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#376 Jensen Huang- Founder of Nvidia

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  • Early Life Challenges
    • Jensen Huang’s family immigrated to the US when he was four, facing significant challenges like language barriers and financial hardship.
    • His parents prioritized education, sending him to a reform school they mistakenly believed was a prep school. Transcript: David Senra He was born in Taiwan. His father visits America. He goes to New York City and he realizes, oh, this is the land of opportunity. I want if I want the best opportunity for my two sons, I need to get them to America. And doing so had to feel like a daunting task to his father. Jensen’s family did not have money. In fact, they didn’t even have a lot of stability. They had to move around Taiwan, depending on where his father could find work. They did not, the two brothers, Jensen and his brother, did not speak English. In fact, I thought it was very fascinating how Jensen’s mother decided, hey, the kids need to go to America. And if they’re going to America, they need to learn English. And so she would select 10 random words from the dictionary every day. She’d make her sons memorize the definition and learn how to spell the words. So 10 English words every single day. And so in addition to reading this book, I watched a bunch of interviews with Jensen and he talks about the fact that he has, he feels a great debt, the fact the sacrifices that his parents Made to give him access to essentially unlimited opportunity. One of the great things about reading, you know, this is not technically a biography of Jensen, but it can function as one. And one of the reason I become an evangelist for, you know, reading biographies, I try to get people to read as many as possible is because you’re not really, yes, we’re studying and we’re Learning about the lives of other people, but it is natural. It’s human nature to put yourself in their shoes and think about how their story or their ideas relate to your own. And this was, you know, actually surprisingly hit me in like an emotional point because I was just thinking about the fact that, you know, this was outside of Jensen’s control. He’s four years old when this is happening. And yet the decisions that were made before Jensen even had a memory affected the entire trajectory of his life. And I thought about the fact that my paternal grandfather was born in Cuba. He died before, I have no memory of him. He died when I was really young. I think I was actually four, as a matter of fact, maybe even younger. And yet I owe the entire trajectory of my life was changed by a decision of of an uneducated, relatively poor man who was living in Cuba. He was 38 years old. He was working any kind of job. He worked as a butcher in a factory that made shoes. He was not a prosperous man. He was not an educated man. He was married. He had a baby, a two-year That’s my dad. And Castro takes over, and he decides, somehow, he knew, he’s like, this is really bad, I have to get out of here, he winds up, imagine living your entire life in a country, you’re 30 years Old, you have a wife and a kid, you don’t have any money, you don’t speak the language, and you just, and you take that risk, and you come to America, and that decision based on somebody I don’t have any memory of changed the entirety of my of my life. This is the luckiest the kindest thing ever anybody’s ever done for me the luckiest break ever had in my life and I think there’s a lot of similarities between the what his parents are Willing to do what Jensen’s parents are willing to do the fact that they send their their sons imagine sending your kids they send Jensen and his brother to Washington, to Tacoma, Washington, To live with their aunt and uncle before they can get over to America themselves. (Time 0:04:43)
  • Embrace Challenges
    • Embrace challenges and develop resilience, as excellence often stems from overcoming difficulties.
    • Jensen’s experiences taught him to tolerate discomfort and not be afraid of new situations. Transcript: David Senra It is a school, a reform school for troubled young people. So really the reason I want to add this like extra context for Jensen’s early life for you is because I think this entire section and all the notes and stuff that I want to talk to you about Before the founding of NVIDIA and really the first like 10 years of NVIDIA too, you could really summarize it by one of my favorite maxims in the history of entrepreneurship. And that is excellence is the capacity to take pain. Jensen has unfathomable levels. I have not discovered the end of his capacity to take pain. (Time 0:08:41)
  • Public Criticism
    • Jensen uses very public criticism so everyone can learn from mistakes.
