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- CDW - From $3 Classified Ad to $21B Fortune 500 Giant
CDW - From $3 Classified Ad to $21B Fortune 500 Giant
Discover how CDW built a $21 billion empire by mastering the "boring" middleman model and what entrepreneurs can swipe from their 40-year playbook.
Nick Horob
July 19, 2025
Today's report is on CDW Corporation. They're a large IT reseller ($21B in revenue) that basically started when some guy placed a $3 classified ad to sell his computer back in 1984.
What caught my attention is how they've built this incredibly successful business by being the "boring middleman". They don't make anything revolutionary, they just help companies buy and implement technology better than anyone else. Turns out that's worth a fortune when you do it at scale.
A few things that stood out:
Scale advantage: They're approximately 3x larger than their nearest competitor, which gets them vendor discounts and product availability that smaller players simply can't match
Smart marketing: Their TikTok campaign using real small business owners (barista, bakery owner, etc.) instead of corporate messaging became their second-most efficient traffic driver
"Eat your own dog food": They use their own AI chatbot to handle 35,000+ IT incidents monthly, which becomes a perfect proof point for selling AI services to customers
Margin expansion: Despite revenue volatility, they've improved gross margins by 480 basis points over the past few years through better execution and a move to offering more services.
The report covers their business model, competitive advantages (they scored 3.8/5 on strategic moats), financials, and their recent moves into AI consulting. Nothing earth-shattering, but it's a solid example of how focusing on execution and relationships can build a massive, profitable business in what most people would consider a commoditized market.
Talk to you tomorrow,
Nick
TL;DR
CDW is a $21B+ IT reseller that simplifies tech buying for businesses, schools, and governments.
It bundles hardware and software with consulting, services, and logistics to act as an all-in-one IT partner.
Its strength lies in scale, efficient operations, and long-term customer relationships.
Key takeaway: You don’t have to invent new tech—being the best integrator can win the market.
The 30,000-Foot View
CDW is a massive value-added reseller (VAR) offering over 250,000 tech products—laptops, servers, cloud solutions, security software, and more—from vendors like Apple, Dell, and Microsoft.
But it doesn’t stop there. CDW also provides consulting, managed services, and lifecycle support.
Business Model
Primarily revenue from product sales (~70–80%), with a growing mix of IT services, including subscription-based managed services, cloud consulting, and implementation support.
Key Revenue Segments (2023)
Corporate: 58%
Public Sector (Gov/Education/Healthcare): 33%
Other (Canada, UK, SMBs): 9%
Key Stats (2024/TTM):
Market Cap: $23.5 billion
Revenue: $21.0 billion (TTM)
Gross Margin: 21.9%
Net Income: $1.08 billion
Employee Count: 15,100
Industry: IT Solutions and Services (Fortune 500 #189)
Company History
Company History (Timeline)
1984: Michael Krasny starts MPK Computing from his kitchen table.
1987: Renamed to Computer Discount Warehouse; low-cost, bulk-buy model takes off.
1993: CDW goes public for the first time.
2001: John Edwardson becomes CEO; drives growth through operational improvements.
2006: Opens a large Nevada distribution center and acquires Berbee (network services).
2007: Bought by private equity firms for $7.3B.
2013: Returns to public markets (NASDAQ: CDW).
2015: Acquires UK-based Kelway.
2019: Christine Leahy becomes CEO.
2021: Buys Sirius Computer Solutions for $2.5B, boosting cloud and consulting services.
2023–2024: Revenue dips slightly post-pandemic; focus shifts more heavily toward services.
