Play Nice But Win
Authors: Michael Dell, Michael Dell
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Overview
In ‘Play Nice But Win,’ I share the wild ride of building Dell Technologies, from its humble beginnings in my University of Texas dorm room to becoming a global tech titan. This book is for entrepreneurs, business leaders, and dreamers—anyone looking to navigate the challenges of a rapidly changing world and create something meaningful. I delve into the key decisions, strategic shifts, and personal reflections that shaped Dell’s journey, from going private to orchestrating the largest tech merger in history with EMC. I recount the high-stakes battles with activist investors like Carl Icahn, the importance of building a strong team, and the power of a customer-centric approach. I also discuss the crucial role of curiosity, continuous learning, and a relentless drive to win in achieving long-term success. The book also looks at the future of technology and how emerging technologies like 5G, artificial intelligence, and machine learning are transforming the business world, and how the ethical considerations of AI are changing our business and the world. Beyond business, this book explores the challenges of work-life balance, the importance of family, and my personal journey as a founder and CEO. It concludes with the idea that true transformation is a never-ending race, and the opportunities for growth and positive impact are limitless. One key theme that runs throughout is adaptability. The tech world changes incredibly fast: if you’re not willing to change and learn and adapt, you’re toast.
Book Outline
1. Headwinds
I was trying to wrestle my company away from Carl Icahn while navigating a transition and challenging headwinds for Dell Inc. In 2005, after years of growth, we saw a dip in PC sales and eroding market share. Our build-to-order model, once revolutionary, was now being replicated by competitors. We were slow to react to changing customer priorities and industry trends, especially in areas like services, solutions, software, servers and the emerging data center.
Key concept: Play nice but win. This was something my parents always said, and it informs much of my business philosophy: compete fiercely but fairly. Always put the customer first. Treat people with respect.
2. Different Places
Growing up in Houston, I was imbued with a strong sense of entrepreneurship from my family, who were always looking for opportunities. I discovered early on that I liked making money, so I started working all kinds of jobs while I was still a kid. My mom taught me a lot about finance and investing. I developed an insatiable curiosity and passion for technology, especially computers.
Key concept: “Many people have great business ideas. Entrepreneurs see them through.” That’s how I see it. It’s important to be curious and willing to take risks, to constantly learn and improve.
3. Going Private (in Private)
Taking a company private is a huge undertaking with a lot of legal and financial complexities. You need to work by the book every step of the way, and know that even if you started the company, your job is to do everything possible to increase the company’s value for all the shareholders.
Key concept: As a CEO, and even as founder-CEO, you don’t have total control. Public company CEOs ultimately answer to their shareholders and boards of directors, and it’s important to understand the legal and financial complexities of any major corporate undertaking, including a go-private.
4. Start Me Up
My passion for computers led me to start a business upgrading and selling PCs while I was still in high school, and that business took off once I went to UT Austin. I learned a lot about sales, marketing, customer service, and supply chain management just by doing it. Soon I dropped out of college and went into business full time.
Key concept: “Dude, you’re getting a Dell.” This catchphrase from our early-1990s ad campaign was a game changer: it helped us build brand awareness among consumers, but ultimately the ads became more about the “Dell Dude” and less about our products, so we went our separate ways.
6. Young Man in a Hurry
The company grew quickly, but not without growing pains and challenges. We struggled with rapid expansion, personnel issues, and quality control. Lee Walker, our first president, played a key role in getting things organized and professionalized.
Key concept: Don’t be afraid to fail. Failure can be a great learning experience. There’s no straight line to success-you often have to zigzag and improvise your way there.
7. The End is Nigh?
After four years, Lee decided to leave, and I was heartbroken, but also determined to keep the company growing. I learned how important it is to be able to delegate and focus on core strengths: developing new products and building customer relationships.
Key concept: Know your adversary. Recognize and appreciate people’s different talents, and always put the team ahead of the player. And remember, there is strength in vulnerability.
8. Up, Up, and Away
We had success with our direct business model, which cut out the middleman and offered better value and service than our competitors. We also developed free on-site service through a partnership with Honeywell Bull, which helped us win more large customers.
Key concept: It’s never too late for diversity and inclusion. Markets are also long-term efficient: if you continually treat your customers well, they will reward you.
