David Senra: I want to jump right into what we were talking about before we started recording. You said you’ve been obsessed, you’ve been running Dell for 41 years. You’ve been obsessed really since you were 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 this story about you in middle school.

Michael Dell: 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 to take these classes. And my mom kind of signed me up, and it was great. They had these college professors, and they were teaching these classes. And the way I would get to Rice University is I would take the bus from our house, right? And it will take you downtown.

David Senra: Okay.

Michael Dell: And I was curious, so I was like, "Okay, if I just stay on the bus, takes me all the way downtown to where the really tall buildings are." So, I go down there. There are really tall buildings, I'm roaming around, I'm 11 or 12 years old, and I see they've got the Stock Exchange there and all these tickers going. I'm like, "Wow, that's pretty cool." And so I just started learning about the stock market. So anyway, it's just something I remembered. And, you know, my parents were always talking about financial markets, and it just sparked sort of this interest really early in life.

David Senra: There's a great line I've seen from both Ken Griffin and Larry Ellison describing you. They're like, "This guy was manufacturing computers in America at a time when there was, like, thousands of other people doing the exact or a very similar thing, and he was the only one that survived." And the reason I just thought about that is because I was watching this talk that Ken gave, I think at Yale, and he said something like this. 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 third grade." And, you know, 60 years later or however old he is, that obsession has not dulled. We were just in your office, and you were showing me one of your new unreleased products that we can't film or photograph. But I was like, "This is like a kid on Christmas." You're still so...

Michael Dell: It's a super cool product. Yeah. I'm very excited.

David Senra: I told you I'll buy one because I think it's cool, too. I'm going to buy one as soon as it comes out. But I just loved this enthusiasm that it is just not dulling. What do you think... I was just with your son, Zach, last night, and we were talking a lot about his business absolutely ripping. He's super intense, and he's just in it right now, right?

Michael Dell: Yeah.

David Senra: And then that was like 95% of our conversation. And then 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?

Michael Dell: You know, it's all just, like, fun and interesting, and I want to learn. And it's like a big puzzle to solve and understand. And you think about the impact that technology has on the world. What could be more exciting than to be in the middle of that, and to figure it out, and to help advance it? And it's an infinite game, right? It never ends. Love to win, hate to lose. And yeah, it's just like the most exciting thing you could do to be in the middle of a business like this and to see it all unfold and play out.

David Senra: Yeah. That's one of the things. He's like, "He's addicted to puzzles." So that's the way you look at it?

Michael Dell: Yeah, I mean, it's like the curiosity solving a puzzle, understanding things, and figuring it out. Yeah, you always want to do that. I mean, I would feel unfulfilled if I couldn't figure out a puzzle, a question. So yeah, there's a burning desire to understand things and to figure them out.

David Senra: Mm-hmm.

Michael Dell: Puzzles and math have always been important.

David Senra: When did you realize that about yourself?

Michael Dell: I never really realized it. You just asked me about it. I mean, it's just what I did. I just wanted to understand things.

David Senra: Mm-hmm.

Michael Dell: And, you know, when I was dealing with physical things, the way I would understand them is to take them apart. It's like, how can you understand something if you don't take it apart?

David Senra: Yeah.

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

Michael Dell: Sometimes I'd put them together, sometimes they would still work.

David Senra: Yeah.

Michael Dell: But it's just the desire to understand things, you know, the curiosity.

David Senra: Yeah, that's 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 12 or something at the time. And then you bring it home and your parents are 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.

Michael Dell: Well, it's like this machine, and it's like it does really cool stuff, but how does it work?

David Senra: Yeah.

Michael Dell: It's like, what's inside it? And how do all those things work? And how do they fit together, and why did they put these things versus those things? And sort of getting down to the essence of it.

David Senra: I had a thought when I was reading your book. At the time, you're taking apart IBM. This is, I'm pretty sure, before... You're a teenager, so this is before you start Dell officially. And I didn't know this about IBM. I had to go back and look it up. It was, like, the most valuable company in the world at the time. It was the first company to ever hit $100 billion 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 reading your book, it's like, "Well, I can do the same thing. What are they doing here that I couldn't do?" Did you have that thought?

Michael Dell: Yeah, absolutely. So, it's back to when you open the thing up, you look inside, what's there?

David Senra: Mm-hmm.

Michael Dell: Well, there are chips, right?

David Senra: Yeah.

Michael Dell: And there are wires, and there are power supplies, and disc drives, and all these components. It's like, "Well, where do those things come from? Who makes those?" Right? "What's inside those?" Or, "How do they make those?"

David Senra: Yeah.

Michael Dell: And so you sort of peel the onion, you know. And you understand all the different elements. And when I originally got the first IBM PC, you know, yeah, probably took it apart before I turned the thing on, you know, just to see what's inside.

David Senra: Yeah.

Michael Dell: 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?

David Senra: Mm-hmm.

Michael Dell: Or these big sort of chips that nobody really knows what's inside except the designers.

David Senra: Yeah.

Michael Dell: All the chips were off-the-shelf chips. So, you could sort of understand what the logic flow was, and what each chip was supposed to do inside the circuit.

David Senra: Mm-hmm.

Michael Dell: And inside the IBM PC, none of the chips were made by IBM, right? And none of the disc 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. They're really charging an incredible markup for this."

David Senra: That's an incredible insight to have as a teenager, though. It's like, to figure out what the actual cost of the components are, and then go look up... You know, it sounds like what Elon did with rockets. Just like, "The Russians won't sell it to me. I'm on the flight back." This is a famous story. It's in all of the books, you know, he's just like, "Well, what is a rocket made of?"

Michael Dell: Mm-hmm.

David Senra: 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, these are all the components, this is what it is. This is, like, where you get them from. Look, the company name's right here. I can just call them up and find out how much this is."

Michael Dell: Well, and you could go to the distributors, and you'd say, "Okay, how much does this chip cost?"

David Senra: Yeah.

Michael Dell: And they'd say, "Well, it's this price for 100 of them."

David Senra: Yeah.

Michael Dell: Right? And you could literally map out the cost of every chip inside the thing.

David Senra: Yeah.

David Senra: 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 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.

David Senra: The best operators in business have this in common, they know their business from A to Z, and their costs down to the penny. Ramp makes doing this effortless. Ramp gives your business easy-to-use corporate cards for your entire team, automated expense reporting, and cost control all on a single platform. Ramp's corporate cards are fully programmable. You can set limits so the spending of your team never gets out of hand. Most companies only find out about excessive spending after the fact. With Ramp, you can stop it before it happens. Matt Paulson, who listens to this podcast, and who is the 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.

