Play Nice But Win: A CEO's Journey from Founder to Leader

by Michael Dell, James Kaplan

Overview

WALL STREET JOURNAL BESTSELLER

From Michael Dell, renowned founder and chief executive of one of America’s largest technology companies, the inside story of the battles that defined him as a leader

In 1984, soon-to-be college dropout Michael Dell hid signs of his fledgling PC business in the bathroom of his University of Texas dorm room. Almost 30 years later, at the pinnacle of his success as founder and leader of Dell Technologies, he found himself embroiled in a battle for his company’s survival. What he’d do next could ensure its legacy—or destroy it completely.

Play Nice But Win is a riveting account of the three battles waged for Dell Technologies: one to launch it, one to keep it, and one to transform it. For the first time, Dell reveals the highs and lows of the company's evolution amidst a rapidly changing industry—and his own, as he matured into the CEO it needed. With humor and humility, he recalls the mentors who showed him how to turn his passion into a business; the competitors who became friends, foes, or both; and the sharks that circled, looking for weakness. What emerges is the long-term vision underpinning his success: that technology is ultimately about people and their potential.

More than an honest portrait of a leader at a crossroads, Play Nice But Win is a survival story proving that while anyone with technological insight and entrepreneurial zeal might build something great—it takes a leader to build something that lasts.

Product Details

ISBN-13:	9780593087749
Publisher:	Penguin Publishing Group
Publication date:	10/05/2021
Pages:	336
Sales rank:	128,286
Product dimensions:	9.10(w) x 6.20(h) x 1.30(d)

About the Author

Michael Dell is chairman and chief executive officer of Dell Technologies, an innovator and technology leader providing the essential infrastructure for organizations to build their digital future, transform IT and"protect"their most important information. Michael is an honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. In 1999, he and his wife, Susan Dell, established the Michael & Susan Dell Foundation.

Read an Excerpt

1

Headwinds

I was sitting at Carl Icahn's dining room table with Icahn and his wife, eating Mrs. Icahn's meat loaf.

It was a lovely spring evening-Wednesday, May 29, 2013-and Carl Icahn was trying to take my company away from me.

It was a truly surreal moment, in so many ways.

That May evening was almost the precise midpoint in a nine-month drama in which the personal computer company I started in my freshman dorm room at the University of Texas in 1984, the company with my name on it, tilted E and all, almost slipped away from me-and then changed forever, changing me along with it.

I'd like to tell you that story, and a couple of other ones besides.

The year 2005 dawned bright with promise for Dell Inc. Apart from the blip of the dot-com bust five years earlier-a correction that affected not just us but tech companies across the board-Dell had enjoyed a pretty uninterrupted run of growth in revenue and profits and cash flow for two decades. In January 2005 our share of PCs sold stood at a robust 18.2 percent. In February Fortune named us the most admired company in America. Dell, they wrote, was "thriving in an industry that may technically qualify as being in the poorest state in the Union. Its profits in this margin-squeezed business soared 15 percent in 2004, a feat that Dell makes look boringly routine. And now it's the first PC maker to hold the rank of America's Most Admired since the original ÔPC' maker, IBM, logged off in 1986."

By September, though, things had begun to change. A lot. Though our profits rose 28 percent in the second quarter, total revenue was several hundred million dollars short of projections. We were, The New York Times reported, "wrestling with the same question facing other mature technology companies that ranked among the highest fliers of the 1990s: How to increase revenues when it is already so big?" Compounding the problem was the fact that personal computers and laptops, which accounted for roughly 60 percent of our sales, were no longer the rich profit center they used to be. As prices had dropped over the course of the year, we'd had to sell that many more PCs just to keep up with the previous year's revenue.

Interviewed by the Times, our CEO Kevin Rollins blamed himself for the shortfall. "Frankly," he said, "we executed poorly on managing overall selling prices"-especially on machines sold to consumers.

Yes, you read that correctly; it wasn't a typographical error. Kevin Rollins, not I, was CEO of Dell Inc. that fall. I'd stepped aside from the position in July 2004 and Kevin had taken over-though taken over isn't exactly the right way to put it. I remained chairman, and the two of us continued to run the company together as we had for a decade; not much really changed except for our titles.

And so if there was blame to be laid for that revenue loss, I shared it. But it quickly became apparent in late 2005 that the underperformance wasn't an anomaly: Dell was beginning to hit serious headwinds. For one thing, our competitors were getting smarter. Companies like Hewlett-Packard, Acer, and Lenovo, companies we'd always soundly defeated with our build-to-order model, had gone back into their cave and figured out how to duplicate many of our supply chain innovations. Meanwhile, build-to-order itself, so effective at addressing the many combinations and permutations of desktop computers, lost its advantage as the industry shifted from desktops to less easily customized notebooks. Customers were starting to focus more on services and solutions as value transitioned from the fundamental client product, the PC and related peripherals, to software, servers, and the data center.

