He built a trillion-dollar company. He wouldn’t do it again

Even after three decades on the job, Jensen Huang remains actively involved at Nvidia. (Reuters)
Even after three decades on the job, Jensen Huang remains actively involved at Nvidia. (Reuters)

Summary

Jensen Huang, the CEO of the year’s most successful company, has a theory about the superpower of entrepreneurs.

When he sat down in a booth at his local Denny’s and began plotting out the business that would change his life, Jensen Huang didn’t know that his startup would one day be worth $1 trillion. In fact, the only chief executive in Nvidia’s history didn’t know much of anything about what he was getting himself into.

But if he had known three decades ago what he knows today, he never would have founded one of the world’s most valuable companies.

“The reason for that is really quite simple," Huang said recently. “Building Nvidia turned out to have been a million times harder than I expected."

Nvidia was the stock market’s big winner of 2023, when the chip maker cracked $1 trillion in value. That would have seemed impossible 30 years ago, and it wasn’t especially probable just one year ago, before the AI boom made Nvidia worth more than Netflix, Nike and Novo Nordisk combined.

So why wouldn’t he do it again?

“If we realized the pain and suffering and how vulnerable you’re going to feel, the challenges that you’re going to endure, the embarrassment and the shame and the list of all the things that go wrong," he said, “nobody in their right mind would do it."

The candor from one of tech’s longest-tenured CEOs wasn’t just eye-opening. Huang’s comments were also a rare peek into the mind of one of the most successful entrepreneurs of his generation, someone who took an idea hatched over Grand Slam breakfasts and Super Bird turkey sandwiches and turned it into a trillion-dollar company. Along the way he learned an important, counterintuitive lesson.

Everyone in Silicon Valley knows they have to be resilient. Huang knows it also helps to be ignorant.

“I think that’s kind of the superpower of an entrepreneur," he said. “They don’t know how hard it is. And they only ask themselves: How hard can it be? To this day, I trick my brain into thinking: How hard can it be?"

Really hard, as it turns out. He didn’t know that the original business plan had no chance of success. He didn’t know how many times he would fail. And he didn’t know just how much he didn’t know. But just because the 60-year-old billionaire says he wouldn’t do it again doesn’t mean he’s telling other people they shouldn’t. In fact, the opposite: Only they have the advantage of being undaunted by the difficulty of building a company.

Huang made his comments in a recent interview with Acquired, a tech podcast hosted by Ben Gilbert and David Rosenthal, who might know more about Nvidia’s history than anyone who didn’t live through it. After releasing three deeply researched, delightfully wonky episodes about the company’s strategy, the podcasters were invited to Nvidia headquarters for an interview with the CEO himself. (Huang declined to comment for this article.)

Huang has been running the company since his silvery hair was the color of his signature black leather jacket. Even after three decades on the job, Huang remains actively involved at Nvidia. He still manages 50 senior executives who report directly to him and attends product meetings with junior employees who weren’t alive when the company was born. 

There has never been a business worth so much that people know so little about. But the more the podcasters studied Nvidia’s success, the more they credited one person.

“That company is him," Rosenthal told me. “He does everything but sweep the floors—and he may sweep the floors."

So when it came time for one final question, they were curious: If he were 30 years old today, sitting in that Denny’s again, what kind of company would he be starting?

He said he wouldn’t start one at all. He might as well have said Nvidia’s chips were made of Doritos.

But his response began to make sense when he reflected on the wrenching years before this year. There are only five American companies worth at least $1 trillion right now. Apple, Microsoft and Alphabet’s stock prices have never dropped 85% from high to low. Amazon had one such drawdown. Nvidia survived two.

Those excruciating stretches in 2002 and 2008 now look so insignificant that you can barely see them on Nvidia’s historical stock chart. They didn’t feel that way at the time. And he got an unwelcome reminder of that feeling when the company lost half its value last year.

But after sputtering in 2022, Nvidia exploded in 2023. That’s because there has never been so much demand for GPUs, the advanced chips that provide oxygen for artificial intelligence, powering almost every piece of technology the nerdiest person you know is psyched about, and Huang’s company controls the supply. 

