Experiences

My 30 Years at Dell

Today is Friday, June 12, 2020, and my official last day at Dell, ending a tenure that began on June 5, 1989. During my last two weeks, I was inundated with questions about my time at Dell, specifically the early days. Do I have a ton of stock? Did you ever meet Michael Dell. Are you going to retire now? As I think about the answers, I figure most of the real company chronology and facts and figures are already well documented. Moreover, Dell’s business model, lessons-learned, and leadership insights can be derived reading Michael Dell’s two books. So I figured I would think through what those days were like more personally. What was a day in the life for us at Dell the startup?

I was actually “recruited” to work at Dell after receiving a phone call in May of 1989 from a Dell HR representative named Jim McCaskill. “Hey Mike, I’m Jim McCaskill from Dell Computers formally PCs Limited. I received your name from Lynn Haxton, and understand that you have experience with a Tandem mainframe?”. At that time, I was an intern at Lockheed’s Austin division, splitting my time between finishing my Computer Science Degree and doing system backups, hanging tapes, and cleaning plotter printers for Lockheed.

By contrast, Dell had just announced earnings: AUSTIN, Texas — May 23, 1989. Dell Computer Corp., a personal computer maker, Tuesday reported net income of $2.05 million, or 11 cents a share, in the first fiscal quarter ended April 28, compared to $2.85 million, or 19 cents a share, in the same period of last year. The per share earnings were on 19.27 million average shares outstanding, compared to 15.16 million shares in the previous year’s first quarter. Revenues totaled $87.5 million, up 86 percent from $47 million in the same period of last year.

During our initial phone call Jim sounded cool (a prerequisite for me in those days), plus anyone in technology who lived in Austin, TX in the mid to late 80’s had certainly heard of Wunderkind Michael Dell and his computer startup PCs Limited. Michael and I were close to the same age, and I had seen plenty of his “Student PC special deals” fliers in my own Austin college dorm room in those days.

EXPERINCES
Dell
AUTHOR
Mike Carter
DATE
2020

The Start of Things, 1989: The Recruitment

I met up with Jim, sometime in May 1989, at Dell’s new Arboretum campus. Dell hadn’t entirely moved in yet, and in fact, they only occupied floors 4 through 9. The first three floors were a Bank with tellers in the lobby. My first reaction, was “what IS this place?”. Jim was as friendly in-person and put me at ease as and we took the elevator to the 4th floor, where HR was going to be. After digging through several boxes, he was able to locate a job application, which he handed to me, saying, “I’m sure you will want one of these.”

I still saw very few employees, but the ones I did see were all very young, 25 max. Very different from the stoggy 40-ish oldtimers (smile) I worked with at Lockheed.

“Is everyone here my age”, I ask Jim.

“Yep, average age here is 28, mostly because we had to hire some old people to help Michael now that we’re a public company”.

Oh…

Next, we went up to the 6th floor; “this is where the computer room is, and where most of IT will be located, along with sales.”

“IT with Sales?”. That seemed random, but Jim stated Dell was developing a new Sales Order management system on their new Tandem Mainframe system. And this is why they were heavily recruiting IT professionals that could code and operate the Tandem Guardian Nonstop Operating System. Dell wanted the IT team developing the new system to be close to the sales team that would utilize it—made sense.

Next, Jim walked me around to see all the empty offices overlooking the Texas Hill Country. The offices had nice wood desks, credenzas, and shelves and were mostly unoccupied save for a few employees clicking away on their Dell Turbo PC systems. We walked into one office with an exceptionally nice view, when Jim said, “This one could be yours Mike”.

It was all over; I really wanted this job!

My First Card

I reassured
my Dad that
I would only
work at Dell
for 2 years

A few days later, I was offered the job at Dell, and much to my Father’s chagrin, I tendered my resignation at Lockheed. My Dad was an executive at Lockheed, responsible for my internship, and unhappy with my decision. At the time, he asked me two critical questions, “are you sure you want to work for a small startup run by a kid?” and “do they at least have a defined pension plan?”. My responses were “yes” and “who cares,” the latter of which is now coming back to haunt me. I reassured my Dad that I would only work at Dell for 2 years, to get some real coding experience and I would then go back to Lockheed.

