That time Michael Dell almost had his PC company taken away

Speaker 1: You build a successful company and you sell millions of PCs, but then the market shifts and you realize you have to rethink the whole thing. So you decide to take your publicly held company private and buy it back from investors. The thing is, it turns out to be a lot more complicated than you thought. And a corporate Raider enters the game threatening to oust you a CEO. Now, what thank you, Michael Dell for taking some time to [00:00:30] talk to me today, I'm gonna ask you about this new book that you wrote. It's called play nice but win. And for anybody who reads the book, which is coming out in October, they'll know where that phrase comes from from your parents, but why don't you tell us why you write a book and why you called it plain nice. But when I wrote, Speaker 2: I wrote the book because, uh, a lot has happened in the last decade. And when I wrote, uh, my first book in the late nineties, uh, I wasn't, I would say [00:01:00] vulnerable enough and self disclosing enough. Um, and certainly after the, you know, the, the, the largest go private ever in technology, the largest merger combination ever in technology with EMC and VMware and the transformation of the company, many people encouraged me to write another book and it's called play nice. But we in, because when I was a little kid, uh, and my two brothers and I would go out in, in the, in the street and, and play [00:01:30] ball, our parents would always tell us, play nice, but win. And it kind of stuck with me as a, as a generally good life philosophy, uh, about, you know, being, uh, forthright and F and doing the right thing, but also not forgetting, uh, to win. So, uh, you know, it's something, it's something we, we, we, we, we talk a lot about at Dell as well. Speaker 1: So you start the book with the story of the battle to take Dell private. I mean, uh, to [00:02:00] be honest, this book is about how you built Dell and lots of people have heard the inside story of, you know, starting it out of your dorm room in Texas, right? This is all computer lore. The moment that you realized that you were in this battle to take Dell private, uh you're right. That it wasn't so much about ego, although your name is on the building, it's on all these computers. So I'm a, there's a little bit of there, but it was really feeling like this corporate Raider wanted to destroy everything you [00:02:30] built. So talk about why you started the, the book that way. And, and do you think you played nice throughout that battle? Speaker 2: You know, it was, it was a, it was a fairly dramatic moment for sure. And, you know, I, I, I thought the go private was, was a difficult thing. And then it became like 10 times more difficult, you know, than, than, than, than I think I, or anybody had expected. And, you know, the motivation for this was really to accelerate [00:03:00] the, the, the, the, the transformation I wanted to, um, really change, change the company didn't expect that Carl Icahn was, was gonna show up and, you know, make things as difficult as, as, as they were. And look, I mean, as you know, he declared war on me, uh, you know, way, way before I started, you know, firing back. And, but yeah, it was, it was kind of the first time that I had encountered somebody just going on national television [00:03:30] pretty much every day and lying, uh, which, you know, took, took me back in a, in a pretty big way. I mean, I dealt with various forms of unscrupulous people from time to time, but this, he just took it to a whole nother level. And I, you know, and a lot of people look at these things, uh, just as the outcome, but I thought it was, I really wanted to describe in a raw way, you know, what actually happened. Uh, Speaker 1: There's a story. I call it the meat loaf story, [00:04:00] where you actually decided after this BA public battle, Carl icon, a corporate Raider for people who don't know, he likes to go into distress companies or companies that he thinks he can make a profit on, buy up, shares, become a very what's the activist investor, put people on the board, you know, lift the, share price, sell off his shares, make a lot of money and walk away, right. He's not really into building companies. And, uh, as that drama unfolded and it got nastier and [00:04:30] ugly, as you say, a lot of back and forth, um, you decided to meet up with him in person. And, uh, I think he was a little bit surprised by that, cuz it wasn't like the beginning of the battle. You were really in a heated moment in time and you went over to his house and his wife made you meet loaf. Tell us the story about what happened. Yeah. Speaker 2: I, you know, I, I sort of came to this idea that he basically had no idea what we were doing as a business and really [00:05:00] had no plan for the business. And so, you know, I wanted to go see him eye to eye, face to face and really sort of confront him and see, you know, uh, was he doing this because he wanted to, you