It took us a little bit longer than we would have liked to figure all this out.

And then there was a Dell plus that was subtly turning into a minus: for a few years we'd been prioritizing profit over growth and share, and a company's success is always a balance between those three. Our profits were strong in the 2000s, but now our share was eroding. And that can be a slippery slope.

We needed to build new capabilities, we needed to invest in new areas, and we needed to move fast.

In 2007 I returned as CEO-both a symbolic move and a practical one-and we embarked upon a major merger and acquisitions initiative, starting with the purchase of the data storage company EqualLogic, for $1.4 billion. The financial crisis of 2008 threw a temporary wrench into our plans, but the following year we restarted the program by buying Perot Systems (for $3.9 billion), and in 2010 we really went on a roll, acquiring storage, systems management, cloud, and software companies such as Compellent, Boomi, Exanet, InSite One, KACE, Ocarina Networks, and Scalent.

In 2011, to round out our enterprise capabilities, we bought Secureworks, RNA Networks, and Force10 Networks. And in 2012 we made still more key acquisitions in software and security, including Quest Software, SonicWALL, and Credant Technologies. For fiscal year 2012, Dell achieved its highest-ever revenue, earnings, operating income, cash flow, and earnings per share.

Maybe it was the calm before the storm.

But in the meantime, all was not well at Dell. We'd tried to enter the smartphone and tablet markets, without success. We'd even come up with what was known at the time as a "phablet"-a five-inch Android device called the Streak. It didn't exactly streak lightning across the sky. (For one thing, most of the profit went to Google.)

By 2012 our PC sales had fallen by double digits, and our share had continued to erode-by year-end, with the heavy weight of Windows 8's failure dragging us down, it had dropped to 10.5 percent-and now profit was declining as well. Our market capitalization had fallen below $20 billion.

In late 2012 our share price would sink almost to penny-stock territory: less than $9, a plummet from the $15-to-$17 levels it had seen in 2009 through 2011. The conventional wisdom, shouted through a thousand megaphones on the internet as well as on CNBC and other media outlets, was that the PC was doomed, and that therefore Dell was pretty much doomed too.

Our shareholders were not happy, myself included.

Despite our spectacular success over the years-anyone who'd bought Dell shares back at the beginning and held on to them had earned 13,500 percent on their investment, twenty-seven times greater than the 500 percent return on the S&P 500 during the same period-our stockholders were worried about the company's future. Still I had the full support of our shareholders, who in July 2012 reelected me to serve as CEO and chairman of Dell with over 96 percent of the vote.

And I was trying to reassure them. "We're really not a PC company anymore," I told Fortune editor in chief Andy Serwer in July 2012, at Fortune's Brainstorm Tech conference in Aspen. But Andy was a tough sell. "Is it really the case that you're not a PC company now or that you don't want to be a PC company in the future?" he asked me.

I reminded him that in the last five years we'd made a concerted shift in our business, toward end-to-end IT solutions: a complete set

of capabilities for customers, from their data centers to their client systems to security, software systems management, storage, servers, and networking.

I told Andy that Dell was really in four businesses now.

First came the client business, which was itself transforming with all that was going on in mobility and client virtualization-which in turn brought new needs in terms of security.

Next came the enterprise data center. I reminded Andy that we'd built a tremendous business in storage and networking, fueled by all those acquisitions-about twenty-five in the last three or four years. I said that in case anyone had forgotten, about one-third of the servers in North America were made by Dell. Cloud and virtual infrastructure had become very big for us.

Then there was our software business, centering around systems management and IT security. I said we were seeing around twenty-nine billion security events per day; we were"protect"ng tens of trillions of dollars of assets for the biggest banks and financial services firms in the world.

I called Andy's attention to the fact that of the 110,000 people at Dell, almost half-a full 45,000-were in our fourth business, services, helping companies capture value from all the IT needs out there.

"So we're right in the middle of some of the stickiest challenges out there," I told Andy. "How do you connect older applications to cloud applications? How do you secure and modernize IT environments and bring them off mainframes and onto the X86 platforms? Put them in the Dell Cloud and do it more efficiently."

Dell, I said proudly, was a much different company than it had been four or five years ago.

Andy looked a little bemused. "Am I wrong, or did I not hear you mention PCs at all in that little soliloquy?" he asked.

