The Jensen Huang Playbook
How Nvidia’s CEO built the biggest company on Earth by ignoring customers, forgoing 1:1s, and picking unfashionable markets.
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In 1973, a ten-year-old Taiwanese boy arrived at the Oneida Baptist Institute in eastern Kentucky. His parents, a chemical engineer and a schoolteacher, had sold most of their possessions to pay for what they believed to be an elite boarding school—a little Andover in Clay County. In fact, Oneida was a reform school dedicated to righting the paths of Kentucky’s wayward youths. The boy’s roommate, a seventeen-year-old illiterate, spent their first night together showing off the knife scars he’d accumulated.
The boy was small in size, spoke little English, and, save for his older brother, was the only Asian student at the school. Combined with an intelligence that seemed unhindered by the changes around him, such qualities made him a natural target for bullies. However, something in his personality would not allow him to become a victim of attacks. He fought back ferociously, unfazed by his small stature. He built muscle, too – in exchange for teaching his older roommate how to read, he was taught how to bench press. By the end of his first year at Oneida, the boy had not only adapted but flourished, becoming a leader among his classmates.
In miniature, this tells you almost everything one might wish to know about Jen-Hsun (Anglicized to “Jensen” during his time at Oneida) Huang. From his earliest days, the Nvidia CEO has exhibited a talent for entering foreign circumstances, often as an unfancied figure, and emerging as the victor. He does so not by dazzling with grandiosity or casting the longest shadow, but by allying intelligence, resilience, courage, and a ferocity prone to spill into fury.
It is this combination that allowed a first-time founder to outmaneuver two hundred direct competitors, outwit giants like Intel, and build what is now the most valuable company on the planet. At the time of writing, Nvidia boasts a market cap of more than $4.15 trillion, a cool $400 billion over Microsoft.
Nvidia is not simply a market-topping juggernaut, but the purveyor of the most existentially important technology on the planet. It is not fair to say that Nvidia is responsible for the modern artificial intelligence renaissance, but it would not have happened without it. The company’s chips are perhaps the essential ingredient in AI’s frothy cocktail – powerful and irreplaceable.
Though many have tried (and some continue to do so), no one has mounted a serious challenge to Huang’s empire, allowing it to clip more than 90% gross margins on its newest products and giving it a functional monopoly. The characters in Frank Herbert’s Dune know that “He who controls spice controls the universe.” While Nvidia’s GPUs may not be quite as multi-purpose as the mind-altering propellant at the heart of Herbert’s series, Huang’s company holds a similar sway in the tech industry. Even Silicon Valley’s grand dukes like Mark Zuckerberg and Sam Altman must genuflect before Huang, knowing, as they do, that much of their fate relies on steady access to his offerings. Competition will increase, and there is no doubt that AI is inflated beyond sense, but for now, at least, Huang stands alone.
As one might expect of such an outlier, Huang runs his business uncommonly. Though certain principles rhyme with those of Jeff Bezos or Elon Musk, he orients himself differently, running with an army of direct reports, ignoring customers (in certain phases), and shunning farsighted planning. He simultaneously mentors and “tortures” his employees, keeping standards high with constant feedback and fits of unbridled rage, yet manages to retain talent extraordinarily well.
This piece is part of The Generalist’s ongoing series of managerial “playbooks.” We have previously delved into Elon Musk and Jeff Bezos. Our aim with this series is to reveal the real strategies great founders use to build their businesses. These are often uncomfortable and in direct conflict with traditional managerial advice. However, if you believe progress depends on innovation, as we do, then understanding these principles, foibles included, is not only interesting but essential.
We spent two months researching this playbook. Among a multitude of sources, some were especially valuable. In particular, I like The Thinking Machine by Stephen Witt, The Nvidia Way by Tae Kim, and the Nvidia series by Acquired. I’d recommend all three for those looking for further resources.
This is the Jensen Huang Playbook:
Understand the “essence” of your industry
“Torture” employees into greatness
Pick “zero-billion-dollar” markets
Ignore your customers
Ship the whole cow
Move at the “speed of light”
The best plan is no plan
Minimize information mutilation
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The Playbook
1. Understand the “essence” of your industry
In 1998, Jensen Huang pulled Nvidia’s head of marketing, Michael Hara, into his office. He had a question.
“Mike, I don’t get it. If you look at the PC graphics industry, why is it that one company can never hold a lead more than two years?”
By that point, Nvidia had made it through its first couple of crises and lived to tell the tale. Freed from immediate existential threat, Huang had become obsessed with this question. Why did advantages disappear so quickly? Why was it seemingly impossible to build a durable lead?
The answer lay in understanding what Huang calls the “essence” of his industry: Moore’s Law. In his presentation at Stanford, Huang gave his distillation of Moore’s Law (emphasis ours): “It’s not so much a physical law as it is a law of competition, a law of challenging engineers. It’s almost a law of setting pace,” he said. “Moore’s Law gives you twice the performance every year or two. Understanding the fundamental ingredient of our business improves by a factor of two every year and simultaneously reduces in cost by a factor of two every year: the question is what makes a survivable business?”
The answer was speed. Historically, chip makers needed 18 months to take a new product from inception to launch. Given the industry’s rate of progress, that meant each of these chips were woefully out of date by the time they hit the shelves. When a competitor launched its offering six months later, it would not just be marginally better, but exponentially so. That made it functionally impossible for a single manufacturer to build and keep a lead.
Nvidia would do things differently. Rather than sticking to the 18-month schedule it had followed thus far, the company would ship a new chip every six months. That way, Nvidia would always be a couple of cycles ahead of the competition. Even if a competitor happened to release a superior product between cycles, customers would know that Nvidia had another product on its way soon, reducing the incentive to switch. “The competition will always be shooting behind the duck,” Huang said.
Doing so required Nvidia to retain the frantic mindset that had helped it endure its early crises. It also required a reorg. Huang segmented a once-unified design team into three sub-teams. While one team designed a new chip architecture, the other two focused on creating even quicker successors to be released down the line. Ultimately, it was an inspired change that allowed Nvidia to break free of the chasing pack.
2. “Torture” employees into greatness
It’s become an accepted rule of business that good managers praise in public and criticize in private. Jensen Huang disagrees. Whether he’s commending an employee on a job well done or eviscerating a misstep, he does so in full view of others.