DOCTOROFF: Good evening. I'm Dan Doctoroff, for another four weeks,
the CEO of Bloomberg. And I am thrilled to welcome you all to the
Council on Foreign Relations meeting. This is "Growth, Innovation, and
Technology: A Conversation with Michael Dell."
I want to thank Bernard Schwartz for his generosity is establishing
this lecture in 2002. These are typically some of the most interesting
meetings that the Council hosts, and we are thrilled to have you with
us this evening.
Just a couple of announcements before we get started. Please turn off
-- not just put on vibrate -- your electronic devices to avoid
interference with the sound system or interruptions to our discussion.
If you'd like to use an electronic device today, please do so outside
the room. And I would like to remind the members that this meeting is
on the record and livestreamed and recorded.
That out of the way, I just want to say something quickly. A few
months ago, my friends at the Council asked me to moderate an evening
discussion with a very special guest. I said, "Well, who is it?" And
they said, "We're not going to tell you."
I said, "Well, give me some hints." They told me it was a guy by the
name of Mike, a guy who founded his company 30 years ago out of a
single room, a guy who grew his company from its humble beginnings to
become one of the most successful and influential technology companies
in the world, a guy who became a billionaire and launched one of the
largest and most important philanthropic organizations in the company,
a guy who stepped down as CEO of the company that bears his name after
a 20-year tenure, only to return to the helm.
I can understand why CFR tapped me for this role. This one actually
hits pretty close to home. And, by the way, Michael, I do have my
resume in my...
... in my pocket here. Nonetheless, it truly is an honor to share
DELL: And I understand you have experience working with Michaels, so
DOCTOROFF: No question about it. So, no, it is my real pleasure to
share the stage with Michael Dell, an entrepreneur so legendary that
his name has been synonymous with innovation for three decades.
Undoubtedly, you know the story of Michael growing the company that
bears his name from nothing into the world's largest PC maker, and you
know that in recent years he's not only returned to the helm, but
taken the reins at a time of unprecedented upheaval in the PC and
technology space. He's taken his company private and now is pivoting
Dell's products, services, and culture with incredible speed that
betrays its massive 100,000-person workforce.
Here, though, are a few facts that you may not know. When Michael was
9, he applied for his GED. Did you actually pass it?
DELL: Well, I never got a chance to take it, so...
DOCTOROFF: Oh, OK. When he was 12, he got a job washing dishes in a
Chinese food restaurant. When he was a teenager, he set an all-time
record by selling $18,000 worth of Houston Post newspaper
subscriptions in a single year, a record that may well stand for all
... since nobody's selling digital subscriptions anymore. The next
time you run into a kid -- seriously -- who thinks that he or she can
take shortcuts or can just start or blog or write an app and get rich,
tell them to read up on Michael Dell. He's the definition of work
ethic. His unique combination of visionary thinking and determined
effort makes him a role model to all of us who are looking to be
successful in business and maybe even leave the world a little better
So, Michael, let's get started.
DELL: Thank you for that very kind introduction.
DOCTOROFF: You're welcome. So let me ask a question. What motivates
you? What drives you? It's been that way since you were a little kid.
What is it that has made you sort of the kind of driven entrepreneur
that you are?
DELL: You know, I think it's just been curiosity. I like to win. You
know, I like to do -- be involved in interesting things. I mean, I've
always been fascinated with business. And, you know, calculating
machines intrigued me from a very early age. My dad had this adding
machine, and, you know, it was the kind where you'd press the numbers
and it would make a lot of noise and it was kind of fascinating to me
that this thing was adding up numbers.
And then in the early '70s, the first semiconductor-based calculators
came out. And I was, you know, like 7 years old, and it was pretty
interesting to me to kind of see, this thing could do math problems.
And then, you know, I was reading about the microprocessor and then...
DOCTOROFF: At 7 years old.
DELL: Well, yeah, I mean, you know, a little later, you know, 11, 12.
DOCTOROFF: Late bloomer, obviously.
DELL: And, you know, it was kind of the beginning of the
microprocessor age. And, you know, it was just incredibly interesting
to me that -- you know, the idea that now you could have a computer
yourself, right? I was in -- I was in a math class in my junior high
school, and I got lucky. My math class, there was a teletype terminal,
and you could program, you know, and send the program off to the
mainframe. The answer would come back, and that was just really
interesting to me. So I, you know, dove into that, understood as much
as I could about that.
And then, you know, right -- that was right about the time the
microprocessor-based computers were coming out. And so, you know, it's
just been a big fun adventure continues.
DOCTOROFF: Certainly continues. So a year ago, you took the company
private with Silver Lake. You -- before the acquisition -- were the
CEO. You owned about 15 percent of the company. Today, you own about
70 percent of the company. Why do this? You know, you're worth
billions of dollars. Why double-down?
DELL: Why not? I mean...
