#385 Michael Dell

There's a book that Ken Griffin recommends reading. It's called Hardball, and the subtitle of that book is Are You Planning to Play or Are You Playing to Win? It is a book about extreme winners and some of the best operators in business. There is a line in that book that sounds like it could have been written by any of the almost four hundred founders that you and I have studied on the podcast so far. And the line says, If you have not examined your cost in detail, It is very likely that there exists. Lurking somewhere in your cost structure, a major opportunity to improve your profits, weaken your competitors, and expand your influence. The first move.

is to drive down your costs faster than your competitors can and use that cost savings to upset their strategy. That sounds like the author was describing Dell, as you will hear me mention. In his autobiography, Michael Dell says that one of the ways he was able to out compete his better funded competitor compact was with a structural cost advantage. Compact's operating costs were thirty six percent of their revenue.

compared to Dell's eighteen percent. of their revenue. Forty years later. Dell is thriving and compact no longer exists. There is something that history's greatest founders have in common. They know their business from A to Z. And their costs down to the penny.

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