Dell Technologies At 40, 'A Damn Fine Puzzle': Five Questions With Its First President Lee Walker

'We were up against IBM, up against Compaq. The competition was immense in size. They were sophisticated and they had tremendous resources,' Lee Walker told CRN. “We had two board of directors. Michael and me.”

The most powerful computers in the world, running the most demanding applications, for governments and enterprises are designed by the same company that 40 years ago saw its first employee, and namesake, upgrade IBM’s for Houston’s small business community.

Now Dell Technologies boasts $88.4 billion in annual revenue, and it leads all technology companies globally in sales of data storage and computer servers, still selling custom designed devices for business.

The longevity and success of Dell Technologies draws a chuckle from Lee Walker, perhaps the only person besides the company’s founder who can appreciate the improbable coup that Michael Dell pulled on the technology industry.

“What Michael has accomplished is amazing,” Walker told CRN this week.

He was Dell’s first president, and first board member – apart from Dell -- and arrived at the company just as it was about to choke on its early success. He left the company in 1990 to become a professor with the University of Texas Austin and discusses his early days with Dell in his memoir, Imagination House: An Entrepreneurial Life.

He spoke to CRN last week while on vacation in Venice, Italy.

“We were up against IBM, up against Compaq. The competition was immense in size. They were sophisticated and they had tremendous resources,” he told CRN. “We had two board of directors. Michael and me.”

When asked if he thought the company would reach 40, Walker chuckled and said, “no.”

“It wasn’t that I didn’t expect it. One doesn’t think in those terms. I didn’t think it wouldn’t make it to 40,” he told CRN. “The perishability of companies is so extreme, especially one in as difficult and competitive an area as the PC. It would have been a foolish bet.”

Today, Dell is the market leader in delivering the compute and data storage that power and keep much of the world’s applications and workloads running.

It is also partners with Nvidia in creating computing stacks that pair Dell XE9680 servers with Nvidia H100 GPUs to power generative AI modelling, a power that is expected to take center stage at Dell Technologies World this week.

“We have a blizzard of new announcements coming targeted just at that, and some great parts of our ecosystem are going to be there. Including (Nvidia CEO) Jensen Huang, again. So, I think we’re highly differentiated in having a complete solution approach and its working,” Dell told CRN prior to this week's show.

Building the fastest computers in the world has been a mainstay of Dell Technologies since the early days. By 1986 Dell Computer Company had debuted a 286 processor that blew away the big competitors and it had achieved $52 million a year in revenue, but as fast as the cash came in it was spent on parts and payroll, according to Dell’s autobiography “Play Nice, But Win.”

The problem led him to Walker.

A college basketball player who majored in physics at Texas A&M, Walker had started and run successful companies by the time 21-year-old Michael Dell turned up on his doorstep in 1986, asking him flatly to be the PC company’s president.

At first, he refused the job, only to relent for reasons Dell writes that he still doesn’t fully understand.

“I think it was a combination of ingredients,” Walker, now 83, told CRN about the change of heart. “How to distill it into a sentence or two or three? Michael’s kind of the son I never had, so I think there was a paternal instincts that came out, I think that’s part of it. I think part of it, is that it was a damn fine puzzle.”

Walker said the PC was poised to unleash an incredible power when compounded over time.

“It looked, to many of us, like the emergence of the automobile companies. There would be hundreds of companies in the beginning, but maybe just several that would emerge,” he said. “It was an interesting puzzle as to who might emerge out of the pack and what would that take. I’m an inveterate puzzler and this was a particularly difficult puzzle because Michael had $1,000 of capital. There were no resources. It had to be through ingenuity and hard work.”

Walker helped Dell to win better financing and create the assembly operations to reliably build custom order PCs, at time when either failure would have created a much earlier and final anniversary for Dell Technologies.

“You know constraint breeds imagination. Since we were constrained by finance we would start building a customer’s computer after the order, because balance management was hugely important. The constraint of building them to order, one at a time, turned out to be brilliant because we created a system where we were mass producing, one at a time.”

Here is a transcript of CRN’s interview with Walker edited for space and clarity:

Did you think Dell the company would get to be 40 years old when you first talked to Michael?

No. (Chuckles)

It wasn’t that I didn’t expect it. One doesn’t think in those terms. It’s not that I didn’t think it wouldn’t. The perishability of companies is so extreme that, if you were to bet on any company being around 40 years, especially one in as difficult and competitive an area as the PC, that would have been a foolish bet.

What Michael has accomplished is amazing. Just absolutely amazing.

What was it that made you change your mind? I think initially Michael said you declined to work for him.

Well I think it was a combination of ingredients. I have written a book called “Imagination House” where I touch on this topic in a little bit of length. Michael was 21 at the time. I was 44. Michael was the son I never had so I think there were paternal instincts that came out. I think that’s part of it. I think part of it is that it was a damn fine puzzle.

Moore’s Law, which is really more of an observation than a law, suggested that the power of the PC compounded over time was going to be amazing. It looked like, I think to many of us, like the emergence of the automobile companies. There would be hundreds of companies in the beginning, but maybe just several that would emerge. It was just an interesting puzzle as far as who might emerge out of the pack and what that takes.

I’m an inveterate puzzler. I just love puzzles and this was a particularly difficult puzzle because Michael had $1,000 in capital. There were no resources. It had to be through ingenuity and hard work.

We were up against IBM, Compaq. The competition was immense in size. They were sophisticated. And they had tremendous resources. We had two board of directors. Michael and me.

Was there an early philosophy or idea or guide that helped you get through the IBMs and the Compaqs?

You mean a single idea?

A principal, an idea. In his book, Michael says, ‘Don’t do five things and expect five great outcomes. Do 10 things and hope for six great outcomes.’

It was that. I think that. It’s a good question. I want to give it justice. Let’s rendezvous when you’re 83 and you’ll understand. (Laughs) Clearly we were dealing direct. That was the primary philosophy. We weren’t dealing through any intermediaries.

One idea we had, and it was born out of necessity. You know constraint breeds imagination. Since we were constrained by finance we would start building a customer’s computer after the order, because balance management was hugely important. The constraint of building them to order, one at a time, turned out to be brilliant because we created a system where we were mass producing, one at a time, which sounds like a contradiction in terms, but when the large corporations came to visit us, they were stunned at how sophisticated we were in terms of our ability to mass produce, but not just generically, each computer had an identity. It had a destination. It had a customer. I think in the spirit of your question, the direct thing, was the key.

Do you expect Dell Technologies to last another 40 years?

That’s just impossible to, although, how old is Michael? I know he turned 21 in 86. Let’s do the math together. He’ll turn 60 next February, so he’ll be just shy of 100 years old by then. I think you’ll have to ask him that question.