Dell Founder Builds Computers, Landscape Company

CALABASAS, Calif. — Michael S. Dell got rich building computers. His innovation was in pruning the PC supply chain and trimming production costs to undercut his competitors on price.

Now some of the billions of dollars he earned in technology go toward a more traditional kind of pruning and trimming. Dell, the founder and chief executive of the computer maker bearing his name, also controls ValleyCrest, the largest landscape design, construction and maintenance company in the United States.

Executives at the private company, which has received little attention in the mainstream press, said their company has managed to keep growing despite the weakening economy.

ValleyCrest has a number of brand-name clients. It has primped the lawns of the Nixon Presidential Library in Yorba Linda, Calif.; the FedEx headquarters in Memphis; and the Centennial Olympic Park in Atlanta.

It also planted the gardens at some of the biggest hotels in Las Vegas, like Caesars Palace, the Bellagio, the Wynn and the Venetian, and even installed the towering palm trees along the Las Vegas Strip.

It manicures the lawns of the rich and famous as well. In fact, Dell discovered the company when it began landscaping his sprawling residential compound in Austin, Texas.

Dell bought 51 percent of ValleyCrest in 2006 through a deal engineered by MSD Capital, the firm he created to exclusively manage the majority of his fortune.

“He was very happy with the work we did on his house,” said Richard A. Sperber, the co-chief executive of ValleyCrest.

The bulk of Dell’s estimated $17 billion fortune is spread across a portfolio of companies that is unusually diverse and low-tech for a technology mogul. MSD Capital has made investments in restaurant companies including those running IHOP, Applebee’s, Steak ’n Shake and Domino’s Pizza.

It also holds stakes in car-related companies, including the Dollar Thrifty Automotive Group, the car rental company, and MSD Automotive Partners, which invests in luxury car dealerships.

MSD Capital has vast real estate holdings in Hawaii, Mexico and California as well, and stakes in large real estate management firms that own hotels and resorts like the Hilton Times Square.

Dell, who owns $2.14 billion worth of Dell stock, declined to discuss ValleyCrest or his other investments for this article. In the past, he has argued that his investment firm’s independence allows him to concentrate on managing Dell. And yet the firm’s investment style appears to mimic Dell’s pragmatic approach toward business.

Indeed, much like Dell Inc., MSD Capital has set a pattern of jumping into consolidating markets and using its capital to give one player an edge in scale and efficiency.

Dell’s investment in ValleyCrest has done well. Despite the roughest economy in decades, ValleyCrest, a private company, expects to bring in more than $1 billion in revenue this year, growing, as it has historically, by about 12 percent a year.

“It’s been tough to communicate the state of the economy to the trees and convince them to stop growing,” Sperber joked.

Over more than 60 years, ValleyCrest, based in this city in the San Fernando Valley, northwest of Los Angeles, has moved from local highway beautification projects to building a zoo and safari park in Abu Dhabi that will have exotic plants and tens of thousands of animals.

“We’re lucky enough to have some of our designers catch the eye of the royal family in Abu Dhabi,” Sperber said.

Burton S. Sperber, Richard’s father, founded the company after buying a nursery from the widow of his employer for $700 in 1949. ValleyCrest had mostly been an installation and maintenance operation, as the industry calls it, handling the back-breaking labor on projects designed by landscape architects.

Today, in addition to maintaining the gardens of so many well-known properties, the company grows 12,000 varieties of trees for customers at an 800-acre nursery and also maintains golf courses.

Richard Sperber, who became co-chief executive with his father last year, has tried to grow the company by taking on a flashier role in projects with a wider range of services for big jobs.

ValleyCrest wants to manage every aspect of new projects from the design to the higher-profit maintenance work. To do it, ValleyCrest has poached some of the top landscape designers in the country from its old partners. For instance, Paul Comstock, a former director of landscape design for Walt Disney Imagineering, led projects like Disney’s Animal Kingdom in Orlando, Fla.

The relationship with Dell and MSD Capital has fueled ValleyCrest’s ambitions, leading to some of its top design jobs.

For example, investors in MSD Capital have relationships with the Kraft family, which owns the New England Patriots football team. That helped ValleyCrest win the contract for Patriot Place, a retail center next to Gillette Stadium, the Patriots’ home in Foxborough, Mass.

But as ValleyCrest dives into the design business, it is causing friction with some of its longtime architecture partners. Lifescapes International, in Newport Beach, Calif., worked with ValleyCrest on several of the Las Vegas properties and has had a relationship with the company for 50 years.

“It was a sad day when they decided to become competitors,” said Julie Brinkerhoff-Jacobs, president of Lifescapes. “We just don’t exchange leads like we once did.”

ValleyCrest has spent the last few years acquiring smaller landscape companies throughout the United States, giving it access to large markets in Florida, Washington and elsewhere.

Despite its growth and the presence of MSD Capital, ValleyCrest continues to operate like a small family-owned business.

“It was a bit of a leap of faith with them coming in,” Sperber said. “But they have left us to run the business the way we know how to run the business.”

ValleyCrest employs more than 11,000 people, though that number drops to about 8,000 in winter when work slows. It is one of the largest employers of Latino workers in America and takes pride in retaining staff through above-average wages and raises.

And now Dell has started to put his touch on ValleyCrest’s traditions. As the company looks to reinvent the landscape supply chain by unifying design, construction and maintenance, it has tried to turn simplicity into a way of winnings customers.

“The inefficiencies of the current system are just so archaic,” Sperber said, sounding a bit like Dell.

Dell urged ValleyCrest to eliminate some of the wasteful practices in the field. After tapping a consulting firm to institute the program, ValleyCrest hired some efficiency gurus from Toyota to make the effort permanent.

“We visited the factories at Dell, and it really opened our eyes to ways we could improve,” Sperber said.