    • He prioritizes work quality over feelings, similar to Steve Jobs. Transcript: David Senra And again, this is why I think all of these really, you know, it doesn’t really matter what order you take them in. Other than I think number one probably has to be that Jensen’s a teacher because he’s really teaching his philosophy to the entire organization, but very public criticism. This is something he’s known for. This is probably repeated more than any other idea in the book. And the reason I put this after number four, which is, you know, build a flat, fast organization, because it turns out very public criticism works very well if you want a flat, fast organization. So Jensen does not believe, you know, there’s this maxim like praise publicly, criticize privately. No, he does not. He criticizes publicly so that the entire organization can learn from a single person’s mistake. There’s so many examples throughout the book. There’s a lot of parallels to, again, Steve Jobs here. I want to read Jensen’s words of like why he’s doing this. Over the years, I realized that what was happening, how people protect their turf and how they protect their ideas. So he’s anti, you know, he does not want bureaucracy to build up into a side of his company. So I created a much flatter organization. His anecdote to backstabbing, to gaming of metrics, and to political infighting is public accountability, and if need be, public embarrassment. I just say it out loud. I’ve got no trouble calling people out. So let me give you an example of Jensen’s public criticism so that the entire company can learn from an individual’s mistake and his constant fight against complacency, which would Be another idea that you and I will talk about. Jeds was furious at the poor planning and execution on the chip. He called out its engineers at an all company meeting. Is this the piece of shit you intended to build? He shouted. The architects did a shitty job putting the product together. How could you not see the issue before it happened? Someone should have raised their hand and said, we have a design issue here. This is a product they called the NV30. And so yelling at the people or cursing at them, you know, some people are like, I can’t like, can we kind of moderate our language? Can we be a little, you know, more kind or more respectful? I was reading this, uh, actually, no, it’s, it came from a, it’s not even from Johnny Ives’ biography. It actually comes from an interview Johnny Ives gave after Steve Jobs passed. And he talked about one of the best criticisms that he ever got from Steve was the fact that Steve called Johnny vain. And this is what Johnny said. He goes, I remember asking Steve about this. I could be perceived that his critique of a piece of work was a little harsh, right? Doesn’t that just sound like what we just, the example we just went over with, with Jensen seems pretty harsh. He’s like calling you a piece of, he called what you did a piece of shit. I can’t believe you did this. He’s screaming. And so Johnny’s recounting this conversation with Steve. He’s like, you know, you were kind of harsh with your criticism. We had put a lot of heart and soul into this. And I asked Steve, could we not moderate the things that we said a little? And he said, why? And I said, because I care about the team. And Steve said this brutally brilliant, insightful thing. He said, no, Johnny, you’re just really vain. You just want people to like you. I’m surprised at you. I thought you held the work up as the most important, not how you believe you were perceived by others. And Johnny’s response was, I was terribly cross because I knew he was right. Jensen is not doing this to intentionally hurt people’s feelings. He’s doing this because he puts the work up as the most important. He has this great line where he says he tortures people’s, I guess I’m laughing. He tortures people into greatness. So Jensen offers NVIDIA employees direct criticism in large meetings so more people can learn from a single mistake. This is what he says. Feedback is learning. For what reason are you the only person who should learn from this? We should all learn from that opportunity. He says that Jensen displays his trademark directness and impatience in all settings. He does this all the time in small meetings too. He just can’t let go. He has to make it punitive a little bit. Again, public criticism is very important to Jensen. It’s repeated, I don’t know, a dozen times over and over again. In fact, I saw it so much. I wound up leaving myself the same note over and over again. I go, oh, this is just like Steve Jobs telling Johnny that he’s vain, that you’re putting people’s emotions over the work. Again, Jensen is going to hold up the highest. (Time 0:38:46)
  • Self-Criticism
    • Cultivate a habit of self-criticism to drive improvement.
    • Jensen believes in “torturing people into greatness,” including himself. Transcript: David Senra He’s going to hold the work as the quality of the work as the most important. So I don’t want to seem like a crazy obsessed person, even though I definitely am. I play. I play the documentary, The Last Dance in the background while I work. And The Last Dance is obviously about Michael Jordan and the final season with the Bulls. And there’s actually that was going over the outline and reading the book while this is playing in the background. And there’s actually a line in the documentary where one of Jordan’s teammates is describing Jordan. And because I was like eyeballs deep in the world of Jensen the past few weeks, at the same time, I’m rewatching the documentary. I was like, oh, this sounds just like Jensen. So this is Jordan’s teammate describing Michael. Michael wanted to be the best player on the best team. He’s raising his voice. He’s calling guys out. He’s talking about how he’s treating his teammates, right? He’s raising his voice. He’s calling guys out. So we’re not playing well as a team. We’re lazy. He’s not worried about hurting your feelings. If he did, you could leave. He would gladly tell you, you don’t want to play hard? Fine. Get out. And then right after this, is explaining this leadership style and why he played the game the way he did and i feel like there’s an echo of of of jensen jensen is not trying to be like oh just You know just another founder he’s trying to be the best of the best to create a company that nobody else on the planet could create and he has done that. And so he’s talking about the fact that he’s being really harsh on his teammates. He’s calling out how lazy they are and not working hard enough, not practicing enough, not playing well in games. And this is a time when the second best player, Scottie Pippen, was out. And he was really worried because they’re losing games. He goes every—this is Michael Jordan speaking now. He goes, every day that Scottie wasn’t playing gave someone else the confidence that they could beat us. And if you’re trying to maintain dominance over people, you don’t want to give them a chance to gain confidence. So that drove my energy. Let’s get this thing rolling. That leads into idea number six, tortured into greatness, this habit of self-criticism. So Jensen is not just publicly criticizing other people. He does this to himself. He has a great line about this where he talks about, I want to torture people into greatness, which he realizes he’s tortured himself into greatness as well. So I’ll talk about this a little bit later on, but Jensen believes that complacency kills. And Jensen has this combination. These traits may even seem contradictory, but I would just say that this combination of traits I’m about to describe to you is very common for a lot of history’s grace entrepreneurs. And as a result of the podcast, I get to meet a lot of world-class entrepreneurs today to listen to the podcast, and they have these traits too. So Jensen has this combination of extreme self-confidence and charisma matched with this inner voice that says he sucks. An inner voice that says nothing he ever does is good enough. And that inner voice typically is impossible to satisfy. Uh, so he tortures his team into greatness, but he tortures himself into greatness as well. (Time 0:42:59)
  • Speed of Light
    • Evaluate performance against the theoretical maximum speed, the “speed of light”.
