This week, I started reading Direct from Dell: Strategies That Revolutionized an Industry. It’s the autobiography of Michael Dell, founder of Dell. The company is famous for being the first to allow customers to order custom-made computers directly from a manufacturer.

I’m early in the book, but already one line has caught my attention: “The $1,000 required to capitalize a company in Texas was the extent of my initial start-up capital.” Michael incorporated the company in January 1984 while he was in college. He dropped out after he finished his freshman year, to his parents' chagrin.

So, Michael is super young and starts this company with $1,000. By the end of 1986, three years later, the company was doing $60 million in annual revenue. And Michael set a goal to do $1 billion in annual revenue by 1992 (which he exceeded).

In the first three years of Dell’s existence, it did $160 million in total revenue and raised zero outside capital. This is probably one of the craziest growth stories for a bootstrapped company I’ve ever read. Growing fast is expensive. You have to put people, systems, and processes in place ahead of that kind of growth. It’s very rare to grow that fast and not raise outside capital.

This is where the genius of Michael’s model shines. A lot of this can be attributed to how Dell sold computers then. It didn’t make computers ahead of time and ship from inventory. Customers paid up front, and then Dell built and shipped the computers. Getting paid up front was a stroke of genius. It allowed Dell to obtain growth capital from customer revenue instead of having to raise money from outside investors. Now, Dell did have to buy parts and other stuff to assemble the computers, but it did so as close to just in time as possible, minimizing the amount of money tied up in raw materials inventory.

In October 1987, Dell completed a private placement on Black Monday and raised $20 million, even though the stock market was crashing. The following summer, Dell went public. The company merged with EMC Corporation in 2016, so it has changed a bit. But that combined company has a market capitalization (valuation) of over $78 billion as of this writing and over 120,000 employees. And Michael Dell is still CEO, more than 40 years later.

I was impressed when I read the details of Dell’s early growth and how Michael did it. His story is a reminder that customer revenue is always the best source of growth capital, especially if you can get customers to pay up front.