On my first day at Dell, eight people were in my new hire cohort. And as customary in 1989, we all had breakfast with Michael Dell. Michael was 24 at the time, with big hair and even bigger glasses. I recall him sounding very intelligent and very young, saying things like “obviously,” “of course,” and “cool” a lot. By the numbers at that time, Dell had about 1200 employees, $257M in revenue, the stock was about $12 a share, and Michael drove a Porsche 928, my dream car.

A few memorable things stood out those first few months at Dell.

1988 must have been one Dell of a year!

Unfortunately, I missed it. Despite starting in 1989, just 5 years after the company was founded, I apparently missed the real fun! Or so I was regularly told. Two prevailing stories were often told by the “old-timer’s” that started just one year prior.

First, in 1988 there was one (hell) Dell of a Holiday party! A wealthy and young Michael rented out the Frank Erwin Center and through a giant Holiday bash. The band that night was a popular 80s cover band from Austin called Duck Soup, and 5 huge fountains were gushing out…well, Margarita’s, of course. Tons of food and drink, and so that Dell employees didn’t risk driving, Michael rented out the entire Radisson Hotel across from the venue. And from what I hear, that is where the party really started! So much in fact that the rumor was that the hotel chain banished Dell Computer for life. 

Second, centered around Dell’s 1988 IPO at $8.50 a share. At that time, every employee received 50 shares, and ironically, this was the real beginning of the whole “Dellionare” thing that exploded in the 90s. And yes, I missed that share grant. And yes, for those 1988 employees lucky enough to have hung on the those IPO shares to at least 1999 would have made about $900K! More interesting, however, were the stories of the ever-present Lee Walker, Dell’s first President and resident adult. Walker actually came to Dell (actually PCs Limited) in 86 to help Michael manage explosive growth, global expansion, and yes, the IPO process. But the prevailing belief amongst the rank-and-file was that Lee was there to “groom” Michael (who allegedly was still prone in those days to show up to work in his go-cart or donut into the parking lot like Steve McQueen). And during the hedonism that was 1988, Walker was apparently viewed as a cranky old guy who followed Michael everywhere, squelching any fun that should erupt. During this time, stories of cool were attributed to Michael, and the un-fun growing pains resulted from Lee. Weird, I know.

Dell was absolutely a startup. 

Like most startups, there was free food! Monday morning, we were greeted with free food, coffee, tea, donuts, and bagels. And when you were working past 6PM (which was often), there were magically pizzas in almost every break room. An added startup bonus was we saw Michael Dell often. Close-up, not just formal settings – in the elevator, at vending machines, break rooms, standing behind you at your desk. When not running his expanding empire, Michael spent a ton of time in those days on the 5th Floor, R&D, and the 6th Floor IT and sales.

Michael was always very curious about what we were working on. Not casually either; I mean, he really understood coding and considered IT and the custom application assets we built weapons that supported the Dell Direct Model. Really profound innovations and accomplishments were met with an “On the Spot Award.” Meaning Michael pulled a $100 bill from his wallet and rewarded the effort on the spot. I once received one of those early direct from Michael awards and vowed to save and frame the bill should Dell really turn into something huge. Unfortunately, Dell did get huge, and I spent the bill – but hey, I was in my early 20’s and usually broke. 

Oddly, despite our startup status, attire at Dell Computer was pretty formal in those days.

A Formal Affair

Michael was also very hands-on. He could be regularly seen on the phone taking sales orders, working on the assembly line (yes, Michael really can build computer systems), and at many end of quarter Michael could be seen in the shipping department helping load trucks with orders right up to the 11:59PM quarter-end cut off.

Oddly, despite our startup status, attire at Dell Computer was pretty formal in the early days. Perhaps it was due to all the make-it-big 80s movies like Wall Street, shows like Miami Vice, Duran Duran videos, IBM influence or perhaps Lee Walker…we all dressed up. At a minimum, Dell 1989 was a pretty formal shirt and tie affair, even in IT!

Dell Headquarters were…Messy!

