Dell Innovates Again by Making Entrepreneurship Its Cause

By Geri Stengel

Michael Dell is a huge champion of entrepreneurship. He should know: his entrepreneurship made him billions so he is also an example of what economists and academia are saying about economic recovery: entrepreneurship is  the way economies around the globe will rebound. Entrepreneurs create jobs, innovate products, processes and services, and promote cross-border trade. All of which boost economies.

Public companies make decisions based on hard facts, not intuition. Decisions take time. Entrepreneurs, like Dell, take risks based on their gut feel. They are laser-focused on customers, nimbly responding to their changing needs. Now that the company is private, once again, Dell has the freedom to guide his company based on his gut. His gut is telling him to support entrepreneurs in a big way. Of course, it’s not just world economies that will benefit;  Dell  the company will, too.

The value of entrepreneurs to our communities has been emphasized in both public policy and private corporate action. Think American Jobs Act, StartUp America, American Express Small Business Saturday, and Goldman Sachs 10,000 Small Businesses, among others.

“For Dell, supporting entrepreneurs isn’t just a business strategy, but a corporate philosophy.” said Ingrid Vanderveldt, entrepreneur-in-residence at Dell. The company is addressing  really important problems -- the need for jobs, innovation and cross-border trade -- in a way that gives other entrepreneurs the advantage of the company’s expertise and that will grow Dell’s business. A win-win for everyone.

For the past year and half, the company has supported high potential entrepreneurs with technology and with those all-important other elements of success:  money, knowledge, and connections. The suite of services called Dell Center for Entrepreneurs is intended for startups that need help scaling.

Access to technology

The company will continue to make PCs, but that’s a shrinking market. Dell is increasingly focused on the more lucrative storage, networking, cloud, and security markets. Sure, Dell is courting big companies, but it’s also betting big time that if it supports the future big businesses of the world, they will remain loyal once they make their mark.

As these businesses scale, Dell will grow, by selling more than computers. It’s selling end-to-end, scalable, integrated solutions, from the device to the datacenter to the cloud. It has built 13 technical centers, Dell Solution Centers, located in key sites around the world. Customers can come in and dive deep in areas that will improve their business including storage, networking, cloud, and security.

Access money

Dell provides both equity and debt financing. Providing equity isn’t unusual for a technology company. Providing debt is. Dell Innovators Credit Fund was Vanderveldt’s idea.

Dell will finance all IT infrastructure needs, both Dell and non-Dell. As an entrepreneur herself, Vanderveldt understands how valuable equity is. Entrepreneurs want to keep as much equity in their  company as possible, she said. She also knows how hard it is for startups to get loans and the hoops entrepreneurs have to go through to do so. Dell doesn’t require collateral or that the customer maintain funds with Dell Financial Services as part of the relationship.

And there are other benefits. “Debt is more tax efficient than equity, because interest payments (on debt) are tax deductible, while dividends paid (on equity) are not tax deductible, said David Rudofsky, Rudofsky Associates, which does business planning, profit strategies, and cost accounting for businesses of all sizes. “There are typically lower one-time legal and other professional fees in raising funds through debt vs. equity,” he continued.

Access to knowledge

Dell executives, including Michael, share their expertise. Seven entrepreneurs  will get feedback from Michael during Dell World 2013's  Pitch Slam on December 12. Other entrepreneurs are part of Dell Founders Club, which  includes more than 110 venture- or angel-backed startups that use technology in innovative ways, make technology a critical part of their future growth, and have immediate technology needs. These companies have concierge access to Dell’s operational expertise in scaling their businesses.

Dell also has specific initiatives aimed at high-potential female entrepreneurs. They recently commissioned the world’s first gender-focused, global entrepreneurship index based on the Global Entrepreneurship and Development Index (GEDI). It identifies barriers that women face in starting and scaling high-growth companies in 17 countries. I will be fleshing out this research by developing lessons-learned and best practices by women in the U.S. who overcame barriers here.

Access to connections

“Whether you’re just starting out, looking to raise capital or planning to expand into new markets, it’s your network that can help you take your business to the next level,” said Vanderveldt. Dell understands how important networks are to growing entrepreneurs’ businesses. Its executives will open their Rolodex to Dell Founders Club entrepreneurs. Those executives  have relationships with lots of other big companies, such as Intuit and Salesforce, as well as many smaller companies.

The proof is in the pudding

Based on the success of the Dell Center for Entrepreneurs in U.S., Dell is expanding the program. It recently launched the U.K. Centre for Entrepreneurs and appointed its Entrepreneur-in-Residence Global Advisory Board to lend strategic direction around global rollout of entrepreneurial initiatives.

Now this may surprise you, but Dell isn’t afraid to support companies that are shaking up a market and, to some degree, are competitive with Dell itself. Neverware, which makes old computers run like new, is reducing the need to purchase new computers.

“The support we've received from Dell as a member of the Founders Club has been critical to the growth of Neverware,” said Jonathan Hefter, CEO of  Neverware. “Scaling-up a startup is never simple, but with Dell as a partner, we've had many powerful resources that have been of tremendous value in the process.”  Dell provides logistical support such as testing, validation, and manufacturing as well as distribution and delivery.

Neverware has two primary targets. The first is K-12 schools that have old computers (some as old as 10 years) and a science teacher who doubles as the IT guy. It will also help these schools source old computers from corporations. The schools benefit by paying less for access to technology and corporations  keep their computers out of landfills by recycling them. The second target audience is at the other end of the spectrum: schools that have state-of-the-art equipment and pay a fortune to maintain it.

A Neverware Juicebox server provides the processing power, the memory, and the latest operating system for old computers - the kind often purchased by schools with small budgets. Because Neverware maintains the Juicebox remotely for a low fee, it’s a great solution even for schools with state-of-the-art equipment. It lets schools reduce their maintenance budgets.

Some problems are best addressed by government and nonprofits, some are begging for a business answer or a combination of all three. Dell and other corporations are proving that big businesses can play a significant role in building economies by helping entrepreneurs do what they do best: create jobs, innovate, and increase trade.

Geri Stengel is founder of Ventureneer, which connects values-driven small business owners with the knowledge they need to make the world a better place and to thrive as businesses.

Photo credit by Sudhamshu.