Dell: one of the top names in the computer
revolution. Thirty years ago Michael Dell revolutionized
the entire business model behind computers and to this day his company remains one of
the biggest computer makers in the world. In this video we’ll see how Michael Dell
started a world-changing business from his dorm room, and how that made him one of the
richest men alive. This video is brought to you by Dashlane. Keep all your passwords secure by registering
with the link in the description. As befitting of the man who would revolutionize
the computer business, Michael Dell spent his childhood experimenting with the early
computer. He would tinker around with his Apple II,
but more importantly he’d also get a sense for business very early on. As the story goes, Michael had a summer job
in high school selling subscriptions to the Houston Post. Instead of making random cold calls, he tracked
down newlyweds and families that just moved into the neighborhood; the people most likely
to look for a newspaper subscription. He ended up making eighteen thousand dollars
that summer, all by targeting his buyers directly. Now, although his parents wanted him to be
a doctor, Michael wasn’t ready to give up his interest in computers. While enrolled in pre-med in 1983, Michael
spent his free time repairing and upgrading PCs, which he sold as an informal business
from his dorm room. The nineteen year old’s hobby quickly proved
profitable, and Michael dropped out of university to pursue his startup. In January 1984, Michael registered his company
as PC’s Limited and began selling computers from his condo. A young entrepreneur, Michael was faced with
a question: How do I compete with established competitors, who not only have name recognition,
but also a network of retailers to push product? At the time, customers went to retailers to
purchase their personal computers. The staff at a Best Buy or a Radioshack would
help shoppers find the right computer—and in return for their services, these middlemen
would raise prices by 10, 20, or even 30 percent. So, Michael figured: why not cut the middleman
out completely and sell directly to consumers? Although it would be harder to attract buyers
initially, PCs Limited would be selling at a discount compared to its established competitors. Michael went all in on his approach, which
became known as the “direct model of selling”. He advertised directly to knowledgeable consumers
in computer magazines. This experienced consumer base could pick
options to have their PCs custom assembled, a service that could not be provided by mass-production
giants like IBM. And so, with the use of Chinese component
suppliers and assembly plants, Michael Dell’s PCs Limited began manufacturing and selling
personal computers. In its first year of operation, PCs Limited
sold more than $6 million dollars worth of computers, which proved the potential of his
new business model. Michael’s company rode the computer boom
through the late 80s, growing rapidly as word spread of its direct-selling and lower prices. In 1987, the 22-year old CEO changed the company’s
name from PCs Limited to Dell Computer and just a year later its sales hit $160 million. Michael’s vision extended beyond just direct
consumer sales, of course, and now he finally had the resources to expand his clientele. One of the most frequent criticisms Michael
had to face was that his model could not be applied to businesses and big clients, who
were exactly the sort of customers any growing company would want. Michael, however, was ready to prove the critics
wrong: he attracted corporate clients by not only assembling built-to-order PCs, but by
also preloading them with all the software they would need. If you were, for example, an oil company filling
in new office space, Dell Computers would not only build your PCs for you with appropriate
hardware, it would also load the systems with software to track sales of your gas stations
across the country. Dell was finally making PCs for everyone,
but what truly kickstarted its global ascent was the advent of the Internet. When Dell launched its direct-sale website
in July 1996 it gained access to innumerable customers. For the first time, people could purchase
PCs online, instead of having to call up the company or sending faxes. Within two months of its website’s launch,
Dell was averaging internet sales above 2 million dollars a day. By 1998, that figure had gone up to 5 million
dollars and Dell has remained in the top 3 of computer manufacturers ever since. Michael Dell is still the CEO to this day,
even despite all the shenanigans around taking the company private and then going public
again, which are honestly complicated enough to warrant a video of their own. What’s not complicated though, is keeping
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using the code ‘businesscasual’. Anyway, thank you for watching. Make sure to follow me on my Instagram page
and to like this video if you enjoyed it. We’re gonna see each other again next Friday,
and until then: stay smart.