know, uh, buy the company, take over the company or, or was he doing it just to get another 5 cents of share or something like that? I was, I was pretty convinced before I went to his house that, [00:05:30] that, that it was all just him playing this game. And, you know, when I confronted him, as I described in the book, you know, okay, what's your plan. He didn't have a plan. Right. And, and, uh, he was just kind of making things up and, and that was kind of his, his, uh, his Motus operandi. Speaker 2: And I called his bluff. And, uh, you know, at, at that moment I kind of saw him, uh, you know, terrified because, you know, he, he knew [00:06:00] that if I walked away, he'd be left holding, you know, the, the bag to try to, you know, figure this out and didn't know anything about the company. As I, as I said, you know, he didn't know whether we made French fries or nuclear reactors and, you know, had no plans for the business, what whatsoever. And that was, that was a point where my confidence, uh, actually dramatically increased that we were gonna be successful, even though it was still several months [00:06:30] before, you know, he was like the zombie, you couldn't kill. You'd like, shoot him. And then he he'd still be alive and shoot him again. And, you know, he just like kept coming back. Speaker 1: Uh, that process would you describe, and anybody at the time could have read all of the S E filings, the whole TikTok was spelled out. What, what do you think you learned ultimately from that whole experience? I mean, obviously you wanted to take the company back and you wanted to, you know, uh, exit acute on your vision of where to take the PCs and, [00:07:00] and all the backend, but just, you're, it's pretty savvy businessman. You're very wealthy at the time this, uh, deal goes through. But what, what did you learn just about that entire experience? Speaker 2: Well, for one, I learned that, you know, if you're, if you're a founder of a company and that's, and you try to buy it back, it's unbelievably difficult. The market doesn't like that at all, but, you know, at the end, I think it was all, it was all worth it. Um, and fortunately, [00:07:30] you know, uh, our customers, our team members held together, um, and, you know, trust, no, it, it, it turned out to be at least 10 times more difficult than I had anticipated, Speaker 1: Uh, and full disclosure, your partner in that deal, silver lake, um, also is a, has a stake in red ventures, which own CNET. So I just wanted to say that, but, um, I guess it was also a matter of finding the right people to go to the with. Speaker 2: [00:08:00] Yeah, certainly, you know, um, you know, I had to find the right lawyers, the right, uh, you know, financial partners. Um, and, and, you know, I think, I think the relationships and, and trust that had been built up over, uh, you know, along, you know, you know, many decades before were helpful and, you know, a, a lot of that, a lot of that, uh, you know, came, came through for us [00:08:30] a as, as we were going through through a difficult battle. Speaker 1: Well, the reason I, I ask you that is because at the time of this, uh, this going private, the PC industry was under, you know, some pressure from the market. Your arrivals had also figured out Hewlett Packard at the time and others how to make, you know, a low cost PCs. And I thought it was super interesting that you spelled out in a great detail, one of your, your misses. And, and I know that there are several misses [00:09:00] that we can talk about Fatel has made smartphone tablets, but I was actually fascinated that you came clean on how big a miss it was for you on notebook PCs. What was the deal there? Did you not think that people wanted to carry around, uh, computers, you not watch star Trek? Like what, what is the Speaker 2: Story? No, no, we, we, we completely knew that that notebooks were gonna be a big thing. We just didn't have the engineering capability to, you know, successfully create, uh, [00:09:30] you know, multiple generations of successful products. So we had to do a, a, a complete restart of our engineering capability. And there was a period of time, you know, around 19 92, 19 93, believe it was where, you know, we were just out of the market, it was the fastest growing hottest we wanted to be in the market, you know, but, but, uh, didn't, didn't, you have any products that were worthy of, of bringing, bringing at that time. Speaker 1: [00:10:00] So you also mentioned, and describe in the book that you went to apple to get some talent to help you build, uh, those notebooks. And I don't know if a lot of people know this, obviously, you know, bill gates super well at Microsoft, you're very important partner or to them in terms of distributing windows, but you were also a really good friend with Steve jobs. And so at one point he had come to talk to you, or you had sat, sat down to talk to him about a deal where [00:10:30] you could possibly license the Mac OS can you tell us that