Profiles of the winners of Inc.'s first national company-building achievement award. (1989)
Announcing the winners of Inc.'s first national company-building achievement awards
Entrepreneur of the Year
Michael Dell, Dell Computer Corp.
Runners-up:
Edward Beauvais, America West Airlines Inc.
Gail and David Liniger, Re/Max International Inc.
Master Entrepreneur
George N. Hatsopoulos, Thermo Electron Corp.
Runners-up:
Dietrich M. Gross, Mercury Stainless Corp.
Stew Leonard, Stew Leonard's
Turnaround Entrepreneur of the Year
Leslie B. Otten, Sunday River Ski Resort
Runners-up:
George Archuleta, Vitalink Communications Corp.
Victor Kiam II, Remington Products Inc.
Emerging Entrepreneur of the Year
Louis Krouse, National Payments Network Inc.
Runners-up:
Jimmy Jam Harris and Terry Lewis, Flyte Tyme Productions
Johnny Imerman, Mindis Recycling
ENTREPRENEUR OF THE YEAR
Michael Dell must be sick to death of people reminding him that he's running one of the fastest-growing personal-computer companies in the country while he's only 24 years old.
Too bad, Michael. Such are the celebrity costs of precocious achievement.
What Dell has accomplished in the past five years is impressive. A company that didn't exist six years ago now makes what the critics say are some of the best PCs on the market and in the fiscal year ending January 27, 1989, sold $258 million worth of them. But the story of how Dell started the company at age 19 and built it to one of the 10 largest PC producers in the United States is somehow less instructive than it might be if the builder had been someone else. What Dell has done is obvious. How he has done it is not. And Dell himself, for all the publicity, remains an entrepreneurial enigma.
As a kid in Houston, Dell learned a lot about computers from hanging around computer stores. Unavoidably, he also learned something about retailing. What he knew about computers got him into the business. What he learned about retailing persuaded him that there had to be a better way to sell them.
"Let's say," Dell begins his story, "that you buy a computer from a retail store, and you pay $4,000. The retailer sends $2,500 of that back to the manufacturer and keeps $1,500. The question I asked myself was, what was the retailer doing to earn his $1,500? Was he adding $1,500 worth of value to that machine for me, a knowledgeable computer buyer? The answer was no."
Dell reasoned that like himself, a growing number of customers would not need the kind of help that retailers provided -- or, in many instances, only promised to provide. Further, even if these same people could still use the after-sale services that retailers were supposed to deliver, there had to be a better way of providing it.
So, the conceptual heart of what Michael Dell set out to create was not a company based on selling an alternative computer -- one of a growing number of IBM-PC clones -- but a company based on selling through an alternative distribution channel. He began with direct response advertising, added telemarketing, and later still hired a direct sales force to go after large corporate clients.
For a couple of years that was Dell Computer's business: selling good computers cheap, direct to business and individual end users. The computers were stripped-down IBMs to which the company added options it purchased at wholesale from, many times, the same vendors who sold to IBM.
Dell Computer went from zero to $69.5 million in three years. That doesn't break any records. Compaq Computer Corp. did $111 million in its first year, but Rod Canion was a veteran of Texas Instruments Inc. and an old man of 37 when he and his partners started Compaq. No, what's mind-blowing about Dell Computer is -- sorry, Michael -- that Dell built it so large at such a tender age, and that still begs the question: how did he do that?
If Michael Dell knows how he built Dell Computer, he doesn't say.
No one at the company's Austin headquarters actually uses the G-word to describe Dell. If they did, that would make the explanation of Dell Computer's meteoric growth simpler somehow. Geniuses often don't understand the process by which they do something. In fact, if they concerned themselves with process, geniuses would be as earthbound as the rest of us. They would agonize like normal mortals over painful decisions, maybe revisit and reexamine them.
But if you choose to believe Dell and the people who work for him, the ongoing decision-making process has been simple for the young founder. There are no stories about time spent agonizing over direction, strategy, or tactics. It's deciding what to do and how to go about doing it that gives most entrepreneurs sleepless nights. And yet that's just the part that Michael Dell does apparently without great effort. In any case, he makes it look easy.
"Michael can assimilate in an hour what might take you or me a semester," says Sid Ferrales, the recently arrived vice-president of human resources, adding, "He's a good listener."
"He has a remarkable faculty," says chief operating officer E. Lee Walker, who looks to be about twice Dell's age with four times the business experience, "for getting to the nub of a problem quickly. He's a big believer in the collegial approach, but as a participant in that he's quicker than most to get to the heart of the issue."
Dell himself often uses such words as "obvious" and "clear" -- as, for instance, in explaining how in late 1985 he made the decision that the company should stop selling stripped-down IBM machines and start designing and making its own. "It was obvious from what I'd seen . . . that we'd have to learn how to do lots of things. I knew we'd have to get people, systems, executives. It was pretty clear to me." And so it was, but the marvel is that Dell seems to achieve in real time the kind of clarity that comes to most of us only in hindsight: it only becomes clear what we should have done.
