My Conversation with Michael Dell

I’ve started a new show where I have conversations with the greatest living Founders. The show is called David Senra. It will be on a separate podcast feed from Founders. So it is very important that you follow David Senra on Spotify, Apple Podcasts, YouTube, or wherever you're listening to this so you don't miss future episodes. Nothing is changing with Founders. I will never stop making Founders.

• 0:00Speaker 00

  I have started a new show where I have conversations with the greatest living founders. That show is called David Senra. It will be on a separate podcast feed from Founders. So it is very important that you follow David Senra on Spotify, Apple Podcasts, YouTube, or wherever you're listening to this right now, so you don't miss future episodes. The first episode was with Daniel Ek, the founder of Spotify, and one of the wisest people that I know. That episode spread all over the world, and the response has been greater than anything I could have ever imagined. The next episode is with one of my personal heroes, Michael Dell. A few years ago, Michael was kind enough to send me one of the greatest messages that I've ever received in my life. He believes in what I'm doing with founders and thinks it's good for the world. And so I was thrilled that he immediately agreed to be one of the first guests.

• 0:45Speaker 00

  His career is singular, and he is one of the most impressive people on the planet today. I am posting our entire conversation on this feed, so you know what the new show is like. I hope you enjoy our conversation, and please don't forget to follow the new show, David Senra, now, so you don't miss future episodes. Oh, and by the way, nothing is changing with Founders. I'm still doing episodes every week and will work on Founders until I die.

• 1:10Speaker 00

  I want to jump right into what we were talking about before we started recording. You said somebody was, you've been obsessed, you know, 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.

• 1:26Speaker 01

  When I was in junior high school, in the summers, in Houston, there were classes at Rice University for young kids, okay? And so you could go to Rice University, take these classes, and my mom, you know, kind of signed me up, and it was great. You know, they had these college professors, and they were teaching these classes. And-

• 1:54Speaker 01

  The way I would get to Rice University is I would take the bus from our house, right? And it would like take you downtown. And I was curious, so I was like, okay, if I just stay 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 roaming around, I'm like 11 or 12 years old. And I see like they've got like 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, it's just something I remembered.

• 2:32Speaker 01

  And you know, my parents were always talking about financial markets and it just sparked sort of this this interest really, really early in life.

• 2:45Speaker 00

  There's a great line I've seen from both Ken Griffin and Larry Ellison describing you. 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 this talk that Ken gave, I think at Yale. And he says something, he's like, for reasons I can't explain. I don't know why. I've just been obsessed with the stock market, with business since I was in the third grade. And you know, 60 years later, however old he is, 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.

• 3:28Speaker 00

  But you were like, I was like, this is like a kid on Christmas. Like you're still so.

• 3:33Speaker 01

  A super cool product. Yeah, I'm very excited.

• 3:36Speaker 00

  I told you I'll buy one. I think it's cool too. I'm gonna 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, we were talking a lot about his business, absolutely ripping. He's super intense and he's just in it right now, right? And then it 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?

• 4:16Speaker 01

  You know, it's all just like fun and interesting and I want to learn. And it's like, 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, and to figure it out and to, you know, help, help advance it. And it's an infinite game, right? It never, never ends. Love, love to win, hate to lose. And, um, yeah, it's just, it's just like the most exciting thing you could do.

• 4:56Speaker 01

  To be in the middle of a business like this and to see it all unfold and play out.

• 5:04Speaker 00

  Yeah, he, that's one of the things he's like, he's addicted to puzzles. So that's the way you look at it?

• 5:10Speaker 01

  Yeah, I mean, it's, it's, it's like, it's like the curiosity, solving a puzzle, understanding things and figuring it out. Yeah, that's, that, that's, uh, you always want to do that. I mean, I, 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, and to figure them out. Puzzles and, and math have always been important.

• 5:41Speaker 00

  When did you realize that about yourself?

• 5:42Speaker 01

  I never really realized it. You just asked me about it. It's just, just, it's just what I did. I just wanted to understand things. And, and, you know, when I was dealing with, with, uh, the 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?

• 6:05Speaker 00

  Yeah.

• 6:06Speaker 01

  And, um, my parents would get pretty frustrated, you know, taking apart things in the house.

• 6:14Speaker 01

  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.

• 6:24Speaker 00

  Yeah, that's just one of your 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 relatively expensive, especially I think you were like 12 or something at the time. And then you bring it home and your parents like, oh, 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.

• 6:42Speaker 01

  Well, it's like this machine, it's like it does really cool stuff, but how does it work? It's like, what's inside it and how do all those things work? How do 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.

• 7:00Speaker 00

  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 you were a 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. It's like the most valuable company in the world at the time. It was the first company to ever hit a hundred billion dollar market cap, which also blew my mind. But you take it apart and you're like, oh, wait, it's just components. 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. And it's just like, it's implied, or at least this is what I was reading through the lines when I read your books, like, well, I can do the same thing. Like, what are they doing here that I couldn't do? Did you have that thought?

• 7:44Speaker 01

  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?

• 7:53Speaker 00

  Yeah.

• 7:53Speaker 01

  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, you know, and you understand all the different elements. And, you know, when I originally got the first IBM PC, you know, yeah.

• 8:23Speaker 01

  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

• 8:56Speaker 01

  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 does this chip cost? What does 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.

• 9:37Speaker 00

  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. It's just like, the Russians won't sell it to me. I'm on the flight back, these famous stories in all the books. And I was just like, well, what is a rocket made of? Like, okay, well, there's a list of components. How much do those components cost? What you just said is 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.

• 10:09Speaker 01

  Well, you could go to the distributors and you'd say, you know, okay, how much does this chip cost? And they'd say, well, it's this price for 100 of them.

• 10:17Speaker 00

  Yeah.

• 10:17Speaker 01

  Right?

• 10:19Speaker 01

  And you could, you could literally map out the cost of every chip inside the thing.

• 10:27Speaker 00

  There is a book Ken Griffin, the founder of 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 is 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 costs 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 out-compete

• 11:09Speaker 00

  his better-funded competitor, Compaq, was with a structural cost advantage. Compaq's operating costs were 36% of revenue compared to Dell's 18% of revenue. More than 40 years later, Dell is thriving and Compaq 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.

• 11:52Speaker 00

  Matt Paulson, who listens to this podcast and who's a founder of Marketbeat, 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.

