Trung Phan Profile picture
May 1, 2022 21 tweets 8 min read Read on X
In 2013, Dell Inc was a struggling PC and hardware firm. CEO Michael Dell took it private in a $25B buyout and turned it into an IT infrastructure + cloud giant (re-listing as Dell Technologies in 2018)

The $4B that Dell put up in the deal is now worth $40B.

Here's the story🧵 Image
We start in 1984, when @MichaelDell was a freshman pre-med student at University of Texas.

He was not a typical student: The 19yo launched a company called PC's Limited with $1k, selling computers (assembled from stock parts) from his dorm room. It was soon making $80k a month. Image
Apple's Macintosh was released in 1984. While Steve Jobs offered a pricy integrated PC, Dell provided a lower-priced options by:

◻️Going direct-to-consumer (order over phone)
◻️Offering made-to-order options which kept inventories low

Dell would drop out of school after 1 year. Image
In 1988, the company re-branded as Dell Computers and IPO'd at a market cap of $85m (for reference, Microsoft went public in 1986 @ $780m).

Dell was 23.

Dell Computers joined the Fortune 500 in 1992 and Dell -- at age 26 -- was the youngest CEO on the list (net worth = $300m+). Image
Boosted by online sales (which began in 1996), Dell Computers overtook Compaq to become the world's top PC seller in 2001.

Dell retired in 2004 but returned in 2007. In the following years, a host of devices (smartphone, laptops, Chromebook, tablets) took share from PCs. Image
From 2007 to 2012, Dell Inc. spent $14B on acquisitions to jumpstart its business amidst a saturated PC market (PC sales peaked in 2011).

Nothing worked: Dell Inc. stock lagged the NASDAQ for years.

Change was needed. And a plan came out of Michael Dell's family office (MSD). Image
MSD Capital takes its name from Dell's initials. The family office was formed in 1998 and managed his multi-billion dollar fortune including investments with PE firm Silver Lake.

In 2012, Silver Lake's Egon Durban pitched the idea of taking Dell private (to pivot the business).
In February 2013, Dell tried taking the company private at $24.4B (a 40% premium).

Investor Carl Icahn felt the offer was too low (pre-offer, Dell shares were trading 1/3rd of 5-yr highs) and fought the deal.

Dell finally won out in October 2013 w/ a $25B deal (he put up $4B): Image
Dell and Durban weren't done.

For years, Dell tried to acquire EMC, a giant data storage firm that owned an 81% stake in VMWare (a leader in cloud-computing and virtualization).

EMC was "in-play" for offers after Hewlett-Packard tried to acquire it. It was pricey, though: $65B.
Already coming off a huge leveraged-buyout, Dell had to find a way to finance the acquisition.

The solution: a tracking stock, which is a type of equity that "tracks" a division of a larger company.

To close the deal for EMC, Dell issued a tracking stock worth 53% of VMWare.
In a complicated transaction, Dell bought EMC (and its juicy VMWare stake) for $67B, the largest tech acquisition ever at the time.

The VMWare tracking stock saved Dell a $12B cash outlay. And Dell raised $50B in debt w/ VMWare as collateral. The deal closed in September 2016. Image
VMWare is a cash-printing machine. And after the deal, this was its ownership structure:

◻️53% in tracking stock (incl. Carl Icahn)
◻️28% for Dell/Silver Lake
◻️19% (stake not owned by EMC that was listed on NYSE)

In 2018, Dell made a move to buy out the VMWare tracking stock.
At first, Dell offered $9B from VMWare's balance sheet to buyout shareholders of the tracking stock at $0.60 on the dollar.

Icahn (again) fought back and the offer moved to $14B. To close the deal, Dell decided to bring the company public as Dell Technologies in December 2018.
At first, the re-listed Dell sold off. With a $50B+ debt pile, the market valued Dell <$0 based on its VMWare stake.

Dell said it would spin off the entire 81% VMWare stake and the market cheered it on. The deal closed last Fall.