    • This pushes teams to work with maximum effort and minimal wasted time. Transcript: David Senra This is very fascinating. I don’t think I’ve ever heard this idea before. It’s Jensen’s speed of light idea. So the speed of light idea is the only benchmark that we’re going to judge ourself and how fast we move will be the absolute maximum speed possible. What the hell does that mean? So he wants all of the work done in a video to be contained by only one thing, and that’s the law of physics. So the speed of light means that you have to take every single project inside your company, you break it down into its component tasks, and then each task must have a target time to completion That assumes no delays, no cues, or no downtime. Why? Of course, you’re going to have some kind of unexpected things pop up, because he wants to set the theoretical maximum, which he calls the speed of light. He wants to know what is the physics, like the fastest it could be done. And you know, it’s the fastest it could be done because it’s physically impossible to, to exceed that time. And then he says, we’re not going to judge ourselves on what we used to do. We’re not going to judge ourselves on what other companies do. I don’t give a shit what other companies are doing. We are going to judge ourselves against the speed of life. So it’s our speed of life, speed of light says Jensen would reprimand subordinates who set goals. I referred to what the company had already done before, or what the competitors were doing at that moment. As he saw it, he needed to prevent that kind of eternal rot that he observed at other companies. So I’m going to give you an example of Jensen’s speed of light idea. I already gave you a little hint earlier. This is about the Reva 128. To save time, Jensen decreed that NVIDIA would have to develop their driver software for the Reva 128 before the prototype chip was completed. This was a reversal of the customary process. This would shave nearly a year off the production timeline. You have to shave a year off the production timeline because if you remember, he’s running, he’s got nine months of cash. Now he just bought that machine. So he’s got six months of cash. There is no time. So it says this would shave nearly a year off the production timeline, but it required the company to find a way to bypass the step of testing the software on physical chips. That’s why NVIDIA invested a million dollars in that Icos emulator. Even though every dollar was precious, it would allow them to approach the speed of time. Here’s another description of the speed of time. NVIDIA employees did not let themselves think about what was likely to work or what they could reasonably achieve. They only cared about what would be possible with the maximum amount of effort and minimum amount of wasted time. (Time 0:46:57)
  • Extreme Dedication
    • Be unapologetically extreme in your work ethic and dedication to excellence.
    • Jensen believes in working relentlessly, stating, “No one will outwork me.” Transcript: David Senra Idea number eight, Jensen is unapologetically extreme. He’s extreme in all things. He works all the hours and he says, no one will outwork me. So these ideas, I grouped all under idea number eight. So, you know, I’m obsessed with Edwin Land, founder of Polaroid, Steve Jobs’ hero. And there’s a great line in one of the many biographies of Edwin Land. I think I’ve done like five or six podcasts on Edwin Land. So if you haven’t listened to them, you should go on the back catalog and definitely listen to as many as possible. Steve was studying Edwin Land when he was 20. Steve was still studying him when he was dying. Just an incredible, incredible person. But Edwin Land is one of one. And there’s a great line in one of his biographies. Somebody worked with Edwin Land. He goes, this man never had an ordinary reaction to anything. Jets is the same way. So there’s this hilarious meme. And any guy knows this. You walk into a public restaurant or public restroom, there’s a series of urinals. It is plight. It is etiquette. If there’s a bunch of empty urinals, do not stand next to me. Like give me some space. And so there’s this meme you always see where this guy’s using a urinal. There’s like 50 empty urinals. And then the guy walks into the bathroom and uses the one right next to him. Jensen literally does that. He did that. This guy is so relentless. He will, if you work for him he will grill you at the urinal i gotta read this to you no place in a video headquarters was safe from a drive-by grilling from jensen let me pause there actually I just thought about this i didn’t think about this earlier there’s a line again another pair of less jobs uh it talks about how intense his focus and like he’ll stare at you and he like He should completely focus on you it’s kind of like it would scare some of the employees at apple and if they found him in like an elevator or something they would like try to skip the elevator Because you don’t want his attention i think there was an example where like you get in the elevator by the time you get off you’ve lost your job it seems like focus on what you’re doing You couldn’t explain where you’re working i was very upset so there’s a there’s an element to that with jensen as well so jensen there’s a guy named kennethley is at a urinal. Jensen walks up and starts using the one next to him. And Hurley goes, I’m not the kind of guy who likes to talk in the bathroom. And Jensen had other ideas. He goes, hey, what’s up? And Hurley replied with not much, which earned him a side long glance from Jensen. Hurley panicked thinking I’m going to get fired because he thinks I’m not doing anything. Hurley proceeded to list 20 things he was working on. Okay, Jensen replied, satisfied with the answer. When I first read that, I absolutely lost it. I just started laughing. Go back to this idea. I was like, no one’s going to outwork me. He’s unapologetically ashamed. He says, there may be people smarter than me, but no one is ever going to work harder than me. When part of his e-staff mentioned to Jensen that some employees were griping about the long work hours, Jensen’s response was typically direct. People who train for the Olympics grumble about training early in the morning too. Jensen was sending a message. Long hours were a necessary prerequisite for excellence. Over and over again, these examples of Jensen just being completely unapologetically extreme. There’s like some kind of like, like award given by a magazine or some kind of like industry, you know, publication. And they thought they were happy. Like, oh, look, we finished