In 1989, Dell’s headquarters were soon crowded and cluttered. In addition to sharing our building with a Bank, things just always seemed like we were in a perpetual state of move-in. And everywhere you looked, there were boxes and mountains of computer stuff. Yeah, stuff. There are no finished systems per se, just parts. Motherboards, memory, pallets of monitors, chassis, keyboards, a shit ton of floppy discs, etc. Perhaps these were early warning signs of the inventory challenges that would continually plague us in those days. But one benefit of this unprecedented access to computer stuff…were computer wars! We pretty much built, configured, and upgraded our own computers using this cache of unfinished goods. In IT, you were regularly greeted with, “Dude, come check out what I did to my system!”. 

In some cases, we weren’t thinking big enough…in other areas, we were too ambitious.

In 1989 it was hard to imagine becoming as large as today’s Dell Technologies. And nowhere was that shortsightedness more apparent than in IT. As I mentioned before, IT built custom applications to support Dell’s Direct business model. One of those applications was the Dell Order Management System or DOMS. DOMS was largely coded in COBOL on the Tandem Non-Stop operating system and originally developed to support 200 sales reps. And at the time, we thought we were throwing the rock way out there. On the networking side, our naming convention to scale domain services were planets, figuring we would never need the network capacity to get to Pluto. In my first year, we switched to naming servers after trees.

By contrast, on Dell’s R&D and product side, things were perhaps a little too ambitious. Glenn Henry, our VP of R&D, created a mission of building a much large R&D capability (essentially zero to 150 engineers) to deliver more advanced products. This team embarked on an ill-fated project called “Olympic,” which intended to span desktop, workstation, and server markets, with single and dual processors and many different operating systems. Plus, design a multiprocessor personal computer using a RISC CPU. 

A demonstration at 1989’s Comdex generator praised Olympics engineering, but confusion on its use and practicality. That was huge it not just financially but for the culture. And we felt in IT as well. Many of our entrepreneurial ideas we would have just started coding in the past were now met with “hey, it’s not just technology for technology’s sake, but technology that matters to customers.” 

We were always conscious of costs.

Despite staggering growth, awesome headlines, global expansion, and crazy hiring, there was always an underlying feeling (reality) that we were strapped for cash. First, little things were eliminated, like free coffee, tea, and breakfast snacks. I’m sure a decision with little benefit from a balance sheet perspective reverberated largely throughout the company. Next were quirky things like Friday paycheck distribution moving from morning to end of the business day. A move that was rumored to prevent us from cashing paychecks at lunch due to Dell struggling to make payroll. Distributing checks at the end of the day gave Dell the weekend to figure things out. Following that decision, payroll then moved to bi-weekly. 

We also felt these pressures from a technology perspective. Our IT budgets were pretty much stripped during this period, and we had no dollars for development or system capacity expansion. 

These challenges, however, gave me just the greenfield I needed to build my brand as an innovator. During this period, limited disc capacity especially crippled sales and manufacturing as applications often crashed and halted operations due to disc I/O errors. To solve this issue, I taught myself TAL (the Tandem Advanced Language, which was the native code of the Operating System). This enabled me to develop native system utilities which could measure the slack space between data records, that when compressed, would yield writable disc space for new data records. Not ideal for application performance; however, the trade-off was nominal as these macros could be run nightly, create free writeable disc space, and avoid operation shutdowns. Plus, we could limp along without hitting CAPEX for storage capacity. 

These utilities proved to be a great win and the start of a great career and evolving professional brand. 

The 90s, A Decade of Crushing Compaq, Hyper Growth, and Dellionaires!

In 1990 we ushered in the decade with our first laptop, the 316LT, which had a monochrome VGA display, 16MHz 80386 CPU, 20MB hard drive, a 1.44 MB 3.5-inch floppy drive (yes floppy drive!), and one whole MB of RAM for $3,500 (about $6,729 today). And weighing in at…13.5 pounds without a battery! By the way, if we had weighed that damn thing with the battery, you could easily have added an additional 5 to 10 pounds! InfoWorld remarked of the 316LT: “Fastest speed; lowest price.” 