DOCTOROFF: It's a good question.
DELL: What else are you going to do? I mean -- so, I mean...
DOCTOROFF: I'm very familiar with guys who didn't know what else to
DELL: You know, in -- in 2007, we set the business on a pretty new
course, and we said we need to build capability in solutions and
services and software. We started acquiring other companies and really
moving the business in a different direction, while still, you know,
holding onto the kind of core infrastructure, product business that we
had, but helping our customers solve the bigger problem that they were
So as we set about to do that, we acquired, you know, 40 companies,
and those companies themselves acquired 150 companies. As we were
doing that, you know, the financial markets, you know, were not really
enjoying what we were doing, right? And so there was a lot of kind of
competing pressures in terms of, OK, you know, don't do that. You
know, have a bigger dividend. Do a share repurchase. You know, why
don't you, you know, consider other alternatives?
So you saw this pressure between the kind of short-term-minded
investor and the long-term-minded investor, and so I felt the best
option for the company to be able to invest more in R&D and get on a
growth path once again and continue the strategy that we're on,
because we fundamentally haven't changed the strategy since we've gone
private. We've just accelerated it.
And, you know, it was -- it was a long, drawn-out process. We got
through all that. And...
DOCTOROFF: Was there ever a time when you really thought you weren't
going to succeed during that whole, long, drawn-out process?
DELL: There were some pretty dark moments. It was a pretty harrowing
process. And, you know, whenever you go through something like that,
you're effectively putting the company in play. And, you know, the
company was available for sale, right? And it's the only way you can
do it. And there were lots of other buyers that showed up and, you
know, fortunately we got through that and, you know, ended up being
the high bidder and paying the highest price available to
But, you know, it inflicted, you know, uncertainty, you know, for a
time on our team and customers. Fortunately, you know, our team really
responded well to that. They held together extremely well. And when it
was all done, boy, were they excited, right? You know, the energy and
passion among the workforce has really been a much greater than I
expected positive surprise.
DOCTOROFF: Why do you think that's happened? Let's step back for one
sec. I mean, based on reports, including Bloomberg News, which is
never wrong, the value of the company, the value of your stake has
increased substantially. You've paid down about $3 billion of debt.
And while we don't what earnings are, clearly revenues are up. I mean,
after a year, it looks great. So what -- just tell us how you feel
after one year.
DELL: Feel absolutely great. I mean, you know, look...
You know, what -- you know, I think even more convinced that it was
the right thing to do. You know, we've been able to direct our energy
100 percent towards our customers. And what our team has seen is that
there's real conviction in the investments in the business.
And so, you know, whether you've been at the company for a day or for
a quarter of a century, you see the, you know, the company really
investing seriously behind the big areas where we want to grow versus
what's going on competitively with split-ups and spinouts and all
sorts of things.
And it's working, right? We're gaining share. We're growing. And so
that's a lot more fun than what we were doing before.
DOCTOROFF: Now, you were the CEO before. The employees were the same
employees. What's happened is you're not public anymore. Is it being
not public that makes that big a difference in terms of how excited
the employees are, kind of how well you're actually doing? Is it
really that big a difference?
DELL: You know, let me go back to this 2007 timeframe. And if you
study the company, what you'll notice is that we went through a pretty
big change in terms of what we were endeavoring to achieve, and we
were, you know, acquiring all kinds of new businesses, new activities.
There was a negative feedback loop, right? So we would go do those
things, and then the market would kind of say, no, we don't want you
to do that. Stock would go down. That wears on people. It's pretty
And, you know, now they see this basically permanent capital owning
the company, and focused on the long term, and it's working. You know,
we had -- we had an event after everything was all done inside the
company, and it was one of the most memorable events ever in the
company. And, you know, we were playing loud rock-and-roll music. I
mean, we had chains unleashed. I mean, it was webcast all over the
world, you know, in every country where Dell operates, and teams were
cheering and excited. And when you get that kind of passion unleashed
with 100,000 people, and then you follow it up with investments and
progress, that kind of force is really fantastic.
And so that's the momentum that we've had. We just had Dell World a
few weeks ago in Austin. We had 5,000 customers. We had hundreds of
customers coming and explaining how they're using our technology and
our solutions to enable their businesses and, you know, essentially
directed all the energy of the company to, how do we help our
customers be successful?
DOCTOROFF: Yeah, I've read a lot about the customers and the comments
that they've had about just in a year the company being so much more
responsive to your customers, and it really is sort of that taking the
public focus off, re-channeling that energy that's really produced
that kind of creativity, entrepreneurship, and drive, despite the fact
it's basically the same employees and the same CEO. It's pretty
interesting. Pretty interesting tale.