David Senra: Go to ramp.com to learn how they can help your business play to win today. That is ramp.com.

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

Michael Dell: Yeah, you want to understand things at a very deep level.

David Senra: Yeah.

David Senra: Yeah.

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

David Senra: 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 why they're doing what they're doing. And this is the genius line from Charlie Munger, where he's just like, well, it's way more effective to tie the ideas to the personality that developed them. And the way you tie it to the personality that developed them is like you read about their life story. You read about their childhood, you read about what their interests were. But I love the part in your book, I was rereading it yesterday, where your parents confront you. Okay, you've started Dell in your dorm room at 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, on this path to be a doctor." And I think your mom was crying.

Michael Dell: She was, yeah.

David Senra: It's very emotional.

Michael Dell: Yeah.

David Senra: And so 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, you're like, cold turkey, didn't even look at a computer for 10 days, and tried to take notes in classes. And then what I realized, it's like, no, it was like you were compelled. Like, "I thought working on computers was going to be thrilling. I'm going to drop out with $1,000, and I'm going to take on the biggest company in the world."

Michael Dell: I think the fact that they put all that pressure on me is the thing that caused me to really reflect on it and decide that, no, this is more than a little hobby or a side thing.

David Senra: Yeah.

Michael Dell: This is just like, "I have to go do this."

David Senra: 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. Yeah, I know, we talked about this last time, it's hilarious, where somebody asked you, it was like, "Well, when you started Dell, like how many hours did you work?" And you're like, "All of them."

Michael Dell: Yeah, I mean, I wasn't doing anything else.

David Senra: Yeah.

Michael Dell: There wasn't really anything else that was important to me. And so, yeah, it was totally all-consuming and super exciting, and I wasn't doing anything else, yeah.

David Senra: Were you more, before that, somebody that just focused on one task at a time?

Michael Dell: I would get pretty obsessed with, you know, individual topics, and sort of go deep on them.

David Senra: Yeah.

David Senra: Mm-hmm.

Michael Dell: So yeah, I wouldn't consider myself generally interested in a bunch of things. I was super deep on certain things that excited me or interested me.

David Senra: Is that still the case today?

Michael Dell: Yeah, tends to be, yeah. Yeah.

David Senra: Yeah, Zach told me, he'll call me at like 5:00 AM. And he'll be like, "I have an idea. We should do this product or this acquisition or whatever." And 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." What made you decide to write the book?

Michael Dell: You know, 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.

David Senra: Mm-hmm.

Michael Dell: And it was during COVID, I had some time and started writing this stuff down. And it felt like a logical place to sort of capture everything that had happened. And, you know, one of the main reasons I wrote it was for our team inside the company, because I want them to understand how we think about the business, and where it came from. And as a business grows larger, it's harder to be able to tell the stories directly with everyone.

Michael Dell: And so, it's just a great opportunity to encapsulate all that, and share what happened really, the good and the bad, the things that worked well, things that didn't work well. And I certainly benefited from reading the stories or hearing the stories of other people, and thought it'd be a good idea.

David Senra: I said this on the episode I made about it, it's like a great gift to future generations of entrepreneurs. I actually think that idea of, like, having a singular piece of media, whether it's a book. There's another idea for you for a podcast. For people as the company grows, to understand, like, these are 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 the actual one that made this. And originally, I talked to them about this, they were just going to do, it was like an eight-part series. It was going to be a private podcast inside the company, which tells the history of Spotify.

Michael Dell: Mm-hmm.

David Senra: So, if you come in now, you know, 20 years into its existence, it's like, well, what was it like year one in an apartment? You know, we got a server in a closet. And so what they did is they did this beautiful narrative, and they would also include the people that were important in the early days. Some people don't last in the company, but they were really important the first two, three, four years.

Michael Dell: Right, right.

David Senra: 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: A Product Story," I think is the name of the podcast. I'm like, "Why don't more companies do this?" I'm not an employee, but if I was coming into Dell or any other company now, and I could have here's eight one-hour episodes, and they say not just this decision was made, it's like, why. These are the constraints we were under, this is what was going on.

Michael Dell: Exactly.

David Senra: Yeah.

Michael Dell: 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.

David Senra: Mm-hmm.

David Senra: Mm-hmm.

Michael Dell: 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 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.

David Senra: Yeah, kind of bring them up to speed. And this is the context, I also think there's an additional benefit 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 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 end up buying their products that I never even would have thought of because now I understand the story.

David Senra: 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, it's just like, "I'm failing for 14 years." This guy is like a mule. He won't give up. 5,127 prototypes. But there's an idea in the book that I thought 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 is designed different, so it's going to catch your eye. But he insisted, they wrote like a 200-word story on a little flyer, right? Maybe like a little piece of cardboard, and you could attach it to the handle of the vacuum cleaner.

Michael Dell: Mm-hmm.

David Senra: And what happens? Humans are attracted to stories, they're attracted to people, right? And so they would read that, and then it would increase their sales because they understood who's behind this, why did they make it, how is it different? It was a very effective sales tool. So, I think doing podcasts like this, books, anything like this, where you can actually tell 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. I'm so glad you put that in front of me." I think it's like a super important idea.

Michael Dell: It's all been a lot of fun.

David Senra: Yeah.

Michael Dell: 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.

David Senra: You mentioned earlier that you benefited from studying people that came before you, and, you know, you wanted to pass that forward. 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?

Michael Dell: 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 all 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 wanted to understand, "Well, how did they do that?" And, "Why did they do that?" And, "What happened?" And I never imagined myself doing anything else other than starting a business.

David Senra: Yeah.

Michael Dell: Or, you know, the idea just was in my consciousness from a very early age.

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

Michael Dell: I always think you can learn from just about anybody, whether they succeeded or failed. And so I try to just understand 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.

David Senra: When you were 15, you were, I think, at some kind of conference, and then this is the first time you ever were in the presence of Steve Jobs. I think Steve was like 25 at the time.

Michael Dell: Yep.

David Senra: 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 like, what was your interpretation of that experience, I guess is what I'm trying to get at.

Michael Dell: Yeah. So, you know, in the early days of the computer industry, as I knew it, the microprocessor-based computer industry, Apple was a leading company, and Steve was obviously this sort of legendary figure.

David Senra: Mm-hmm.

