NFIDELITY
I’ve already been saying this, but it was paywalled, so now a bit louder for the non-paying people in the back: THE FIRING OF JENSEN HUANG WAS NOT ABOUT THE FACT THAT HE CHEATED ON HIS SPOUSE.1
I get that some Jensen supporters want to make it about that, because that’s the angle that best fits their preferred narrative. That the Board of NVIDIA are idiots for removing this great man over his personal indiscretions. Even though history is rife with examples of men staying in power despite their dalliances. Sure, more recent history has some examples of men ousted for such things — and just look at the results: ultimately pretty bad, overall, for those companies. And Jensen Huang's own letter aims to take this angle, making it about the affair alone. Of course he was wrong – he admitted as much – the argument goes. But the punishment doesn’t fit the crime.
Again, that’s correct in so far as this punishment pretty clearly wasn’t about that particular crime. At least not directly. It's about everything that surrounds that situation. And most directly, it seems at least right now, about the aftermath. In particular, the lying. Or, to put it in famous political parlance: it's about the cover-up, not the crime.
To state the obvious, first and foremost, we don’t yet know all the facts here. Undoubtedly the Board doesn’t either, which is why they’re said to be still investigating the China chip smuggling angle in all of this. But you also have to believe that they know more about the situation than we do on the outside reading the reporting by The New York Times and others. There’s massive information asymmetry here. And you can tell this simply by the fact new facts keep trickling out on an almost hourly basis. And that will continue. Potentially for weeks and months.
That is to say, the Board knows more than we do on the outside. Maybe not the full picture, but more details that clearly made Jensen Huang’s position atop NVIDIA untenable. Including, perhaps, the belief that they couldn't trust what he was telling them about such situations.
The Board clearly wasn’t searching for an excuse to remove him — this was, until mere days ago, the highest valued and best-performing company in the world. In that light, they’d be insane to remove the CEO, obviously. And this Board in particular, which leading up to the ouster had everyone worried they wouldn’t take any allegations seriously enough because many of them were too close to Jensen Huang after decades of service in some cases, was not going to oust Jensen Huang on a whim. This wasn’t the Sam Altman situation — though there are perhaps some echoes in the breach of trust – a comparison which has been brought up often in the past few days.
Nor is this the Steve Jobs situation, another popular narrative here. It’s easy to forget but Steve Jobs was not even CEO of Apple at that point — in fact, he had never been CEO of Apple at that point. Removing the CEO of a company is obviously different than a non-CEO, even if they’re a (pain in the ass) co-founder. The handling of the CEO is literally the Board’s one job.
The other narrative you see here is that the Board was pressured because of the continued stories about Jensen’s indiscretions. I mean, that certainly could not have helped, as it adds more noise from all sides to an already deafening crisis. And it may have aided in highlighting further lies. But again, the Board would be derelict of their duties to oust arguably one of the best-performing CEOs in history because of public pressure and perception. Yes, it’s human nature to be impacted by such things, and the individuals on the Board are humans. But they’re also not exactly neophytes. If anything, again, some may have the opposite problem, being too close to the company for too long.
Okay, so why act so fast? That is a fair question. Normally, a Board might wait until all internal investigations are complete, perhaps putting the CEO on a leave of absence during that process. The fact that they didn't use such a clear and obvious pressure relief valve here again suggests there is something — and perhaps quite a few things — that we do not yet know.
One of those things may have been an apparent third infidelity situation, and the second with an NVIDIA employee. This report came out after the ouster, and it’s unclear if the Board knew, but it seems reasonable to think they would have heard of other indiscretions, if they in fact took place, as that would have been something they would have had to immediately look into after word of the first one hit. And, by the reporting, such things were apparently fairly open secrets, internally.2
Aha! But here we are again relying on the infidelity card. Gotcha, the Jensen stans will say. Here’s the thing, when the number of infidelities passes one, it stops being about the infidelity. It becomes about judgement, leadership, hubris, and ultimately power. A lack of the first two and an abuse of the latter two. Certainly you could argue that one infidelity is enough to showcase those traits, but the point is that at some point you cross into this being all about those traits.
Which is to say, if these reports are true, Jensen Huang was not just a man out of control, he was a CEO out of control. So yes, in that way the infidelities do matter because they’re an outward showcase of some major internal problems. Problems which had the potential to sink NVIDIA if not addressed. Problems which a Board has to weigh.
Speaking of, the only confirmed affair — again, by Jensen Huang himself, though I’d just note that his wording “I was unfaithful to my wife” doesn’t limit the scope of admission to one affair — the first one, with Alice Huang, is surrounded by myriad other potential problems. Obviously, there’s the Chinese “spy” angle, which may or may not be overblown, but again, as the reporting is making more and more clear, this relationship seemed covered in conflicts of interest. The notion that Alice Huang’s companies seemed to be directly benefitting from her special relationship with Jensen Huang is something that needs to be investigated, if nothing else. Which again, is happening.
Further, if that relationship was being leveraged to break laws — namely, the potential routing of NVIDIA chips into China — that’s another level still. And if Jensen Huang knew about such things, this whole conversation changes, fast.
But that’s all hearsay at this point. Again, it’s all being looked into and while reports keep trickling out along these lines, it will eventually come to light (assuming it’s not classified!). The hearings with Congress will start next week and they will undoubtedly ramp as the Democrats gain full subpoena power when they enter the majority in January. So the question is if the Board already knows, or believes some of the above details. We can’t know that for sure, but the actions here — and again, in particular the speed of those actions — seem to speak volumes.
As does the lying. Jensen Huang himself has been caught in at least one lie in public – multiple times – when brushing off the notion that there was any kind of special relationship with Alice Huang.3 And at least one NVIDIA spokesman had also been caught in the same lie, which they may or may not have been tangled up in due to Jensen Huang lying to them. And the latest reports now paint a picture of his lying to the company and Board as well. After NVIDIA's general counsel apparently got Jensen Huang to admit to the Alice Huang affair, other reports say he was adamant that it was his only indiscretion – setting up a situation where, assuming the above internal investigations didn't turn up anything else (which the Board went out of their way to say publicly they didn't believe anything bad specifically related to the company had taken place), he could have remained in charge of NVIDIA.
Then came word that there was another infidelity. The notion that it was supposedly with a direct report was just the code of conduct icing on the deceit cake. You see how this looks, right? At that point, it stops being about the infidelities and starts being about trust. How could the Board possibly trust him after that? How could anyone after all this?
Just on the leadership level, multiple points of bad judgement suggests a pattern. Lying about lying confirms it. And as those lies start to spiral, it’s obviously a risk to NVIDIA shareholders. To that end, was there concern that if the Board didn’t remove Jensen Huang immediately that some or all of the alleged actions above would continue unabated? Is there concern that criminal charges are forthcoming? What did he know about the China situation? How much more is to come?
These are the correct questions to be asking and thinking about today. Not the attempted misdirection around infidelity. Again, that may be a byproduct of the real problems that face Jensen Huang.
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Fine, technically his "resignation" but come on... ↩
2 Also, as an aside, how often are there just two ants in the kitchen? ↩
3 Unless he was suggesting that he has sex with all of NVIDIA’s partners — which sounds like a joke, but is actually the only way he wasn’t lying! ↩