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HOUSEKEEPING 📨

Seriously considering my life as a founder right now. Recently, I had an extraordinary event happen to me after I added really high intensity—zone 4 and 5 for you fitness nerds out there—training to my already stacked schedule of heavy weightlifting.

I woke up one morning with my respiratory rate up 30% (bad), my heart rate up 20% (fine), and my HRV (Heart Rate Variability) up a whopping 800%. It stayed that way for two weeks straight. And throughout the whole thing, my heart felt like it was going to pound itself right out of my chest.

Obviously, I went to the doctor and had ECGs and bloods, which found a “singular ectopic (early) beat captured, but with no heart damage.” The doctor told me non-functional overreaching (the precursor to overtraining syndrome), but that this whole thing could be brought on by stress, which scared the bejeebies out of me. The worst thing is, these periods, although not as prolonged, are becoming more frequent.

As a founder, I always wondered how there was no real ‘physical damage’ from the stress we put ourselves through; well, let’s just say, I wonder no more. Has anyone else ever had anything like this? Send me a reply if so, as I am keen to hear.

Anywho, today’s post is a fun one. It took me a while to write, to be honest, and was something I’d been meaning to do for a while, considering the black box that is Nvidia. Anyway, I hope you enjoy it!

DEEP DIVE 🕵🏻

Jensen Huang - Co-Founder, President & CEO at Nvidia

Jen-Hsun ‘Jensen’ Huang (Chinese: 黃仁勳; pinyin: Huáng Rénxūn; Pe̍h-ōe-jī: N̂g Jîn-hun; born February 17, 1963) is an American businessman, electrical engineer, and the Co-Founder, President, and CEO of Nvidia Corporation. As of February 2024, Huang's net worth was estimated at $162 billion per Bloomberg, making him the 8th richest person in the world.

The incredible thing about Jensen—even rocking his patented leather jacket—is how unassuming he is. The man drives a Toyota Supra. Last year, the Goldman Sachs trading desk called Nvidia “the most important stock in the entire world.”

Today’s story will be one of ambition, tenacity, and survival. I aim to not only demystify, as much for myself as anyone, Jensen and Nvidia, but to show why Jensen should be spoken of alongside both the greats who built our past, and also the small handful in line to build our future. He is the man who is figuratively, and quite literally, holding all the chips.

Early years

Jensen, or Jen-Hsun, was born in February 1963 in Tainan, Taiwan. He and his family moved to Thailand when he was five, before he and his brother were shipped off to live with an uncle in Tacoma, Washington. Jensen was growing up on US soil from the ripe age of nine.

“I tried to impress her—not with my looks, of course, but with my strong capability to complete homework,” Jensen would say of the courting process between he and Lori.

Jensen’s next move would be what all young, smart, technology-obsessed graduates do—a master's degree in electrical engineering at Stanford University, followed by a move into a role at semiconductor company, LSI Logic.

Pre-Nvidia … pre-iN-video-games

While at LSI Logic, Jensen learned how to master the intricacies of custom semiconductor and ASIC technology, honing his skills in large-scale integration and pushing the boundaries of chip design. He also gained experience collaborating with cross-functional teams and understanding the evolving needs of the electronics industry.

His next move was to Advanced Micro Devices, Inc., more commonly known as AMD, where he delved deeper into microprocessor design.

AMD was a semiconductor company based in Santa Clara, California, born of Jerry Sanders, and seven of his colleagues from Silicon Valley famed, Fairchild Semiconductor. Recently, Jensen told the Acquired Podcast that he loved his time at AMD, and in an alternate reality, he could see himself still there today.

1993: Jurassic Park, Chicago Bulls & the birth of Nvidia

The year of 1993 was amazing culturally. If you were like me, you likely versticulated (*original word) at the intersection of movies, sports, and video games, then you were in heaven. 1993 was a mecca for jocks and nerds alike.

The two Sun engineers that Jensun met with on that fateful evening in 1992 were Chris Malachowsky and Curtis Priem. The three co-founders envisioned that the next wave of computing would be in the realm of accelerated computing, specifically in graphics-based processing. Graphics for computers—and video games. Think Doom & Wolfenstein, but in 3D.