• 12:26Speaker 00

  Something I don't even know if I've ever verbalized before, but it's in all these biographies that I read. What I feel is just like, there's just like a lot of common sense where they just, the founder tends to just keep asking more questions and just like going to like an, you just said, I think, killing an onion. It was like, yeah, just like, okay, I got that answer. What's the next one? And then what's the next one? And there's something in human nature where we just like, we stop at the first question. But you have this like infinite curiosity that was very obvious like from childhood. And I think based on what we were just talking about, your office is obviously still present. But yeah, it's just very fascinating. It's like, it's not rocket science. It's just like, keep asking questions and collecting information and thinking about the answers that you're getting.

• 13:04Speaker 01

  Hey, you want to understand things.

• 13:06Speaker 00

  Yeah.

• 13:06Speaker 01

  At a very deep level.

• 13:07Speaker 00

  Yeah.

• 13:08Speaker 01

  And so that's always been a thing for me.

• 13:13Speaker 00

  Yeah, I think that's what I'm very interested in. It's like, if you read the life story of somebody, like, I'm very interested in understanding who the person is and like, 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 just, it's way more effective to tie the ideas to the personality that developed them. And the way you tie it to the personality you developed them, it's like you read about their life story. You read about their childhood. You read about what their interests were. I love the part in your book, I was rereading it yesterday, where your parents confront you. Okay, you've started Dell and you're a dorm room at the University of Texas, and they're just distraught, which is really funny, given what's occurred over the next four decades. Like, what are you doing, Michael? You're supposed to be, you know, just passed to be a doctor. And I think your mom's crying.

• 13:58Speaker 00

  You're, you know.

• 13:59Speaker 01

  She was, yeah.

• 14:00Speaker 00

  Very emotional.

• 14:01Speaker 01

  Yeah.

• 14:02Speaker 00

  And so you, you were like, okay. In the book, you said, "I caved," okay? Which is very unusual, because you have a super strong personality from a young kid. But then the very next page, I can see it in my mind right now. Like, I, cold turkey, didn't even look at a 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. I'm going to take on the biggest company in the world.

• 14:33Speaker 01

  I think the fact that they, they...

• 14:37Speaker 01

  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.

• 14:49Speaker 00

  Do 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, I know, we talked about this last time, it's hilarious, where somebody asked you, it's like, well, when you start Dell, like, how many hours did you work? And you're like, all of them.

• 15:07Speaker 01

  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, yeah.

• 15:24Speaker 00

  Were you more of like, before that, somebody that just focused on one task at a time?

• 15:29Speaker 01

  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 or interested me.

• 15:49Speaker 00

  Is that still the case today? Or is it just basically?

• 15:52Speaker 01

  Yeah, it's the place to be, yeah.

• 15:53Speaker 00

  Yeah, Zach told me, he's like, he'll call me at like 5 a.m. And he was like, I have an idea, like, we should do this product, or this acquisition, or whatever. He's just like, he just can't help himself. And I asked him, I go, what would get him to stop? He's like, you have to kill him.

• 16:10Speaker 00

  What made you decide to write the book?

• 16:12Speaker 01

  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 had 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 had happened. And

• 16:45Speaker 01

  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.

• 17:27Speaker 01

  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.

• 17:38Speaker 00

  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 podcast for people as the company grows to understand like this is the decisions that were made. This is why it was, this is what we've gone through. Spotify has this originally they did Gustav is the head of product at Spotify and he's actually one that made this. And originally I talked to them about this, they were just gonna do, it was like an eight part series. It was gonna be a private podcast inside the company, which tells the history of Spotify.

• 18:18Speaker 00

  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 a server in 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. Like, you know, some people don't last in the company, but they were really important for two, three, four years. But I listened to the thing like two or three times and thank God that now it's public. Anybody could just type in Spotify or product story, I think is the name of the podcast. I'm like, why don't more companies do this? Like, I'm not an employee, but if I was coming into Dell or any other company now, and I could have here, here's eight, you know, eight one hour episodes. And they say, not just this decision was made, like why, these are the constraints we're under. This is what was going on.

• 19:01Speaker 01

  Exactly. So, 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.

• 19:34Speaker 00

  Yeah. Kind of bring them up to speed. And this is the context. I also think there's an additional benefit for, 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 would find out by my, buying their products that I'd 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'm failing for 14 years. This guy is like a mule. He won't give up.

• 20:19Speaker 00

  5,127 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. His, obviously he's 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 are attracted to stories. They're attracted to people. Right? And so they would, they'd read that and then they, it would increase their sales because they understood who's behind this? Why did they make it? How is it different? Like, it was a very effective sales tool.

• 21:01Speaker 00

  So I, I think like doing podcasts like this, books, anything of this where you can actually tell of 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. Everybody knows 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.

• 21:36Speaker 01

  It's all been a lot of fun and still is. And it feels like we're just getting started, actually, when I think about the business and the opportunities we have. And yeah, it's all fun.

• 21:51Speaker 00

  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, who are a few of the people that you studied, you felt you learned from, or that influenced your thinking about how you built your business?

• 22:07Speaker 01

  You know, when I was a kid, you would read about entrepreneurs that were 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 just super interesting to me. And I grew up 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 stories were always just interesting and compelling. And you want to understand, well, how did they do that?

• 22:52Speaker 01

  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 consciousness from a very early age.

• 23:11Speaker 00

  There's a great line that Jeff Bezos says, where he's like, "We don't choose our passions, our passions choose us." I think there's multiple, like, my notes, myself in the margins, like, oh, he's compelled. It's like, this is coming through him, like, he has no choice. This is going to happen. But is there anybody in particular that you, like, really honed in on and admired and tried to emulate in some way?

• 23:32Speaker 01

  I always think 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 worked? What didn't work? And those were always the compelling and interesting stories.

• 23:57Speaker 00

  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 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 that a model for you? Or what was your interpretation of that experience? I guess what I'm trying to get at.

• 24:23Speaker 01

  Yeah, so, you know, in the early days of the computer industry, as I knew it, the microprocessor-based computer industry, you know, Apple was a leading company and Steve was obviously this sort of legendary figure. So I was in this Apple user group, which was a bunch of, you know, geeky people. It was like get together and...

• 24:46Speaker 00

  You don't say.

• 24:48Speaker 01

  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 was like using these incredible metaphors and, you know, like, listening to him and looking at what Apple's doing and going, wow, that's really cool. And, you know, you also started hearing about Bill Gates, you know, who's also about the same age as Jobs.