Even smart people, it seemed, were hung up on that one subject.

Andy then put a polling question up on the screen behind us: "Last year desktops and laptops accounted for 54 percent of Dell's revenue, down from 61 percent in 2008. How big will Dell's PC business be in five years?"

Possible answers were: (a) 50-54 percent (about same as today); (b) 40-50 percent; and (c) 39 percent or less. Choice C got the most votes by far.

The correct answer was A.

I told Andy that with all due respect to his poll, a better way to think about the question of our PC business vis-ˆ-vis our other businesses was in terms of revenue and profit. Let's say (I said) you sell a billion dollars' worth of PCs, versus a billion dollars' worth of software: those two transactions would have very different characteristics in terms of free cash flow and margin. Therein lay some of the difficulty in looking at Dell strictly from a revenue standpoint. Our business mix was definitely shifting, I repeated.

Hoping the message was starting to sink in.

I believed passionately in everything I told Andy at Aspen. And in the days, weeks, and months that followed, the business press kept pushing the narrative that Dell equaled PC, and the PC was dying.

And our stock continued to swoon.

I'll freely admit that some part of me smarted at seeing our share price sink so low. The company had my name on it; after my family, it meant everything to me. But my wiser side saw an opportunity for the company. Back in 2010 I bought a big block of Dell stock in the open market, confident that the share price would rise. (There are very stringent rules about when and how an insider like me can buy or sell our stock: soon, but not too soon, after quarterly earnings have been announced. Needless to say, I followed them.) Yet it also occurred to me that if I-with help from others, of course-could buy back all the stock, our transformation as a company could proceed without the tyranny, the ever-ticking shot clock, of a quarterly earnings report. Going private would open up the possibility of dramatically accelerating the growth of the company and allow us to have a far greater impact in the world.

Others had the same thought.

In 2010, at a Sanford Bernstein conference, an analyst named Toni Sacconaghi had asked me if I'd considered taking the company private.

"Yes," I said. My monosyllable hung in the air. There was a little laughter in the room.

Sacconaghi smiled. "That's more succinct than I would think," he said. "What would be a galvanizing event for you to consider it much more seriously?"

"No comment," I said, feeling I may have already said too much. I smiled back.

Fast-forward two years. In late May of 2012, a month and a half before the Aspen conference, I had a meeting at our Round Rock, Texas, headquarters with several officers of Southeastern Asset Management, a Memphis firm that was the second-largest shareholder (some 130 million shares) of Dell stock after my wife, Susan, and me. These meetings happened on a regular basis right after we'd announced our quarterly earnings, but this meeting was different, because in the midst of the customary drone about numbers and projections, Southeastern's chief investment officer, Staley Cates, told me he felt we should take the company private.

"Can you tell me more?" I asked him.

"Let me get back to you," Cates said.

This, frankly, made me nervous. It wasn't the idea of going private itself that worried me; it was the fact that our second-largest stockholder was bringing it up. I had no clue what Cates was driving at. Obviously he wanted to increase the value of his shares, but was he saying that he wanted me to buy him out? Or was he saying he wanted to help me take the company private? What was he saying? I went over to the other side of the building and talked to Larry Tu, our general counsel, and Brian Gladden, our CFO. "What do we do now?" I asked them.

"Ask him how that would work," Brian said. "Ask if he has a financial model he'd like to share."

So I asked, and Cates sent me a simple spreadsheet that outlined his idea. I sent the spreadsheet to Gladden, and Brian sent it to a banker he knew at one of the major investment banks. And the banker analyzed the idea and told us it didn't hold water. "Too complicated, too much debt; not gonna happen," he said. "Forget about it."

So we forgot about it. Then something very interesting happened.

As I was taking off my microphone backstage at the Aspen Q&A, a guy-a few years younger than me, fit-looking-came up and introduced himself. His name was Egon Durban, he told me, and he worked for Silver Lake Partners.

"Hey, I'd love to meet with you about an idea I had," he said. "I have a house in Hawaii near yours-can we get together sometime?"

Now, people come up to me all the time, and I'm polite, but . . . people come up to me all the time. If this Egon Durban had been from a company I'd never heard of, I would have told him, "Sure, call my office," and we'd never speak again. But Silver Lake was a major private equity firm with a great track record and a deep expertise in technology (and whose first fund I'd invested in when it started up in 1999), so I gave Durban my email address. And when I looked him up, I saw he was one of Silver Lake's four managing partners.