Michael Dell: So, I was in this Apple user group, which was a bunch of geeky people who would get together.

David Senra: Mm-hmm.

David Senra: You don't say.

Michael Dell: Exactly. And, you know, sort of compare how they had souped up their computers, and software they had written, and learned from each other.

David Senra: Yeah.

Michael Dell: And so, Steve came to speak to our user group. And yeah, he was using these incredible metaphors, and we were all listening to him, and looking at what Apple's doing and going, "Wow, that's really cool." And you also started hearing about Bill Gates, who is also about the same age as Jobs.

David Senra: Mm-hmm.

Michael Dell: And 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."

David Senra: 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 explicit advice. I think you were just making an observation. But you said something along the lines that you've seen how countless different companies and entrepreneurs come and go over four plus decades. And you said something that terrified me, unintentionally, that most of the entrepreneurs and founders that you've known were never taken out by competition, that they sabotaged themselves. Can you say a little bit about that?

Michael Dell: Yeah, I mean, I think you could make the argument that they made mistakes along the way that were fatal. And ultimately, the companies didn't succeed. But it's all of their own doing, right? You have to make the right choices in order to continue on and survive, and ultimately thrive.

David Senra: 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 causes for somebody to sabotage themselves or to not live up to what they should have?

Michael Dell: Charlie's right about those three things. We stay away from those.

David Senra: Yeah.

Michael Dell: 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, when I look at the competitors that are no longer around, yeah, they had either overzealously expanded, or made design errors, or they failed to understand the competitive landscape. I mean, there's lots of ways to fail, right?

David Senra: You have a great example of one in the book with Adam Osborne, where he had a very successful... I think the Osborne 1 was relatively successful, right?

Michael Dell: Yeah.

David Senra: Okay.

Michael Dell: Yeah.

David Senra: And he's like, "All right, now we're coming out with Osborne 2. 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 you're like, "We have this great new product. It's even better than 1." What are you telling to the market?

Michael Dell: 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 out of business. And so, yeah, don't want to do that. So, go make some mistakes nobody's ever made before. Try to make them in small increments. Fix your mistakes as fast as you find them.

David Senra: Mm-hmm.

Michael Dell: And you actually want to make mistakes. You just want to make them small, and iterate and fix them quickly.

David Senra: Yeah.

Michael Dell: I mean, one of the things when you're creating a new business in an area that has never been done, or with some new technology, new business model, there's no playbook. There's no book you can read that says, "Here's how you do it," right?

David Senra: Yeah.

Michael Dell: And if you hire the people from the adjacent industry companies and ask them to go do it, well, they're just going to go do what they were doing before, right?

David Senra: Yeah.

Michael Dell: And so that's not going to work. So, you need a lot of creativity, and you need to sort of intuit your way to the answer by experimenting. It's like, "Okay, here's a theory that we think will work. Let's try it," right?

David Senra: Yeah.

Michael Dell: And, you know, "Does it work? Great, okay. Let's do 2X that. Okay, let's do 10X that. Let's do 100X that. Doesn't work? Okay, let's stop, restart, come up with another theory."

David Senra: Yeah.

Michael Dell: And just keep experimenting until you find the answer.

David Senra: You're kind of going through that now. In fact, I want to read something that you said that was one of the most interesting things. You said it on a podcast, and you made this, essentially, talk to your entire company, and you said, I'm just going to read this quote.

David Senra: 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."

Michael Dell: Yeah, exactly. So, you know, when ChatGPT came out in November of '22, we're still looking at this and going, "Wow, this is a big deal. This is pretty interesting."

Michael Dell: ... and you started to see the rate of improvement in the LLMs. And, you know, in technology, you can sort of look at the rate of improvement and the learning curve, and you can sort of plot, "Well, where's this thing going?" Right? "Where is it going to be in a year, or 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. Well, what does that actually mean for the way knowledge work gets done and the tools that humans are going to have?

Michael Dell: So, you think about that, and you go, "Wow, this is a big deal here." We need to totally reset how we're thinking about the business and reimagine it, reframe it, and understand what the processes are going to look like in five years.

Michael Dell: And so, you do all that and you say, "If we keep doing what we were doing before, we're going to be in serious trouble." Because some new company's going to come along, and yeah, they're going to have all these new tools. They're not going to have this legacy of crap from the past, right? And old ways of doing things, and they're just going to do it the new way.

David Senra: Yeah.

Michael Dell: 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 know, you get people excited, motivated, and to drive the necessary change. I mean, in one sense, this is not a technology problem. The technology's there whether you use it or not.

David Senra: Mm-hmm.

Michael Dell: 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, you know, the 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.

David Senra: 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. It's like companies and people cannot envision a future that's different from the present that they succeeded in. So, they just kind of, like, dismiss it, or kind of ignore it.

David Senra: I'm trying to think, though, so you just said, okay, there's no books. Like, what you guys are doing right now at Dell, right? You're on the cutting edge. So, 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. The personal computer, then obviously, the internet was invented.

Michael Dell: Client server technology a little bit before the internet, yeah.

David Senra: Yeah.

David Senra: How many? So, like, I've got four or five?

Michael Dell: Yeah.

David Senra: 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?

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

David Senra: 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 obviously fixed that."

Michael Dell: Right, right.

David Senra: You're not going to be perfect over that many decades. But do you see... Like, is there an echo between all of these that you can apply? Like, certain ideas you could take away and form a structure? It was like, 'Oh, that's kind of similar to what we had to do when we had to reinvent for X, and we're doing-'

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

David Senra: Oh, say more about that.

Michael Dell: So, if you think about the internet, you know, first you had the internet and you had the World Wide Web, right? And websites started popping up in the mid-'90s. And then, you know, but it took a decade before there was really a boom in things like e-commerce. I mean, 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 ten times faster?

David Senra: Yeah.

Michael Dell: You know, if you look at the growth in the usage of these tools. And part of it is that each successive wave of technological improvement is built on the prior foundations, and so they're able to go faster. So, if you have five billion people connected with all kinds of devices, well, now they can use these tools, and that just goes way faster.

Michael Dell: And I think you have to have this idea in your head that any, you know, new thing has some chance of succeeding, right?

David Senra: Wait, say more about that.

Michael Dell: So, there's a lot of wild ideas out there, and if you dismiss them all, you're going to miss some things. So, you kind of have to hold this idea in your head that any of these wild ideas has a chance of succeeding, and let's sort of understand what do all these things mean, and figure out what is the point of intersection, right? You know, what should we be doing about this? And when is it actually relevant, interesting, valuable, and it sort of, you know, hits escape velocity? And if you're sort of stuck in a particular paradigm or you're, like, dismissing things, you're going to miss them.