• 25:31Speaker 01

  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.

• 25:42Speaker 00

  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, unintentionally, that most 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?

• 26:25Speaker 01

  Yeah, I mean, I think you could make the argument that they made mistakes along the way that, you know, were fatal and ultimately, you know, 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.

• 26:54Speaker 00

  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 out by three things, ladies, liquor, and leverage. So like, have you seen any common like causes for somebody to sabotage themselves or to not live up to what they should have?

• 27:15Speaker 01

  Charlie's right about those three things. You know, we stay away from those.

• 27:21Speaker 00

  Yeah.

• 27:22Speaker 01

  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...

• 28:03Speaker 01

  They, you know, had either

• 28:07Speaker 01

  overzealously expanded or made, you know, design, you know, errors, or they failed to understand the competitive landscape. I mean, there's lots of ways to fail, right?

• 28:22Speaker 00

  You have a great example of one in the book with Adam Osborne, where he had a very successful, I think the Osborne one was relatively successful, right?

• 28:30Speaker 01

  Yeah.

• 28:30Speaker 00

  Okay.

• 28:31Speaker 01

  Yeah.

• 28:31Speaker 00

  And he's like, all right, now we're coming out with Osborne two. It's even new and improved 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 like, we have this great new product. It's even better than one. What are you telling to the market?

• 28:45Speaker 01

  The Osborne effect. I don't think people talk about it so much anymore, but back then, the Osborne effect was a thing where you introduce a new product that's better than your first product and nobody buys your first product anymore. And you're, you're out of business. And so, you know, yeah, don't want to do that. So, 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

• 29:26Speaker 01

  in an area that has never been done, or with some new technology, new business model, there's no playbook. There's no like, uh, book you can read. It 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, uh, here's a theory that we think will work. Let's try it, right? And, and, and, you know, does it work?

• 30:10Speaker 01

  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, let's stop, you know, restart, come up with another theory. And just keep experimenting until you find the answer.

• 30:24Speaker 00

  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 talked 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 that we are 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.

• 31:05Speaker 01

  Yeah, exactly. So, you know, when ChatGPT came out in November of 22, or sort of 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 LLMs. And you, you know, in technology, you can, you can sort of look at the, the rate of improvement in 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, two years or three years? And you look at, okay, we're going to have agents and multi-agent systems. And we're going to be able to reason over incredible amounts of information.

• 31:48Speaker 01

  Well, what does that actually mean for the way knowledge work gets done? And the tools that humans are going to have? So you think about that, you go, wow, this is a big, big deal here. Um, 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 company is going to come along and yeah, they're gonna have all these new tools.

• 32:31Speaker 01

  They're not going to have this legacy of crap from the past, right? Old 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 if you don't have a crisis, make one, right? 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.

• 33:10Speaker 01

  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. You're 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.

• 33:54Speaker 00

  Yeah, this is excessively rare. I mean, think about the story in the book where I think the line that I summarized where you were saying about IBM is like, yeah, the personal computer is, 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, you know, something that's occurring over multiple decades, 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, I'm trying to think though, like, so you just said, okay, there's no books, like what you guys are doing right now, right? You can't, it's just like you're on the cutting edge. There's no, there's no books you can read about it, but you have surfed how many different? Technological revolutions. You did the microprocessor, right? Microcomputer, sorry.

• 34:39Speaker 00

  The personal computer. Then, obviously, the Internet was invented.

• 34:44Speaker 01

  Client-server technology a little bit before you.

• 34:47Speaker 00

  How many? So, like, 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?

• 34:57Speaker 01

  Yeah, there's probably been six or seven of them.

• 35:00Speaker 00

  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 good on this one, but we've fixed 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."

• 35:22Speaker 01

  Yeah, there are, although the timeframes that these things occur tend to be shrinking.

• 35:30Speaker 00

  Say more about that.

• 35:31Speaker 01

  So, if you think about the Internet, you know, when, you know, first you had the Internet, you had the World Wide 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. And, I mean, it was, it was going on in the late '90s and, you know, early 2000s, but it really didn't, it took a long, long time. So now, maybe it's, like, five to 10 times faster? You know? If you look at the growth in the usage of these tools.

• 36:10Speaker 01

  And part of it is that each successive wave of technological improvement is built on the prior, you know, foundations, and so they're able to go faster. So if you have 5 billion people connected with all kinds of devices, well, now they can use these tools, and that just goes way faster. But I, I think you have to have this idea in your head that any, you know, new thing has some chance of succeeding, right?

• 36:42Speaker 00

  Say more about that.

• 36:44Speaker 01

  So, there's a lot of wild ideas out there, and if you dismiss them all, you're going to miss some, some things. So, so you, you, you kind of have to hold this idea in your head that...

• 37:01Speaker 01

  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, right? You know, what should we be doing about this? And when is it actually relevant, interesting, valuable? And it's sort of, you know, hits escape velocity. And if you're, if you're sort of stuck in a particular paradigm, or you're like dismissing things, you're gonna miss them.

• 37:35Speaker 00

  Yeah.

• 37:36Speaker 01

  And so, and so, you know, you need to be open minded enough to consider all possibilities.

• 37:47Speaker 00

  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 high school and college. And maybe you've added a couple, but like you're kind of like just stuck on that. Where you are just like a completely open, maybe addicted to, you know, new technology and new ways to think about or new ways to solve like old problems.

• 38:17Speaker 01

  Yeah, I love, I love the stuff.

• 38:19Speaker 00

  But how do you not squash new ideas? Like you just said, like, you know, that does a great line. It's like, any idea can work now. Everybody's connected and they can grow faster than you can possibly imagine. So how do you like, do you have a process for like, how do you not? You know, new ideas are fragile. And, you know, they need some kind of protection and some time to grow. Like, but most people just like kind of snuff them out or dismiss them immediately.

• 38:41Speaker 01

  Well, you know, sometimes 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, you just have to be open minded and.

• 39:04Speaker 01

  Consider the possibility that things are changing fast enough that,

• 39:11Speaker 01

  you know, some, some new thing comes along. If you took the top computer scientists,

• 39:18Speaker 01

  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 LLMs in the next five years. Probably 99 out of 100 would say, no, no, that's not going to happen. Right? And so,

• 39:40Speaker 01

  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, 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.