Internally we marveled at the machine. And, despite hindsight, my first impression back then was that the thing was very sleek and portable. I’d happily forego free coffee and donuts if we kept producing computers like this!

By now, my Dell career was six months old, and my work developing system DASD utilities paid off, and I was promoted to Tandem Systems Analyst. In IT, the step up from operations, programming to systems analysis was very coveted. Although I was the youngest (and later found to be the lowest-paid…by a lot), I was both ecstatic and envied by my promotion. And it validated my decision to move from Lockheed, where such career advancement would have taken 10 to 15 years. Things advanced very fast at Dell, and the days were long. Back then, it was not unusual to work 12 to 14 hours a day, plus most of my weekends back then were bunked out in my office, optimizing the Tandem systems for the week ahead. 

New decade, new logo. 

The 90’s also ushered in increased use of Dell’s new logo! And like most employees at that time, I hated it! The elegant typeface, the Computer Corporation badge, and teal accent color were gone. In its place was a simple, bold blue Dell. No “limited”, no “Computer Corporation”, just “Dell”. Our old “Dell Computer Corporation” logo was elegant and made us seem bigger, more mature, and more established. 

Plus, I recall thinking, “we’re not big enough to simply be Dell.” Could we really pull off the mononymous status of Prince, Madonna, and Sting? Hell, my friends back in California thought I worked for Del Taco, so I really needed the Computer Corporation clarification! That said, the most polarizing feature of the new design was that damn crooked “E.” No one outside of marketing understood that decision. Of course, in hindsight, the move was brilliant, but man, was it hated early on.

It’s war, Crush Compaq!

This era is probably my favorite and most personal period in my time at Dell. A lot has been published about the “Golden Years” of the PC and the price wars this landscape created in the 90s, but there was no more publicized war than Dell and Compaq. And man, was it personal! Around the Dell Campus and Manufacturing facilities in those days, it was common to see the giant “Crush Compaq” posters. On Fridays, our sales teams began wearing army fatigues, and some even adopted military-style buzzcuts, including some women. At that time, Joel Kocher, our President of Worldwide Marketing, Sales, and Service, was our battle commander. The easiest way to think of Joel is to imagine Tony Robbins as a PC Sales Executive. And like Tony, Joel could really work a room! He literally instilled the notion that this all out war, and it was personal.

And man did we respond, I mean throughout the company we literally hated Compaq!

It was commonly believed that our (Dell’s) ambition was to use cost advantages to drive Compaq out of the market. This simply wasn’t the case, and in fact, it was Compaq who fired the first shot! The reality is Compaq Computer Corp. was growing tired of both Dell and Gateway 2000 eroding its market share, and they were readying a massive 15% price cut to wipe us off the map. 

So with that, we loaded and aimed our most powerful weapon at that time…Goldberg Moser O’Neill! Goldman Moser O’Neill, or GMO, was our ad agency back in the 90s and created some of our most iconic (and ballsy) advertisements, now aimed squarely at Compaq! So literally the day after Compaq’s little pricing stunt (that also sent our stock down 20%!), Dell and GMO responded with a direct attack on Compaq in INFOWORLD. The three-page ad began with a single page that read, ‘If we can offer more features and better customer satisfaction for less money, it’s not surprising how we sell so many PCs.’ The reader turned the page to find a two-page headline that says, ‘What’s surprising is how Compaq does.’

The ad then offered a list of 14 reasons to buy a Dell, including our high level of service and our #1 spot for customer satisfaction. The opposite was one item listed for a reason to buy a Compaq, which simply read, ‘They have a pretty nice logo.’

Whereas the price war certainly galvanized us against a common enemy, I’m. not entirely sure we “won.” Price wars continued throughout the 90s. They reignited into the 2000s, and “technically,” we defeated Compaq since HP acquired them. But did we win? If you ask wall street, Hell yeah, but the reality is that Dell only netted a 4% increase in market share due to the price war and at a high cost to profit despite all the bravado.