AI models require tens of thousands of these graphics-processing units that can handle lots of computational tasks at the same time, and they’re made almost entirely by Nvidia because Huang invested in GPUs long before there was a roaring market for them.

Nvidia’s central role in the AI economy is the reason it has tripled in value and beat every other company in the S&P 500 this year. It’s on pace for the best annual performance of any major stock in the past decade.

Which made the recent comments from one of the world’s richest men all the more curious.

Huang had a better year than anyone this side of Taylor Swift. But even at the height of his company’s success, he remains haunted by the prospect of failure. According to the New Yorker, Nvidia’s unofficial motto is his mantra from the startup’s early, uncertain years: “Our company is 30 days from going out of business." 

At this point, Nvidia is worth more than the other American chip giants put together, and AI would have to destroy the world for Huang’s company to be out of business in a month. But he’s still driven by that fear.

“You’re always on the way to going out of business," he recently said at Columbia Business School. “If you don’t internalize that sensibility, you will go out of business."

The moments when his company nearly crashed are burned into Huang’s memory as permanently as the Nvidia logo tattooed on his arm.

When the world’s most valuable chip maker was founded in 1993 by Huang, Chris Malachowsky and Curtis Priem, the only people paying attention to them were the waiters of a Denny’s in San Jose, Calif. 

There was no reason to suspect three lousy customers guzzling too much coffee were laying the foundation of a revolutionary company. And when Huang told people he was making graphics cards for videogames, his own mother told him to get a real job.

But the secret to Nvidia’s early success wasn’t the people involved or the industry they set out to conquer. It was the unusual, informal governance structure they chose for their startup.

Huang was always in charge, and Malachowsky and Priem reported to him, but they made a deal that each founder would have authority in his own fiefdom.

“We would talk or argue over each other’s decisions, but we would default to the final decision of the person who had the expertise in that area," Priem told me. “It wasn’t ‘agree to disagree.’ The decision terminated any disagreements and became the direction we were going."

Their arrangement made Huang responsible for business operations and finding partners to manufacture its chips. But that was a huge burden for one person, which Priem learned the one time he told Huang what he thought he should do. 

“He unloaded on me," said Priem, “telling me all the responsibilities he had and all the things he was juggling." He was stunned: Huang had kept the pressures of his job to himself. “It was an oh-my-God moment for me to understand how alone he was in his role," Priem told me.

A trillion dollars in market value hasn’t made Huang’s job any easier. These days, his company must navigate tight U.S. regulations meant to stifle China’s access to powerful chips, not to mention increased competition from rivals at home desperate to pierce Nvidia’s dominance.

But it was much harder when Nvidia wasn’t as successful.

After the company released its first product, a graphics card that flopped, Huang laid off half the workforce. Running out of money, teetering on the edge of bankruptcy, he bet the company on the 1997 chip that saved Nvidia. 

But the decade after Huang’s company went public in 1999 would bring two more brutal stretches during the dot-com bust and global financial crisis. Even when markets rallied, Nvidia didn’t. From 2008 to 2013, when the S&P 500 was up 25%, Nvidia was down 50%.

The whole company was worth less than the $6 billion that Huang personally made in a single day of trading this year.

Nvidia stagnated as Huang plowed money into a new platform for accelerated computing, one that would allow developers to do anything they wanted with GPUs. 

Wall Street was skeptical of his vision of the future. But there was one group of people who could see it: AI researchers. Once they began using Nvidia’s chips to train neural networks, they realized the transformational potential of Huang’s tools.

And then he decided to put his chips on the table again.

The initial breakthroughs in deep learning compelled Huang to make another bet-the-company move on AI. Nvidia began work in 2012 on the system that would become its first AI supercomputer. Huang delivered it four years later to OpenAI, whose researchers would use Nvidia’s GPUs to educate ChatGPT, which became the hottest app in tech history when it was released last year.

But this was the year those chips became the picks and shovels of a gold rush.

Now there are young entrepreneurs sitting in their own metaphorical Denny’s, dreaming about building companies and completely unaware of how hard it’s going to be.

Because how hard could it be?

He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
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He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
View Full Image
He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
View Full Image
He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
View Full Image
He Built a Trillion-Dollar Company. He Wouldn’t Do It Again.
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