Table of Contents

Part 1 Public to Private

1 Headwinds 3

2 Different Places 20

3 Going Private (In Private) 40

4 Start Me Up 62

5 Mr. Denali 81

6 Young Man in a Hurry 102

7 The End is Nigh? 120

8 Up, Up and Away 146

9 Redemption 173

Part 2 Private Back to Public

10 Growth, and Other Hazards 193

11 Body and Soul 216

12 Project Emerald 240

13 Harry You and the Bolt from the Blue 264

14 Zettabytes and Moon Shots 298

Acknowledgments 317

Appendix 322

Editorial Reviews

08/16/2021

After spending much of the last decade engaged in a pitched battle to hold onto his eponymous computer company, a triumphant but bruised Dell (Direct from Dell) looks back at a lifetime of naysayers and relishes the chance to set the record straight in this intimate, insider portrait of a tech titan under siege. Chapters alternate between Dell narrating the ferocious battle to buy out the company and his transformation from a scrappy, entrepreneurial teen to a college-dorm dwelling CEO, two threads that are linked by his singular faith in the future of personal computing. Dell describes his aggressors: the “trouble-making opportunist” Carl Icahn, who waged a public war against Dell as the founder and CEO sought to take his company private and insulted Dell while he restrained from commenting on anything related to ongoing negotiations; shareholders who “abandoned” him during a spate of poor earnings; and a business media that had “an ax to grind.” While the personal narrative is fast-paced and humorously told, the overwhelmingly one-sided perspective and frequent jargon-laced explanations of the industry will likely turn off those not already familiar with the contours of the industry and Dell itself. Business news nuts who love swashbuckling stories will feel right at home. (Oct.)

Publishers Weekly

“The book is acidly funny, nail-biting and fast-paced. It is also blessed with a villain from central casting: Carl Icahn, activist investor and publicity hound, whose sparring with Mr. Dell gives the story its bite.”
—The Economist

“In this super-candid book filled with revealing stories, Michael Dell shows how his development as a person was tightly intertwined with building the company he founded in hiscollege dorm room. It’s a fast-paced tale of launching a public company, taking it private, and then taking it public again, all while wrestling with colorful characters such as Carl Icahn. Dell provides a wealth of business insights but also something more important: how curiosity and good values are essential to success both in life and in business. It’s a lesson he learned from his strong parents and shares with his wife in the work of their foundation togive kids better opportunities. The result is a book that is exciting, insightful, and valuable.”
—Walter Isaacson, bestselling author of The Code Breaker

“Michael Dell takes you into the real world of building and transforming an empire, vividly describing conversations and deals with key players so you see the whole picture. It’s a great gift for those on a similar journey.”
—Ray Dalio, founder of Bridgewater Associates and author of Principles: Life and Work

“Play Nice But Win is exactly right. Exceptional entrepreneurs like Michael Dell have changed the world under great pressure, but with great success. Michael tells you how to be successful and true to your values in this awe-inspiring narrative of what it takes.”
—Eric Schmidt, cofounder of Schmidt Futures and former CEO and chairman of Google

“Michael Dell is the rare leader who set his company on a successful long-term direction by balancing innovative strategy with consistent values. In Play Nice But Win, he reminds us that courage and conviction are the key to transformative change in any organization.”
—Indra Nooyi, former chairman and CEO of PepsiCo and author of My Life in Full

“Many people have great business ideas. Entrepreneurs see them through. That’s the story of Michael Dell, whose book takes us on a riveting journey from the dorm room at the University of Texas to the boardroom of one of the world’s largest tech companies. It’s a tale of vision and perseverance every aspiring entrepreneur should read.”
—Sir Richard Branson

“This is Dell Direct. With insightful frankness and humor, Michael Dell tells his story, that of his iconic company and the grit required to compete in the ever-growing technology industry.This is a book for entrepreneurs, leaders, and dreamers.”
—Satya Nadella, CEO of Microsoft

“Michael Dell’s journey is part of the historic fabric of American business. His story of multiple transformations through the decades has insights for leaders at every stage, from entrepreneur to CEO.”
—Howard Schultz, cofounder of the Schultz Family Foundation, former chairman and CEO of Starbucks

“With rare candor and insight, Michael shares his incredible journey as founder and CEO of one of the most iconic and admired tech companies. It’s the unvarnished story of one of the world’s greatest entrepreneurs, a visionary with unparalleled determination and a commitment to leading with compassion and integrity.”
—Marc Benioff, chair and CEO of Salesforce

“As Michael Dell likes to say, life is about taking a punch, falling down, getting back up, and fighting again. Play Nice But Win is as much a story about resilience as it is about business. Michael is candid about the setbacks and challenges he’s faced in his life and career. The lessons he’s learned along the way are important for everyone who aspires to lead.”
—Sheryl Sandberg, COO of Facebook and author of Lean In and Option B

