FYI: The Dallas Morning News
Michael Dell gives lessons about the new economy.
It should come as no surprise that Michael Dell was a precocious kid.
But the entrepreneurial instinct that he displayed even in high school may help explain why Dell is a billionaire many times over while the rest of us are not.
At 16, he hired some of his buddies to cull marriage licenses and
mortgage records at county courthouses around Houston. He had a
target-marketing strategy to sell subscriptions to the local newspaper.
The plan worked well enough for young Dell to earn $18,000 that year, a fact he revealed to his history and economics teacher during a class project in which students were asked to submit their tax returns.
''At first my teacher corrected me, assuming I had missed the decimal
place,'' Dell writes in ''Direct from Dell: Strategies that
Revolutionized an Industry'' (HarperBusiness, $26, 236 pages). ''When
she realized I hadn't, she became even more dismayed. To her surprise, I had made more that year than she had.''
That teacher was not the first person to question Dell's success, nor
would she be the last. So far, at least, the 34-year-old chairman and
chief executive of Round Rock, Texas-based Dell Computer Corp. has only confounded the naysayers.
Even his parents, who were initially disappointed that he dropped out
of the University of Texas after his freshman year to turn his side
business making personal computers into a full-time career.
''After a while, my parents forgave me,'' he writes. ''A little bit
after that, I forgave them, too.''
Small wonder. Dell is now one of the world's leading makers of PCs,
with sales in its last fiscal year of more than $18 billion. As the
fastest-growing major PC maker, Dell's stock has been one of Wall
Street's highest fliers, rising over the last decade some 36,000
percent.
That decimal point is in the correct place, too.
With Dell now established as the PC maker to watch, it was only a
matter of time before Dell would tell his story. His book was written
with Catherine Fredman, who also collaborated with Intel Chairman
Andrew Grove on his 1996 book, ''Only the Paranoid Survive.''
Like the Grove book, ''Direct from Dell'' is less a memoir or corporate history than a series of lessons about the new economy, sweetened with personal anecdotes.
Both books are focused on how the Internet is bringing huge change to
the way business is conducted.
Dell has some useful lessons to pass along for life in the information age, particularly on how manufacturers can and should cultivate closer relationships with their suppliers and customers.
Unfortunately for Dell, many of the messages that seemed fresh in
Grove's book about being nimble in an era of rapid change now seem
tired.
''Direct from Dell'' is best at describing scenes from one man's
remarkable odyssey in the computer business and weakest as a textbook.
Indeed, to some degree, it is ironic that Dell, the college dropout,
now has a book destined to be read by so many of those who dream in
their business-school classes of becoming high-tech moguls.
The Dell story is largely about proving the skeptics wrong. For much of its history, Dell was considered a quirky bit player in the PC industry because of its business model - taking orders from customers and then custom-building machines.
Rival PC makers, such as Compaq Computer Corp. and International
Business Machines Corp., have sold their machines primarily through
traditional channels, such as retailers and specialty distributors.
Many people mistakenly assumed that Dell's customers were primarily
computer hobbyists. Instead, the company was taking aim at large
corporate accounts worldwide, now the mainstay of its business.
Dell has argued that the direct-sales process bypasses middlemen who
add costs to the transaction without necessarily providing additional
value to the customer.
Moreover, selling directly allows Dell to have a closer relationship
with its customers. Their suggestions for added customization, such as unique software loads or attaching corporate asset tags at the factory, have improved Dell's competitive edge.
Over the past two years, Dell's biggest rivals - Compaq, IBM and
Hewlett-Packard Co. - have copied aspects of the direct model. And to
some degree, those companies are gaining market share as a result.
For Dell, the Internet was a natural extension of its roles as a
computer firm and a direct seller. The company has one of the leading
electronic-commerce Web sites, with daily sales of more than $14
million.
Dell does not want to automate the whole process. He is still a big
believer in personal contact, holding meetings for his largest
customers in regions around the world to get feedback on their
technology priorities.
Ultimately, though, Dell is a bigger believer in the process he has
created than in his own intuition. Facts are your friend, writes Dell, who advocates relying most on sales data for future planning.
''When you come across data that are strikingly different from what you previously thought, how long does it take you to shift your thinking?'' he writes. ''The longer it takes, the more you're relying on your emotions.''
(c) 1999, The Dallas Morning News.
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AP-NY-03-04-99 0623EST< -0-
By Alan Goldstein
The Dallas Morning News
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