David Senra: Yeah.

Michael Dell: And so, you know, you need to be open-minded enough to consider all possibilities.

David Senra: But your ability to do that is so counter to human nature, because 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, if you look at what music people listen to, for example, it's like the music you listened to when you were in high school and college, and maybe you've added a couple, but, like, you're kind of 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.

Michael Dell: Yeah, I love the stuff.

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

Michael Dell: Well, you know, sometimes it's a good idea but it's the wrong time.

David Senra: Mm-hmm.

Michael Dell: Sometimes it's a good idea, but it's the wrong company. Sometimes it's just a bad idea, right? But there's no absolutes here, right?

David Senra: Yeah.

Michael Dell: You just have to be open-minded and consider the possibility that things are changing fast enough that, you know, some new thing comes along. If you took the top computer scientists 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."

David Senra: Yeah.

Michael Dell: Right? And so, that's a pretty good example in contemporary period here, you know, where you just need to be open to the possibility that things are going to change. 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.

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David Senra: I just had a thought listening to you speak, tied to something else that you said earlier, where it's like, basically, human's inability to have accurate predictions about the future is kind of tied to the importance of iterating and make sure you're doing a lot of experiments and then having that tight feedback loop to constantly, like, get information. "Oh, that didn't work. Okay, we ran an experiment, it didn't work. Let's try it a different way." Like, those two things work really well together. It's like, well, we're not going to predict the future, we're going to create the future through iteration.

Michael Dell: Yeah, 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 say, okay, let's say you had somebody who was supposed to be really smart or supposed to be an expert at something, right? And you said 10 years ago, how good were they at predicting what was going to happen? Not very good, right?

David Senra: No, terrible.

Michael Dell: So don't rely too much on that, right?

David Senra: This is why I think entrepreneurs have to study past entrepreneurs too, and it's, like, obviously very valuable. Like, it's no surprise that you were reading about these people. Like, what I always say is, "The greats all studied the greats." This is, like, they were doing it today, they were doing it 40 years ago, they were doing it 200 years ago. If you took an average person in 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?

David Senra: 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, this constant iteration, you learn as you go, you can't predict. Like, you just, you know, change one thing and then test it and see how it goes. And he mentions studying Henry Ford a lot in that book. And then James Dyson wrote an autobiography 30 years after that, that he also mentions Henry Ford a lot.

David Senra: 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 ChatGPT is... You know, that my 13-year-old... I use ChatGPT all the time, but I'm a nerd. I like to research stuff. I like to read about stuff. She uses it as a therapist, a shopper, a friend, like, it's an entire ecosystem for them. There's no way you can predict that.

David Senra: So, there's a great line in Henry Ford's autobiography, which was written 120 years ago, okay? This is not a new phenomenon.

Michael Dell: Hmm.

David Senra: 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. Experts tend to know so much and they're so convinced that they're right, they get no work done."

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

David Senra: Yeah.

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

David Senra: So, when we go back to that, "Hey, they're coming for us. They're going to be faster, more efficient, more capable, and they're going to put us out of business. And we're not going to let that happen, because we're going to transform. We are going to be that business."

Michael Dell: Right.

David Senra: What was your hypothesis back then? Do you remember?

Michael Dell: Oh, it was pretty simple. It's that it will be possible to dramatically improve the way we do things in all of the core processes of the business, from software development to support to sales, to every major function in 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.

Michael Dell: So, you know, an 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 soft errors and all these things that are going on 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.

Michael Dell: And so, we created this tool called 'Next Best Action,' which takes all this data and understands what problem the customer's trying to solve. And it helps either the customer or the agent that's trying to help the customer get to exactly the best way to solve that problem in the fewest possible steps. And so, the person helping them feels like, 'Wow, I'm way better at my job than I used to be, because now I got this genius on my shoulders telling me exactly how to solve this problem.' The customer's way happier. The problem's solved way faster, and the tool summarizes the call. So, that saves a ton of time. And so everything gets way better.

Michael Dell: So, you can take that same example and, you know, software development with coding assistance. Our sales teams have access to incredible tools, and so we're doing this all over our business. And of course, our customers are doing it. And what is this doing? It's unlocking the power of data, using compute and using all these models, which also happens to be, you know, we're in the business of compute, and storage, and networking. So, it's an enormous opportunity for Dell itself to be able to help all of our customers unlock the power of their data.

David Senra: 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 all the tools, but we just know that they're coming.

Michael Dell: If we didn't do that, and our competitors did, we'd be finished, all right? 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.

David Senra: Yeah, there's a line in Andrew Carnegie's biography that 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. This is the new product that every other product is going to be made out of, from bridges to roads, and everything else.

David Senra: Like, 'This is the biggest opportunity of 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, wondering what the price of the stock was. He's like fully focused on the greatest opportunity of his entire life.

David Senra: He went into an existing business that was run by older gentlemen, 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 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?'

David Senra: It's like, yeah, because humans are kind of the same everywhere. There's some cultural differences, but our core motivations are, you know, 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.

David Senra: Every time there was a better machine, a more efficient machine, he would immediately rip out the old machine and input and put in the new technology of his day. We wouldn't think about it as technology today. It's definitely technology back then. And when you read his autobiography, which, you know, is in the public domain, anybody can read it for free. It's an incredible gift to humanity. I remember getting to this part of the biography, which is exactly what you just said. It's like, "Okay, even if this isn't going to give us an 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 his technology, and they went out of business.

David Senra: So he says, and this is not a direct quote, this is me summarizing his idea. He says, "Invest in technology. The savings compound. 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? That wound up making his company profitable in a year or two, and their company unprofitable. And then slowly and slowly, they just kept losing money, and then they went out of business. It's very fascinating how these, like, themes just keep reappearing over and over again.

Michael Dell: Yeah.

Michael Dell: Yeah, exactly.

Michael Dell: You don't necessarily want everybody to know what you're doing also.

David Senra: The maxim I have from this, I use it on the podcast all the time, is that, 'Bad boys move in silence.' And so, you mentioned earlier that 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 a 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."

David Senra: One thing that was just hilarious that your son Zack wanted me to ask about was what he calls 'Dad Terminal.'