“Play Nice But Win is an autobiographical thriller, and Michael Dell is the gangster protagonist—never looking for a fight, but relishing every brawl once he’s in it. By outwitting tyrants, takeovers, and dead ends, Michael relentlessly"protect", transforms, and expands the product he tinkered with as a teenager into the multinational company Dell is today. Michael consistently wins not by exposing loopholes but always by making advantage of the rules. Play Nice But Win is a magic trick, and one hell of a caped crusader coup.”
—Matthew McConaughey, Academy Award winner, bestselling author of Greenlights

“Play Nice But Win belongs on the list of great digital-age memoirs. The quietest of the entrepreneurs who created the modern computer business finally tells his story.”
—Malcolm Gladwell, host of the podcast Revisionist History

“This is the saga of how one of the great founders of our time launched his company, grew it, got it back, and rejuvenated it. Michael Dell’s entrepreneurial spirit is infectious, and his behind-the-scenes stories are full of important lessons about leadership, collaboration, competition, and innovation.”
—Adam Grant, #1 New York Times bestselling author of Think Again and host of the TED podcast WorkLife

“In his new book, Play Nice But Win, Michael Dell provides a powerful portrait of his life—the early years, the obstacles and challenges, the successes and triumphs. Thoughtful and revealing, it shares an inside look at what it takes to become a good leader—and more important, a good human being.”
—Jamie Dimon, chairman and CEO of JPMorgan Chase

“This book is an incredible window into what it’s like to be in a founder’s shoes, and the difficult work of growing a company. Michael Dell is not only an innovator, but a leader, and in Play Nice But Win he shows what it really takes to build the future.”
—Marc Andreessen, cofounder of Netscape and Andreessen Horowitz

“Michael walks you through every step of his journey, from starting a company in his college dorm to pulling off the largest all-tech acquisition in history. Anyone who’s interested in business at any level can learn from the insights in this book.”
—Bill Gates

“Fast-paced and humorously told… Business news nuts who love swashbuckling stories will feel right at home.”
—Publishers Weekly

“…a candid second memoir… a lively chapter in computer history."
—Kirkus

“In Play Nice But Win, the taciturn Texan entrepreneur finally has his say. It is worth going along for the ride . . . a good reminder that all business really is personal.”
—Financial Times

“… a refreshingly candid account of Dell's success in the computer industry, and how his company has remained at the top of the business world.”
—Booklist, a publication of the American Library Association

“… a candid memoir from one of the most irrepressible entrepreneurs of the computer age.”
—Alan Murray, Fortune

“A quick and compelling read . . . a glimpse inside one of the era’s great entrepreneurial minds . . . Dell still wanted to play the game, and his enthusiasm for it is infectious.”
—Porchlight, Staff Pick

From the Publisher

2021-08-04
A bold tech entrepreneur tells his story.

From the time he was a teenager, Dell, founder of his eponymous personal computer company, was fascinated by computers. When he was 14, he bought an Apple II with his own hard-earned money and promptly took it apart. Tutoring other kids about using computers proved to be “a pretty lucrative sideline,” he recalls, and he joined a local Apple User group, which met “to talk upgrades and trade parts and swap stories.” In a candid second memoir, following Direct From Dell (1998), the author recounts his evolution from computer geek to business mogul and philanthropist, interwoven with a chronicle of his company’s growth, problems, and challenges. Dell’s company began in his dorm room at the University of Texas in 1984, when the college freshman marketed souped-up IBM PCs to doctors, lawyers, and architects. By 1985, incorporated as Dell Computer Corporation, the company was selling its own models; by 1988, it went public; and by 1989, it had subsidiaries in Germany, France, and Canada. Dell had created a niche for which there was unprecedented demand. “Absolutely nobody else,” he writes, “was building blazing-fast computers custom-tailored for consumers’ needs and shipping them out on a lightning-quick turnaround.” In 1990, Dell, not yet 25, was named Inc. magazine’s first Entrepreneur of the Year. But the company began to flounder, and in 2010, Dell wanted to go private as a way to reinvigorate “the entrepreneurial spirit of the company’s origins, of getting much more aggressive on gaining share, of investing in R&D and adding sales capacity.” A business background would be helpful for following the stakes and complexities involved in making a transition from public to private and back to public again: Tensions and machinations (notably from the arrogant corporate raider Carl Icahn) went on for years. A driven, optimistic, and savvy businessman, Dell prevailed, and he is now estimated to be worth more than $30 billion.

A lively chapter in computer history.

Kirkus Reviews