• 40:14Speaker 00

  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 behavior, predictions about the future. It's kind of tied to the importance of iterating

• 40:56Speaker 00

  and make sure you're doing a lot of experiments and then having that like tight feedback loop to constantly like get information, oh, that didn't work. Okay, we ran an experiment, didn't work. Let's try it a different way. Like those two, like those two things work really well together. It's like we're, we're not going to predict the future. We're going to create the future through iteration.

• 41:12Speaker 01

  Yeah, and, and, you know, it's okay to try to predict it as well. It's just really hard to do and, you know, you might want to have a lot of experiments. I mean, if you go back and, 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? He's 10 years ago. How good were they at predicting what was going to happen? That's very good.

• 41:37Speaker 00

  No, terrible.

• 41:37Speaker 01

  So, so, uh, don't rely too much on that, right?

• 41:43Speaker 00

  This is why I think entrepreneurs have to like study past entrepreneurs too. And it's like, obviously very valuable. Like it's, it's no surprise that like you were reading about these people. Like what I would say is like the greats all studied the greats. This is like very, like they were doing it today. They were doing it 40 years ago. They were doing it 200 years ago. If you took like an average person in a normal society and the way they think about experts, okay? And the way it's discussed in all these biographies, it's like they're very dismissive of experts. Right? I just mentioned I was reading James Dyson's autobiography. You know, the whole thing is just like, he believes in the Edisonian principle of design. Just constant iteration, you learn as you go, you can't predict. Like you're, you just, you know, change one thing and then test it and see how it goes. And he mentions studying Henry Ford a lot in that book.

• 42:27Speaker 00

  And then James Dyson wrote an autobiography 30 years after that, that he also mentions Henry Ford a lot. And 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? Like they're not going to tell you that chat GPT is absolutely, you know, that my 13 year old. I use chat GPT all the 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. Okay, this is not a new phenomenon. Human nature does not change. History doesn't repeat, human nature does. And he says, if I ever want to sabotage my competition, I would fill their ranks with experts.

• 43:10Speaker 00

  Experts tend to know so much and they're, they're so convinced that they're right, they'd get no work done.

• 43:15Speaker 01

  Yeah, at the limit, nobody knows anything. Right? And it's not a bad philosophy. You know, when, when, when you're thinking about the future.

• 43:29Speaker 01

  It's good to have a hypothesis, though, right? And ideas and experiments and to keep an open mind.

• 43:35Speaker 00

  So what was, when we go back to that, hey, this, 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.

• 43:48Speaker 01

  Right.

• 43:49Speaker 00

  What was your hypothesis back then? Do you remember?

• 43:51Speaker 01

  Oh, 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.

• 44:32Speaker 01

  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 Jira databases. It's like millions and millions of documents. No human could ever interpret all this. And so we created this tool called Next Best Action, which takes all this data and understands

• 45:16Speaker 01

  what problem the customer's trying to solve. And it helps either the customer or the agent that's trying to help the customer.

• 45:26Speaker 01

  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's 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?

• 46:10Speaker 01

  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.

• 46:32Speaker 00

  You couldn't predict 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 predict like all the tools, but we just know that they're coming.

• 46:48Speaker 01

  If we didn't do that and our competitors did, we'd be finished. And so we're not going to do that. And, you know, even if we did it and our competitors did it, let's say it just neutralizes. You have to do it. You have no choice.

• 47:10Speaker 00

  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. 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. It's like everything, this is the new, the new product that everything, every other product is going to be made out of, from bridges to roads 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 and wonder like 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 Bessemer steel, that he got from England. So he took the idea from England, imported it into America, which it's kind of weird

• 47:55Speaker 00

  how often that is in the history of entrepreneurship, where it's like, oh, this idea is working in one geography, will it work over there? It's like, yeah, because humans are kind of the same everywhere. There's some cultural differences, but our core motivations are very similar. 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's 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 its technology today, it's definitely technology back then. And when you read his autobiography, which, you know, is in the public domain, anybody

• 48:37Speaker 00

  could read it for free, it's an incredible gift to humanity. There, 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 the same level. And the summary of what Andrew Carnegie was saying, these guys wind up not adopting the 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, it gives you an advantage over your slower moving competitors, and it can be the difference between a profit and a loss. If he didn't do that investment into the new technology that his competitors were dismissing, the stupid young kid with his fancy machine, right?

• 49:21Speaker 00

  That wound up 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 themes just keep reappearing.

• 49:33Speaker 01

  Yeah, exactly. You don't necessarily want everybody to know what you're doing. Also.

• 49:38Speaker 00

  The maxim 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 uh, there's no, sometimes there's no book, you're on the cutting edge. And so I remember there's this 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 has this great line, he goes, "You can't go to the library and check out a book called the business model of animation. Because 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.

• 50:23Speaker 01

  Yeah, so Dad Terminal is, is what he, he refers to as when he kind of taps in and, you know, wants to talk about a particular topic or has a, has a question. And it's one of my favorite times with Zach, you know, because, because, you know, we're, we're talking about solving problems or challenges inside his business and, you know, I get to share the mistakes I made, mistakes I saw other people make, lessons learned,

• 50:59Speaker 01

  and hopefully save him some, some pain and suffering and, you know, uh, steps from, you know, uh, learnings along the way.

• 51:11Speaker 00

  Yeah, he says, instead of typing in the re, I was like, why is it called? 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.

• 51:23Speaker 01

  Exactly. Yeah, yeah.

• 51:25Speaker 00

  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. He's like, I don't use Bloomberg, I use.

• 51:34Speaker 00

  I use that terminal. And I was like, give me an example, like, what is, what's the last query into that terminal? And he goes, supply chain. He said it like, it was like, obvious. I was like, I don't have a supply chain. I run a podcast, I read books, like, explain it to me. He's like, my, there's a handful of things, not 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 the supply chain. And I'm curious, this is like, why you think, why other people describe you as really good at that? Is that, is supply chain just related back to how we started this discussion? It's just like, another puzzle for you to, like, direct your curiosity to?

• 52:11Speaker 01

  It's definitely an important puzzle and, and a critical puzzle. I mean, I think if we had not figured out how to do our, 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 it, in our business.

• 52:37Speaker 00

  So, it's just you've thought more about this area over?

• 52:40Speaker 01

  And, 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.

• 52:54Speaker 00

  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 90, you might be 20 years old at the time. But you're taking your first trip to China, if I'm not mistaken?