DELL: You know, what we heard from customers at Dell World was that,
you know, the level of innovation that they've seen from the company
in the last year is pretty remarkable. And one of the challenges for
us is we've created so many new things, even we don't know about them,
right? You know, all the people in the company don't know about them,
and certainly our 10 million-plus customers don't all know about them
yet. That's one of our challenges, is how do we get out and explain
all the new capabilities we have in cybersecurity, in, you know,
solutions, and in, you know, helping our customers, you know, deal
with the cloud, deal with mobile technologies.
DOCTOROFF: The -- speaking of long term, you know, you have a partner,
owns 25 percent. Private equity firms -- I used to run one -- are
generally not known for their really long-term horizon. You know,
typically they have a fund and they want to liquefy in some form
within 5 years maybe. How do you think about that as a window? Or do
you have an understanding with Silver Lake that you're going to do
whatever it is for the long term and they're going to have to trust
you and they're going to be around along for the ride?
DELL: Well, look, you know, we're figure that out. You know, they're
not permanent capital. They do have a fund. And there are any number
of ways to, you know, to deal with that, so -- you know, at the right
DOCTOROFF: You know, we talked about going private. Give me a couple
of really good examples of how your decision-making has actually
changed in the last year as a result of the fact that you don't have
to deal with that, you know, 90-second shot clock, that quarterly
reporting that you did before?
DELL: Yeah, the 90-day shot clock, so...
DOCTOROFF: 90-day shot clock, right.
DELL: You know, the first thing that you realize is that, in a large
public company, you have a machine that is essentially constructed to
-- you know, all the leaders in the company are thinking about, OK,
how do we deliver the results that we're supposed to be delivering,
right? And anything that is sort of outside of that, you know, there's
a lot of energy to not go do those things, right?
And so, first, you have to kind of retrain people to say, well, hey,
you know, what are the new opportunities? Because we weren't
necessarily seeing them all, and so you want to take on some new
risks. You want to accept some volatility. And so as we go around and
look at the business, we're finding areas where we can, you know,
substantially grow parts of the business that are -- you know, that
have tremendous potential.
And, you know, so we're, you know, laying down new investments. You
know, we had a review of our software business on Monday. And the team
came back with, we have a particular business that's growing very,
very rapidly, and, you know, and we kind of challenges the team at the
prior review to come back with a plan to make that like four times
bigger than it is now. And we think that's very possible. We think we
know how to do that. The sort of GAAP financial results, you know, to
go make that happen are not particularly great. But...
DOCTOROFF: It's not something...
DELL: That's going to be fantastic business, right? So we're going to
go do that, right? And, you know, as you discuss, you know, the
business with your colleagues, it's like, OK, you know, this
particular period, it's a nanosecond in the, you know, life of a
company, how do we take the business we have today and grow it
substantially faster than the industry for five years, for 10 years?
And what do we need to go make that happen? So you start to turn on a
whole different part of their brain for our team.
DOCTOROFF: Let's talk for a second about the PC business. You know, in
the last year, your market share in the PC business has gone from 11.9
percent, I think, to 13.3 percent. The PC business has turned out to
be -- at least the market itself, beyond your market share gains,
better than you thought at the time of the acquisition. What's going
on in that business right now? Help us understand some of those
DELL: Well, this is not really new information, but there are about
1.8 billion PCs in the world, roughly 380 million sold per year, and
about 35 percent of them are four years old or older. This is actually
very similar to the data, you know, even a year-and-a-half or two
years ago. And so what you have is a business where at various points
in the cycle, new things will come along where the customer will say,
hey, this product is so much better than the one I have that's five
years old that I should replace it.
Now, if we don't create a new product that's significantly better than
the one we sold you in 2007, shame on us, right? You shouldn't buy
one. But if we do, then, you know, we get this massive wave of
replacement, and certainly there are other factors -- Microsoft having
a new release of the operating system or expiring the support for an
older version -- we see that in the data center, too. You know,
there's a Windows Server 2003, millions of servers are going to be
replaced, and we've got a whole new product cycle geared up for that.
And, look, I think with the excitement and energy around smartphones
and tablets, at one point, there was this idea that somehow those were
all going to replace the PC. And the reality inside businesses is a
little bit different, right? You actually have more than one device.
And, you know, each device doesn't necessarily replace the other
device. So if I have a smartphone, I don't necessarily not have a PC.
Maybe I have both. And, you know, the tablet, that may be a third
device. You know, we have these convertible 2-in-1 devices that sort
of combine the notebook and the tablet.
And then, of course, you've got the emerging markets, right, you know,
enormous growth outside the United States and, you know, billions of
new users coming online. And then the other interesting thing is, our
business is way beyond the PC, right? For every 50 or 60 new
smartphones that get minted out there in the world, there's a new
server that pops up to feed the data, and as the world digitizes and
as the cost of silicon comes down, you have this explosion in the
amount of data. It all has to be stored, protected, analyzed, turned
into valuable insights.
