(FORTUNE Small Business) – Michael Dell is an unlikely proponent of patience. After all, he couldn't even wait until he finished college to start a direct-sales computer business in his dorm room at the University of Texas. In the 18 years since then, of course, his Dell Computer has become the market-leading computer manufacturer. Last year it pulled in $31.2 billion in revenues.

Still, at an FSB luncheon at Chicago's Four Seasons Hotel, Dell preached the benefits of waiting--for a business plan to gel, for the tech meltdown to pass, for the Internet to grow into its place in the world--before an audience of 25 entrepreneurs. He also discussed the future of the tech economy and how his company interacts with its clients. In fact, his comments were so incisive it seemed unfair to keep them from our readers. Below, some highlights from his April 9 talk, recorded by FSB editorial director Brian Dumaine.

ON THE RESILIENCE OF THE TECH ECONOMY. "Periods of hype or excitement like the dot-com meltdown come along every once in a while. This one was pretty massive. But productivity is still very important. Companies are going to continue to invest in productivity. There's a lot of opportunity, then, for technology. Many companies may be gone, but the underlying capabilities of the technology are not gone. There are still a lot of companies out there innovating, and the capital system still allows for an incredible amount of experimentation."

ON THE FUTURE OF THE INTERNET AND COMPUTING. "I think the Internet is like electricity. Every once in a while something comes along that fundamentally changes the way all business is conducted. And if you think about friction as any extra cost or any extra markup that exists, technologies like the Internet have a way of removing friction from the economy. That's going to take, I don't know, seven, ten, 20 years to fully work its way into the economy. But there's always a new level of efficiency that can be reached. And we don't see it slowing down.

"One of the exciting things that's on the fringe out there is high-performance clusters. We are seeing a lot of people stringing together industry-standard building blocks of computing systems that can replace superlarge mainframes and supercomputers. We have an alliance with Cray where they're taking the servers, the kind that we would sell to small businesses, and putting 64, 256, or, in some cases, over a thousand of these things together and creating masses of scalable computing power. It's an incredible cost-paradigm change."

ON SELLING ON THE INTERNET. "You can't just assume that once you put things out on the Internet, all of a sudden they'll sell. When you go to Dell.com, you see a front end to a business process that's been refined and honed over a long period of time and existed before the Internet.

"I think you have to have a sales and customer engagement methodology that is synergistic with the Internet. So if your business is channel-based or if you're not engaging with the customer in a direct relationship or if you can't enhance your business in some way from the Internet, you have a fundamental issue.

"The best thing about the Internet is that you can experiment for free and figure out what works. When you go to Dell.com, you'll see there's a primary offer. We learned that a lot of consumers go there and assume that's the best deal. They just buy that. Since that is what they're going to do, we make sure we have got something really good there.

"And you do have challenges. When you're on the telephone, if a customer says, 'I'd like to buy the Power Edge 1550 server,' we can say, 'You should get the 2650 because it has redundant power and it has this and that.' On the Internet that's a little harder to do. In some cases we actually will risk breaking a sale that occurs online. We'll contact the customer and say, 'I know you bought this. Are you sure? Do you really need three backup drives? Maybe this would be better for you.'"

ON KNOWING THE NATURE OF YOUR BUSINESS. "In the early '90s we took a foray into retailing. That was a mistake. At the time, the conventional wisdom was that direct sales was only a niche market, and we believed that. Then these wholesale warehouse clubs emerged, what became CompUSA and Sam's Club. It wasn't quite the dealer channel, it wasn't quite direct. And we said, Why don't we try this? It will be a great way for us to get to the consumer. But it kind of violated a lot of the principles that helped the company succeed. It destroyed the integrity of the customer relationship that Dell is really based on. The relationship became one between the store and the customer. Fortunately it never became a very big part of the business, so we were able to shut it off quickly."

ON LAUNCHING NEW CONSUMER PRODUCTS. "We have hundreds of thousands of interactions every day with our customers, and we have all kinds of measurements to track their likes and dislikes, their satisfaction and loyalty. When you get to the consumer, one of the things our team has found is that there is a great value in testing things. A few weeks ago we set up a test in our consumer business to see how many people wanted to buy installation of their computers as a service in addition to maintenance. In the test, we trained our phone operators to ask our customers what they like about the installation service, what they don't like. Then we tailored it. The test was successful, and then the very next week we rolled it out to the whole consumer business. It's working great."

ON THE IMPORTANCE OF TIMELY INFORMATION. "One of the great things about our business is that we have immediate information; we don't have to wait a week or a month. We get information every day, so that I know that yesterday we sold 77,850 computers. I know it by customer type, by product type, by geography, and what the mix was. So that immediacy of information is incredibly valuable to everything in our business, because it's changing very, very rapidly. We just continue to shrink the time and space and distance between our customers and our suppliers and make that as efficient as we can. We're down to about three to four days of inventory now. We get deliveries every two hours based on what we just sold. You take out the guessing."