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Parents are Hard to Please: Michael Dell

Michael Dell (Image: Wiki)
Michael Dell (Image: Wiki)

Michael Saul Dell is a legend. From a dorm room, he built a multi billion dollar business. Dell Inc, the company he founded in 1984, is going private 25 years since it went public. On Monday, the company’s board recommended a $24.4 billion buy out offer from Michael Dell and the investment firm Silver Lake partners to take the company private. It’s like starting all over again. As Dell makes bigger and more long term bets, it doesn’t want to play to public shareholders who may see these moves negatively. In an interaction with entrepreneurs at an event organised by India’s software lobby Nasscom’s startup program, Dell shared his experiences and thoughts on entrepreneurship. Edited Excerpts:

What would be your advice to entrepreneurs?

I would experiment, test, build fast, fail fast. You know planning is fine, but generally when you are starting, you always do 10 times more when you start doing it than when you are thinking about doing it.

Every entrepreneur has an advantage of looking at the world with a fresh pair of eyes. That’s the beauty of a new business.

Think about today, the number of devices that are connected together and how that’s growing as the cost comes down. How much data is being created. By 2020, we will have say 10 devices for every human. That will be 70 billion devices. Tonnes of new opportunities, businesses. Today we know customers store a lot of information but how many businesses use this to make decisions? So I believe we are still in early stages of the IT industry. Its a great time to be an entrepreneur.

Most growth in global economies is occurring in small and medium business and its happening because of access to technology. Its also the largest market in the world.

Its a great time to be an entrepreneur.

How did you look at failures and false starts?

I don’t have any regrets. But I did live in fear of failure. The good news is that I wasn’t going out seeking a lot of advice. If I’d asked a lot of people, they would have told me it wouldn’t work and tried to persuade me otherwise. Entrepreneurs need to be a little bit crazy. At least in the eyes of the others.

We have to be willing to do things that others wouldn’t be willing to do or think is outrageous. If it was obvious, everyone would have done it.

What would you focus on if you were to startup up?

There is so many to choose from. Combination of biological science and physical science is creating a lot of opportunities. The field of how do you capture value from all the information that’s being created. IT security is creating opportunity. No shortage of opportunity. There are interesting things happening in data centers as we move from tightly coupled appliances to more open architectures. In storage, we are seeing software defined models. In networking we are seeing software defined networks. It changes the game. The fun continues.

Your parents wanted you to be a doctor. How did you become an entrepreneur?

We have the Dell Medical school now (laughs). So I didn’t turn out a doctor but we have a doctor now. Are you happy now? And we have a children’s hospital. Are you happy now? Parents are hard to please. Still working at it (laughs). For me, I come from a family of doctors. I was the first not to be one. I also observed that there are fields that have not seen a lot of IT. For example, in a hospital you see a lot of files. What century is this from? Don’t they know there are databases and computers? Using information, you can address a lot of issues. Whether it is education, healthcare or energy.

How do you go about selling to the global market?

It really depends on the product and the target customer. If its in enterprise, there aren’t that many countries that represent significant majority of enterprise market. They are easily identifiable. In our case, we started in the US, went to UK, Canada and so on.

How do prices work in these markets?

Prices have to be a function of the local costs which could be different. You have to understand what the buying criteria is. You have to start with the leading customers who are more adventurous and willing to experiment.

Does it make sense for an enterprise focused startup to address consumers?

Hard for me to answer but I’ve seen that there are way more startups in the consumer space than the size of the market dictates and not nearly as many startups in the business and commercial space. If the IT market is 3 trillion dollars, about $250 bn is consumer and the rest is commercial. But there are way more consumer startups than commercial startups. We are all consumers so we can relate to that. If you got to startup conferences, you will see a whole lot of consumer startups and not enough enterprise startups. The odds are better if you are in the enterprise market. The consumer market is smaller with a lot more competitors.

How do technical founders move on to becoming the CEO of a company?

First, go and get some good sales guys. Its very personal decision. You may decide that I love developing products and will continue to do that. That’s possible. You just need to think about the organisation and how do you do that. You can also decide that I will do what is needed no matter what that is. Its a personal decision.

Have investors asked you to do things that didn’t make sense?

We never had an outside investor until 9 months before we went public. We didn’t seed capital, venture capital or anything. So because we didn’t have capital, I created a business model that didn’t require a lot of capital. There never really have been venture capitalists in the business.

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