Show Me the Money
Stand-out Features
Revenue flat-line, income boosted by gross margin expansion
High margins despite hardware commoditization
Strong free cash flow (~$1.3B/year)
Material, but moderate, debt (Interest expense = $215M in '24)
Low capex, high returns on capital
Financial Data
Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
Revenue | $20.8B | $23.7B | $21.4B | $21.0B |
Gross Profit | $3.6B | $4.7B | $4.7B | $4.6B |
Gross Margin | 17.1% | 19.7% | 21.8% | 21.9% |
Ops Profit | $1.4B | $1.7B | $1.7B | $1.7B |
Ops Margin | 6.8% | 7.3% | 7.9% | 7.9% |
CapEx | $100M | $128M | $148M | $123M |
Net Debt | $6.6B | $5.6B | $5.1B | $5.1B |
The N.O.O.B. Nine — Competitive Powers
The Nerd Out on Business Nine is made up of Hamliton Helmer’s famous “7 Powers” of competitive advantage (Scale Economies, Network Economies, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power) combined with two of my own (Data Flywheel and Distribution Advantage).
Power | Score | Rationale |
|---|---|---|
Branding | 3/5 | Solid 40+ year reputation but operates in commoditized market where relationships matter more |
Data Flywheel | 4/5 | Deep insights from 250,000+ relationships create competitive advantages that compound |
Process Power | 4/5 | AI-powered tools (HAROLD AI handling 35,000+ incidents monthly) create operational advantages |
Scale Economies | 5/5 | 7x larger than nearest competitor with $21B revenue delivers superior vendor discounts and availability |
Switching Costs | 4/5 | Deep integration as IT extension, personalized account management creates high barriers |
Cornered Resource | 3/5 | 7,000+ customer-facing sellers valuable but not irreplaceable |
Network Economies | 4/5 | Strong ecosystem connecting 1,000+ vendors with 250,000+ customers creates reinforcing value |
Counter-Positioning | 2/5 | Limited differentiation in core reselling business; competitors can replicate model |
Distribution Advantage | 5/5 | Multi-channel distribution and vendor relationships create unmatched logistics advantages |
Average Score: 3.8/5 - CDW has built a formidable strategic moat through scale and operational excellence.
Memorable Marketing
CDW focuses on trust and expertise over flashy campaigns, emphasizing content marketing and thought leadership to IT decision-makers.
Key Campaigns:
"Make Amazing Happen" (2023): Flagship brand campaign positioning CDW as outcome-focused partner rather than product pusher.
TikTok Microsoft Surface Campaign (2024): Breakthrough B2B social strategy using small business creators (barista, interior designer, bakery owner). Despite only 3% of budget, became second-most-efficient traffic driver with 2.49% CTR (+573% above benchmarks).
"HAROLD AI" Showcase: Uses internal AI chatbot success (35,000+ incidents handled) as customer proof point—perfect "eat your own dog food" marketing.
Tactical Takeaways:
Authenticity wins: Creative freedom beats corporate scripts
Internal first: Use your own products to create credible customer stories
Partnership leverage: $1.2B in co-marketing revenue from vendor collaborations
Educational approach: 240 technical webinars with 127,000 participants builds trust
AI Uses & Opportunities
AI & Automation
Current Uses
AI aids in supply chain management, customer service automation, forecasting, and product recommendations.
Emerging Use Cases
AI-driven quoting bots and virtual IT consultants
Predictive churn models and procurement suggestions
AI-assisted vendor pricing and bulk-buy timing
Future Product Idea
AI-as-a-Service consulting for SMBs
Bumps in the Road
Post-pandemic IT refresh spending slowed, affecting revenue.
Heavy reliance on major vendors—vulnerable if they go direct.
Margin pressure from hardware commoditization.
Cultural and operational risk from large acquisitions (e.g., Sirius).
Talent competition in tech hiring markets.
Your Swipe File
Be the translator: Complex markets need middlemen who can simplify.
Blend service with product: Don’t just resell—advise, support, and configure.
Make logistics a strength: Delivery, speed, and scale matter more than hype.
Invest in relationships: Dedicated account reps = customer stickiness.
Use content to stay top-of-mind: Thought leadership builds trust over time.