Michael Dell: Yeah. So, Dad Terminal is what he refers to as... when he kind of taps in and, you know, wants to talk about a particular topic or has a question. And it's one of my favorite times with Zack, you know, because 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, and hopefully save him some pain and suffering and steps from learnings along the way.

David Senra: Yeah. He says instead of typing in the... I was like, "Why is it called 'Dad Terminal?'" I didn't understand what that was. And he's like, "Well, Bloomberg Terminal."

Michael Dell: Exactly. Yeah, yeah.

David Senra: He's like, "You subscribe, you log in, and you have a question, and then, like, you type it in, and you get this really advanced answer."

Michael Dell: Yeah. Yeah.

David Senra: And he's like, "I don't use Bloomberg. I use my Dad Terminal."

Michael Dell: Yeah.

David Senra: And I was like, "Give me an example. Like, what's the last query into Dad Terminal?" And he goes, "Supply chain." He said it like it was obvious. It was like, "I don't have a supply chain. I run a podcast. I read books. Like, explain it to me." He's like, "There's a 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 as to, like, why you think other people describe you as really good at that. Is supply chain just related back to how we started this discussion, as just, like, another puzzle for you to direct your curiosity to?

Michael Dell: It's definitely an important puzzle.

David Senra: Mm-hmm.

Michael Dell: And a critical puzzle. I mean, I think if we had not figured out how to do our supply chain well, you know, we would not be here today. It's as simple as that. So, it's a fundamental thing that is just super important in our business.

David Senra: So, it's just you've thought more about this area?

Michael Dell: 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.

David Senra: 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 might be 20 years old at the time, but you were taking your first trip to China, if I'm not mistaken.

Michael Dell: Well, so that would have been 1985. You couldn't really go into mainland China at that point. There was nothing really to do there.

David Senra: Mm-hmm.

Michael Dell: They weren't making anything.

David Senra: So, you were going to Asia.

Michael Dell: You're going to Asia. So yeah, I went to Japan, Hong Kong, Taiwan, and South Korea.

David Senra: Okay.

David Senra: Yeah. But what I love is just, like, how excited you were.

Michael Dell: Oh, yeah.

David Senra: Because it's like something you said earlier. It's like, you had 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 spending 16 hours a day, I'm sleeping in my office, I'm working. We have customers, we're hiring employees, we have revenue growth, but now I'm getting a deeper and deeper understanding." And so, as I read these biographies of people, I try to build, like... You know, I think I have a good sense of how you think and, like, what's important to you.

David Senra: And what I realized is, like, that instinct that you had as a 20-year-old man or however old you were at that time, it's like that has never been alleviated. It's just this constant, like, keep going lower and lower and lower to seek a deeper understanding of, like, the world around you, but also how your business fits in that world, and how you can build technology to enhance everybody else around you.

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

David Senra: You say, "Of course," and like... So this is another thing I told you when we had dinner. Like...

Michael Dell: How else would you do it?

David Senra: But to you, this is what...

Michael Dell: I don't understand.

David Senra: This is why I think writing the book and having a conversation like this is important, because, like, there is so much s*** in your head that is so unusual and, like, just it's so valuable getting it out and putting it out into the world. Because I remember, like...

Michael Dell: I wouldn't know any other way to do it.

David Senra: 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 just like, I study uncommon people for a living. You are uncommon amongst uncommon people, right?

David Senra: So, the paradox I couldn't reconcile was between this crazy ride that you've had, that's described beautifully in your book. This four-decade, you know, mission that you've been on, that you've relentlessly given a lot of your life energy to, and just how normal you are. Like, I'm talking about like your affectation, your personality. You're very polite, and calm, and measured, but it's just like, do you understand how rare this is?

Michael Dell: No.

David Senra: I know! Because you're like, "Of course, this is what I love."

Michael Dell: Just wake up every day and go do the thing.

David Senra: This is why you're great. But that's why you're great.

Michael Dell: Seems pretty normal to me.

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

Michael Dell: Yeah, sure.

David Senra: Yeah.

Michael Dell: Yeah, yeah.

David Senra: So, he has a great line, and he said that, "The founder is the guardian of the company's soul." That it's impossible to separate, you know, the creation from the creator.

Michael Dell: Mm-hmm.

David Senra: And I think over time, like, the...

Michael Dell: I resemble that.

David Senra: Goddamn right, you do. This is also, again, how abnormal you 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. 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 really made me think about things. 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.

Michael Dell: Yeah, and if you've been doing it every day for 41 years, it seems pretty normal, right?

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David Senra: Lee Walker, tell me how important that was, finding a person.

Michael Dell: Mm-hmm.

David Senra: Because you were relatively persistent in recruiting him. And you were like 21, I think, at the time?

Michael Dell: 21, yeah.

David Senra: And he was 45 or something like that.

Michael Dell: Yeah.

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

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

David Senra: In like operations? Like, what do you think?

Michael Dell: Yeah, I mean... Well, first of all, we were growing so fast. We just didn't have the balance sheet or the capital to support our growth. And so, he helped us get some credit lines and, you know, that freed up capital, and then, like, sort of organized 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 the customers.

David Senra: Yeah.

Michael Dell: And so, he helped sort of get all that stuff on the right path. And then, as we needed even more capital, you know, with a private placement, and then going public, he helped sort of get all that going. And just basically, how do you scale this thing up to get it ready for 10X or 100X growth?

David Senra: One thing I thought was very fascinating that Lee Walker said, right, is you got to the point where, you know, you had that negative cash conversion cycle, but you were selling to, like, individuals. So, an individual is 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.

David Senra: But now you've moved up, and now you're doing enterprise, and some of these companies are huge, like Texaco, and like these giant companies. And I remember at one point in the book, it was something, you were doing like 60 million a year in revenue, and you had like 200 grand in your bank accounts or something. It's just 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 had this maxim that relationships run...

Michael Dell: He did.

David Senra: Okay.

Michael Dell: Yeah, yeah.

David Senra: So, relationships run the world, and you see that over and over again. And so, Lee had relationships with these bankers, that I assumed in the book, and you just verified. But then what I thought he did was really smart. They're like, "Listen, we trust you, Lee, but we don't know this kid." And his whole point is like, "You don't have to even trust me or the kid." He's like, "Look at all the purchase orders. Like, do you think Texaco's going to pay us or not?" And using the brand and the prestige and, you know, essentially the value, like Texaco's not going out of business. They're going to pay this kid that you say you don't know, lend us against our receivables." I'm like, "That's a really good idea."

Michael Dell: Yeah.

