Who should read this book?
If you are in the computer business, you must know Dell's story. He was a hard worker, he came up with a very simple idea - direct selling - and then expanded his company to become the second largest privately owned computer manufacturer in the world. The story of Dell himself is always associated with the story of his company, and this book (written by himself gives readers very honest perspectives. The author presents the history of development. company, its challenges, its troubles, and its achievements in an unpolished and genuine voice.
About the author
Michael Saul Dell (born February 23, 1965) is an influential capitalist, investor, social activist, and author. He is the founder and CEO of Dell Corporation, one of the world's leading providers of information technology system solutions. He was ranked 49th in Forbes' 2012 list of the world's richest people. As of August 2016, his total net worth is estimated at $20.1 billion.
Michael Dell, from a young entrepreneur…
Dell started collecting stamps at the age of 12. At that time, he noticed that stamp prices were increasing, and he also discovered that auctions were a good way to learn about stamps and make money. So he organized an auction of his own. He asked the neighbors if they wanted to sell his stamps and advertised the auction in a business newspaper. The auction not only helped Dell raise $2,000, but also taught him two valuable lessons: cut out the middleman and don't hesitate to bring your ideas to life.
On summer vacation at age 16, Dell sold subscription publications at the Houston Post Office as a part-time job. Due to future customer demand, he realized that newlyweds, first-time homebuyers and people who had just moved to the area were more likely to subscribe to the long-term newspaper. He immediately bought the list of those people from the real estate companies and the scribe who handled the county marriage registration. After that, he made $18,000 by hitting his target customers and contacting them.
Born in 1965 in Houston, Texas, Dell grew up in the early years of the personal computer age, and they quickly became his great passion. He kept hanging around at computer stores and finally on his 15th birthday, his parents had to buy their son a PC. However, the two were infuriated when he immediately disassembled the machine to find out how it worked. Then, fortunately for him, the 1982 National Computer Conference (Comdex) was held in Houston and Dell skipped school every day to attend. The PC Manufacturing Deepening Conference opened up Dell's eyes. He discovered that price increases helped sustain revenue—the way IBM buys components for a PC for $600-$700 and sells them to retailers who would market the product for $3,000. .
“I would rather dismiss a great idea than not make the most of it.”
Rekindle a business
Another thing Dell realized is that anyone can buy these components and build their own machine. Plus, store salespeople are often tech-savvy. Retailers make $1,000 in profit from a computer but don't help the customer. The demand for computers at that time was so great that people often didn't ask questions, they just bought them. Despite his young age, Dell believed he could make better computers and sell them cheaper – but his parents wanted their son to go to college and become a doctor. doctor.
In his first year at the University of Texas, Dell took the regular class while upgrading computers for business people and professors, earning about $50,000-$80,000 a month. . He also obtained a license to sell equipment, so he was able to bid on orders to sell his high-tech computers to the state and win a lot of contracts. However, with that success, his grades were not very good at school, so his parents unexpectedly visited their son. He quickly threw away all the computer-related stuff in his dorm room, but was still forced to give it up and focus on his studies. His father said: “Strive for his priority. What are you going to do with your life?” In response to his father, he half-jokingly said, "I want to compete with IBM!"
In 1984, Dell founded Dell Computer Corporation. He rented a small office, hired a few employees, and began buying IBM's inventory of computers to renovate and resell. But all he really wanted to do at the time was make his own computers. He realized that it was possible when a company called Chips & Technologies started selling chip sets that reduced the number of chips needed to make a PC based on the Intel 286 processor from 5 to 5. 6 chips. The Dell engineer was also hired to design the prototype – which he completed in just a week and received $2,000.
From the company's early days, Dell delegated authority and fought bureaucracy. He required the sales staff to install their own computers, so that they could understand the characteristics and construction of the machines. In 1985, he moved the company to a 30,000 square meter building, which two years later was once again expanded. In 1988, the company went public for the first time.
“If you have a really great idea, ignore the people who say it doesn't work and hire people who actually see your vision.”
Compete with big rivals
Dell devised a unique strategy to compete with other big PC companies: he cut out the middleman – something he learned at his stamp auction as a child. Instead, he sold directly to customers, delivering computers straight from the factory to them. The company carefully inspects the parts to ensure consistent quality. Knowing that consumers might be hesitant to buy an expensive machine they can't test first, Dell offers a 30-day money-back guarantee.
The company uses market research to find new opportunities. Highly trained sales teams reach buyers from government, small business owners and schools. Dell builds machines with the features consumers want and they will buy. When IBM captured 70% market share by offering the 6 megahertz 286, Dell designed an 8 megahertz machine and sold it for $2,000 less than IBM's line.