The private turnaround has made Dell a fortune. Image
Before going private in 2013, Dell owned 16% of a PC maker. Now he owns:

◻️52% of Dell Technologies (a $100B revenue IT infrastructure business); stake = $19B
◻️43% of VMWare (a $12B revenue cloud business); stake = $21B

In 9yrs, Dell's investment has grown from $4B to $40B.
A key difference w/ Dell buying Dell Inc and Elon buying Twitter is debt: Dell Inc had the cash flow to support more of it.

Michael Dell personally put up 16% ($4B) of the $25B Dell deal. Elon may put up as much as 64% ($33.5B) of the $46.5B Twitter deal (huge skin in the game). Image
If you enjoyed that, I write business threads 1-2x a week.

Def follow @TrungTPhan to catch them in your feed.

Here's one you might like:
PS. Check out my Saturday newsletter too: trungtphan.com/subscribe/

(And here's a glorious Dell meme) Image
Had to write this thread after Michael tweeted this lol
Broadcom eyeing a $50B acquisition of VMWare, of which Michael Dell owns >40% … deal of the century only gets better Image

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More from @TrungTPhan

Feb 13
Masayoshi Son does the craziest investment swings:

▫️In mid-90s: invested $1.7B into 100+ internet firms (including a ~30% stake in Yahoo! for $100m)
▫️In 2000: was worth $78B at peak Dotcom and was the richest person in the world for 3 days (ahead of Gates)
▫️The bubble burst and he lost 99% of wealth
▫️In 2000, puts $20m into Alibaba for a 34% stake (sold out almost entirely by 2023 and made ~$72B)
▫️Lost $14B on WeWork
▫️Once owned ~5% of Nvidia but sold it all for $3.6B in 2019 (that stake would now be worth $90B)
▫️In 2016, Softbank bought Arm Holdings for $32B (still owns 90% and the stake is $114B, a gain of $82B)

Based on his ownership in Softbank and other investment vehicles, his personal wealth is currently ~$15B.Image
Masa in the 90s:

Masa $72B Alibaba:

Masa Arm:

Masa wild daily investing routine during COVID: forbes.com/forbes/1999/07…
ca.finance.yahoo.com/news/masayoshi…
finance.yahoo.com/news/masayoshi…
economist.com/business/2021/…
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Would love to get into one of these 8am to 10pm Zoom calls for the app and ask Masa for 0.000000000069% of the $100B Vision FundBearly.AI
Read 4 tweets
Feb 9
Nearly 100% of intercontinental internet traffic goes through submarine cables. 

It is a robust system with many redundancies. 

There are 500+ subsea cables and a fleet of 60 repair shops on stand-by but Big Tech isn’t taking chances:

▫️GOOGLE invested in 25 cables (and owns 12 outright). Per The Economist, the search giant started its sea cable program in 2008.
◽META invested in 15 cables (owns 1 outright).
◽MICROSOFT partly owns 4 cable.

One of the 500+ cable gets cut every 3 days (most common reasons are shark bites, anchor drops and deep-sea fish trawlers).

Remote areas are still very at risk.

Example: In 2022, a volcano erupted near Tonga and a mudslide took out the only cable nearby. Starlink provided some free internet coverage while it took 5 weeks for the cable to be fixed (5 weeks!!).Image
Full Economist read here:

Here is a cool excerpt of the deep-sea repair process…it’s no joke: economist.com/technology-qua…

Robert Metcalfe (inventor, ethernet cable) famously predicted internet would flame out. He thought cables couldn’t handle traffic and not enough investment in them.

He was wrong and literally ate his words.

Wrote about it and 7 other bad predictions here:readtrung.com/p/the-worst-te…
Read 4 tweets
Jan 26
Dyson created the first bagless vacuum and used the cyclone tech for related products: air purifier, hand dryer, fans and hair dryer.

It took a big swing on EVs and missed ($500m+ on R&D). There was also a washing machine flop.

But the most random product line? A strawberry farm that grows off-season so the UK can have local access to the fruit year round.

Dyson Farming was established in 2012 and — with 36,000 acres — is one of the largest farms in the country.

The semi-automated strawberry farm has 700,000 plants and will produce 750 tonnes of strawberry a year.
My wife made me buy 4 of the aforementioned Dyson products. You can probably guess which ones.