1985 1990 1995 1996 1997 1998
Compaq 3 4 10 10 13 14
IBM 25 13 8 9 9 8
Dell <1 <1 3 4 6 8
HP 2 1 4 4 5 6

Some pundits during this time suggested we would have been better served by worrying less about market share, and focusing on taking a higher percentage of the market profit. Our price war was kind of like smoking in your youth; it felt good at the moment, but boy could it hurt in mid-life! History showed that hardware prices never recovered, and this put huge pressure on our business in the mid-2000s and beyond.

Early Turbulence, Hyper Growth, Maturity, and IT Evolution

Because of, or despite the war with Compaq, Dell’s overall growth during the ’90s was nothing short of phenomenal. However, the 90s were not all roses. Interestingly, although the price wars continued throughout the decade, the internal tone for Crushing Compaq began to dissipate. By the early 90s Lee Walker had already left the company due to health reasons, and weirdly Joel Kocher, who led the Crush Compaq charge, seemed to fade to the background. 

By 1992, I was still in the Tandem Systems Group and by now my role had evolved into Dell’s first DBA. I was learning a lot and still loved working at Dell and my contributions to IT and the company were valued, however the fast-charging 80’s startup culture begun to change. Sure we still celebrated every little accomplishment with cake  and t-shirts, but there were signs that things were beginning to unravel. By 1993 our stock price plummeted from $49 in January 1993 to $16 by July. We had entered a widely publicized spat with a Kidder Peabody analyst who questioned our currency trading and accounting practices, right at a time we were leveraging our market capitalization for expansion. I vaguely recall the breaks placed on several initiatives due to our plummeting stock. 

Our chief financial officer had resigned, and worst of all, we scrapped all of our new lines of notebook computers. This meant sitting on the sidelines of the fastest-growing segment of the PC market for more than 12 months. 

Michael Dell revamped most of his leadership team during this bleak period, including a new CFO, Tom Meredith. Meredith changed the company’s orientation away from growing at any cost…to liquidity, profitability, and growth, which became the mantra for the company and perhaps may have tempered the ‘win at any cost’ fervor created by Joel Kocher. During this period, I also recall an interview that Joel once gave in which he stated that he had only held his infant child once, ostensibly because of his ‘balls to the wall’ work ethic. But certainly not a good look for Dell.

Sometime in 1993 was the last time I recall Joel addressing the company during an all-hands at the Frank Erwin Center. During his speech, he told a story about the past Thanksgiving holiday and how he was notably absent during his families festivity. He said that his father asked if he had been working the whole time, which Joel proudly confirmed. Joel said his father, then told him, “Son I think you’re a ‘Work-a-holic’,” to which Joel responded (yelling in the mic for effect), “No Dad (pause) I’m a Success-a-holic!”. 

The auditorium fell silent. I slowly looked at each of my co-workers sitting on either side of me, exchanging looks of disbelief. Sometime during the faint sounds of wind and crickets, the next speaker took to the podium. I never personally saw Joel again. His LinkedIn indicates he left the company in late ’94. And just like that, we grew up. 

Michael made additional leadership changes, most notably bringing in a new Vice-Chairman, Mort Topfer. Topfer is a strong operations guy with a penchant for detail and quality. I remember him bringing in a company-wide mantra called Q.U.E.S.T. or Quality Underlies, Every, Single, Task. And instead of developing battle cries, Topfer pushed us to focus on such sober terms as “process” and “discipline.”

Despite early speedbumps, we rapidly grew to become one of the top three vendors in the PC industry and saw an extraordinary increase in share price and market valuation. While other PC makers were unable to handle the demands of the dot.com era, Dell continued to thrive in such an environment. Of course, the key to our success was our direct sales and build-to-order business model. However, while pretty simple in concept, the model proved highly complex to execution, especially with rapid growth and change. 

Fortunately, IT continued to play a vital strategic role in evolving, scaling, and executing our business model. Our custom IT systems coordinated the build-to-order processes from order taking through procurement, logistics, production, service, and support. 

Of course, the key to our success was our direct sales and build-to-order business model. However, while pretty simple in concept, the model proved highly complex to execution, especially with rapid growth and change. Fortunately, IT continued to play a vital strategic role in evolving, scaling, and executing our business model. Our custom IT systems coordinated the build-to-order processes from order taking through procurement, logistics, production, service, and support. 