So the pie of opportunities for us is just growing, and then you have
the -- you know, the Internet of things, which are kind of like little
PCs that are embedded in lots of, you know, devices out there. So
we've got an expanding space that requires investment. It requires,
you know, conviction.
DOCTOROFF: Beyond the PC, as you mentioned, you're into all sorts of
things. You want to be the end-to-end provider, so you're in cloud
storage, you are in data analytics, you're in security, you're in
mobile, kind of the list goes on and on. Of all of those non-PC
products, which is the one that you are most excited about today?
DELL: Well, there's -- this is like, you know, which of your children
do you like the most, you know?
DOCTOROFF: And I'm asking you to pick.
DELL: It's pretty hard to do.
DOCTOROFF: Let me ask the question a different way. If you were a --
you were 20-something or 18 years old again, being the entrepreneur
that you are, what's the company -- what kind of company, in what area
would you want to create today? Where would you want to focus?
DELL: The big opportunity that I see is in turning the data into
useful insights and outcomes. And so it's what we call the data
economy. And you think about how -- you know, how's the tech sector
going to grow from $3 trillion to $4 trillion? I'm convinced it's this
data economy. And the way to think about it is, we've been helping
customers store, protect this data for a really long time. How many of
them actually use the data to make better decisions, particularly in
real time? The real answer is, almost none, right?
And so that unleashes an enormous amount of productive power in the
economy, that's a huge opportunity, and that requires all kinds of new
-- new capabilities.
DOCTOROFF: The -- just want to make sure we're not going too long so I
want to give the audience time. Any big mistakes you've made over the
last year? Anything you actually regret over the last year?
DELL: It's been a really good year. I don't -- I don't -- I don't have
a lot of complaints.
DOCTOROFF: How many of you can say that?
DELL: You know, I think -- I think we've -- you know, we've been
running pretty fast and doing some things, and we're learning things.
So, for example, you know, we've been adding lots of channel partners
into our business. We've been working more with systems integrators.
We're covering, you know -- working to cover a lot more customers. As
we've done that, we've, you know, done some things with our
20,000-person sales force to try to line them up, you know, against
the right opportunities. Sometimes we change things a little too fast,
and that's disrupted the business, so we are going to learn from that
You know, I think it's, how fast do you learn? And how fast do you
take learning? But, you know, so far, no real big mistakes, and -- you
know, we're doing a lot of experiments and funding a lot of new things
that we're quite encouraged by.
I mean, we have a fantastic business in health care IT, where we are
creating the health information systems, the evidence-based medicine
systems, you know, the -- you know, physician-affiliated systems. And,
you know, health care IT is an enormously rapidly growing sector,
well-positioned there. That's a place where we're, you know,
DOCTOROFF: One thing our companies share, obviously, as we mentioned
before, both have founders who have their names on the door. When I
announced I was leaving, I was quoted in the New York Times as saying,
"Mike is like God at Bloomberg. You know, he created the universe. He
issued the Ten Commandments. In our case, then he disappeared and came
back." But, you know, the thing is, is that when you have God at the
company, people are going to listen. And frequently they are going to
be either afraid or intimidated to really push back. How do you
encourage people to actually push back on you?
DELL: Well, I think you have to, first of all, look -- look to make
sure that, you know, that they're not telling you what you want to
hear, and that's relatively easy to understand. But, you know, having
an open culture, having, you know, a strong team. It's not just me. I
mean, you know, we have an enormously talented group of people, and,
you know, I'm fortunate to lead the company now, but, you know, you
don't get to do everything forever.
DOCTOROFF: If you own 70 percent, you can, if you want, though.
DELL: But you still can't do it forever. You know, I think we've done
a nice job in our culture of, you know, having active debate and
discussion and discourse, you know, around, you know, ideas and -- you
know, it's absolutely important.
DOCTOROFF: Yeah. The -- beyond your role at Dell, you've also been a
tremendous philanthropist. What are the things that you really would
really like to focus on with your philanthropy going forward?
DELL: Yeah, you know, we focused on areas where we can work for a few
years and then leave, right, and have some change occur, and primarily
focused on children and urban poverty. One of the areas where I think
the foundation has done some incredible work is on, you know, measures
and data, particularly in the public school system.
There was a formative project in New York City that the foundation was
very involved in. And out of that and a number of other things, we
created this standard called Ed-Fi, which is now adopted in I think
about 35 of the 50 states, and being used as a way -- here's the
A child goes from the third grade to the fourth grade. What does the
fourth grade teacher know about how the child did on particular
subjects? Did they have an attendance problem? You know, what do you
actually know about this kid? At a small private school, maybe the
teachers will talk to each other. They'll explain, you know, this is
what you need to know about this kid to help the kid succeed.
The other challenge you have is you'll have two classrooms in the same
school, kids go in, and they come out but different outcomes. And
who's doing anything about it? You know, you know, what's the
opportunity to expose that data to the principal, to the parents,
right and, you know, make some real productive change in the system?