10. Growth, and Other Hazards
Despite our success in selling PCs direct, we struggled to enter the server market initially because we didn’t appreciate the importance of direct relationships with our customers, and the high value they placed on reliability and service.
Key concept: Change or die. This has always been our company mantra: we know that adapting to change quickly, and being willing to change course when necessary, is essential for staying competitive.
11. Body and Soul
In the early 1990s, we faced some setbacks as we continued to expand quickly. After a period of rapid growth, we had some personnel issues, including a CFO who wasn’t up to the job and a VP who was engaged in some unethical activities. We also faced challenges with our notebook business, where our products were underperforming, and our entry into the server market was not going as well as we’d hoped. And then there was the issue of our corporate culture: after the dot-com bust, it became clear that there were flaws that needed fixing.
Key concept: Transforming a company can involve some uncomfortable changes, and not everyone on the team will be happy. But if you put together a team of talented, passionate, and committed people, you can do great things.
12. Project Emerald
As the internet took off and e-commerce began to develop, we started selling online in 1996 and reached $1 million a day in sales in 1997. We began to think of PCs as a loss leader, a way to get in the door to sell customers our higher-margin software and services. We also saw opportunities in the growing server and professional workstation markets, where we could capitalize on rapid technological development and offer customers better value than our competitors.
Key concept: “The big deal is software.” Software has become the key to technological development, with much higher margins than PC hardware. PCs can be a gateway to upselling more profitable software and services.
13. Harry You and the Bolt From the Blue
In 2014, after taking the company private, we entered into one of the biggest tech mergers ever, with EMC/VMware. The deal was highly complex and controversial, opposed by Carl Icahn and other major investors. Ultimately, we succeeded, and the merger dramatically expanded Dell’s capabilities. We kept working, kept innovating, and began to position the company for long-term success in the new world of cloud computing and big data.
Key concept: Never be afraid to bet on your company. It’s important to listen to what the experts say, but sometimes the best opportunities come from having a contrarian point of view, and going against the grain.
14. Zettabytes and Moon Shots
The pace of technological change is constantly accelerating and as a company, and as individuals, we need to be able to adapt and learn and change, and stay ahead of the curve. We need to find ways to make technology work for everyone, and to use its power to find solutions for the world’s biggest challenges. We also need to make sure our business is sustainable, and that we’re doing everything we can to create a diverse, inclusive, and ethical culture where everyone can succeed. And we will keep winning.
Key concept: “We’re opening a whup-ass factory.” When you have complete confidence in your vision and your plan, that belief is infectious: it empowers people to take risks, try new things, and never stop challenging themselves. As my grandpa told me, “You’re a businessman.”
Essential Questions
1. What were the key principles that guided the creation and growth of Dell from its inception?
I built Dell from a tiny operation in my dorm room to a multibillion-dollar global company by relentlessly focusing on the customer, always asking how we could offer them better value, better service, and better technology. I took calculated risks, learned from my mistakes, and adapted quickly to changing market conditions. This direct, customer-centric approach, combined with ruthless efficiency and a passion for innovation, formed the cornerstone of Dell’s success.
2. How has the concept of ‘transformation’ been central to Dell’s success, both personally and professionally?
In the constantly evolving tech world, if you aren’t willing to change and adapt, you’re doomed to failure. Going private was a bold strategic move that enabled us to accelerate our transformation, take risks, invest heavily in new areas, and move far faster than we could as a public company. We changed our competitive posture from playing offense some of the time to playing offense all the time. And by combining Dell with EMC/VMWare we dramatically expanded our ability to adapt and grow. It allowed us to build a business that wasn’t beholden to the cyclical ups and downs of the PC market. We knew that software would become the most important part of the IT world, and that by becoming an essential IT infrastructure provider, we’d be well positioned for the long term.
3. What role did mentorship, teamwork, and culture play in navigating Dell’s challenges and achieving its goals?
I was fortunate to have older, more experienced mentors at key junctures, including Lee Walker, Mort Topfer, and Mort Meyerson. They provided invaluable guidance and helped me see the big picture when I was caught up in the thick of the action. But it’s also important to assemble your own team of talented, passionate people and create a culture where everyone feels valued and can contribute their best. It’s all about finding the right people, putting them in a position where they can succeed, and always putting the team ahead of the player. You’re only as good as the people you surround yourself with. And it’s important to keep the right balance between a long-term vision and the short-term needs of running a business, especially a public company.