Several key themes featured prominently within the IT organization during this era; inventory cycle times, the Internet, Project Genesis, and the “Pepsi Generation.”

To punctuate the need to for constantly keeping pace with a dynamic business, we had three and a half CIO’s from 1990 to 1999; Glynn Meek (1989-1992), Tom Thomas (1992-1995), Tom Meredith (CFO and acting CIO 1995-1997), and Jerry Gergiore (1997-2000). Tom Thomas was easily the most disliked of the three and the primary disruptor of our “startup” culture of ’89. First, he replaced a very well-liked and personable CIO in Glyn Meek. We all loved Glyn; he was stylish (the English accent) and drove a cool car (Mitsubishi GT 3000), and had an engaging can-do spirit and open-door policy reminiscent of the “startup” days. 

Although Tom brought in such foreign yet needed concepts like Change Management and Governance, the first words out of his mouth were that we were “Cowboys” and that he would end the “Wild Wild West” days of IT. Who the hell was this guy?

End of the Wild Wild West

"Okay Folks, It's Time to End The Wild Wild Wild West Days of IT".

– Tom L. Thomas, Dell CIO & New Sheriff

After pretty much telling us all we were dogshit, Tom Thomas introduced his three-phase plan:

Phase 1: Stabilize the current environment by installing common hardware and operating systems and software and tools to manage it. The new infrastructure was composed of Tandem and Sun servers, with the overall network controlled by Tivoli network management software. Ok, not bad.

Phase 2: Interim upgrades to enable new capabilities, including Internet/Intranet presence, a global virtual private data network, new data centers in Austin, Ireland, and Penang, Malaysia; and increased IT capacity and training to operate in the new environments. Ok, even better!

Phase 3: Implement a next-generation enterprise system—SAP/R3—to develop a unified application and system environment throughout the company. The SAP implementation was dubbed the Genesis Project. What the fuck?!

And with that, Tom Thomas dealt the worst blow to Dell’s IT-an-asset culture.

The SAP implementation involved a 140-member staff from corporate and regional information systems units. It essentially divided IT into two distinct camps, Genesis and Legacy. Despite my plea to be part of the Genesis brave new world effort, I was deemed a “critical” asset to the “keep the lights on” Legacy team. There were two IT organizations, and literally, two different classes of citizens depending on which camp you belonged. The Genesys IT team was squired away to an entirely different cipher-locked building. A building lavished with free vending machines and, free of the headaches of product system support, and more importantly, unlimited SAP training and resources.  

One day a fellow legacy colleague and I drove to this secret building and tail-gated our way inside. We wanted to see what our former teammates were up to in this golden land of Genesis. I remember the first person we saw, a “former” colleague from our mutual good old days. There we stood with outstretched arms, ready for hugs of “long time no-see,” only to be met with a stern, “How did you two guys get in here!”.

Although she briefly recovered enough to exchange a few pleasantries, we were quickly ushered right back out of the secret lair. 

Humiliation aside, the worst part of the IT split was a retention stock grant that was put in place for the Genesis project team. Although I am sure that group was sworn to secrecy and NDA, word quickly got out that Genesys team members received a significant stock grant that would vest in 20% increments as the five key modules of SAP were deployed. The timeline was loosely modeled to be five years. For us on the legacy IT team, zilch. The belief was that SAP training would create a highly marketable skill set, hence the need for a talent retention vehicle. Those of us legacy workers, working long hours, wearing on call pagers, with no support or budget to keep Dell running, were not so valuable. At least that’s how things festered until we staged a walkout. To mitigate risk, IT leadership quickly cobbled together a cash retention bonus – a couple thousand $$, compared to the Genesis stock plan, which netted members millions – more on that later. 

To be fair, Thomas did some innovative things to scale IT, improve cycle times, and usher on the Internet. Toward the end of Tom’s tenure, Dell began experimenting with the Internet and online shopping in 1994, after we withdrew from the retail market in the U.S… Our hope was that electronic selling would provide a new channel to expand sales and restore growth. 