DOCTOROFF: Just one last question before we turn it over to the
audience. Actually, you said that our foreign policy has been focused
on, quote, "dropping bombs instead of dropping jobs," and that you're
pushing to include job growth as part of the U.N. Sustainable
Development Goals. How do you think developed countries can benefit
help developing countries create good jobs?
DELL: Well, I took on this other job with the United Nations as the
global advocate for entrepreneurship, and one of my observations
traveling around the world is, you know, there are -- there are places
where there are lots of young people that are very excited about their
future and they're often very near some of these conflict zones.
I mean, we have in Dell the example of Morocco, OK? And I remember
this because we were looking at setting up a site in Northern Africa,
and we were comparing Morocco and Tunisia. And it was about 60/40, you
know, in favor of Morocco.
Now, the Tunisian government could have done a few things here and
there, and maybe it would have been, you know, in favor of Tunisia,
but Morocco won. And if you go to our site in Morocco, we've got like
2,000 people there. They're young, excited, bright-eyed, bushy-tailed.
You know, the unemployment rate in Morocco is not very high. And those
young people go home to their families and they, you know, believe
that their future is going to be better, you know, tomorrow and --
If you go to some of these conflict zones, you know, you can change
the government, you can have whatever, you know, military action
occurs. If you still have an enormous number of young people that are
unemployed, you got a real problem. And so I think the -- you know,
you think about, where do the next 500 million jobs come from? Where
do the next billion jobs come from? 70 percent to 90 percent of the
new jobs anyway come from entrepreneurs, small-, medium-sized
businesses, and so we've got to be thinking really seriously about,
how do we create jobs and opportunity in those countries? Because no
matter what you do, at the end of the day, if there aren't jobs,
you're going to have a continuing problem and maybe worsening problem.
DOCTOROFF: Great, thanks. So at this time, I want to invite members of
our audience to join the conversation with their questions. And a
reminder that this meeting is on the record. Wait for the microphone
and speak directly into it. Please stand and state your name and
affiliation, and please limit yourself to one question, and keep it
concise to allow as many members as possible to speak.
So, right here.
QUESTION: Thank you so much. My name is Lara Setrakian. I'm with News
Deeply. I'm a new media entrepreneur. And I'd love to get your take on
risk-taking and resilience. You touched on some of it, but how do you
really take risks? How do you make the choice to go for it? And when
you have those dark moments, how do you, frankly, accelerate the time
it takes to bounce back?
DELL: Yeah, well -- you know, risk-taking for me is pretty natural.
But I'm not -- I'm not like a gambler, and I don't jump out of
airplanes, you know? So my risks are pretty calculated. But, you know,
I think big companies are not good at taking risks. The bigger they
get, the -- you know, even the word "risk," you can't find it in big
companies. It sort of gets taken out of the building.
So my job is to make sure it stays there and we talk about it, we talk
about taking risks, which basically means you've got to accept some
failure. And, you know, a way to think about it, you know, inside an
organization is, I don't want you to do five things and get all five
right. I want you to do 10 things, and if you get 7 or 8 of them
right, that's OK.
DOCTOROFF: And you actively communicate that?
DELL: Yeah. Now, if you keep making the same mistake over and over
again, that's not risk-taking, right?
Be clear about that.
DOCTOROFF: Exactly. Yes, right here.
QUESTION: Thank you very much (inaudible) it's a thrill to speak to
the guy who created the machines I use all the time. May I say...
DELL: Thank you.
QUESTION: May I say that the best product you have for a small
business, which I hope you take internationally, is the Gold Support.
I think it's phenomenal. And without that, a small business can't
operate. So I'm asking you, what do you do about that internationally?
DELL: You might be referring to our Pro Support.
QUESTION: Yes (OFF-MIKE)
DELL: Yeah, Pro Support -- and we have something new called Pro
Support Plus, even better than Pro Support.
Cleverly named. We have been actively expanding the global footprint
of our support. In fact, this last year, we opened up support in a
huge number of countries across Africa, you know, Southern Asia.
Today, we actually cover 99 percent of the world's GDP with our
support services, so I think we've already done it. There are a few
countries where we're not allowed to operate, and we -- you know,
can't help you there. But, you know, it's like -- you know, the three
or four you would think of.
But, you know, we are everywhere else. And that's a tremendously
attractive element, particularly for companies that are globalizing.
So they'll show up in, you know, Azerbaijan and Ivory Coast and, you
know, anywhere else and we're already there. You know, we started by
following our customers around, and it started, you know, with the big
global companies. But now you're seeing a lot of small- and midsized
companies that are globalizing much more rapidly.
DOCTOROFF: In the back, on the aisle?
QUESTION: My name is Chandragan Pancholi (ph) from (inaudible) Weekly.