• 53:11Speaker 01

  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. They weren't making anything.

• 53:22Speaker 00

  So, you were going to Asia?

• 53:23Speaker 01

  You were going to Asia. So, yeah, I went to, I went to Japan.

• 53:29Speaker 01

  Hong Kong, Taiwan, and South Korea.

• 53:34Speaker 00

  Yeah, but what I love is just like how excited you were.

• 53:37Speaker 01

  Oh, yeah.

• 53:37Speaker 00

  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 now it's like, oh, I'm like spending 16 hours a day. I'm sleeping in my office. I'm working. We have customers. We have, we're hiring employees. We have revenue growth. But now I'm getting like deeper, a deeper and deeper, deeper understanding. And like, so as I read these biographies of people, I try to like build like, you know, I think I have a good sense of like how you think and like what's important to you. And what I realized is like that instinct that you had as a 20 year old man, or however old you were in at that time, it's like that has not, it's never been alleviated. It's just like this constant like keep going lower and lower and lower to like seek

• 54:22Speaker 00

  more, a deeper understanding of like the world around you, but also how your business like fits in that world and how you can build technology to like enhance everybody else around you.

• 54:32Speaker 01

  Yeah, of course. I mean, that's what you're supposed to do, right? You're supposed to understand things, right?

• 54:37Speaker 00

  You say, of course, like this is the, this is another thing I told you when we had dinner, like.

• 54:41Speaker 01

  How else would you do it?

• 54:43Speaker 00

  But to you, this is why I think like writing the book and having a conversation like this is important because like there's so much shit in your head that is so unusual. And like, like just it's so valuable, like getting it out and putting it like out into the world. Because I remember like.

• 54:58Speaker 01

  I wouldn't do any other way to do it.

• 55:00Speaker 00

  I know, because you don't understand how abnormal you 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 like the crazy career that you've had. It's like I study uncommon people for a living. You are uncommon amongst uncommon people, right? You have this, so the paradox I couldn't reconcile is between this crazy ride that you had. It's described beautifully in your book. This four decade, you know, mission that you've, that you've been on, that you've relentlessly seen given a lot of your life energy to. And just how normal you are. Like you're like not, I'm talking about like your affectation, your personality. Like you're very polite and calm and measured.

• 55:45Speaker 00

  But it's like, you understand how rare this is. No. I know. Because you're like, of course you would. It's like, this is what I love. It's like.

• 55:54Speaker 01

  Just wake up every day and go do the thing.

• 55:56Speaker 00

  This is why you're great. This is why, but that's, that's why you're great. So like.

• 55:59Speaker 01

  He's pretty normal to me.

• 56:02Speaker 00

  There's nobody that reads this book like this guy's normal. No, it's not at all. So there's, what I love about this, and this is why it's so important because, and I mentioned this on the episode I made on you, but there's this, uh, this engineer turned, and turned, uh, founder, uh, Sidney Harmon. You know, the, the company Harmon Carden?

• 56:22Speaker 01

  Yeah, sure.

• 56:22Speaker 00

  Yeah.

• 56:23Speaker 01

  Yeah.

• 56:23Speaker 00

  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, the, the creation from the creator. And I think over time, like the.

• 56:36Speaker 01

  I resemble that.

• 56:38Speaker 00

  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 that's authentic to you. And then in this book, Lee was, you know, talking about, he was only able to last four years, I think. Um, and he's just like, you know, we're fighting IBM. We don't have any money. And he's like, my back's hurting. I'm losing my hair, like I can't sleep. And he's just like, Michael's ecstatic. He's like tap dancing to the office every day. And he said a line that changed, like really made me think about that. He's just 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.

• 57:18Speaker 01

  Yeah. And if, if you've been doing it every day for 41 years, it seems pretty normal, right?

• 57:26Speaker 00

  On the last episode during my conversation with Daniel Ek, 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. If you're going to be the best. That what you do, you need to maximize your energy and output. And that is why I've partnered with Function. Function provides access to comprehensive blood tests and other lab testing to help you improve your health. So you can perform at your highest level.

• 58:11Speaker 00

  Function has made it easy for me to monitor and improve my internal health markers. So that I feel at my absolute strongest. As a member of Function, you get access to test over 100 of your biomarkers. From hormones to toxins to markers of heart health, inflammation and stress. Function gives you a straightforward analysis of all your results, along with advice from expert doctors. On how to improve things like your testosterone, your stress hormones, how to reduce toxins in your body and much more. The platform is absolutely beautiful and provides an easy to understand picture of your overall health. Once you try Function, you'll immediately understand why it's the fastest growing health platform in the country. To learn more about Function and to join, go to functionhealth.com/cenra.

• 58:53Speaker 00

  Right now, Function is offering $100 credit to the first 1000 people who sign up for a Function membership. To get this $100 credit, just visit functionhealth.com/cenra. Again, that's functionhealth.com/cenra. Lee Walker, tell me how important like that was finding a person. Cause you were relatively persistent in recruiting him. And you were like 21, I think at the time.

• 59:16Speaker 01

  21, yeah.

• 59:17Speaker 00

  And he was 45 or something like that.

• 59:19Speaker 01

  Yeah.

• 59:19Speaker 00

  Like what's the role that you feel he played at that point in Dell's history?

• 59:25Speaker 01

  Well, yeah, the company was, was, uh, I mean, it's like our rocket had sort of taken off. But you know, it was, it was pretty fragile, right? And, uh, you know, we had some good ideas, but there was a lot of missing pieces. And Lee helped fill in those missing pieces and, you know, sort of organize. The, uh, uncontrolled chaos and helped us sort of really, you know, scale, scale up the business.

• 1:00:00Speaker 00

  In like operations, like what do you think?

• 1:00:03Speaker 01

  Yeah, I mean, it was, 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 freed 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.

• 1:00:40Speaker 00

  Yeah.

• 1:00:41Speaker 01

  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 then going public, you know, he helped, helped 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?

• 1:01:03Speaker 00

  One thing that was very fascinating that Lee 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. So individuals like, oh, I want a computer, Michael. Okay, give me your credit card. You're like, 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'd be 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 there. And what was smart is he went to the banks and I was curious, it sounds like he had relationships with the bankers. And I always have this maxim that relationships run.

• 1:01:44Speaker 01

  He did.

• 1:01:44Speaker 00

  Okay. So relationships run the world. You see that over and over again. And so Lee had relationships with these, 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 or 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, 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 our receivables.