second. This is the early days of NVIDIA. And Jensen sternly tells them, second place is the first loser. Jensen’s guidance was direct. Just go win. The idea was whoever could run faster is going to grab all the land. Jensen’s unapologetically extreme when he was recruiting. He invites this guy that working at, he’s a chief engineer at Silicon Graphics. He invites him to lunch. He goes, listen, John, you should really think about coming to NVIDIA because ultimately I’m going to put SGI out of business. Jensen is completely relentless about work. He says, you have to allow yourself to be obsessed with your work. I work every day. There’s not a day that goes by that I don’t work. If I’m not working, I’m thinking about working. Working is relaxing for me. And so here’s an example of how I’m just being unapologetically extreme actually created a lot of value for NVIDIA. And some might call this story like, how do you work three times as hard and three times as fast as your competitors? But there’s just a lot of anecdotes in the book where there’s people that used to work in a video, they got used to the culture, then they leave and they go work at other like tech companies. They’re like, wait, why is everybody like everybody else is moving like slow motion. There’s like way, their culture is a lot less intense. So it’s not just to be unapologetic extreme for the sake of being unapologetic extreme or throwing a lot of, a lot of like hours at something. It’s like doing this, you have an advantage that other people don’t. And so Jensen, this is before the AI boom. NVIDIA is just a PC graphics, still just in the PC graphics industry. And he’s trying to figure out, he’s like, okay, the top of this industry, there’s a lot of turnover. I’ve gotten to the top. I want to stay here. How do I do that? And one way he does this is by being unapologetically extreme. So he says, if you look at the PC graphic industry, why is it that one company can never hold a lead for more than two years? Now that NVIDIA was the market leader, Jensen became obsessed with this problem. He realized the whole industry moved according to the rhythms of the computer manufacturers who refresh their product launches twice a year. Chip makers, NVIDIA included, took 18 months to design and launch a new chip and typically only worked on one chip at a time, which means chips were functionally obsolete long before Chip makers could come out with a new product. Jensen had figured out how to keep NVIDIA ahead of its competition. He said, we were going to fundamentally restructure the engineering department line up with the refresh cycles, which how do you do this? NVIDIA would split the design team into three groups. The first would design a new chip architecture, while the other two worked in parallel to the first to develop faster derivatives based on the new chip. What is that? Why? Why would you do that? Because this allows the company to release a new chip every six months. The competitors are releasing a chip every 18 months. And he has a line for this. He says, this was called three teams, two seasons. Now the company would have three times as many chips on the market. Even if a competitor offered a slightly better product, PC makers would have no motivation to switch away from NVIDIA, knowing that a faster part would arrive within six months. (Time 0:49:31)
  • Top Five Emails
    • Implement a system for gathering unfiltered information from all levels of your organization.
    • Jensen uses “top five” emails to gain insights from the “edge.” Transcript: David Senra Idea number nine. This is one of my favorite ideas. I’ve never heard this either. It’s Jensen’s top five email idea. Really, this is just a genius way to get unfiltered information from the entire company. So Jensen asks every employee at NVIDIA at all levels that you have to send an email and they’re called like T5T. So you need the top five things that you’re working on or what you’ve recently observed in the market. Things like customer pain points, what some competitor is doing, any kind of new development of technology, if there’s any kind of project delays. And so the ideal top five email is five bullet points where the first word is an action word. And so something like finalize, build, secure. And to make it easier for Jensen to filter these emails, he has each department tag them by the topic and the subject line. So let’s say he wants to get all the recent emails on hyperscale or accounts. He can just easily do a keyword search, see all that, and then read through all these bullet points. Now, top five emails is a crucial, they are crucial feedback channel for Jensen. And he would tell his employees why he, why he did the top five emails are so important. He says, it’s easy to pick up on the strong signals, but I want to intercept them when they are weak, which he winds up doing, which I’ll tell you back in one second. But again, I think all these ideas are combined, unapologetically extreme top five emails. So he’s like, you know, I want to pick up on these weak, these signals when they’re weak, and then we can develop into something that’s strong. But to his e-staff, he said it this way, don’t take this the wrong way, but you might not have the brainpower or the wherewithal to detect something that I think is pretty significant. So every day he reads, you know, over a hundred top five emails to get a snapshot at what’s happening inside of the company. And so I want to read from that Wall Street Journal article that was written by Ben Cullen that Tay Kim sent me. He says, employees have been sending notes known as T5Ts, top five things, that they’re working on, things they’re thinking about, or things they’re noticing in the corners of the Business. And for decades, Jensen has been reading them, all of them. If you send it, Jensen says, I’ll read it. Top five thing emails have become his preferred method of flattening hierarchy. Strategy isn’t what I say, it’s what they do, Jensen said. That’s a good line. Strategy isn’t what I say, it’s what they do. So it’s really important that I understand what everybody is doing. He does that by reading top five thing emails. He doesn’t want information that has already made its way through layers of management. What he wants is information from the edge. That’s a direct quote from Jensen. He says, I want information from the edge. He is looking for the next zero billion dollar market, a frontier that has not been explored because it barely exists, but one day could be a thing. (Time 0:55:29)
  • Direct Communication
    • Communicate directly, concisely, and truthfully.