4. How did curiosity and a hands-on approach to technology shape Dell’s approach to innovation and competition?
I learned how to build an enterprise by first taking things apart. By learning how everything worked from the inside out, I could understand the opportunities to innovate. And I learned early on how important it is to keep learning and stay curious. As a company, we kept taking things apart, especially our competitors’ products. And while it’s hard to dramatically change the share position of a company, it’s much easier when you’re starting out in a new market like servers, where customers are more willing to take a chance on a new technology, especially if it offers greater value.
5. How did the dinner with Carl Icahn reveal his motives and tactics, and how did this encounter contribute to Dell’s successful go-private transaction?
As Carl Icahn and I sat at his dining room table over meat loaf (made by Mrs. Icahn), he attempted a power play to wrestle control of Dell. Though he claimed Dell was undervalued, I felt he was bluffing, trying to use greenmail techniques to force us to increase our offer. I saw right through him, and ultimately we outmaneuvered him and reached our goal of taking the company private. The encounter made it clear that even in the world of high finance, personal interactions and an understanding of human psychology play a crucial role.
1. What were the key principles that guided the creation and growth of Dell from its inception?
I built Dell from a tiny operation in my dorm room to a multibillion-dollar global company by relentlessly focusing on the customer, always asking how we could offer them better value, better service, and better technology. I took calculated risks, learned from my mistakes, and adapted quickly to changing market conditions. This direct, customer-centric approach, combined with ruthless efficiency and a passion for innovation, formed the cornerstone of Dell’s success.
2. How has the concept of ‘transformation’ been central to Dell’s success, both personally and professionally?
In the constantly evolving tech world, if you aren’t willing to change and adapt, you’re doomed to failure. Going private was a bold strategic move that enabled us to accelerate our transformation, take risks, invest heavily in new areas, and move far faster than we could as a public company. We changed our competitive posture from playing offense some of the time to playing offense all the time. And by combining Dell with EMC/VMWare we dramatically expanded our ability to adapt and grow. It allowed us to build a business that wasn’t beholden to the cyclical ups and downs of the PC market. We knew that software would become the most important part of the IT world, and that by becoming an essential IT infrastructure provider, we’d be well positioned for the long term.
3. What role did mentorship, teamwork, and culture play in navigating Dell’s challenges and achieving its goals?
I was fortunate to have older, more experienced mentors at key junctures, including Lee Walker, Mort Topfer, and Mort Meyerson. They provided invaluable guidance and helped me see the big picture when I was caught up in the thick of the action. But it’s also important to assemble your own team of talented, passionate people and create a culture where everyone feels valued and can contribute their best. It’s all about finding the right people, putting them in a position where they can succeed, and always putting the team ahead of the player. You’re only as good as the people you surround yourself with. And it’s important to keep the right balance between a long-term vision and the short-term needs of running a business, especially a public company.
4. How did curiosity and a hands-on approach to technology shape Dell’s approach to innovation and competition?
I learned how to build an enterprise by first taking things apart. By learning how everything worked from the inside out, I could understand the opportunities to innovate. And I learned early on how important it is to keep learning and stay curious. As a company, we kept taking things apart, especially our competitors’ products. And while it’s hard to dramatically change the share position of a company, it’s much easier when you’re starting out in a new market like servers, where customers are more willing to take a chance on a new technology, especially if it offers greater value.
5. How did the dinner with Carl Icahn reveal his motives and tactics, and how did this encounter contribute to Dell’s successful go-private transaction?
As Carl Icahn and I sat at his dining room table over meat loaf (made by Mrs. Icahn), he attempted a power play to wrestle control of Dell. Though he claimed Dell was undervalued, I felt he was bluffing, trying to use greenmail techniques to force us to increase our offer. I saw right through him, and ultimately we outmaneuvered him and reached our goal of taking the company private. The encounter made it clear that even in the world of high finance, personal interactions and an understanding of human psychology play a crucial role.