• 1:02:21Speaker 01

  Yeah.

• 1:02:22Speaker 00

  It's a really good idea.

• 1:02:23Speaker 01

  Yeah, it was receivable-based financing. The problem was that, you know, as a 21-year-old, you know, starting a business with really no capital infusion from the beginning, $1,000, right?

• 1:02:42Speaker 00

  Yeah.

• 1:02:44Speaker 01

  A banker looking at it with no one known inside the business to trust would sort of... Their general action would be, "I think I'll go do something else," right?

• 1:02:56Speaker 00

  Yeah.

• 1:02:57Speaker 01

  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 logjam. And that, you know, gave us some of the capital we needed to continue to grow and expand.

• 1:03:14Speaker 00

  So can you explain how you stumbled upon the negative cash conversion cycle and why that was so powerful?

• 1:03:20Speaker 01

  Yeah, so, you know, we didn't have any capital, right? And so, you know, 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, pay 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 you don't need as much capital to raise to be able to grow the company. You have a high return on capital. So we started looking at the business that way.

• 1:04:05Speaker 01

  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.

• 1:04:44Speaker 00

  Whoa.

• 1:04:44Speaker 01

  So, you know, it would say like 42...

• 1:04:51Speaker 01

  Ninety-two, and that meant it was that chip was built in the forty-second week of the ninety-second year. And so you could literally date how old the inventory was by opening these things up. But anyway, so they had like ninety days in their collective supply chain. And we figured out how to have like five days. I mean, it was crazy. It was like, 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, and you know, it's, it's a pretty predictable thing.

• 1:05:32Speaker 01

  And so if our components are five days old and the competitors' components are ninety days old, well, theirs 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 ninety-day-old fish or bananas, right? You're selling the, the, the new chip, the, 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

• 1:06:15Speaker 01

  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, you know? And we, 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 just didn't understand it. They like, they like misunderstood it, which was fantastic.

• 1:06:48Speaker 00

  How is that? So I

• 1:06:50Speaker 01

  It's like you don't want them to understand what's going on. You don't want to explain it.

• 1:06:55Speaker 00

  But how do you explain their inability to?

• 1:06:59Speaker 01

  Now you can explain it.

• 1:07:00Speaker 00

  Yeah.

• 1:07:00Speaker 01

  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.

• 1:07:09Speaker 00

  So I have a funny story about this, and then I want to get 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 dynasty. And he started working in the business since he was six. And it was like crazy stories. I started on the shipping. They own one of the largest privately held shipping companies in the world. And he's this raconteur. He's like super charismatic and just like, I was, it was incredible dinner. But I had found out, same reason where you're 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?

• 1:07:50Speaker 00

  I have some of these books in my house, not from this guy, where these family businesses or, you know, these people at brokerage companies, they have, they'll hire, you know, an actual author, pay him whatever, a million dollars, write the book, and then they'll print it just like this, but there'll be no ISBN number on the back because it's not available for sale. So I have a couple of these in my home library that people have given me because of the podcast. But he was telling me the story. He's like, 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, dude, give me those books. I leaned in, I was like, I want those books. I was like, I'll crush the episodes. Episodes would be great, like, because he had so many crazy stories. Without hesitation, he goes, absolutely not. I was like, why? He goes, I have no desire to educate my competitors. So that you just nailed it.

• 1:08:35Speaker 00

  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 old Soggy 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 of you? He didn't think you were a threat? Like, what was going on there?

• 1:09:04Speaker 01

  He's still alive. You can go ask him. I, you know, I think, I think when you're

• 1:09:13Speaker 01

  You know, you're in a bubble, you know, 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.

• 1:09:23Speaker 00

  Did you read the new biography of Jensen Huang called the Nvidia? Actually, it's a history of Nvidia, but he's heavily featured Nvidia way.

• 1:09:31Speaker 01

  I haven't read the whole thing.

• 1:09:32Speaker 00

  Okay. I did an episode on it, I'll send it to you.

• 1:09:35Speaker 01

  Yeah.

• 1:09:36Speaker 00

  But he has this whole thing where the threat comes from below. And his, I think he reduces everything to maxims. He's like a really good communicator. And so he's saying, he's 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 just 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 outperformed Compax, which you sold direct to the consumer for $795, if I remember correctly. It was faster than theirs.

• 1:10:18Speaker 00

  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.

• 1:10:33Speaker 01

  Yeah, and you know, you kind of hope that they don't even see it.

• 1:10:38Speaker 00

  Yeah.

• 1:10:38Speaker 01

  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.

• 1:10:51Speaker 00

  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.

• 1:10:57Speaker 01

  Yeah, or if they were sort of paying attention. But you kind of hope they don't notice and don't pay attention.

• 1:11:05Speaker 00

  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 take these things and see, oh, this is the 42nd week of the 96 year. That's insane. There's a line in the book.

• 1:11:19Speaker 01

  It's not that hard. The numbers are right there.

• 1:11:21Speaker 00

  It's not that hard to you.

• 1:11:22Speaker 01

  The numbers are just sitting there. It's like they're just staring at you. They're talking to you.

• 1:11:28Speaker 00

  I 100% agree with you. It's like, but this is the difference between somebody that's obsessed and somebody that'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 at anybody. There's a story in the book where you guys are doing, I think, the private placement of IPO and it's Black Friday happens. And I think Lee Walker walks in your office to tell you that, oh shit, there may be some trouble. There's trouble brewing in the capital markets at this point. And he said, Michael was in his office taking apart another computer.

• 1:12:03Speaker 01

  That's what you do.

• 1:12:06Speaker 00

  That's what you do. Exactly. I think that's the biggest thing, man. It's like, it's an unfair advantage if you can direct your energy at something that you... There's no... We talked about this at 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 this podcaster dude, this investor guy, this entrepreneur, this athlete. And he's like, what I'm drawn to, what all these people have in common that may not be obvious to you, David, is that there's no end. Like, you can't get to the end of what they're interested in. You think he uses the analogy of like a cup. You just pour and pour and pour. It's like it just keeps going. Like, they can never get to the end of their curiosity.

• 1:12:48Speaker 00

  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 Seinfeld has a great line. He goes, "If you just do it for the money, you're only going to go so far."

• 1:13:02Speaker 01

  Yeah, when it's like a passion or an obsession, you just... There's no end to it.