    • Jensen favors short, impactful emails, similar to haikus. Transcript: David Senra One of the weak signals that he intercepted years ago was a wonky but exciting development in machine learning that kept popping up in T5T emails. Jensen decided that NVIDIA needed to invest more in tools for accelerating workloads on its GPUs. This is why they’re a $3 trillion company today. That decision clearly paid off. These days, those GPUs are the brains of artificial intelligence. And again, the hilarious part about him being unapologetically extreme, he says, this is what he does for fun. He’s like, I drink a scotch and I do emails. And the one funny thing, there’s an anecdote in the book that’s pretty funny, where people hate when Jensen goes on vacation because he emails them more. They’re like, what are you supposed to be on vacation? He’s like, no, I’m doing emails. I’m like watching my kids play or whatever when they were younger. There’s a very intense email culture. They say the email culture in a video is like unrelenting. There’s nothing. He doesn’t let anything stay or anything fester. If you get an email from him, you need to act on it right away. He does not want anything to fester. And in fact, I finished reading this book quite a while ago, and I’m working on outline and organizing the ideas for way longer than I normally do. Because I really do think it’s, you know, he is one of the most important founders alive right now. And I think there’s just a lot of good ideas that you and I can hopefully use in our work too. So I’ve been like having nonstop conversations with a bunch of my founder friends about this. And I was actually telling a friend about this intense email culture described in the book. And I didn’t know that Nvidia invested invested in my friend’s company this company called together ai and the company’s again this is just an investment from nvidia and he’s like oh Yeah like he’s like that in real life like what do you mean he goes like he invested in our company and we’ll send emails and the response is super fast and at the same lunch when we’re having Lunch i met a young guy. I shouldn’t say kid. But a few years ago, he was a kid. He was probably like 19 at the time. And he was working for like some chip company. I can’t remember the name. But he heard what we were talking about. He’s like, oh, yeah, I emailed Jensen. What do you mean you emailed Jensen? He’s like, well, I was an intern at this chip company. And inside that company, they kept talking about they’re developing like the NVIDIA killer or whatever. And so this intern at another chip company cold emails jensen and within you know a few minutes jensen writes back with like his perspective on is there like is it true what their company’s Saying is it possible is a nvidia killer but again he just wants to know what’s going on he wants information from the edge idea number 10 this won’t come as a surprise, Jensen’s communication Style, blunt, concise, and direct. (Time 0:57:58)
  • Mission-Driven Structure
    • Structure your company around missions, not organizational charts.
    • Appoint a “pilot in command” for each project to ensure accountability. Transcript: David Senra Idea number 11, Lua. Again, all these ideas interact with each other. I think they build upon each other. We just talked about how important being direct, important of having a flat organizational structure and going really fast. So if you start rambling, Jensen will just say Lua. Okay. This is a maxim and a shorthand. It’s an acronym. It means listen to the question, understand the question, answer the question. So if he says Lua, he wants you to stop and just do those three things in order. Listen to the question, understand the question, answer the question. Number 12, this is so cool. Again, I love, there’s a bunch of ideas in this book that are truly novel and unique. So number 12, the mission is the boss and pilot in command. I think he really picked up on the fact that as you build an organization, over time, as it grows, it starts to exist for the sake of perpetuating itself. And he’s like, no, no, no. We want a flat organization. One, we want to just focus on the mission. But as the mission changes, and if you read the book, and you obviously clearly, they started on the video game industry. What are they doing now? They’re dominating the artificial intelligence industry. Like that is because he had this flat, fast, reactive culture and organization, and he can switch the mission and then take all the resources onto that new mission. This is what Jensen says. The concept of the mission is the boss makes a lot of sense because ultimately we’re here to realize a particular mission, not in service of some organization. Under the mission is the boss philosophy, Jensen starts every new project by designing a leader. And I love what they call their leader. They call the leader a pilot in command. This pilot in command now is the one accountable for that mission and is directly, reports directly to Jensen. He says, we have a PIC, a pilot in command for every project. Nobody can hide behind such and such team is working on that. No, it’s a person. There’s a goddamn name attached to it. The pilot in command is accountable. Jensen organized NVIDIA’s employees into groups centralized by functions, sales, engineering, operations, and so on. They’re treated as a general pool of talent and not divided by business units or divisions. Why? Because when you have a new mission, you take all these functions, sales, engineering, operations, whatever, and now you can turn them or point them at a new mission. And now they’re under the direction of a pilot and command. (Time 1:02:18)
  • Action Over Planning
    • Prioritize action over rigid long-term plans, adapting to the ever-changing business landscape.