With around $40k in the bank, the team set out to build the next generation of computer gaming. Their first product, the NV1, was successful, but only to a point. It lacked the industry support—mainly from game developers— that it needed to be successful due mainly to the fact that it was optimised for processing quadratic primitives, rather than triangle primitives, which was industry standard.

If you are lacking a PHD in computer science, what I am saying in layman’s terms is, they build something new, and people didn’t like it.

This little chip, and the impact it had on Nvidia, might be the one product that meant today we have the ability to argue with ChatGPT about whether pineapple belongs on pizza.

The RIVA 128, or the Real-time Interactive Video and Animation accelerator, was so popular that it sold a million chips in the first four months of its hitting the shelves.

When Nvidia released the RIVA in August 1997, it was down to its final month of cash flow to fund payroll. It quite literally saved Nvidia from being nothing more than a failed also-ran.

“If you lose my money, I will kill you”

One of the funniest stories from the early stages of Nvidia was related to the late Sequoia Capital founder, Don Valentine. Don was a large, imposing figure in Silicon Valley circles, famous for his no-nonsense approach to investing.

The story of Jensen and Don is that when raising its first round of venture capital, the two legendary figures met for Jensen to pitch the opportunity to invest in Nvidia. Jensen, although usually quite confident, smart and charismatic—totally bombed the pitch.

And Don told him about it. He told him it was terrible. Luckily for Jensen, though, he was introduced by his former employer, LSI Logic's founder Wilf Corrigan. Wilf had spoken incredibly glowingly of Nvidia, and Jensen in particular, so much so that Don knew he was going to invest in him anyway.

As they were finishing their meeting, Don reached out to shake Jensen’s hand and tell him he’d be investing. With the firm grip of a venture capital titan, he looked Jensen square in the eyes and finished with, “If you lose my money, I will kill you.”

Jensen is alive and well today, and Sequoia’s original investment in Nvidia is regarded as one of the great technology investments in history.

The middle years & the rise of the GPU

Riding on the back of the RIVA 128’s success, Nvidia went public on January 22nd, 1999. Later that year, Nvidia would launch a new product: the GeForce 256. This product is the first product marketed as a GPU.

What was so great about the GPU? Well, the GPU was the world's first Graphics Processing Unit (GPU). The GeForce 256 was a big advancement in graphics technology. It integrated both 2D and 3D graphics rendering, with hardware acceleration in a single chip. This had not been done before.

For many of us who have not lived through all the previous technology waves, Nvidia may seem like a somewhat new name on the global stage. But look at this historic revenue run-up of Nvidia’s starting a quarter-century ago.

Nvidia, by this stage, had begun to make a name for itself in the niche of gaming. And game developers knew that their rabid fanbase would never be happy with the current graphics stack. It could never be more alive. Because of their reputation, Nvidia began working with Microsoft to develop the graphics for the Xbox.

The continued rise of gaming supercharged the company’s growth through the early 2000s. But that wasn’t all Nvidia was suitable for at the time—CAD design systems, automotive infotainment, tablets and smartphones, video processing—all these use cases were built on top of Nvidia’s chips.

But just like all good drama stories, things were about to get a lot darker and stormier for Nvidia. Although Nvidia was the little engine that could of the tech sector, the years 2005 and 2006 saw negative, followed by stagnant revenue growth. The market was becoming increasingly saturated, and they were facing stiff competition, which was pushing down margins and slowing their growth overall.

A brief bright spot was in 2007, when Forbes named Nvidia its ‘Company of the Year,’ highlighting its accomplishments in the early part of the decade. That same year, Nvidia launched CUDA (Compute Unified Device Architecture), a parallel computing platform that marked a significant shift in GPU capabilities. However, unbeknownst to Jensen and his team, the storm clouds of the Global Financial Crisis were gathering, with the trigger being just a few subprime mortgages away.