Key Takeaways
1. Maintain direct relationships with your customers.
One of the defining aspects of Dell’s success was their direct-to-customer model, which gave them an unparalleled understanding of their needs. This direct connection allowed for rapid adaptation to evolving demands, enabling the company to consistently deliver high-quality products at competitive prices. It fostered loyalty and valuable feedback loops, driving continuous improvement and innovation. Similarly, in the age of AI, direct access to user data and feedback will be paramount for building successful products and services that meet real-world needs.
Practical Application:
An AI startup could focus on developing cutting-edge algorithms and partnering with established players in specific industries to access larger markets and diverse data sets. This approach would allow them to leverage existing infrastructure and customer relationships while focusing on their core strength: technological innovation.
2. Embrace continuous learning and adaptation.
Dell’s journey was marked by constant adaptation and willingness to learn from mistakes. From the initial struggles with quality control to the failed foray into the server market, every setback served as a learning opportunity. By embracing a culture of continuous improvement (kaizen and PBNS - pleased but never satisfied), the company was able to iterate on its products, strategies, and even its company culture, ultimately emerging stronger and more resilient. This principle is even more critical in the rapidly evolving field of AI, where continuous learning and adaptation are essential for staying ahead of the curve.
Practical Application:
An AI product team could conduct regular “red team” exercises where external experts are brought in to try and break their systems, identifying vulnerabilities and potential weaknesses. This process would strengthen their products’ resilience and security and foster a culture of constant vigilance.
3. Focus on offering superior value, not just being ‘the best.’
Dell Inc. never aimed to ‘be the best’ at everything, recognizing that ‘best’ is often a moving target and sometimes a matter of opinion. Instead, they focused on offering superior value to their customers: the highest-quality products and services at the most competitive price. This pragmatic approach allowed them to carve out a unique position in the market, even when competing against giants like IBM and Compaq, and it helped them establish a reputation for reliability and innovation. In the world of AI, where claims of ‘best’ are ubiquitous, focusing on delivering demonstrable value to users will be even more critical for long-term success.
Practical Application:
When building a new AI product, a team could gather data on user needs, competitor offerings, market trends, and technological advancements to identify where they can offer the greatest value to their potential customers. This objective process would help them prioritize features and functionalities that maximize impact, rather than simply trying to ‘be the best.’
4. Anticipate and adapt to major technological shifts.
Dell’s transformation from a PC maker to an essential IT infrastructure provider highlights the importance of anticipating and adapting to major technological shifts. They recognized early on that the future of IT was in software, services, and the cloud, and they made strategic acquisitions and investments in these areas, which positioned them for long-term growth. This understanding of technological trends is essential in the AI field, where new developments are constantly emerging, and businesses must be able to adapt quickly to stay competitive.
Practical Application:
An AI product manager could benefit from understanding how cloud computing has fundamentally changed the IT landscape, shifting value away from hardware and towards software and services. This knowledge would enable them to develop product strategies that leverage the cloud’s scalability, flexibility, and cost-effectiveness, while addressing the security and data privacy concerns that come with it.
5. Maintain ethical business practices.
One of the defining characteristics of Dell’s leadership has been a consistent focus on ethical business practices. From the beginning, Dell Inc. made a commitment to treating its customers, employees, and partners fairly and ethically. This principle is especially critical in the world of technology and AI, where ethical concerns about the use of data and potential biases in algorithms are paramount.
Practical Application:
As an AI company grows, establishing clear ethical guidelines and policies around data privacy, algorithmic bias, and responsible use of AI technologies is critical. This includes creating internal review boards, conducting regular audits, and actively engaging with stakeholders to ensure alignment with societal values and expectations.
1. Maintain direct relationships with your customers.
One of the defining aspects of Dell’s success was their direct-to-customer model, which gave them an unparalleled understanding of their needs. This direct connection allowed for rapid adaptation to evolving demands, enabling the company to consistently deliver high-quality products at competitive prices. It fostered loyalty and valuable feedback loops, driving continuous improvement and innovation. Similarly, in the age of AI, direct access to user data and feedback will be paramount for building successful products and services that meet real-world needs.