    • Focus on daily execution and maintain flexibility. Transcript: David Senra Johnson says, strategy is not words. Strategy is action. Strategy is not words. Strategy is action, Jensen said. We don’t do periodic planning. The reason for that is because the world is a living, breathing thing. We just plan continuously. There is no five-year plan. Okay. So again, I’m going to read that paragraph and I’m going to filter that paragraph through every other thing that I’ve read for this podcast and every other thing that you and I’ve talked About. It’s that line, strategies, not words, strategies, actions. One of my favorite lines in the book. And immediately I think of Henry Singleton. So Henry Singleton had a very distinct philosophy around planning. I did, I think one or two episodes on him years ago. I got to redo this. He’s too important. And I didn’t know how to podcast back then. So I got to do another episode on him. But Charlie Munger, for example, said Henry Singleton was the smartest person he ever met. Crime that business schools don’t study Singleton. And I think he said you could take the top 100 business school graduates and combine their record and still wouldn’t compare to Singleton’s record. There’s a lot of ideas because I discovered Buffett and Munger before I discovered Singleton that I thought were Buffett and Mungers. And they were actually, they learned from Singleton because he was building a very successful conglomerate called Teledyne. So I go and I ask Sage for these ideas, like how did, what did Henry Singleton say about planning? And Sage did an excellent job summarizing Singleton’s philosophy, which to me sounds a lot like Jensen’s philosophy. So number one, flexibility over rigid plans. Singleton said, I know a lot of people who have very definitive plans, they follow assiduously, but we’re subject to a great number of outside influences on our business and most of Them can’t be predicted. So my plan is to stay flexible. Sounds a lot like what Jensen just said. Number two, daily steering versus long-term planning. Singleton’s approach was summed up in the quote where he says, my only plan is to keep coming to work every day. I like to steer the boat each day rather than plan way ahead into the future. Number three, rather than getting caught up in detailed strategic plans, Singleton focused on retaining flexibility and keeping options open. He believed excessive planning constrains freedom of action. Number four, recognition of complexity, which is exactly what Jensen said, the fact that the world is a living, breathing, changing thing. Singleton understood that businesses are subject to numerous outside influences that cannot be predicted, making detailed long-term planning potentially counterproductive. And then this is, I think, what Jensen would agree with. Number five, independent thinking. When others were doing something, Singleton was often skeptical. For example, late in his career, when many companies were doing share repurchases, Singleton said, if everyone’s doing them, there must be something wrong with them. And so when Jensen also said, hey, there’s another line that popped up to me. He’s like, we don’t have a five-year plan. That is exactly the same kind of thinking that Michael Bloomberg used to build his company. In fact, in Bloomberg’s autobiography, this is what he wrote. I never let planning get in the way of doing. Don’t devise a five-year plan. Central planning didn’t work for Stalin or Mao, and it won’t work for an entrepreneur either. (Time 1:05:47)
  • Reward Top Talent
    • Generously compensate top talent, recognizing their significant contributions to your mission.
    • Reward exceptional work promptly and directly. Transcript: David Senra Okay, idea number 14, choke you with gold. This is a very, very old idea. Brad Jacobson, his book, How to Make a Few Billion Dollars, talks about the fact that between all his companies, it’s like 140,000 employees or something. He goes, listen, money animates people everywhere. You really should overpay for top talent because it’s nearly impossible to overpay for top talent. And the reason I distilled this down to the maximum, choke you with gold, it’s because I was reading this old book of David Ogilvie. And David Ogilvie talks about this. He says, the Medici family persuaded this very famous sculptor in Florence to enter their service, where they wrote him a letter which concluded, come, I will choke you with gold. If you are talented in contributing to NVIDIA’s mission, Jensen will choke you with gold. Jensen pours over the stock allocation reports. Managers can refer an employee for special consideration to senior executives. Jensen will review this list of top contributor, which they call TC list. Jensen will review the list of top contributor candidates and give out special one-off grants of stock that vest over a four-year period. Once such a grant is approved, the employee receives an email from a senior executive with Jensen copied on the email. The subject line will say special grant, which authorizes the RSU grant in recognition of your extraordinary contributions with a clear description of the rationale behind the award. This is really important, I think, too, about when you do this thing, when you decide to grant these. Jensen also reaches down into the organization anytime and awards stock directly without waiting for an annual compensation review. This allows him to ensure that people who are doing great work feel appreciated in the moment. (Time 1:08:52)
  • Attention to Detail
    • Pay close attention to details.
    • Jensen is deeply involved in all aspects of NVIDIA, reflecting Walt Disney’s belief that details matter. Transcript: David Senra It is another sign of his interest in every single aspect and every level of his company. Which leads us to idea number 15, which is a quote from Walt Disney. Walt Disney said, if we lose the detail, we lose it all. Jensen is in the details. I’m sure people would accuse him of being a micromanager, just like they would accuse Walt Disney of being a micromanager or Steve Jobs and so on and so forth. Uh, for his entire, Jensen is, keep in mind, Jensen has run NVIDIA for over three decades. And the way he’s done that is he manages the company directly. He involves himself deeply in product decisions, sales negotiations, investor relations, and more. He does not work in a private office. He involves himself in everything at NVIDIA. And so all of these company building philosophies that he has learned and implemented really allow him to get out of the, to get the most out of the organization that he built. And he built that organization in the bet that in the way that makes it the best for him to run. Remember what Michael Morton said on Steve Jobs and the great founders, founders, at least the very best of them are unstoppable, irrepressible forces of nature. (Time 1:10:37)
  • Complacency Kills
    • Actively combat complacency, recognizing it as a significant threat to success.