2008 and CUDA

In the first report of 2008, amid the turmoil of the GFC, Nvidia took a $200 million write-down on its first-quarter revenue. ‘Abnormal failure rates’ apparently the culprit. During this period, from a 2007 high to a 2008 low, Nvidia lost roughly 80% of the value of its stock. For most, if not all, companies, an 80% drop in your stock price is an existential shock to your system.

Again, Nvidia would need to rebuild, and rebuild itself. They would need to bet the house, again. It’s not something that particularly scared Jensen and the team. During the 90s, they had come up with an unofficial motto that "Our company is thirty days from going out of business." That being said, people were invested. Their careers, their emotions, their finances. So they set out to continue building on their totally new computing platform, CUDA.

In machine learning environments, CUDA was a game-changer as well. ML is all about crunching massive datasets. A heavy lift, computationally speaking. But with CUDA, devs can train and run models way quicker than with just CPUs. This boost has led to some mind-blowing breakthroughs, from recognising images and speech to processing natural language and beyond.

CUDA was thought of as the best-in-class software for many of its use cases. And Jensen knew it. This was one of the times in which he would pull one of the great levers in business. When you know you have a significant technological advantage, raise your prices.

This is a muscle Nvidia and Jensen have been building over time, and flashing forward to today for a moment, Nvidia’s current gross margins are in the mid 70s, up from 66% only two years ago.

30-year overnight success

There are a lot of things that happened in the years in and around the crash of 2008. Competitor AMD would approach Jensen for a potential merger. Nvidia stock would plummet 50%+ (again) after a bad stock call. And deep learning would be supercharged with AlexNet, the brainchild of Alex Krizhevsky, Geoffrey Hinton, and Ilya Sutskever of OpenAI.

Smart Silicon Valley insiders saw it coming, though. Marc Andreessen in 2016 noticed that everyone was building on Nvidia and was quoted as saying; “if we were a hedge fund we’d put 100% of money into Nvidia.” And NVIDIA's slow but strategic shift towards AI, deep learning, and data center markets puts it front row centre to capture the value of the next wave of computing.

But even with the strong tailwinds towards the end of the 2010s, no one in their right mind could predict what would come to pass in the latter part of 2022.

The great battle for chips

Every so often, there is a hype cycle in technology that blows the doors off the industry. You can go as far back as the Space Race, through the rise of the personal computer, the internet, and the Dot-Com boom. More recently, we have seen social media, mobile, blockchain & (lol) web3.

But there may be no bigger hype cycle—and no more meaningful one—than the cycle we are going through today. The hype cycle that is artificial intelligence.

On November 30, 2022, Sam Altman and the team at OpenAI dropped a product release so popular and so revolutionary that it surprised even their staunchest believers. ChatGPT. The trajectory of Nvidia, and the world for that matter, would be changed forever.

It was as if the man with the starter's gun pulled the trigger, and the race was on. Not only a race between big tech—Google, Amazon, Meta, and Microsoft—but a race against regulators, a race against China, and really a race against time to build enough energy to power the data centers of the world that are powering this AI revolution.

One thing we do know is that the market believes the story of Nvidia. “I’ve never seen anything like this,” Scott Galloway would say of their rise. Before we take a final look at the future for Nvidia, let’s look at a few things that make it unique.

Rule #1: Bet the farm, just don’t die doing it

One thing that Nvidia has done really, really well since its founding in 1993 is what one could only describe as not dying. Somehow, through Jensen’s phenomenal leadership, they have managed to make bold, courageous bets and have them miraculously pay off.

And although it may look lucky—and let’s be clear, there is a healthy amount of luck involved in any successful business tale—their success is also by design. Jensen is famous for talking about making sure Nvidia is, in fact, in the right place at the right time. Or close enough to be able to have impacts. He calls this the “zero-billion-dollar market”.

In order to position yourself in this way, you need to be spending time on things that may not look important at the time. And you may need to push all your cards in. Take NVIDIA’s vision in ~2010 to create “neural network processors, safety architectures that run AI algorithms”.

This was at a time would have been close to a ‘zero billion dollar market.’