And I'm still using your desktop since 10 years. But I'm...
DELL: Thank you.
QUESTION: I'm still very, very (inaudible) you are very (inaudible)
about your business model. And I'm trying to figure out what type of
business model you are following now, and it has nothing to do with
few drinks I had at the reception.
But are you following the crowd? Are you having the same thing, like
software business and security business and other things, which other
people are doing? So how do you defer? What is your return on equity,
as you're private now, and whether you're going to become an IPO
DELL: Well, I can tell you that the return on equity for Dell going
back to, you know, the late '80s, today, forward has averaged, you
know, well over 30 percent. And we do have an attractive business
model from a capital and cash conversion standpoint.
You know, there's been a pretty big change in the last four or five
years, as we've focused more on solutions. So we're definitely in the
product business, but, you know, we see our growth opportunity is
helping customers solve the bigger problems, you know, going beyond
And what we found, as we created more and more powerful products, is
that just having the product wasn't sufficient. You needed to be able
to help the customer apply the solution. Some customers wanted us to
actually run it for them. And we needed combinations of hardware and
software and services together to be able to address the opportunity.
But we hope we can replace your 10-year-old desktop. There have been a
few advances in technology that might interest you recently.
DOCTOROFF: Right there, please.
QUESTION: Hi, I'm Marshall Sonenshine, chairman of Sonenshine
Partners, and I'm on the faculty at Columbia. When we break, I'll give
you the piece that I wrote called "The Curious Case of Dell." It's
published at Columbia Business School. It's now a case.
And it talks about some of the curiosities that I think bedeviled the
company as a public company, which was a tough ride for a while, and
that bedeviled the process of going private. But I'm wondering what
some of the curiosities are about American business from your
perspective during that long ride, about being public, about the
nature of boards or activists or financial markets or competitiveness,
any of the great themes that we think about when we reflect on
American business in the world today, must -- I imagine must strike
you as including some curiosities. What are some of the things that
you witnessed over these past 20 years that maybe could change for the
better, if somehow one could flip a switch and change things?
DELL: Well, you know, look, we think there's an important role for the
public markets for sure. And, by the way, you know, in the 25 years
that Dell was a public company, our shares appreciated 13,500 percent,
which was 27 times better than the S&P 500. So if somebody had bought
the shares at the time of the IPO, and the shares were sold at the
time of going private, that was quite an attractive return.
You know, one observation I have during that 25 years, certainly, is
more and more of the available time of the -- of the board was spent
on backward-looking activities, as opposed to forward-looking
activity. And this was a function of, you know, Sarbanes-Oxley and
Dodd-Frank and, you know, all of those kinds of activities.
You know, I think there are some new models that are being explored
out there in terms of, you know, companies that go public but want to
retain a longer-term perspective. You know, we're perfectly happy
being private, so -- you know, that's a big question you're asking.
DOCTOROFF: Let me ask a question about that public versus private. I
mean, there are companies, as you point out, that sort of managed to
maintain that long-term perspective. Amazon as an example. You know,
Jeff Bezos has managed to convince the market that, you know, it
doesn't matter what happens in the short run, that he's making these
very smart investments, he has the track record to demonstrate it, and
that over time it will pay off. You couldn't have done the same thing
as a public company, sort of better articulated that vision and got --
given your success, given what you delivered for shareholders over
time, and gotten permission to make the kinds of investments that you
felt you needed to?
DELL: You know, I'm an optimistic guy, so could we have done it? Yeah,
I think we could do it. I think it would be slower, right? So -- you
know, and so, you know, being private gives us the freedom and
flexibility to do it in a different way, and accepting some of the
volatility and the risk that goes with that.
And, you know, I think that's -- you know, in our case, there was a
pretty big disconnect between the views of some of the more
short-term-minded investors and what I think of as the long-term
QUESTION: Benjamin Barber. We've talked a lot about business here, not
so much about technology and not all at all about the background
environment of science, in which as a technological entrepreneur you
operate. I have a background question which really interests me.
As somebody who's been an innovator and a leader in business
technology, you live in a country where a considerable preponderance
of people don't believe in science. You know, they're creationists.
They don't believe in the science of climate warming. They really
don't seem to know the difference between science and opinion. We had
a president not so long ago who said science is just another form of
opinion and you have a right to yours, I have a right to mine.
I'm wondering how it is for you to do business in technology in a
country which is probably in the developed world the most backward in
the world, in terms of its popular understanding of science.
DELL: Well, I'm not sure what your question is, but...
But, you know, we love doing business in America. You know, and I
think it's a great country. You know, we do have about half our
business outside the United States. You know, the U.S., from a
technological standpoint, is quite advanced. And, you know, don't
really see your question manifested -- manifesting itself as a problem
from, you know, our sort of business perspective.