    • Focus on continuous innovation and maintain a healthy paranoia. Transcript: David Senra Walt Disney would fall into that category. Steve Jobs would fall into that category. Jensen falls into that category. Number 16, idea number 16, complacency kills, no looking back, no resting on our laurels. Innovation is a necessity, not an option, and paranoia. And so there’s a line in the book that says Jensen runs the company the way he does because he believes that NVIDIA’s worst enemy is not the competition, but itself, the complacency that Grips any successful company. And this is, he applies this to complacency that is both real and imagined. Remember, he is ruthlessly self-critical and blunt about his failures and his mistakes. And so, you know, people are looking at a video now, it’s like one of the best companies I’ve ever created, but he, it’s very fascinating that he doesn’t like looking back. And when you do look back, it says he resists overly positive accounts of NVIDIA startup period and his own missteps. When we were younger, we sucked at a lot of things. NVIDIA wasn’t a great company on day one. We made it great over 31 years. It did not come out great. You don’t build NV1 because you’re great. You don’t build NV2 because you were great. The failure of those nearly killed the company in its infancy. And so he has a great line about this. He says, we survived ourselves. We were our own worst enemy. Jensen believes that for the first 15 years when he was CEO, he sucked. He says this. He actually says it in third person. He goes, if Jensen, meaning himself, wasn’t even involved in the first 15 years of the company, I would really like that. He was not proud how he managed the company. And he says, I don’t love talking about our past, but I don’t want to like, I think this is an important thing too. It’s like, yeah, he doesn’t love talking about his past. He’s not just talking about his past failures. He applies that even after a massive success. Remember that one story when they’re smashing the quarter and he tells his team that he woke up that morning and wakes up most morning mornings, looks at himself in the mirror. It’s like, you suck. And I actually think there’s a very productive way to do this. So this idea of not looking back not resting on your laurels again this is something he has common with steve jobs and he has a great way i think summarizes what jensen’s doing here not Resting on his laurels not like he i think later on the book jensen says something like you know wasting there’s nothing worse than like looking back at your own accomplishments or um Just not good use of your time and so what Steve says is, he says, I think if you do something and it turns out pretty good, then you should go do something else that’s wonderful and not dwell On it for too long. Just figure out what’s next. The reason I think this is important that it also fits into like Steve Jobs’ overall philosophy. If you go back and ask, if Steve was asked one time, like what his favorite quote is, and it was actually a quote by Aristotle where it says, we are what we repeatedly do. Excellence then is not an act, but a habit. And so I think Steve would tell you the key is to keep pushing forward, stay hungry, and continue to create really wonderful things rather than dwelling on past achievements. And so throughout this book, this theme just reoccurs over and over again that complacency kills. I went back and searched all my notes and highlights, and you just see this over and over again. Andy Grove, he had this mantra, success breeds complacency. Complacency breeds failure. Only the paranoid survive. Herb Keller, the founder of Southwest, said a company is never more vulnerable to complacency than when it’s at the height of its success. We must not let success breed complacency, cockiness, greediness, laziness, indifference, preoccupation with bureaucracy, hierarchy, or obliviousness to threats posed by the Outside world. There’s a great line from one of the biographies of Bernard Arnault, founder of LVMH that I read. He abhors complacency so much. Les Schwab, who’s one of Charlie Munger’s favorite founders, he said, we must constantly remind ourselves as to why we are successful and what we must do to continue to be successful Because if we become complacent, brother, it’s all over with. Warren Buffett, you need to fight off the ABCs of business decay, arrogance, bureaucracy, and complacency. When these corporate cancers metastasize, even the strongest of companies falter. (Time 1:11:41)
  • Learn From Everyone
    • Continuously learn from everyone and every experience.
    • Jensen attends conferences to learn, reflecting Bezos’ approach. Transcript: David Senra Idea number 17, Jensen goes to school on everybody. I already mentioned this earlier. This is somebody, this is this idea of going to school and everybody was described in one of the biographies I read of about a young Jeff Bezos. He said he went to school on everybody, obviously before he founded Amazon and during and after. But Jensen has the exact same, you know, tendency, same idea. So this is this conference on neural information processing systems, essentially an academic conference where all the machine learning and neuroscience experts present their Latest findings. Okay. And so there’s an actual NVIDIA employee who’s there. And he runs into Jensen unexpectedly. He’s like, well, Jensen, like, what are you doing here? You’re not, you’re not, you’re not scheduled to speak to speak. What are you doing at the conference? And Jensen told him, I’m here to learn. And what he noticed was that Jensen was sitting towards the front row. And it’s not like he hired somebody to take notes on. He’s sitting there taking notes, showing up himself and trying to absorb, absorb all the recent developments in artificial intelligence. Because again, it goes back to Jensen wanting to be involved in every aspect of NVIDIA. He’s not trying to outsource things. He’s trying to be in the details. Jensen also talks about the fact that at conferences like this, he meets a lot of smart people and winds up recruiting and they become employees and assets of NVIDIA. (Time 1:18:41)
  • Create Markets
    • Focus on creating new markets rather than competing in existing ones.
    • Offer unique value and avoid commodity products. Transcript: David Senra Okay. Idea number 18, create markets. Don’t do anything someone else can do. Don’t do anything someone else can do is the motto of Edwin Land. But what Jensen was setting out to do, he really believed that he was building a company that was unlike any other company. And he knew he didn’t want to build an undifferentiated commodity product. He wanted some kind of pricing power. And so it says, NVIDIA doesn’t believe in building commodity products because commodities are subject to downward pricing pressure as competition increases. Jensen has always said that we should be doing things that other people cannot. That is exactly what Edmund Land said. We need to bring unique value to the marketplace. And you do that by doing work that’s cutting edge, that’s revolutionary work that no one else can do. We do not, and this is really the punchline, we don’t have a culture of going after market share. We would rather create the market. Okay, so all of these ideas leads us up to the final idea. (Time 1:21:39)
  • Swarm Opportunities
    • Identify and fully commit to your greatest opportunities.