Michael Dell: Yeah, it was receivable-based financing.

David Senra: Yeah.

Michael Dell: The problem was that, as a 21-year-old starting a business with really no capital infusion from the beginning. You know, $1,000, right?

David Senra: Yeah.

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

David Senra: Yeah.

Michael Dell: But, you know, Lee had those relationships. He was trusted, and he was able to kind of explain it to them, and that helped sort of break open that logjam. And that gave us some of the capital we needed to continue to grow and expand.

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

Michael Dell: Yeah, so you know, we didn't have any capital, right?

Michael Dell: And so, what we figured out was that if we could dramatically shrink our inventory and get paid from our customers faster, and maybe not pay our suppliers instantly, and 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 then 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, and of course we also... There was this really interesting thing where our competitors, who didn't really understand what we were doing, had these elongated supply chains.

Michael Dell: 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.

David Senra: Whoa.

Michael Dell: So, it would say like 42-92, and that meant that that chip was built in the 42nd week of the 92nd year. And so, you could literally date how old the inventory was by opening these things up. But anyway, so they had like 90 days in their collective supply chain, and we figured out how to have like five days. I mean, it was crazy. It was like a massive advantage. Now, the other reason this is important is because it turns out that the price of electronic components generally goes down, right?

David Senra: Mm-hmm.

Michael Dell: And it's a pretty predictable thing. And so, if our components are five days old and the competitor's components are 90 days old, well, theirs cost a lot more than ours do, right? Now you've got this structural competitive advantage. Now, another element of this is that you also have the freshest and the newest, and the best technology. You're not selling the 90-day-old fish or bananas, right? You're selling the new chip, the latest capability, and so now you've got even another advantage, right?

David Senra: Yeah.

David Senra: Yeah.

Michael Dell: And then you've got this feedback loop because you're getting signal from the customers of, "Oh, I like this, I want that, change this," and so you're able to create this dynamic feedback loop. So, that was what we created, and it worked, you know? And we kept iterating it and evolving it. The competitors, you know, they kind of dismissed it, and one of the best things was they just didn't understand it. They misunderstood it, which was fantastic.

David Senra: How is that... So I-

Michael Dell: It's like you don't want them to understand what's going on.

David Senra: Oh, for sure.

Michael Dell: You don't want to explain it.

David Senra: But how do you explain their inability to...

Michael Dell: Now you can explain it.

David Senra: Yeah.

Michael Dell: But back then-

David Senra: No, I know.

Michael Dell: You don't want them to know what's happening. You just want them to maybe not even see what's going on.

David Senra: So, I have a funny story about this, and then I'm going to get back to Compaq 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. Started in 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... It was an incredible dinner, but I had found out...

David Senra: The same reason we were like, "Hey, I'm writing this book because I want people that come to Dell to understand the history." The family had commissioned a real author, right? I have some of these books at my house. Not from this guy, where these family businesses or these people with brokerage companies, they'll hire an actual author, pay them 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.

David Senra: So I have a couple of these in my home library that people have given me because of the podcast.

Michael Dell: Mm-hmm.

David Senra: But he was telling me this story. He's like, "Yeah, 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, gimme those books." And I leaned in. I was like, "I want those books." I was like, "I'll crush the episodes. The episodes will be great." Because he had so many crazy stories. And without hesitation, he goes, "Absolutely not." And I was like, "Why?" He goes, "I have no desire to educate my competitors."

Michael Dell: Yeah.

David Senra: So that, you just nailed it.

Michael Dell: Yeah.

David Senra: It's like, obviously if you have an edge, shut up about it. This is what I don't understand. So, maybe IBM and Compaq are the two main companies that are not understanding the advantage that you had at this time, right?

Michael Dell: Yep.

David Senra: IBM is a big, old, stodgy company. Okay, that makes somewhat more sense. Compaq 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? What was going on there?

Michael Dell: He's still alive. You can go ask him. You know, I think when you're in a bubble, people tell you things are working, and maybe you just don't want to believe that there's alternate information, and so you dismiss it.

David Senra: Did you read the new biography of Jensen Huang called "The Nvidia..." It's actually a history of Nvidia, but he's heavily featured. "The Nvidia Way."

Michael Dell: I haven't read the whole thing, no.

David Senra: Okay.

Michael Dell: No.

David Senra: I did an episode on it. I'll send it to you.

Michael Dell: Yeah.

David Senra: But he has this whole thing where the threat comes from below. And I think he reduces everything to maxims. He's a really good communicator. And so his thinking is like, "We're going to ship the whole cow because the threat goes from below."

Michael Dell: Mm-hmm.

David Senra: 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. So, 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 Compaq's, which you sold direct to the consumer for $795, if I remember correctly. It was faster than theirs, and they sold a worse computer for $1,500, and it was only through retail stores. It's like, 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!"

Michael Dell: Yeah.

David Senra: "This-"

Michael Dell: And you kind of hope that they don't even see it.

David Senra: Yeah.

Michael Dell: 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.

David Senra: 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.

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

David Senra: I think this is tied back to the importance of following your natural star and something you're just obsessed with. Because I didn't know that part where you could take these things and see, "Oh, this is the 42nd week of the 96th year." That's insane. There's a line in the book, though.

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

David Senra: It's not that hard to you.

Michael Dell: I mean, the numbers are just sitting there.

David Senra: Of course.

Michael Dell: It's like, they're just staring at you. They're talking to you.

David Senra: I 100% agree with you. But this is the difference between somebody who's obsessed and somebody who'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 the IPO, and Black Friday happens. And I think Lee Walker walks into your office to tell you that, "Oh s***, there might 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."

Michael Dell: That's what you do.

David Senra: 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 in Sam Hinkie, 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.

Michael Dell: Mm-hmm.

David Senra: 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. You can't get to the end of what they're interested in." I think he used the analogy of a cup. So you just pour and pour and pour. It's just like, it just keeps going. They can never get to the end of their curiosity. And I think you're a perfect example of that, where if you look at other founders that are doing things for fame or status or whatever the case is, it's like... Jerry Seinfeld has a great line. He goes, "If you just do it for the money, you're only gonna go so far."

Michael Dell: Yeah, when it's a passion or an obsession, there's no end to it.

David Senra: Yeah. And you're taking apart 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 eventually that is going to change. There's not going to be a depression forever. So what can I focus on? I'm going to just focus on understanding what I'm working on, what's in front of me, and then following this deep curiosity, and actually taking the curiosity that comes from your head into an actual product that makes somebody else's life better." It's like the miracle of entrepreneurship.

