How Michael Dell started a business and kept it going


Michael Dell founded his company 33 years ago, in his dorm room as a freshman at the University of Texas, Austin. He had $1,000 to buy PC parts, and took orders over the phone.

After that, it ballooned like crazy — making Dell Computer one of the fastest-growing companies ever. The stock price went on a dizzying tear throughout the 1990s, roughly doubling most years throughout the decade.

It also made Michael Dell a multi-billionaire.

Since then, the path hasn't been easy. The era of gonzo growth in personal computers and corporate servers – Dell's bread and butter – is over. Now, attention has turned to smartphones and cloud computing.

Sensing weakness, legendary investor Carl Icahn tried to buy out the company nearly four years ago, which probably would have resulted in it breaking into pieces. Dell fought him and won, taking his namesake company private, and then making it bigger than ever.

Fortt Knox went to Round Rock, Texas to talk to Michael Dell, just days before his Dell EMC World conference in Las Vegas. We talked about the product news for CNBC viewers, but also about his long journey. Dell almost lost a company he's spent nearly two thirds of his life building, but he developed the skills he needed to become a legendary founder-CEO … and survivor. Here are just a few highlights:

Be Unique

Dell recalled that he had a love for numbers growing up – and that led him to pursue different activities than a lot of his peers in Texas in the late 1970s.

"I was in seventh grade math class, and we had this thing called Number Sense. So, I wasn't on the track team. Wasn't on the football team. Wasn't on the basketball team. I was in the Number Sense Club," Dell said.

"So this math teacher got a Teletype terminal. So you'd write a program, Send it off to the big computer in the sky, and the answer would come back. I was pretty fascinated by that," he added.

At a time when society is encouraging kids to tackle all sorts of activities to pad their college applications, it's instructive: Sometimes it pays to be different, and focus on the talents and skills that are unique to you. Go deep.

Ideas Aren't Everything

Fortt Knox asked Dell what he thought tomorrow's Michael Dell is noodling with in his or her dorm room right now. I mean, he's probably not building PCs. In 1984, personal computers were cutting edge; in the mid-1990s it was websites and web portals. Is it artificial intelligence? Virtual reality?

His response: It's not the what so much as the why.

"You have to do stuff that you're actually incredibly passionate and excited about, and you know something about," Dell said. "The 'oppor-tuneurs' don't do as well as the entrepreneurs," he quipped.

In other words, he believes his success was less about him building PCs in 1984, and more about him following his technology obsession. It recalled the advice Twilio CEO Jeff Lawson gave on Fortt Knox: Don't pursue a business venture just because it sounds like a sure-fire moneymaker.

Study Up

No matter how successful you are in the beginning, you've got to keep learning. Five years into his Dell Computer adventure, in 1989, Michael Dell flew to California to take business classes at Stanford. While he was there, he decided to put together his own advanced curriculum.

"I called up a bunch of the CEOs of Silicon Valley companies, and said 'Hey, can I come and see you? And I'd like to learn about what you're doing.' And I don't know, most of them said yes," Dell said.

"Irwin Federman, and Jimmy Treybig, and Andy Grove. ... You go see these guys, and you know, 'How do you manage a big company?' and they would talk to me, Dell said, speaking about some of Silicon Valley's early titans.

"That was great. I was doing everything I could to learn and get help," Dell added.

Fortt Knox is a weekly podcast from CNBC anchor Jon Fortt. Previous episodes of the program can be found here.