story? What that was Speaker 2: Like? Yes. So, so we had worked a little bit with next with, um, you know, uh, they had this web object software that we used to build dell.com, you know, in its early days. And there was some people that were using the next operating system on our workstations, all though, that was a really niche or were weren't, wasn't a [00:11:00] lot of volume there. And as you said, when Steve went back to apple, he took next OS with him and it became Mac OS. And so he came to see me, you know, a couple of times and said, Hey, look at this, we've got this Dell, you know, desktop, and it's running Mac OS, you know, why don't you license the, the, the Mac OS. Great sounds great. Uh, the only problem was, you know, he wanted a fee for every machine [00:11:30] we sold, including the, the, the, you know, the, the windows machines. And he also wouldn't guarantee us access to the Mac OS like three or four or five years later, which created a real problem for us. So it was a, it, it wasn't an economic, uh, proposition that, that made a lot of sense. Uh, but yeah, you know, Mac OS was, was running on, on the X 86 PCs, uh, you know, long, long time ago. Speaker 1: [00:12:00] So this is one of those. What if moments, what if you had cut some sort of a deal where you could have licensed, you know, the Mac OS, uh, I think his offer was that you pay us for every machine you ship, and then customers decide whether they want, you know, Microsoft OS installs or windows at the time or Mac. And I obviously that would be to his advantage cuz you're selling a lot of PCs, but I I'm just curious. Do you ever think about what if yeah, Speaker 2: [00:12:30] I mean, it, it, it, it, it could have changed the trajectory for, you know, windows and Macco S on, on PCs. Um, but obviously they went in a different direction and many, many years later came out with the iPod and of course the iPhone, you know, iPad, et cetera, and, uh, you know, gone onto incredible success. Speaker 1: Okay. Last question for you, you end the book, uh, bringing us up to speed with the pandemic and how many [00:13:00] people are working remote Dell itself as a company, obviously using computers, you were able to get your workforce working remotely pretty quickly when we were all, you know, quarantined, uh, last year, but you also just alluded the, the fact that you're still figuring it out, the future of work has changed. So give us just a sense of what you think. Are we all gonna go back to offices five days a week, uh, or I don't know what, what's your vision of now this hopefully soon post pandemic world [00:13:30] and how we all live and work, thanks to digital technology. Speaker 2: I think that at what we've had is, is this glimpse of the future. And I don't think we're gonna go back at all to the way it was. I think we've all figured out that work is something we do. It's not a place there, there can be places where we congregate together to collaborate or be together in person because we like that at interaction and social connection. But, um, [00:14:00] yeah, I mean, I think, I think hybrid work is, is here to stay. Every company will figure out what's right for them, but there are so many incredible benefits to, you know, working from anywhere, right? There's an environmental benefit. There's a quality of life benefit. And I don't think we're just gonna give that up once the pandemic has passed, but you know, pandemic, uh, still has a long way to go seven and a half billion people in the world. It's gonna be a long time before, you know, this is totally passed Speaker 1: [00:14:30] Your book again, play nice, but win is coming out. You're very candid and straightforward. And some of the struggle, some of the, some of the things that you did unconventional, some of the people that helped you along the way, what do you want after people read this book? What do you want them to remember? Speaker 2: Yeah. You know, I, I, I think, I think I want people to have a real sense for the importance of taking risks and, and, uh, uh, you know, uh, don't, don't, don't, don't [00:15:00] feel like you gotta follow every rule that's out there. And look, I have this deep seated belief that a lot of people don't realize their full potential because they're too afraid to fail and too afraid to make mistakes. And certainly if you read the story or listen to me, tell it on the audio book. Yeah. There's so many ups and downs and twists and turns. And, you know, in the first couple years, the business could have failed, you know, at least 10 times, [00:15:30] uh, with, with all sorts of things that were going on. But that's, that's that's reality. And that's, that's how I think, uh, you know, great businesses are, are built. All right. Speaker 1: Well, Michael Dell, thank you so much for taking some time to talk to us again, the book play nice, but win. Look forward to seeing what hybrid looks like at do. Maybe you'll lead the way on setting some Andrews for how other businesses will do it as well.