Michael Dell: You got it.

David Senra: So we were just talking about the fact that Compaq and IBM... They were almost like... Essentially, you got fuel from being underestimated. You mentioned in the book that you found it... I think you said something that's like, "a powerful motivating force." Do you recall why you felt that way?

Michael Dell: Yeah, 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."

David Senra: Mm-hmm.

Michael Dell: And so, they didn't see us coming because they were underestimating us, you know? I think the CEO of Compaq would refer to us as a "mail-order company," or a, "garage operation," or whatever. And you'd hear that, and you'd go, "Oh, wow, this is great." It's like, they have no idea what we're doing. All that was motivating. You know, anytime there was sort of a setback, and the conventional wisdom or even whatever interpretation was, "Okay, they're going to fail. They're going to go out of business," all that was incredibly motivating.

David Senra: Is it still like that today?

Michael Dell: Of course. Yeah. Absolutely.

David Senra: I love how everything is, "Of course." Of course, it is.

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

David Senra: And still caring about the company, even from the grave.

Michael Dell: Yeah.

David Senra: It's a common, I think, misconception, I'm curious to get your take on this, where people are like, "Well, if you don't raise all the money at the beginning and your competitor does, 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 a thousand dollars and a dorm room." Do you feel that it is actually different today? Like, if you were advising a younger entrepreneur.

Michael Dell: I think it's very situation-specific in terms of the company, industry, et cetera.

David Senra: Mm-hmm.

Michael Dell: So I don't think you could give generic advice there.

David Senra: Yeah.

David Senra: Yeah, that's why I think 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."

Michael Dell: Like I was saying earlier, I don't think there are ever these absolutes. I think you always have to hold out the possibility that somebody is going to figure out some clever, interesting way to do something that nobody's ever thought of that is different. And, you know, that's just going to happen, right?

David Senra: Yeah. That's actually an interesting area to go down, where it's like who else... You figured it out by accident because necessity is the mother of all inventions. Like, "I don't have capital, so how do I get money? Well, I'll just ask my customers for the money." And then you accidentally discovered all these advantages and had a deeper understanding as you went along. Are there any other examples of entrepreneurs or businesses that you've studied where it's like, "Wow, that's a really clever way to do something effectively, inexpensively?"

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

David Senra: Yeah. The other one that came to mind was Sam Zemurray, the Banana King. He essentially builds the second-largest banana empire, and then later on overtakes the first largest, which is United Fruit Company. But I guess one thing 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'd have these things called 'ripes,' which are the bananas that are going to go bad in two days from now. And they just take them off the boat and throw them in the garbage because they can't get them fast enough to the store."

David Senra: And his idea is like, "Well, I can use this new technology of the day, which is the railroad. And I can buy this for almost nothing because they're not getting anything anyway, and I'm going to put their ripes, and get on the railroad with it, and then sell it at every single stop." And then he was generating so much cash. And then he could start working down the line all the way to when he had his own banana plantations.

Michael Dell: Mm-hmm.

David Senra: Just that idea. It's like, it starts out with this little nugget of, "Oh, this is an interesting opportunity," and now understanding as you pull and pull and pull and pull, and it gets more and more. Like, you keep stacking these advantages one on top of another. Yeah, I should organize and look into more examples of like... Is there another example of what you had at the beginning of Dell? Because I think that's the key. Like, I think to some degree it's the easier path just to go and sell part of the company, or raise more money, or find essentially, like... Solving the problem with money, where you solved it with creativity and hustle, and intelligence. Those ideas are excessively fascinating to me. IKEA is another one where, same thing, he was just selling mail order.

Michael Dell: Mm-hmm.

David Senra: He's a mail-order company. And he has a great line in-

Michael Dell: Yeah, there's that mail order thing again.

David Senra: I know. I think it's still... [unintelligible]. 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."

Michael Dell: We had this whole thing in the '80s, and we called it, "Beat the mail order stigma."

David Senra: Really?

Michael Dell: And it was sort of like, as we were establishing our brand, sort of the conventional wisdom was a mail order company, which was sort of like an insult, you know?

David Senra: Mm-hmm.

David Senra: Pejorative.

David Senra: Yeah, okay.

Michael Dell: It's like, okay, it's a mail-order company, and it's sort of a stereotype. It's like, "Oh, you can dismiss it because it's a mail-order company," right?

David Senra: Mm-hmm. Yeah.

Michael Dell: And all the press, you know, for years they were like, "Mail-order company Dell," you know, "Mail-order company Dell introduces server." I was like, "What?" It's like, "Okay, we have 30,000 patents. When are we not a mail-order company?" It's like, "What is this mail-order thing?"

David Senra: Yeah.

Michael Dell: So anyway, we had to get rid of that.

David Senra: How did you beat it?

Michael Dell: Just kept doing our thing. You know?

David Senra: Yeah.

Michael Dell: And, eventually, people go, "I guess it's not really, no... I mean, it's the internet, and it's not mail order." I was like, "Nobody orders stuff in the mail. What was it?"

David Senra: I think you just made me realize something that I didn't understand when I read the book... When you were talking about how important it is to not squash ideas, and that, you know, ideas can come from anywhere. And they seem small, but they can have a huge impact. I think Dell was one of the first companies to sell on the internet, right?

Michael Dell: Yeah. Well, so we were selling direct, right?

David Senra: Yeah.

Michael Dell: Like, people could call us on the phone. And we used to have these rooms with a gazillion fax machines, and they would send us their orders on faxes. It was crazy. And they had catalogs, right? And so then, the World Wide Web comes along and websites, and, like, "Oh, you mean we can create a website and people can go on there, and the catalog is there, and they can press a button and order the thing?"

David Senra: Yeah.

Michael Dell: "That's the coolest thing ever. We got to do that," right?

David Senra: Yeah.

Michael Dell: And so, in my first book, you'll notice on every page at the bottom, it says, "www.dell.com." So like, we were just obsessed with getting people to the website because it just became the easy way to interact with people.

David Senra: I read that book, too.

David Senra: Yeah.

David Senra: And that book came out in '97, right? Or '99?

Michael Dell: I think '98, yeah.

David Senra: In '98, yeah. So yeah, you were-

Michael Dell: So it was '98. But yeah, we started with one of the first websites. I mean, there weren't many websites. I remember when-

David Senra: It was a small number.

