanted to come to Austin and see our factory, right, you know, operation.

• 21:02Guy Raz?

  Yeah.

• 21:02Speaker 01

  And so this was a little bit scary because it sort of looked like a massive dorm room. You know, it was, it wasn't the most put together place.

• 21:13Guy Raz?

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

• 21:19Speaker 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.

• 21:29Guy Raz?

  Yeah.

• 21:30Speaker 01

  So the guy is 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.

• 22:12Speaker 01

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

• 22:22Guy 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.

• 22:49Guy 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.

• 23:22Speaker 01

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

• 23:31Guy Raz?

  Yeah.

• 23:31Speaker 01

  So we introduced a 12 megahertz 286-based computer and we sold it for $1,995. So our computer was twice as fast and was half the price.

• 23:47Guy Raz?

  How were you able to do that?

• 23:49Speaker 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, we would give that signal back to our suppliers who would every day or every few hours deliver parts to our factory.

• 24:18Guy Raz?

  Yeah.

• 24:19Speaker 01

  And then we would ship those computers out to the customer. So we had an 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.

• 24:44Guy Raz?

  And you didn't, you were a 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.

• 24:54Speaker 01

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

• 24:59Guy Raz?

  It was to business.

• 25:00Speaker 01

  It was to businesses.

• 25:02Guy Raz?

  Right.

• 25:02Speaker 01

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

• 25:08Guy Raz?

  Yeah.

• 25:08Speaker 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.

• 25:20Guy 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?

• 25:29Speaker 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 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 going to be a relevant company.

• 26:02Guy Raz?

  Yeah.

• 26:03Speaker 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.

• 26:23Guy Raz?

  Huh.

• 26:24Speaker 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 would 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.

• 27:06Guy Raz?

  Wow. I want to, I want to 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 were 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?

• 27:31Speaker 01

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

• 27:36Guy Raz?

  66 million dollars. I mean, just for a moment, you know, have an out-of-body experience for a moment. 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.

• 27:58Speaker 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?

• 28:19Guy 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?

• 28:31Speaker 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.

• 28:47Guy 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.

• 28:59Speaker 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.

• 29:26Guy Raz?

  Really?

• 29:26Speaker 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.

• 29:56Guy 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.

• 30:07Speaker 01

  Well, we had plenty of stresses. I mean, I remember one time we got this letter from something called the Federal Communications Commission, 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. And, you know, they basically said, you have to stop making these things.

• 30:39Guy Raz?

  Wow, when was this?

• 30:40Speaker 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.

• 30:49Guy 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.

• 31:35Speaker 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.

• 32:04Guy 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.

• 32:51Guy 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.

• 33:26Guy 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 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. You become number one, more than Compaq, more than IBM.

• 34:43Speaker 01

  Yes.

• 34:43Guy Raz?

  What did you, do you remember finding that out?

• 34:47Speaker 01

  Yeah, you know, we sort of have this celebrate for a nanosecond.

• 34:53Speaker 01

  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 you know, 2000, 2001, we would have been thinking a lot about China, you know, and India and the emerging markets.

• 35:17Guy Raz?

  Yeah.

• 35:18Speaker 01

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

• 35:23Guy 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?

• 35:46Speaker 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.

• 36:01Guy 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 mistake you made?

• 36:20Speaker 01

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

• 36:27Guy Raz?

  Which was a software?

• 36:28Speaker 01

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

• 36:33Guy Raz?

  Yeah.

• 36:34Speaker 01

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

• 36:51Guy Raz?

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

• 36:54Speaker 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.

• 37:08Guy Raz?

  Yeah.

• 37:09Speaker 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 have to just learn by doing. And you have to intuit and experiment your way through the problem.

• 37:46Guy Raz?

  I'm curious about 2004, because you stepped down as the CEO of Dell. You're, I mean, 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, OK, I've made it. I'm 39. Time to move on and start a different phase of my life?

• 38:07Speaker 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 we did everything 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.

• 38:42Guy 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?

• 39:02Speaker 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.

• 39:23Guy Raz?

  Yeah.

• 39:24Speaker 01

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

• 39:33Guy 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, I'm sure you saw that criticism. So how did you, how did you deal with that?

• 39:47Speaker 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, I felt then and feel now a deep sense of responsibility and commitment to the company. And I'll, I'll care about the company after I'm dead.

• 40:26Guy Raz?

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

• 40:29Speaker 01

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

• 40:49Guy Raz?

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

• 41:01Speaker 01

  Good question. I don't really know. I'm sure there's some element of luck there. I've probably been lucky a lot. 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, you have an opportunity to start a business. And when you're 20 years old and you show up and you want to sell something to somebody, 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.

• 41:46Guy Raz?