Practical Application:
An AI startup could focus on developing cutting-edge algorithms and partnering with established players in specific industries to access larger markets and diverse data sets. This approach would allow them to leverage existing infrastructure and customer relationships while focusing on their core strength: technological innovation.
2. Embrace continuous learning and adaptation.
Dell’s journey was marked by constant adaptation and willingness to learn from mistakes. From the initial struggles with quality control to the failed foray into the server market, every setback served as a learning opportunity. By embracing a culture of continuous improvement (kaizen and PBNS - pleased but never satisfied), the company was able to iterate on its products, strategies, and even its company culture, ultimately emerging stronger and more resilient. This principle is even more critical in the rapidly evolving field of AI, where continuous learning and adaptation are essential for staying ahead of the curve.
Practical Application:
An AI product team could conduct regular “red team” exercises where external experts are brought in to try and break their systems, identifying vulnerabilities and potential weaknesses. This process would strengthen their products’ resilience and security and foster a culture of constant vigilance.
3. Focus on offering superior value, not just being ‘the best.’
Dell Inc. never aimed to ‘be the best’ at everything, recognizing that ‘best’ is often a moving target and sometimes a matter of opinion. Instead, they focused on offering superior value to their customers: the highest-quality products and services at the most competitive price. This pragmatic approach allowed them to carve out a unique position in the market, even when competing against giants like IBM and Compaq, and it helped them establish a reputation for reliability and innovation. In the world of AI, where claims of ‘best’ are ubiquitous, focusing on delivering demonstrable value to users will be even more critical for long-term success.
Practical Application:
When building a new AI product, a team could gather data on user needs, competitor offerings, market trends, and technological advancements to identify where they can offer the greatest value to their potential customers. This objective process would help them prioritize features and functionalities that maximize impact, rather than simply trying to ‘be the best.’
4. Anticipate and adapt to major technological shifts.
Dell’s transformation from a PC maker to an essential IT infrastructure provider highlights the importance of anticipating and adapting to major technological shifts. They recognized early on that the future of IT was in software, services, and the cloud, and they made strategic acquisitions and investments in these areas, which positioned them for long-term growth. This understanding of technological trends is essential in the AI field, where new developments are constantly emerging, and businesses must be able to adapt quickly to stay competitive.
Practical Application:
An AI product manager could benefit from understanding how cloud computing has fundamentally changed the IT landscape, shifting value away from hardware and towards software and services. This knowledge would enable them to develop product strategies that leverage the cloud’s scalability, flexibility, and cost-effectiveness, while addressing the security and data privacy concerns that come with it.
5. Maintain ethical business practices.
One of the defining characteristics of Dell’s leadership has been a consistent focus on ethical business practices. From the beginning, Dell Inc. made a commitment to treating its customers, employees, and partners fairly and ethically. This principle is especially critical in the world of technology and AI, where ethical concerns about the use of data and potential biases in algorithms are paramount.
Practical Application:
As an AI company grows, establishing clear ethical guidelines and policies around data privacy, algorithmic bias, and responsible use of AI technologies is critical. This includes creating internal review boards, conducting regular audits, and actively engaging with stakeholders to ensure alignment with societal values and expectations.
Suggested Deep Dive
Chapter: Chapter 13: Harry You and the Bolt From the Blue
The discussion of the VMware tracking stock offers a deep dive into the complexities and innovative thinking that goes into structuring large acquisitions, relevant for any AI engineer working on large-scale projects or M&A activity.
Memorable Quotes
Chapter 1: Headwinds. 10
Many people have great business ideas. Entrepreneurs see them through.
Chapter 3: Going Private (in Private). 45
PCs were Jeff’s main lane, his technological true love-the greatest general-purpose business productivity device ever created, in his view.
Chapter 7: The End Is Nigh?. 73
For the first time in my life I didn’t have an idea in the world what to do. I was alone, and I was afraid.
Chapter 9: Redemption. 94
Being underestimated by IBM and Compaq was a powerful motivating force.
Chapter 14: Zettabytes and Moon Shots. 163
It is not the critic who counts.
Chapter 1: Headwinds. 10
Many people have great business ideas. Entrepreneurs see them through.