Michael Dell: I remember when you could go to all the websites. Like, in the whole world, you know?

David Senra: You're like, "I'm done for the day."

Michael Dell: People were like, "There's no more websites!" And it was like... Kind of it sounds crazy now, but there used to be not that many websites.

David Senra: Yeah.

Michael Dell: You could go to them, and, "Okay, I'm done." Like, "There's nothing else to see." That obviously changed quickly.

David Senra: So, how the hell do you even build a store? Like, you were collecting... Do they have to call a number in? Because I remember taking credit cards online. Well, maybe not in '90... If you were doing... Do you remember what year you launched the site? In '97, probably? In '96?

Michael Dell: I think it was probably '90s, '96.

David Senra: Well, you had to build all the stuff.

Michael Dell: In '95, '96.

David Senra: You had to build all the stuff custom.

Michael Dell: We had to build the whole thing.

David Senra: Okay.

Michael Dell: Yeah.

David Senra: Yeah, and it's funny. I forgot about the fact that dell.com is at the bottom of every page. But what's fascinating is that if you read Bezos's shareholder letters, 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 because he's just like, "We got to push you guys to this new thing called, "the internet," where you can buy things."

Michael Dell: Yeah.

David Senra: It's such a fascinating thought, how novel it was. But you kind of saw it right away. We should just do this because it's cool.

Michael Dell: We had experimented with, how do you create an electronic version of the catalog? Even like, we're going to send you a floppy disc or a CD-ROM, and you put it in your computer, and you load it up, and the catalog is there.

David Senra: Mm-hmm.

David Senra: Yeah.

David Senra: Yeah.

Michael Dell: Right? Those are some of the ridiculous things that happened before the internet or before the World Wide Web, I should say.

David Senra: Did you ship that?

Michael Dell: Yeah. We did.

David Senra: So you just, kind of, like...  Remember AOL, and they just essentially carpet bombed the entire country with their CDs?

Michael Dell: Yeah, we didn't do it like that.

David Senra: Okay.

Michael Dell: But ours was more targeted.

David Senra: Yeah.

Michael Dell: 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 kind of infinitely accessible to anyone.

David Senra: The idea of mailing out a floppy or a disc of a catalog is just a hilarious idea.

Michael Dell: But then people were surprised when people started ordering computers online. And I remember we sold 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.

David Senra: Yeah.

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

David Senra: How soon into Dell were you starting to sell targeting institutions over individuals?

Michael Dell: You know, it's really interesting. If you go back to the very, very beginning, the first full year, over 80% of the business was to businesses.

David Senra: Okay, so it started with doctors and dentists, right? Or lawyers were some of your first. But they were using them for business purposes.

Michael Dell: An individual doctor or dentist, I would think of them as more like an individual.

David Senra: Yeah.

David Senra: An individual, okay.

Michael Dell: But... Well, first of all, let's level set here. So, if you look at all technology spending, roughly 75 to 80% of it is in businesses, not consumers. And so that's kind of been the thing for a long time.

David Senra: So within the first year, you got to the same, similar percentages.

Michael Dell: Similar percentage, yeah. You know, there were companies, universities that were buying 5, 10, 20, 50 machines at a time.

David Senra: One final thing that I want to talk to you about that I think is one of the most important ideas in your book, especially when you're trying to push these stories down the generations. So, I see it in a lot of the biographies, and I think it's another misconception... How we just talked about the misconception between entrepreneurs know to be wary of experts, and how they can kill new ideas. Whereas, a normal person would revere them, right? So there's this difference of understanding between that.

David Senra: Another one that I would say is the importance of ego and self-belief, and self-confidence. And general society might say, "You know, you should generate evidence and then be confident." And I hear this a lot, which is perplexing to me because in the books, this is, "No, you have that 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."

David Senra: And you sit there, and again, I don't think you should be reading these books quickly. There's no test at the end. Like, sit with the ideas and really think about what's happening on this page. And I think it's one of the most important pages in the book. I can actually see the page in front of me. And what you realize, you say on that page where it's just like, "Was I a little full..." You know, the idea is like, "I have $1,000. I'm in a 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. I think you have to be to do anything important." Can you explain that mindset?

Michael Dell: Yeah, I think it's a combination of naivete, right? Which is an important element.

David Senra: Right.

Michael Dell: It's like, you don't know enough to know that maybe this won't work, okay? And confidence, but you never sort of want to go over into the arrogant zone.

David Senra: Mm-hmm.

Michael Dell: 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." 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 maybe are no longer as relevant, or maybe you come up with some clever new way of doing it. And then the confidence piece is, "All right, I'm going to go make it work. I'm going to go figure it out." Right?

Michael Dell: But there's always that little voice in your head that'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." Because then you're going to ignore those little voices about, "Well, what about this? What about this?"

David Senra: Yeah.

Michael Dell: So, yeah. It's sort of, I think, a combination of naivete being real here and confidence.

David Senra: Mm-hmm.

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

Michael Dell: It was officially 'Dell Computer Corporation' doing business as 'PCs Limited.'

David Senra: Yeah.

David Senra: Business as-

Michael Dell: Right.

David Senra: Yeah, but then you realized, "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-

Michael Dell: Yeah, what if it doesn't work?

David Senra: But it's interesting because you just said, it's like, "Yeah, I have a lot of confidence I'm going to do this," but the doubt never goes away.

Michael Dell: Yeah, and you know, fear.

David Senra: Thank you. That's actually the last thing I want to talk to you about. One of the first things when we saw each other last month, what we talked about. We were walking around Zach's office. And I don't know how it came up, but it came up almost immediately. And it was a surprise to me because I feel the exact same way. But the fear of failure, in my experience from studying all these history's greatest entrepreneurs... But I think you said the same, is just like, "The fear of failure to this day is a bigger motivator than the love of success."

Michael Dell: Yeah, totally.

David Senra: Yeah.

Michael Dell: One hundred percent. Yeah, you don't want to fail, although failing is how you learn. Pain is the best teacher. And so, you have to have some little failures along the way. But that fear of... You know, you can't have it paralyze you to where you don't want to make any decisions because you're afraid to fail.

David Senra: Has that happened to you?

Michael Dell: Not really, no. You know, what you want to do 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 betting the whole company on this decision. We're just experimenting. And if it doesn't work, great. We learn something, we move on.

David Senra: That's perfectly said. Thank you for writing the book. Thank you for the time. I really appreciate it, Michael.

Michael Dell: Thank you, David.

David Senra: 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."

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