QUESTION: Irik Miller (ph) from JPMorgan. I'm a tech banker. The first
laptop I was given 20 years ago was a Dell. And the one that I got
three months ago when I took this job was a Dell, so I've upgraded.
DELL: Thank you.
QUESTION: My question for you -- I guess somewhat along those lines --
is really, you know, given your role as the global advocate for
entrepreneurship, what are the things that you're going to advocate
for or you are advocating for from a U.S. perspective in terms of what
you'd like to see, in terms of policy and our regulations around
DELL: Yeah, my role with the U.N. is very, very focused. I really only
have one job, and that is to convince world leaders that job creation
and entrepreneurship should be one of the Sustainable Development
Goals that they vote on in September 2015. And, you know, if you're in
business or you're an entrepreneur or you're involved in creating
businesses, this seems pretty obvious to you. But apparently, not the
case, with all world leaders, so my job is to convince them of that.
You know, simple observation is if you look at the Sustainable
Development Goals, it's pretty hard to imagine those things happening
without job creation. And where do the jobs come from? As I said
earlier, 70 percent to 90 percent come from new and emerging
businesses, entrepreneurial businesses. We need more of those.
You know, you could argue -- and I'm more of a -- you know, I'm not
waiting for the government to, you know, help me conduct my business.
But, look, government can make it a little bit easier or a little bit
harder. And I think, you know, I was in France last week. We as Dell
pay 70 different kinds of taxes in France. Pretty complicated, right,
just to calculate it, you know?
And so, you know, if you want -- you want more entrepreneurs, you want
more new businesses, you know, make it easier. The big companies often
have a voice. The smaller companies, the entrepreneurs often don't
have a voice, but that's actually where the jobs are being created.
QUESTION: Jason Tepperman from Promontory Local Credit (ph). A big
part of competing in the system business historically, at least, has
been being a low-cost producer, managing inventory, working capital,
and historically I think a lot of industries have found that when
they're a low-cost producer, it drives away some of the talent they
need or the ambition that they need. Do you see that as a tension in
your business? And if you do, how do you -- how do you manage that
element of your activity?
DELL: You know, I think it's another kind of innovation. I mean, we
have -- in our operations discipline, we have a process where every
couple of years, we will hire a bunch of new graduates, often from
programs like the LFM program at MIT, and we'll give them a challenge,
you know, from an operational perspective, whether it relates to
inventory or cycle time or, you know, process flows or -- quality,
whatever it might be, combinations of those things. And we don't
actually know how to do it, right? We don't tell them that.
But, you know, they'll often get 80 percent or 90 percent of the way,
maybe even, you know, exceed what -- and they'll create a lot of new
ways of doing things. And that's how you keep, you know, improving.
And, you know, if we don't do it, somebody else is going to, and so,
you know, that's just another form of innovation, as far as I'm
DOCTOROFF: We're in a world in which there's massive investment in
start-ups. How do you as a big company attract some of the top talent
sort of without that sort of big equity opportunity that so many young
people in particular are looking for?
DELL: Yeah, it is a pretty amazing time right now, in terms of
start-ups, and I think that's overall quite a healthy thing. You could
argue whether it's too frothy or not, but in aggregate, it's a very
good thing for the economy.
We haven't really had a problem attracting people to the company. And
I'll say, since we've gone private, the interest in Jordan and company
(ph) has gone up, you know, considerably, because, you know, people
see it as another wave of the adventure and the growth.
And we are headquartered in Austin, Texas. A lot of people like to
come to Austin. Hopefully they don't all come, because we can't have
them all coming there, but, you know, we're operating all over the
world and -- there are definitely particular kinds of skills where
there are shortages for our whole industry. But we've been able to
attract and develop the talent we need for the most part.
QUESTION: Do you think we are in a start-up bubble right now?
DELL: I think there are some concerning signs out there. You know,
it's always hard to, you know, call these things specifically. You
know, there -- the level of kind of digital disruption, reinvention
that's going on right now is very, very high. I think we're going to
see more of that, not less of it. So that's the offsetting piece of
And what's interesting about many of those companies is they're
business model innovations, they're not really technical innovations.
And they're incredibly hard to predict, you know, if you're trying to
think about the technology. So, you know, we can think about what's
going on in software or semiconductors or material science, but that
won't lead you to understand eBay or Uber or airbnb. So those are
different kinds of combinations of technology and business model.
QUESTION: Ladissa Gariette (ph), Escape Dynamics, a space technology
company. Michael, as a leading technology entrepreneur, what do you
see your role in maybe helping companies like -- not the companies
themselves, but innovation in the U.S.? We see Tesla. We see Uber,
that you mentioned, running into big regulatory issues that often are
linked to very outdated regulation and context. And they're each
battling on their own, and innovation in the country's completely
And do we let them just fight on their own? Or do all technology
entrepreneur like you -- is there -- do you have a role to play? Do
you do anything about it? What can we do about it as a nation?