Under Tom’s watch, he did greenlight our initial Internet development, and we set up Dellnet (now called Inside.dell.com) as an intranet for our employees. Dellnet gave employees easy access to information needed to do their jobs more efficiently, such as financial reports, customer data, product information, technical documents, etc. 

Moreover, in 1995, we created Dell.com, which initially only provided customers with technical support and product information. We also published company information such as annual reports, Dell’s stock price, and other financial statistics.

It’s 1995, Enter The Pepsi Generation!

By 1995, Dell was broken into four major regions: Americas, Europe, Asia, and Japan. At the time, the Americas region, by far the biggest, was further subdivided according to business markets (large business, government/international, small business). Since the purpose of this restructuring was to increase autonomy and responsibility at the regional level, with each region having its own sales, services, and manufacturing. With regional level P&L and operations responsibility, regional leaders wanted control over their IT budgets and applications. Such decentralization was counter to the highly integrated strategy of SAP Project, which required process uniformity throughout the company. Another concern was that SAP may not have the region and country flexibility needed to handle regional business practices impacting growth. Ultimately, Dell’s board ruled that management “must not put an information system in place that would jeopardize Dell’s ability to sustain its desired growth rates.”

Following (or because of) those decisions, Tom Thomas left the company, and IT was put under our CFO, Tom Meredith. Despite Meredith’s lack of technical understanding, IT received this decision well. I don’t know if that was a matter of how much Tom Thomas was disliked, or Tom Meredith liked, but probably a little of both. 

Oddly, the SAP program continued for another couple of years under Tom Meredith, ostensibly supporting the one HR application that did deploy. Finally, Jerry Gregoire, formally the CIO of Pepsi, was hired as vice-president and CIO in 1997. After an initial evaluation and discussions with regional managers, Gregoire pulled the plug on SAP, except for the human resources component already in place. Beyond SAP’s incompatibility with the new business structure, Dell’s rapid growth was also an issue in the decision, given that Dell was $2.5 billion when the Genesis project started and a $10 billion company by the time of deployment.

However, abandoning the SAP project did not eliminate the need for better-integrated systems. The regions themselves were becoming large companies, and there was still a strong need for corporate information systems to support top management decision-making within each region and across the company. A system architecture was needed to allow better data sharing and coordination without inhibiting growth. With that, Jerry hired what seemed like his entire former leadership team from Pepsi, and they set about architecting our future and ushering in the Pepsi Generation.

Gregoire’s answer was a new IT architecture called G-2.

G-2 was a blueprint for architecting IT systems and executing client-server-based application development, and that was low cost to build and manage and easy to use. In a company with 60% annual transaction growth, we could not afford IT roadmaps that took years to implement. The G-2 architecture was designed to be extensible, meaning that changes could be made iteratively without shutting down whole systems or retraining workers. The G-2 architecture is layered, with a Web browser user interface on top of an applications layer, a message broker, and a database.

The G-2 architecture also enabled Dell to run “best-of-breed applications”, to “run Dell on Dell,” and extend the life of our legacy Tandem-based applications.

Needless to say, us “Legacy IT” folks absolutely loved Gregoire’s new strategy. And although Jerry hired a gaggle of his IT cronies from Pepsi to fill most of the senior leadership opportunities, his G-2 architecture paved the way for me to become a Middleware Developer and leave my legacy Tandem Systems DBA day’s behind.

The key for this to work required a message broker layer to serve as an information bus, linking all applications and databases to each other, so they don’t have to talk to each other separately. It also allows new data engines or applications to be added to the system without making changes throughout the system. 

After evaluating a few messaging applications, we selected IBM MQ Series as our application integration system. And I became Dell’s first IBM MQ Series certified developer. In fact, I think there were only 2 or 3 of us in the nation at that time. The messaging infrastructure we designed made it possible to link applications and data to a message broker layer to the necessary functions. It also allowed Gregoire to enforce central architectural standards across the company. Regional IT executives aligned with regional business managers could then decide what applications to develop or adopt. 

One of the first applications for our new messaging capabilities was Dell.com. If you recall, we had already leveraged the Dell.com domain to share basic information about the company; we were now in a position to turn the site into a true eCommerce platform. By 1996, Dell began to offer online shopping for its PCs. The site enabled customers to select and configure a system, get a price quote, and purchase the PC at that price online or by phone. After ordering, the customer received an e-mail confirmation and could check on the order’s progress through our order status system.