• 1:13:08Speaker 00

  Yeah, and you're taking more chips and analyzing like, oh, I have a 90-day advantage over here. And I'm not worried about the capital 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? Can I just focus on understanding what I'm working on, what's in front of me, and then following this deep curiosity? You know, and actually taking the curiosity that comes through your head into like an actual product that makes somebody else's life better. It's like the miracle of entrepreneurship.

• 1:13:37Speaker 01

  You got it.

• 1:13:39Speaker 00

  So we were just talking about the fact that Compact and IBM...

• 1:13:46Speaker 00

  They were almost like, essentially, you got fuel from being underestimated. You've mentioned in the book that like you found it, I think you said something that's like a powerful motivating force. Do you recall why you felt that way?

• 1:14:01Speaker 01

  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, and so they, they didn't see us coming because they were underestimating us, you know. I think the CEO of Compaq, you know, would refer to us as a mail order company or, you know, garage operation or whatever, you know, and you'd hear that and you'd go, oh, wow, this is, this is great. It's like, they have no idea what we're doing. All, all that was motivating, you know.

• 1:14:42Speaker 01

  Anytime, you know, there, there were sort of a setback 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.

• 1:15:00Speaker 00

  Is it still like that today?

• 1:15:02Speaker 01

  Of course. Yeah, yeah, absolutely.

• 1:15:06Speaker 00

  I love that everything is of course and of course it is.

• 1:15:09Speaker 01

  Yeah. I mean, if it wasn't, I'd probably, probably, probably be dead. I mean.

• 1:15:17Speaker 00

  And still caring about the company.

• 1:15:18Speaker 01

  Yeah.

• 1:15:19Speaker 00

  Even from the grave.

• 1:15:21Speaker 00

  It's, 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. And I was like, I don't know, like, Compaq 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?

• 1:15:48Speaker 01

  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.

• 1:16:00Speaker 00

  Yeah, that's why I think like the generic advice is you have to do this or you're dead. I'm like, I'm pretty sure that's not the case.

• 1:16:06Speaker 01

  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 gonna figure out some clever, interesting way to do something that nobody's ever thought of, that is different, and you know, that's just gonna happen.

• 1:16:27Speaker 00

  Yeah, that's actually an interesting area to go down, where it's like, who else you figured out by accident? Like, because, you know, necessity is the mother of all inventions. 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 had a deeper understanding as you went along. 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, inexpensively?

• 1:16:58Speaker 01

  Well, I mean, you think about some of the retailers, you know, like Walmart and Costco, Amazon obviously came up with with the super clever ways of winning in that space by, you know, doing things inexpensively, taking out all kinds of costs.

• 1:17:21Speaker 00

  Yeah, the other one that came to mind was Sam Zemurray, 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 a general food 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 docks 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 gonna 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 of the day, which is the railroad.

• 1:18:04Speaker 00

  And I can buy this for almost nothing because they're not getting anything anyways. And I'm gonna put their ripes and get on the railroad with it and then sell it at every single stop. And then he was generating so much cash and then he could start working down the line all the way to when he had his own banana plantations. Just like that idea. It's like, it starts out with like this little nugget of like, oh, this is like an interesting opportunity. And not understanding as you pull and pull and pull and pull, it gets more and more like you're, you keep stacking these advantages, one on top of another. Yeah, I gotta, I should organize and like look into like more examples of like, is there another example of like what you had at the beginning of Dell? Because I think that's the key. Like, I think some degree, it's like, the easier, more path

• 1:18:47Speaker 00

  is just 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 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 in-

• 1:19:11Speaker 01

  Yeah, there's that mail order thing again.

• 1:19:13Speaker 00

  I know. I think it's like still, still.

• 1:19:18Speaker 00

  He has that great line where he's like, expensive solutions to any problem are signs of mediocrity. So he was like, you have to be more creative.

• 1:19:25Speaker 01

  We had this whole thing in the eighties and we called it beat the mail order stigma.

• 1:19:32Speaker 00

  Really?

• 1:19:32Speaker 01

  And it was sort of like, as we were establishing our brand,

• 1:19:38Speaker 01

  you know, sort of the conventional wisdom was mail order company, which was sort of like a-

• 1:19:45Speaker 00

  Pejorative.

• 1:19:46Speaker 01

  Like an insult.

• 1:19:46Speaker 00

  Yeah, okay, okay.

• 1:19:48Speaker 01

  It's like, okay, it's a mail order company. And it's sort of like a stereotype. It's like, oh, you can dismiss it because it's a mail order company, right? And- All the press, you know, for years, they were like mail order company Dell, you know, the mail order company Dell introduces server, you know, like, what? It's like, okay, we have 30,000 patents. When are we not a mail order company? What is this mail order thing? So anyway, we had to like get rid of that.

• 1:20:19Speaker 00

  How did you beat it?

• 1:20:21Speaker 01

  Just kept doing our thing, you know, and eventually people go, I guess it's not really mail. I mean, it's internet and it's not mail order. What? Nobody orders stuff in the mail. What is it?

• 1:20:33Speaker 00

  I think you just may 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 seem small, but they can have a huge impact. I think Dell was like one of the first companies to sell on the internet, right?

• 1:20:53Speaker 01

  Yeah, well, so we were selling direct, right? You know, like people would call us on the phone and we used to have these rooms with like a gazillion 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 world wide web comes along, new 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 can like press a button, order the thing? That's the coolest thing ever. We gotta do that, right? And so in my first book, you know, it's on every page at the bottom. It said, www dell.com.

• 1:21:32Speaker 00

  I read that other.

• 1:21:32Speaker 01

  We're just like obsessed with getting people to the website. Because it just became like the easy way to interact with people.

• 1:21:46Speaker 00

  And that book came out in 97, right? 99?

• 1:21:49Speaker 01

  I think 98.

• 1:21:50Speaker 00

  98, yeah.

• 1:21:51Speaker 01

  Yeah, it was 98. But yeah, we started, we started. You know, with, with, with one of the first websites, I mean, there are, there weren't many websites. I remember when there-

• 1:22:01Speaker 00

  It was a small number.

• 1:22:02Speaker 01

  I remember when you could like go to all the websites. Like in the whole world.

• 1:22:06Speaker 00

  Yeah, I'm done for the day.

• 1:22:07Speaker 01

  Like, there's no more websites.

• 1:22:10Speaker 01

  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. It's just, there's nothing, nothing else to see. That obviously changed quickly.

