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- Michael Dell said he’s seen three common failures in competitors who have since failed.
- The failures include expanding too quickly and misunderstanding the competition.
- “I mean, there are lots of ways to fail, right?” Dell said on the “Founders” podcast.
Michael Dell founded his namesake company in 1984. Since then, dozens of consumer tech companies have risen and fallen — and he says he knows why.
On the “Founders” podcast, Dell said that he watched many of his competitors make critical judgment errors. While he said there were many he could list off, three were top of mind.
“If you’re in the middle of a super competitive endeavor and you don’t completely understand what’s going on, well, you’re going to make mistakes,” Dell said.
The first failure, according to Dell, was that companies “overzealously expanded.”
The CEO doesn’t name any specific competitors, though tech history provides a graveyard of businesses that burned fast and bright. Compaq, for example, purchased the struggling Digital Equipment Corp. for $9.6 billion in 1998. By 1999, Dell Technologies had overtaken it, and by 2002, Compaq had been sold to Hewlett-Packard.
The second failure that Dell said he noticed in the company’s unsuccessful competitors was “design errors.”
Again, Dell didn’t name names, though Dauphin Technologies is a possible candidate. The company debuted the DTR-1, a lightweight palmtop PC, in 1993. Some complained that the computer had limited functionality and a clunky keyboard. By 1995, Dauphin filed for bankruptcy.
The final failure Dell said he saw: companies that “failed to understand the competitive landscape.”
Gateway, a primary competitor for Dell Technologies in the late 1990s and early 2000s, may have suffered from this problem. The dot-com bubble burst hit Gateway hard, and the company was slower than Dell Technologies to work with businesses and corporate clients.
“I mean, there are lots of ways to fail, right?” Dell said.
On the podcast, the CEO also advised against “the Osborne effect.” In this case, a business introduces a new product that makes its old product obsolete, cutting off an entire line of sales.
“You’re out of business,” he said. “Don’t want to do that.”
Dell has been the company’s CEO for almost four decades, only interrupted between 2004 and 2007, when Kevin Rollins took over. Dell Technologies has made its share of mistakes, too, he said, but they were the right kind of mistakes.
“Go make mistakes nobody’s ever made before,” he said. “You actually want to make mistakes, you just want to make them small and iterate and fix them quickly.”
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