💡 Note: If you are looking to hire engineers experienced in AI, machine learning, and other bespoke stacks, Athyna can help you find them.

On management & leadership

Jensen has a unique perspective when it comes to management. And prefers to think from first principles when it comes to organisational design. Nvidia has a famously flat structure, unlike most companies you would see today.

Now, when I say a flat structure, I mean very flat. Jensen personally manages ~40 direct reports today. His reports submit a weekly list of the five most important things they are working on, of which Jensen reviews every morning. He elaborates further:

When talking about the typical org structure you see today—think C-level, VP, Head of this, Director of that—he was particularly critical, preferring a ‘horses-for-courses’ approach to organisational design.

I could go on. There are no departments, no business units, no status reports. They do not have a 1-year plan, 3-year plan, god forbid, a 5-year plan. Jensen has a very particular way of running his org, and hey, maybe we are the weird ones.

Playbook

• Anticipating market trends: Jensen foresaw the significance of GPUs not just in gaming but in a wide range of computing tasks, including artificial intelligence. His ability to anticipate and invest in these trends early on has kept NVIDIA at the forefront of innovation.

• Technical expertise: With a foundation in electrical engineering, Jensen has a deep understanding of the technical aspects of NVIDIA's products. This understanding allows him to make good decisions day-to-day and drive the right changes within the company.

• Embracing adversity: Jensen co-founded Nvidia with a bold vision, despite the risks associated with starting a new company in the competitive semiconductor industry. His willingness to take calculated risks along the way meant they could push the envelope of new technology.

• Cultivate partnerships and community: Jensen recognised early on the importance of developers as partners in innovation. He has actively fostered an open-source developer ecosystem and has invested heavily in developer relations. He has also excelled at forging partnerships across industries, from automotive to science to healthcare.

• Prioritise long-term innovation: Jensen pushes relentless research and development, investing heavily in future-oriented technologies even when they don't offer immediate returns. “We spend about a decade in $0B dollar markets,” he said.

• Have a bit of luck on your side: And be lucky. No one really saw this AI boom—at least to this extent. Sometimes you just have to carry a rabbit’s foot around in your pocket and hope for the best.

Future

Today, so much of what we touch is powered by Nvidia. Your favourite social feeds, the algorithm you use while scrolling YouTube, and even your car if you happen to drive a Tesla. And while the rise of Nvidia has been a 30-year success story, in Jensen’s eyes, they are just getting started.

In the history of technology, there has been one guiding principle regarding the pace of computing growth: Moore’s Law. But like all true rebels, Jensen sees this law as nothing more than an antiquated relic of less ambitious times.

It's the year 2025, folks. AI is here. The future has arrived. And if Jensen Huang has anything to do with it, we're only just getting started.

Fun factoids

• Naming the company: The name ‘NVIDIA’ is derived from combining .nv for ‘next version’, the word ‘Invidia,’ which is Latin for envy. The brand is green because, well, green with envy.

• Biggest fear: Jensen said recently that his biggest fear is the same today is was on the first day of Nvidia; “letting his employees down”.

• There would be no do-over: If he had the chance to do it all again, what would he do differently? His answer: he would simply not do it at all.

• Tattoo appreciation: Huang is a fan of tattoos; he’s not afraid to show off his guns and flex some bicep art from time to time.

• Car aficionado: Huang has a well-documented love for fast cars. He owns several high-performance vehicles, including a Ferrari 599, a Ferrari 430, and a Swedish Koenigsegg CCX.

Extra reading

• The Acquired Podcast Series + Jensen Interview - Over the last 5 years

• Stratechery interview: Manufacturing Intelligence - March, 2022

• Stratechery interview: AI’s iPhone Moment - March, 2023

• Nvidia Hardware Is Eating the World; Wired - February, 2024

• Microsoft, OpenAI & Nvidia Back $2.6B Robot Startup - February, 2024

And that’s it! You can also hope you enjoyed it, folks. You can go out and build your own AI startup on Nvidia’s chips here, haha.

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