  That's Michael Dell. And lest you 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, in Spider-Man, Captain America, even Mission: Impossible. In fact, 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.

• 42:27Guy Raz?

  And please do stick around because in just a moment, we're going to hear from you about the things you're building.

• 42:37Guy Raz?

  Hey, thanks so much for sticking around. And before we jump into this installment of How You Built That, just a quick warning, if you are a parent of small children, you are about to hear about poop and barf. Because those two things are at the very heart of Hannah England's business. She has two small children of her own, three and eight months. And if you've ever wondered what happens inside one of those family changing rooms at the airport, well...

• 43:05Speaker 02

  I walked into the bathroom and there were two moms. One was at the changing station and her baby had just had a blowout, like major, like up the back, all the way to the neck, kind of a thing. And this is going to be a situation that every mom gets themselves into.

• 43:26Guy Raz?

  And by the way, every dad, I mean, I've been there. And here's the thing, once you've cleaned up your kid, what are you supposed to do with all those soiled and disgusting clothes, especially when you're not at home?

• 43:38Speaker 02

  You know, you kind of just cringe when you have to stick that in your diaper bag. And then when you have to open it after a full day, I mean, it is not pleasant.

• 43:47Guy Raz?

  Not to mention, after the clothes have festered in your diaper bag for a day, it may become impossible to get the stains out of them. Anyway, all of this got Hannah thinking.

• 43:58Speaker 02

  I came up with this idea when I was putting my three-year-old to bed. And I came out to the living room and I just started describing to my sister-in-law and my husband this bag, this soaking bag. And I kept filling in the blanks. What if we could, and what if it had this? And then they looked at me and they're like, well, it sounds like you just invented it.

• 44:21Guy Raz?

  And what Hannah envisioned was a watertight, plastic bag that you could keep in your diaper bag. It would have a soap pod in it, kind of like the pod that goes into your dishwasher, so that when your kid pooped or barfed all over her clothes, you would just throw it in the bag, add water, and voila, the clothes would soak in soapy water while you went about your day.

• 44:42Speaker 02

  And then I kind of just hit the ground running because I thought, I need this in my life.

• 44:49Guy Raz?

  So about a year ago, she started calling around to different manufacturers. They sent her a bunch of samples of plastic bags, and she and her husband began to test them.

• 44:58Speaker 02

  We'd immediately fill it with water and seal it and hang it upside down in our living room and kitchen to look for drips and leaks because we want these things to be able to hold up in a mom's diaper bag, and that's like going to combat.

• 45:14Guy Raz?

  But in those early days, nothing worked. The bags would break, or the zippers would come undone, and water would get everywhere. So Hannah kept calling around until she found one manufacturer in Wisconsin who seemed to know exactly what she needed.

• 45:30Speaker 02

  And he goes, well, I think we're going with a seal that's actually really aggressive for your utility. And I said, exactly. I want it to be aggressive.

• 45:38Guy Raz?

  A seal so aggressive that you would have to use scissors to get it open. And then Hannah found another manufacturer to make a very gentle soap pod. And finally, she designed the outside of the bags with classy black and white stripes.

• 45:54Speaker 02

  I wanted the design itself to not scream like, okay, this is a bag for soiled poop.

• 46:01Guy Raz?

  She then launched a Kickstarter campaign to raise about $12,000. And for a while, it looked like she wasn't going to make her goal. But then, kind of an amazing thing happened. The accounting software company, QuickBooks, found out about her. And QuickBooks has this program where it supports small businesses. And so someone from QuickBooks sent her a message via Kickstarter that basically said, hey, we're going to back you for the rest of the way.

• 46:25Speaker 02

  It just showed up on our Kickstarter thing. And my husband, of course, was going, nope, this is some weird fraud thing. And I laughed at him. And I'm like, what kind of fraud puts money into your bank account? Normally, they take money out.

• 46:40Guy Raz?

  Hannah was right. It was not a fraud. And just a few weeks ago, she shipped her very first production run, about 5,000 bags, to those Kickstarter backers. And if you want to find out more about Hannah and her company, Wash It later, check out our Facebook page. And of course, if you want to tell us your story, go to build.npr.org. We love hearing what you're building. And thanks for listening to our show this week. If you want to find out more or hear previous episodes, you can go to howibuiltthis.npr.org. Please also subscribe at Apple Podcasts or however you get your podcasts. You can write us. Our email address is [email protected]. Our Twitter address is @howibuiltthis. Our show was produced this week by Rund Abdelfatah.

• 47:25Guy Raz?

  Ramtin Arablouei composed the music. Thanks also to Niva Grant, Sanaz Meshkentour, Thomas Lu, Diana Mustak, and Jeff Rogers. Our intern is Noor Kutsi. I'm Guy Raz, and you've been listening to How I Built This from NPR.