Michael Dell - The Man Behind DELL

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Michael - The Entrepreneur

Michael's entrepreneurial skills were evident very early on. At the age of twelve, he created his own 'auction business' for philatelists. He got a few people in his neighborhood to give their stamps to him, advertised 'Dell's Stamps,' in a trade journal and earned $ 2,000 from this venture. According to Michael, it was then that he learnt the importance of eliminating the middleman. This became a guiding principle for all his ventures. Michael got a chance to seize greater opportunities and learn important business lessons when he was sixteen. He got a summer job selling newspaper subscriptions to The Houston Post. The newspaper gave its salespeople a list of new phone numbers to be called. Dell thought that this was a random method for acquiring new business. On the basis of feedback from potential customers, he soon noticed a pattern. He found that there were two kinds of people who usually bought subscriptions to the Houston Post: people who had just moved into new houses or apartments and people who were newly married. Michael discovered that couples who planned to get married had to register their names and addresses in the country courthouse for getting a marriage license.

Soon, Michael, along with some of his high school friends collected the names and addresses of such couples and started targeting them through personalized letters offering them a subscription to the newspaper. Even after he went back to school, Michael continued with this work. Soon thousands of subscriptions poured in and he earned $18,000, more than what his teacher earned in a year.

Michael's fascination for machines that could compute things started when he was in junior high school, when his mathematics teacher installed the first Teletype terminal in their school. By the time he was in high school, computers had become a hobby. On his fifteenth birthday he got an Apple computer - he promptly tore it apart to understand it's functioning. In 1981, Michael replaced his Apple computer with the newly introduced IBM PC. He was enamored by the software and programs available for business purposes. It did not take Michael long to realize that the PC would become an integral part of businesses in the future.

Michael spent a lot of his time learning about computers and he was soon able to 'enhance' PCs by adding more memory, disk drives and bigger monitors. Instead of buying components from retail stores, he bought them in bulk from distributors, thus reducing his costs significantly. In 1982, Michael went to the National Computer Conference at Houston and spent his time in computer stores learning about the latest prototypes and previewing technology that would soon be introduced in the market. Michael saw a big business opportunity in computers. He discovered that while an IBM PC was sold for about $ 3,000, its components were available for around $ 600 or $ 700 only. Michael also realized that the people who ran the computer stores were not familiar with PCs. He saw hundreds of computer stores in Houston selling PCs for a profit of $ 1000. These stores were very successful even though they did not offer any customer support.

As Michael was already buying components, upgrading computers and selling them to people he knew, he realized that if he could sell a higher number, he could compete with these computer stores - not only on price but also on quality, and earn good profit. At this stage, he joined the University of Texas. His obsession for the PC business continued and he started upgrading and selling computers there as well. The state of Texas had an open bidding process for which any vendor could bid. Michael applied for a vendor's license and started selling high-performance computers much below the market prices. He soon won a lot of bids for selling computers.

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