Restored Growth and the Era of the Dellionaire. 

This section hits the questions I am asked the most about my time at Dell: “Are you a Dellionare?” and/or “Why aren’t you retired?”. Ok, for those who are new to Earth, the story goes like this… During the period outlined here, Dell revenue soared, and so did its stock price. From the day of its initial public offering in 1988 to its peak in March 2000, Dell’s stock rose a staggering 87,000 percent. And a lot of Dell employees got rich. Legend has it that Dell’s stock was said to have created 2,700 millionaires, so many that they got a name: Dellionaires. 

Although I was not one of these fortunate employees, I was well aware of and participated in our stock-obsessed culture of the time. Our stock ticker was featured prominently on our intranet home page, and there were frequent exclamations in the hallways of “Dude, have you seen the stock?!”. Dell executives bought spacious homes, Austin’s Porsche dealership pretty much had their year made courtesy of Dell. And don’t forget bonuses. As Dell grew, the corporate modifier of annual bonus plans sent payments through the roof. Bonuses paid out in March, and in April, the Dell parking lot looked like a Eurosport dealership of new cars. For senior-level leaders, wealth was built through stock options and bonuses, and for the rank and file, we had the Employee Stock Purchase Plan (ESPP). Could you technically get rich from this plan? Sure, but like 401K, it would require you to max out your contribution (15%). At lower salaries, it was very unlikely that you would become a Dellionaire even with astronomical stock growth. Most employees I knew at the time simply could not afford meaningful contributions to 401K and ESPP. 

So the key was stock option grants, of which every employee received 50 options early in the 1990’s. I think this actually happened twice. One grant vested based on stock sustaining a certain level, the other time based (20% a year over 5 years). The net is most people, including my 23-year-old self, simply could not afford foresight and sold the options for thousands, vs. hanging on to them for hundreds of thousands. 

In those early IT days, I was also naively focused on what cool technology I was learning and its impact on the business over my grade level, bonus structure, and stock option package. But excuses aside, the reason I didn’t become a Dellionaire is that in my single 20’s I simply did not have the foresight to invest in Dell’s lucrative Employee Stock Purchase Plan. 

While many Dell employees did have the discipline and forethought to amass a generous windfall, most lower to mid-rank employees I directly knew only variably participated in this program. Or equally as likely, took profit proceeds as they became available vs. maximizing the split value of their shares.

There was, however, a large cohort of IT employees that did, in fact, become Dellionaires; the Project Genesis team. Remember that effort to deploy SAP as Dell’s centralized enterprise system? Due to the program’s cancellation, that team had the good fortune of having their SAP retention stock grants held in an account during Dell’s most lucrative period of stock growth. The post-split shares than ‘balloon vested in 2001 at the market’s peak. And almost 200 employees became instant millionaires.

Stock aside, the 90s at Dell was perhaps one of the best periods of my career. The work I was doing not only created the foundation of my professional career, but enabled Dell’s global scale and industry dominance. The Dell of the 90s also had a powerful to both Austin and Round Rock were we moved our headquarters to in 1994. Between Round Rock and Austin campuses, Dell employed 22,000 and the our local suppliers brought in tens of thousands more. The industry, wealth, and technology Dell pumped into Austin in only 10 years was on a level unseen in the Cities history. Today, as 65,000 people a year now pour into central Texas, it was Dell as much as anything else, that gave the city the critical cultural and economic mass to make that happen.

Dell Inc: A New Millennium, A New Name,
A Brand New Era.

We survived Y2K and by the new millennium Dell, was headquartered in Round Rock, Texas, we were the world’s leading direct computer systems company, and our revenue for the last four quarters totaled $25.3 billion. Dell ranked No. 1 in the United States, with more than 36,500 employees around the globe. Dell Computer was now Dell Inc. to more accurately reflect our expansion to a broader product line that now included storage, software, peripherals, and services. Also by now, Dell.com had hit $40 million a day in sales.

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