By 1986, when Dell's sales hit $60 million, Michael Dell decided it was time to go international. In 1987, he opened sales in the UK. Although critics argued that customers in other countries - including the UK - would not buy directly from the company, Dell proved them wrong wherever he branched out.
The foundation of the “direct model”
Dell's "live model" requires close communication with the customer. It is based on the following rules:
- Understand the customer – Dell employees communicate with customers approximately 30,000 times per week. Dell itself estimates that it spends 40% of its time with customers. The company arranges large customer support teams such as Boeing, AT&T and Nortel at their headquarters.
- Learning from the customer – When Amoco needed a generic card to access their PCs throughout the system, Dell created specialized machines just for this purpose. Dell customers can focus on their own needs, while Dell provides computers designed to meet those needs and support their operations.
- Find reputable suppliers – Maintain good supplier relationships, strengthen inventory management, increase the expertise of the workforce, and help the company develop cutting-edge technologies. Because of its good relationship with Intel - one of the suppliers, Dell was able to get machines using Intel's new processors on the day Intel launched them. 90% of Dell product components are supplied by nearly 40 businesses. Reducing the number of suppliers helps Dell reduce the cost of maintaining relationships. Dell expects its suppliers to be agile, agile, and able to keep up with the company's 40% annual growth rate. Those businesses must not only know Dell's current productivity, but also plan for future production schedules and demand.
- Manage inventory speed – In a business full of rapid change, Dell can't waste money waiting for parts or getting stuck with obsolete components. The company doesn't want to have a lot of inventory (especially when the goods have become obsolete), but they want to always have supplies on hand when needed, so Dell commits to buying more from businesses if they Take small orders more often. To make sure they can meet their schedules, Dell provides as much information as possible about the company's goals and strategies – a method known as "commodity exchange".
- Reduce R&D costs – The computer industry pours more than $12 billion annually into research and development, of which Microsoft and Intel account for more than half of this. Through strategic research and development, Dell invests more than $3 billion. The company knows that larger orders instead can prompt suppliers to upgrade their technology or perhaps even create new technology.
Dell often jokes that no one at school taught him how to run a billion-dollar company. It was the rapid pace of growth that became a problem, because it distracted him from more important things than profitability and cash flow; that is, the value is opposite to the growth rate. The solution, already obvious, is to focus on facts and data. From here a new goal was born: to do less and focus on quality.
Instead of trying to launch a lot of new models, for example, the company will focus all its efforts on the Dell Latitude. This is the first laptop with a lithium ion battery that lasts as long as a flight from LA to New York. This is a huge success. In today's competitive world, Dell says, "We're starting to realize that understanding what you're doing is just as important as knowing what you're doing."
Dell cherishes the method of selling online before everyone else. The company's specialty is direct-to-consumer sales, so the direct (no intermediaries) nature of the Internet is a perfect vehicle for growth. In June 1996, the company started selling computers online and by December was making a million dollars a day, while Amazon.com was only making $15 million a quarter and that number was dwindling. So, when this business model was launched, it reaped huge gains by applying the right methodology.
Dell also became known for its in-house service, at a time when something went wrong you had to take it to the store. Because the company did not have any stores at the time, Dell was forced to provide this service. Being a direct selling company means working harder to convince customers to believe in its awesomeness. The company had to “promise little and deliver a lot,” as Dell mentioned, never doing things just to race with technology, he wanted to make sure that what was delivered to the customer was the right thing. they need.
“Some people have said that the difference between Dell and other companies is that while the rest make mistakes, Dell always tries not to make the same mistakes a second time.”
Success Lessons of Michael Dell
- Think Different – Many people have told Dell that the direct approach to selling computers won't be universally applicable. "It's fun to do things that people think are impossible." he said. As such, skepticism has become a fundamental element of the company's culture.
- Building “a company of owners” – Employees at Dell are encouraged to think like Dell entrepreneurs or owners, focus on the main goals of the company, constantly learning, thinking Create and share company success stories outside. To avoid complacency, his corporate environment values debate and self-criticism.
- Never stop learning – “Getting on the cover of Fortune doesn't guarantee anything,” says Dell. In the computer industry, no one sleeps on victory; You need to be an avid reader of what's going on and be prepared for it. Dell even surfs the web after the kids go to bed to see what people in the chat room are saying about his company.
- Understand the economic situation of the company – Must focus on increasing earnings and market share, profitability and cash flow; as well as understanding where your money is coming from and what's driving it. In the mid-1990s, server prices were very expensive. Dell saw that opportunity and launched a low-priced server, and he ended up capturing a large share of the market.
Written in the frenzied days of technology in the early days of the Internet, Direct from Dell is a classic because it is both a chronicle of a golden age as well as an autobiography of the author's own success. And although Dell is clearly a passionate businessman in this book, his humanity can still be felt gently in every word.