Forum Home Page see Broadridge note below]

The Shareholder Forumtm

special project of the public interest program for

Fair Investor Access

Supporting investor interests in

appraisal rights for intrinsic value realization

in the buyout of

Dell Inc.

For related issues, see programs for

Appraisal Rights Investments

Fair Investor Access

Project Status

Forum participants were encouraged to consider appraisal rights in June 2013 as a means of realizing the same long term intrinsic value that the company's founder and private equity partner sought in an opportunistic market-priced buyout, and legal research of court valuation standards was commissioned to support the required investment decisions.

The buyout transaction became effective on October 28, 2013 at an offer price of $13.75 per share, and the appraisal case was initiated on October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. The Delaware Chancery Court issued its decision on May 31, 2016, establishing the intrinsic fair value of Dell shares at the effective date as $17.62 per share, approximately 28.1% more than the offer price, with definitive legal explanations confirming the foundations of Shareholder Forum support for appraisal rights.

Each of the Dell shareholders who chose to rely upon the Forum's support satisfied the procedural requirements to be eligible for payment of the $17.62 fair value, plus interest on that amount compounding since the effective date at 5% above the Federal Reserve discount rate.

Note: On December 14, 2017, the Delaware Supreme Court reversed and remanded the decision above, encouraging reliance upon market pricing of the transaction as a determination of "fair value." The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for the realization of intrinsic value in opportunistically priced but carefully negotiated buyouts.


Forum reference:

Dell interviewed by Bloomberg CEO Doctoroff


Source: Council on Foreign Relations, December 3, 2014 interview video and transcript

Growth, Innovation, and Technology: A Conversation With Michael S. Dell

Speaker: Michael S. Dell, Chairman and Chief Executive Officer, Dell, Inc.
Presider: Daniel L. Doctoroff, Chief Executive Officer, Bloomberg
December 3, 2014

Event Video

Michael S. Dell, chairman and CEO of Dell, Inc., discusses growth, innovation, and technology in a globalized world.

This meeting is part of the CEO Speaker Series.


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 the...

DELL: And I understand you have experience working with Michaels, so that's...

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 time...


... 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 off.

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 do. So...


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 having.

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 shareholders.

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 difficult.

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 time.

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 underlying dynamics?

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 and change.

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, investing.

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 problem.

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 -- they're excited.

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.


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 again.


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 just products.

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 owner-operator perspective.


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 technology.

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 concerned.

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 this.

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 stifled.

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 attractive market.

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 business anywhere?

DELL: You know, I just started in Texas, because that's where I was. And...


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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