    • Jensen’s focus on AI transformed NVIDIA, despite initial doubts. Transcript: David Senra Idea number 19 is swarm your greatest opportunity. And the reason this one is last is because it’s going to describe the massive historical opportunity that NVIDIA has pursued in artificial intelligence. And it’s obvious when you read the book that all the things that you and I just talked about enabled and helped NVIDIA seize what is going to be likely one of the greatest opportunities That humanity has ever seen. And a single company has been able to, especially corner the market, and reap most of the profits so far. So, this is going to, the wild thing here, and this is going to be probably the longest section, is the fact that this played out over, you know, multiple decades. Jensen is going to recognize the AI trend very early. He’s going to invest heavily, you know, when other people are telling him not to do this. And he’s going to, by doing so, he’s going to maneuver his company into position to take advantage of it better than anybody else in the world. So I’m going to read a couple of highlights. We’re just going to go through, obviously, this is what mainly the book is about, but I’m going to give you what I feel are like the basic framework of important actions, I think, that Jensen did. And so there’s an idea that reoccurs throughout these books. It’s the idea that you have to stay in the game long enough to get lucky. So the idea that’s going to turn NVIDIA into a multi-trillion dollar company actually came from their customers coming up with unique ways to use their product. So the first reference to using NVIDIA GPUs for non-graphical purposes was in a 2002 research paper on using computers to simulate the movement of clouds. You could think of these like really weak signals that Jensen was referencing earlier. So it says an increasing number of computer science researchers were using GPUs for non-graphics applications. Researchers who ran their simulations on computers with GPUs reported significant speed improvements over computers that relied on CPU power only. These simulations required computers to learn how to reframe non-graphics computations in terms of graphical functions that a GPU could perform. In other words, the researchers had hacked NVIDIA’s GPUs. Now, Jensen’s response here was brilliant. He sees this way, this unexpected opportunity as a way to expand the market for his products. And he’s interested in making it easier for other people to do that. So what does he do? Number one, he hires the guy who discovered how to do this. Number two, he picks a mission. He wants to make it easier for people like the guy who discovered this to find more non-graphical applications of GPUs. Why? Because anytime you make something easier for people to do, that will expand the market. And so this guy’s name is Harris. Harris is the guy that coins the phrase GPGPU, which means general purpose computing on GPUs, which he’s describing this phenomenon that he is witnessing. Now, this is why Jensen’s saying, you know, I want direct unfiltered information. I want information from the edge. Jensen quickly grasped that GPGPU had the potential to open up the markets for NVIDIA’s GPUs way beyond their existing market, which was just computer graphics. And so Jensen’s next thought is, well, how do I make this easier? The way I make this easier, I want to generate more demand. I need to make it easier to program these GPUs. So they create this new programming model for chips that they call the Compute Unified Device Architecture. It’s called CUDA. CUDA makes it possible and easier for scientists and engineers to leverage the GPU’s computing power. Now, keep in mind, we’re like a decade and a half before all this huge AI explosion. The reason that’s important is because Jensen believed that this could expand NVIDIA’s reach into every corner of the tech industry. And this next section is why number 19, the idea number 19 is swarm your greatest opportunity. So this is happening in 2008, 2007, 2008 is where we are. So the error of the GPU would create so many opportunities that Jensen saw as his mission to prepare NVIDIA to take advantage of it, even if no one could know exactly what those opportunities Would be. Everything else was secondary. So again, this is one of the most mind blowing parts of the book for me because it’s 2007, 2008. Jensen’s decision to go all in on this is literally going to create trillions of value for the company in the coming decades. It’s a crazy amount of foresight on his part. And it’s also going to require him to endure even more pain. So Jensen’s way to do things is like, I’m going to push this everywhere. I want to make what I’m doing a foundational technology. And if Jensen has conviction for that, this is going to work. He’s willing to invest heavily for the long term, even when other people and the market are telling him not to do that. So let me just read this section. It’ll just make a lot more sense. Jensen understood the importance of saturating the marketing with the market with it. The more people who had CUDA in their hands, the faster the technology would establish itself as a standard. We should push this everywhere. We need to make it a foundational technology, Jensen told the CUDA team. The move was extremely expensive. It took four years, and the company invested so much in converting its GPUs for CUDA compatibility that its gross margin fell from 45% to 35%. As NVIDIA increased spending on CUDA, the global financial crisis destroyed consumer demand. And NVIDIA’s stock price fell by more than 80% from October 2007 to November 2008. Jensen believed so strongly in CUDA’s market potential that he remained committed to the course he had chosen, even as his investors demanded a strategic course correction. I believe in CUDA, Jensen said. We were convinced that accelerated computing would solve problems that normal computers couldn’t. We had to make that sacrifice. I had a deep belief in its potential. And then NVIDIA does something really smart here. This is something that there’s been a couple examples of throughout history of the importance of doing so. When you’re doing something brand new, you have to make a commitment to spend a lot of time and energy and resources into educating the market about this new invention. So Intel did this when they invented the microprocessor. In fact, they knew they were on to the biggest, they swarmed their greatest opportunity. It was very confusing to the market, very, in some cases, scary to the market. So they wind up sending all the founders and the, the, the, the, the, the, all the, like the executives inside of Intel, including their founders spent the majority of their time educating The market and running classes. In fact, what Nvidia does here, it sounds a lot like what Intel did when they invented the microprocessor. So developers don’t know what to do with CUDA. That’s fine. Nvidia is going to teach them. We are going to educate the market. So NVIDIA’s chief scientist is again named David Kirk begins offering and sending colleges and universities CUDA capable machines. If they committed to teaching a class on the subject, uh, (Time 1:22:36)