• 1:22:23Speaker 00

  So how the hell do you even build a store? Like you were collecting, do they have to like call a number in? Cause I remember like taking credit cards online. Well, maybe not 90, if you were doing, do you remember what year you launched the site? 97, probably 96?

• 1:22:35Speaker 01

  I think it was probably 90, 96.

• 1:22:37Speaker 00

  You had to build all this stuff.

• 1:22:38Speaker 01

  95, 96.

• 1:22:38Speaker 00

  You had to build all the stuff.

• 1:22:39Speaker 01

  Had to build the whole thing.

• 1:22:40Speaker 00

  Okay.

• 1:22:41Speaker 01

  Yeah.

• 1:22:42Speaker 00

  Yeah, it's, it's funny. Uh, I, I forgot about the fact that Dell.com is on the bottom of every page. But what's fascinating is if you read Bezos's 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 into Amazon. Cause he's just like, we gotta 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 like right away, like this just, we should just do this cause it's cool.

• 1:23:15Speaker 01

  We'd experimented with, how do you create an electronic version of the catalog? Even like, we're gonna send you a floppy disk or a CD-ROM. And you put it in your computer and you load it up and the catalog is there.

• 1:23:28Speaker 00

  Yeah.

• 1:23:28Speaker 01

  Right? Those are some of the ridiculous things that happened before the internet, before the world wide web.

• 1:23:33Speaker 00

  Did you ship that?

• 1:23:34Speaker 01

  Yeah, yeah, we did.

• 1:23:35Speaker 00

  So you just, it's kind of like, remember AOL, they just like essentially carpet bombed the entire country?

• 1:23:41Speaker 01

  Yeah, we didn't do it like that, but, but we, ours was more targeted. 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, to anyone.

• 1:23:58Speaker 00

  The, the idea of mailing out a floppy- Or a disk of a catalog is just like a hilarious idea.

• 1:24:07Speaker 01

  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's like, it didn't happen as fast as some of the things that are happening now.

• 1:24:22Speaker 00

  Yeah.

• 1:24:22Speaker 01

  But obviously, for a business that was selling directly to businesses and, you know, individuals, you know, all over the world, it was just total rocket fuel.

• 1:24:35Speaker 00

  How soon into Dell were you starting to sell, like targeting institutions over individuals?

• 1:24:41Speaker 01

  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.

• 1:24:54Speaker 00

  Okay, so it's sort of like doctors and dentists, right? Our lawyers are some of your first, but they were using it for business purposes.

• 1:25:01Speaker 01

  An individual doctor, dentist, I would think of them as more like an individual. But, well, first of all, let's just 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.

• 1:25:24Speaker 00

  So within the first year, you got the same similar percentages?

• 1:25:28Speaker 01

  Similar percentage, yeah. You know, there were companies, universities, they were buying five, 10, 20, 15 machines at a time.

• 1:25:39Speaker 00

  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 your stories down the generations. So I, 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 machine, like entrepreneurs know, beware of experts and like how they can kill new ideas, where like a normal person would revere them, right? So there's like this, this difference of understanding between that. 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.

• 1:26:22Speaker 00

  And I hear this a lot, which is perplexing to me because in the books, this is no, you have that directly 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'd sit there and like, again, I don't think you should be reading these books quickly. It's just 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, that page where it's just like, was I a little full, you know, the idea is like, I have a thousand dollars, I'm in UT dorm room, I'm going to take on the biggest company in the world. And you said, was I a little full of myself at 19? Sure, I was.

• 1:27:07Speaker 00

  I think you have to be to do anything important. Can you explain that mindset?

• 1:27:15Speaker 01

  Yeah, I think, I think it's a combination of, of 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. But, you know, you never sort of want to go over into the arrogant zone because that's really, I think, a dangerous place to be. So it's like, okay. I have not been in this industry for a long time. And so, you know, all these reasons why it won't work are unknown to me.

• 1:27:57Speaker 01

  Okay, so that's the naive part, right? And that can actually be sometimes a good thing, right? Because you're not sort of bound by those conventional thinking 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.

• 1:28:31Speaker 01

  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 never want to sort of assume, okay, this is absolutely going to work no matter what. Then you're going to ignore those little voices about, well, what about this? What about that?

• 1:28:52Speaker 01

  So, yeah, it's sort of, I think a combination of naivete, being real here, and confidence.

• 1:29:01Speaker 00

  I think a perfect illustration of that would be your reluctance, initial reluctance to name the company after you because it was PCs Limited, right? At the very beginning.

• 1:29:11Speaker 01

  It was officially Dell Computer Corporation, doing business as PCs Limited, right?

• 1:29:18Speaker 00

  Yeah, but then you realize like, why don't we just do Dell? And then that's when I thought of the Osborne thing because you're like, wait a minute, this guy, he named his company after that. Like, there's no way.

• 1:29:26Speaker 01

  What if it doesn't work?

• 1:29:28Speaker 00

  But it's interesting because you just said, it's like, yeah, I have a lot of confidence in going to do this, but the doubt never goes away.

• 1:29:33Speaker 01

  Yeah, and, you know, fear.

• 1:29:38Speaker 00

  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 Zach's office. And I don't know how it came up, but it came up almost immediately. And it wasn't a surprise to me because I feel the exact same way. But you fear of failure, in my experience, from studying all these histories of entrepreneurs, 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.

• 1:30:12Speaker 01

  Yeah, totally. 100%.

• 1:30:20Speaker 01

  Yeah, you know, you don't want to fail, although failing is how you learn.

• 1:30:30Speaker 01

  You know, pain is the best teacher. And so, you know, you have to have some little failures along the way. But that fear of,

• 1:30:43Speaker 01

  you know, you can't have it paralyze you where you don't want to make any decisions because you're afraid to fail.

• 1:30:50Speaker 00

  Has that happened to you?

• 1:30:52Speaker 01

  Not really, no. I, you know, what you want to do is, is, is sort of be incremental. And again, it's back to iterating. It's like, okay, we're not sure if this is a good idea. Let's try it, right? 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.

• 1:31:20Speaker 01

  And if it doesn't work, great. We learned something, we move on.

• 1:31:24Speaker 00

  It's perfectly said. Thank you for writing the book. Thank you for the time. I really appreciate it, Michael.

• 1:31:27Speaker 01

  Thank you, David.

• 1:31:28Speaker 00

  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've 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.