Chapter 3: Going Private (in Private). 45
PCs were Jeff’s main lane, his technological true love-the greatest general-purpose business productivity device ever created, in his view.
Chapter 7: The End Is Nigh?. 73
For the first time in my life I didn’t have an idea in the world what to do. I was alone, and I was afraid.
Chapter 9: Redemption. 94
Being underestimated by IBM and Compaq was a powerful motivating force.
Chapter 14: Zettabytes and Moon Shots. 163
It is not the critic who counts.
Comparative Analysis
Similar to other founder memoirs, such as ‘Shoe Dog’ by Phil Knight (Nike) and ‘Made in America’ by Sam Walton (Walmart), ‘Play Nice But Win’ offers a first-hand account of building a successful company from scratch. However, Dell’s story stands out for its emphasis on technological innovation and adaptability in a rapidly evolving industry. Unlike Knight’s focus on building a brand and Walton’s emphasis on operational efficiency, Dell prioritizes staying ahead of the technological curve. His narrative also offers a unique perspective on the challenges and opportunities of taking a company private and then public again, including the high-stakes negotiations and battles with activist investors. Compared to more recent tech memoirs like ‘The Everything Store’ by Brad Stone (Amazon) and ‘Chaos Monkeys’ by Antonio Garcia Martinez (Facebook), Dell’s story highlights a different era of tech entrepreneurship, one marked by rapid growth, intense competition, and the emergence of the internet and e-commerce. It also gives a valuable perspective on the cyclical nature of the tech industry, from the dot-com bust to the rise of cloud computing and big data.
Reflection
Reflecting on ‘Play Nice But Win,’ it’s clear that the narrative is not without a certain amount of self-congratulation: most founders have healthy egos, and I’m not an exception. And there’s some smoothing over of rough patches and a certain amount of ‘after the fact’ certainty about the success of various strategies and initiatives. Success, as I note, is a horrible teacher. It’s always easier to look back and say you knew all along what was going to happen, and that of course you had complete confidence in every decision, but in reality, transforming a company involves dealing with enormous uncertainty, and the outcomes are never a sure thing. You don’t succeed if you’re not willing to take risks, experiment, and fail-and learn from your mistakes. I’ve learned more from our mistakes than from our successes. And you have to be willing to change, even if it makes you look bad in the short term. One of the book’s strengths is the clear-eyed view it provides of the high-stakes world of corporate finance, M&A, and dealing with activist investors. It also offers a compelling perspective on the challenges and opportunities of running a company in a world that’s changing at warp speed. It’s important to anticipate and adapt to these changes. My goal is to help provide the tools and technology that empower people to reach their full potential and solve the world’s most challenging problems.
Flashcards
What is the ‘string of pearls’ strategy?
A strategy where a company acquires multiple smaller companies, much like stringing pearls on a necklace.
What is NPS?
Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships.
What does FUD stand for?
Fear, uncertainty, and doubt.
What is the cash conversion cycle?
The time it takes for a company to convert resources (like cash) into product, sell the product, and collect cash from customers.
What does build-to-order mean?
Build-to-order means making things only when customers have ordered them.
What is an ASIC?
Application Specific Integrated Circuit. These are chips that perform specific tasks.
What is NAND flash?
Non-volatile flash memory that doesn’t require power to retain data.
What does OEM stand for?
Original Equipment Manufacturer.
What does ODM stand for?
Original Design Manufacturer.
What was Michael Dell’s family motto?
Play nice but win.
What is the ‘string of pearls’ strategy?
A strategy where a company acquires multiple smaller companies, much like stringing pearls on a necklace.
What is NPS?
Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships.
What does FUD stand for?
Fear, uncertainty, and doubt.
What is the cash conversion cycle?
The time it takes for a company to convert resources (like cash) into product, sell the product, and collect cash from customers.
What does build-to-order mean?
Build-to-order means making things only when customers have ordered them.
What is an ASIC?
Application Specific Integrated Circuit. These are chips that perform specific tasks.
What is NAND flash?
Non-volatile flash memory that doesn’t require power to retain data.
What does OEM stand for?
Original Equipment Manufacturer.
What does ODM stand for?
Original Design Manufacturer.
What was Michael Dell’s family motto?
Play nice but win.