They all have cyclone technology, which James Dyson borrowed from the sawmill industry…and it is my favourite cross-industry innovation: readtrung.com/p/11-types-of-…
Dyson Farming details:

And here are strawberries out in the world…so random lol dysonfarming.com/strawberries/

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Read 6 tweets
Jan 24
The Palworld story is wild.

Dubbed “Pokémon With Guns”, the game has sold 6m+ copies in past 4 days (making its developer Pocket Pair over $100m on a ~$7m budget).

Some details on the game development process:

◻️ CEO Takuro Mizobe worked at JPMorgan Securities before launching a crypto exhange in 2014.
◻️He made some dough in crypto and used funds to launch indie game developer Pocket Pair in 2015.
◻️The original Palworld team was 4 people and started with $10,000.
◻️The main model developer is a high-schooler who the team met because he worked part-time at a convenience store they frequented.
◻️They added guns because to be a global success, it had to do well in America and the CEO said “Americans like to shoot things”.
◻️Asked about Nintendo, the CEO says they make innovative games whereas he is fine to chase trends (“I don’t [have a creative vision]. I just want to make a game people like.”)
◻️ There was no version control. The team saved files in a “bucket of USBs” and merged them to the main build when done.
◻️Switched from Unity to Unreal Engine late into the development process.
◻️ There are rumours that the game assets were mostly created by AI (but they deny it and there is little evidence).

Palworld’s early success is astounding when you consider triple AAA game titles easily break 9-figure development costs (eg. Cyberpunk 2077 has run $400m+)

Earlier today, Palworld peaked at 1.8m concurrent players. That’s the 2nd highest ever for Steam’s platform (ahead of CounterStrike 2 and behind only PUBG).

The next stat to watch: Nintendo released “Pokémon Scarlet and Violet” in 2022 and it has sold 23m+ copies.

Could Palworld top it?
More from Gene Park / WP:

Dev details from screenshots below:
1.
2.

These details seem to be from CEO TV interview and his post here (in Japanese): washingtonpost.com/entertainment/…


note.com/pocketpair/n/n…

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I wrote about Hello Kitty and Japan’s track record of making some wildly successful IP.

Here is lifetime franchise for:

— Pokémon ($119B)
— Hello Kitty ($89B)
— Super Mario ($48B)
— Anpanman ($45B) readtrung.com/p/hello-kittys…
Read 6 tweets
Dec 20, 2023
TIL: AWS has 60,000 sales & marketing employees (~1/2 all AWS employees) Image
From The Information:

AWS is at ~$90B annual revenue but still only 20% of Fortune 1000 spends at least $10m on its cloud (Amazon aiming to get that to 80% of Fortune 1000s in next few years) theinformation.com/articles/aws-o…
Image
AWS sales is so sprawling that customers bump into different sales folks — who don’t know each other — and realize they not getting the best deals Image
Read 4 tweets
Dec 16, 2023
Gordon Ramsay tries a real Texas BBQ platter for the first time (Snow’s BBQ in Lexington).

He is shook by the portion size and pays respect to the pitmaster Tootsie Tomanetz.

Ms. Tootsie is now 88-years old and has been BBQ-ing since 1960s.

Her routine: Snow’s is only open on Saturdays and — on those days — Ms. Tootsie gets up at 1am to prep the pork and brisket.

People start buying at 8am and Snow’s serves until the food is gone, usually by noon (~200lbs of meat sold).

During the week, Ms. Tootsie keeps busy by working as a janitor at a local high school.

Everyone knows her as the “Queen of BBQ”, though (she was featured in Netflix’s “Chef’s Table” and once shortlisted for James Beard Award).

She’s an absolute legend.
From Gordon, Gino and Fred’s road trip show:

Goldbelly has a good 2.5 minute short on her cooking:

And this platter looks insane (if you’ve been, Im very jealous):

snowsbbq.com/meats/
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Had to use the research app to do “Texas BBQ platter” but “even more Texas BBQ platter-er” Bearly.AI



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Read 5 tweets

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