DELL: I think we have a role to play. You know, we've taken the
approach of going to the government, to Washington, to explain what it
is we're doing, what role our industry plays in creating new jobs,
and, you know, being a bit proactive. And, you know, also with the
belief that if we -- if we do nothing, you know, we're likely to get,
you know, regulations that don't really contemplate our business or
our industry. And, you know, that's worked reasonably well.
There are always going to be these new businesses that pop up that
are, you know, very disruptive and concerning for incumbents. I don't
know that there's a real easy problem to that -- or there's no easy
solution to that. And then you have the states, you know, getting
involved in a number of those.
You know, regulation is a really bad way to slow down innovation,
because, you know, the innovation will just pop up in another country.
That other country will move ahead. And -- but, you know, again, we
have about half our business outside the United States. And
comparatively speaking, the U.S. is quite an attractive place to do
business, you know, as compared with most places in the world.
So, you know, for all the problems and challenges and opportunities we
have here, I think it still ranks -- and, you know, if you look at net
investment flows, you know, the U.S. is still attracting tremendous
amounts of investment. A lot of our European customers are expanding
aggressively here in the United States because they see it as an
DOCTOROFF: Yes, sir? Right there.
QUESTION: Thanks. Eric Shube (ph). We've seen a bunch of high-profile
hacking incidents recently, including Sony this week, I guess, and
suggestions that there are national security issues associated with
that. What should we as a country be doing about that?
DELL: You know, this is a complex issue. You have an enormous number
of bad actors out there. And the number of them are increasing. We've
identified about 1,100 different specific groups. We have a business
called SecureWorks that helps protect the largest banks and financial
companies, pharmaceutical companies, anybody with valuable IP, and
also helps respond when there are, you know, incidents that occur.
This is kind of the -- the new form of warfare. And, you know, there's
intellectual property theft. There's state-sponsored. There are
organized crime groups. There are, you know, all kinds of activist
groups. You know, there are things that the government can do, and the
government has some groups that, you know, communicate with those of
us on the technology sector that are working on this problem. There
are some limitations in the regulations in terms of our ability to
share information with the government. There's work going on to make
that a bit easier.
And then -- and then, you know, there's this societal issue, which
relates to privacy. If you want to be private, you're also anonymous.
If you want to be anonymous, then we can't tell you where the bad guys
are. So how private do you want to be? This is not for me to answer;
it's for society to answer. And, you know, we deal with this in, you
know, airports and other public venues where, you know, there's
inspection and authentication.
You know, inside your company, I mean, Dan, you wouldn't allow
somebody in your company to sort of roam around the network and take
whatever information and do whatever they wanted, and you had no idea
who they are, right? You kind of want to know who -- but you can do
that, because, you know, it's your company and, you know, you can
control the environment there.
You'll probably see more and more of those kinds of things. But the
problem's getting more challenging, because you have this federation
of different systems and different users and -- it requires a really
build-out of capability.
DOCTOROFF: We have time for one more question. In the back?
QUESTION: Hi, I'm Amy Wilkinson. I'm an author with Simon and
Schuster, publishing an entrepreneurship book. So I'm curious your
perspective on running a technology company in Texas versus Silicon
Valley and the advantages regionally, you know, for where you are
located. And can you do this anywhere? Could you do it in Ohio? Could
you do it in Wyoming? Like, you know, how do you start a high-growth
DELL: You know, I just started in Texas, because that's where I was.
You know, we have -- we have a great office in Silicon Valley that
came mostly from acquiring a bunch of other companies. I see a lot of
the Silicon Valley companies coming to Texas. And, you know, if you
look at the economy in Texas relative to the whole country, it's done
very well. And it is a great place to do business.
DOCTOROFF: You sound like Rick Perry.
DELL: Well, let's get back here on topic, first of all.
So, look, I think -- I think if you want to find a great company,
first, you'll find it a great university. And, in fact, I would tell
you that there's no great company where there's not a great university
nearby. And it takes a long time to build great universities. It may
be 100 years, right? You know, these things don't pop up in a decade.
And there are a lot of great universities out there. You know, we see
start-ups, you know, all over the country, all over the world. There
definitely are these beehives of activity and incubators and pools of
talent. You know, our company, as it grew, recruited a lot of talent
that came to Austin, to help -- to help the business grow.
And, you know, certainly, it's not going to all be in one place. But,
you know, for us, Texas has been great. That's where I was born. But
we have -- you know, 96 percent of the people we want to sell to don't
live in America. And so, you know, we're out there expanding all over
the world. That's where we see our market.
DOCTOROFF: Well, I think that's about all the time we have. I want to
thank Michael Dell from his candor.
DELL: Good to be here.
DOCTOROFF: I'd like to highlight that our next CEO speaker series with
DuPont's Ellen Kullman will be on December 18th. And thank you very
much for joining us this evening.
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