The Envy of Everyone
With news that NVIDIA had taken the mantle of the most valuable company in the world yesterday, I was reminded back to this incredibly prescient profile of co-founder and CEO Jensen Huang back in 2017 by Andrew Nusca (in naming him Fortune's 2017 'Businessperson of the Year'). It's filled with nuggets that, nearly 7 years later, appear in a totally new light:
“Every six months we have an off-site,” Huang says, leaning back in his chair to tell the story. “And at one, someone said, ‘What are we gonna do when the stock price hits $100?’ That was two splits ago. One person said they’d shave their head, or paint their hair blue, or get a mohawk, or something. And another said they’d get a nipple ring. And then by the time they come around to me, it was already at tattoo level. So I said, ‘Yeah all right, I’ll get a tattoo.’ And then the stock price hit $100.” He pauses and grimaces a little, remembering. “And it hurt so bad.”
$100! NVIDIA's is over $100 once again this week – after a 10-to-1 stock split. What on earth did he do when the stock hit $1,000/share?1
Booming demand for its products has supercharged growth at Nvidia. Over the past three full fiscal years, it has increased sales by an average of 19% and profits by an astonishing 56% annually. In early November the company reported results that once again blew past Wall Street’s estimates, with earnings per share 24% higher than expected. In its past four quarters, it has generated total sales of $9 billion and profits of $2.6 billion.
Such results have made Huang’s company a darling of investors. Nvidia’s share price, just two years ago hovering around $30, was recently over $200. Its market capitalization, at about $130 billion, is approaching that of IBM and McDonald’s.
Last year, NVIDIA's sales tripled. Profit hit $42B. IBM is valued more highly than it was 7 years ago, it now stands at $150B. McDonalds has done even better, now at $180B. NVIDIA? It's now valued at $3.3T.
The NVIDIA founding story took place not in a Silicon Valley garage but at a Silicon Valley Denny's:
“We believed this model of computing could solve problems that general-purpose computing fundamentally couldn’t,” Huang says. “We also observed that video games were simultaneously one of the most computationally challenging problems and would have incredibly high sales volume. Those two conditions don’t happen very often. Video games was our killer app—a flywheel to reach large markets funding huge R&D to solve massive computational problems.”
This is obviously beyond genius in hindsight – as it even was back in 2017 – but that wasn't always the case:
“There were some rough years there,” says Rev Lebaredian, a Hollywood veteran who serves as vice president of Nvidia’s GameWorks and LightSpeed Studios units. “Look at our stock price, say, 10 years ago. The world didn’t quite realize what we were building. What we’re doing is foundational to humanity. This form of computing is too important for it not to be valuable.”
Key to Nvidia’s ability to endure years of market doubt, Lebaredian adds, is Huang—a leader with deep conviction in the potential of graphics technology and an ability to think in 10-year time horizons.
While Huang says he didn’t anticipate how self-driving cars would evolve or when A.I. would arrive, he had utter conviction in the superiority of graphical computing. So he invested to make sure his company was ready to capitalize on the opportunities created by a major shift in tech. “I’ve been talking about the same story for 15 years,” Huang tells me. “I’ve barely had to change my slides.”
Sometimes, "right place, right time" takes a lot of time. But this is the real key of the entire profile:
Huang leans toward me and asks me to pose the questions I had intended to get to earlier, when he was still busy working the rope line. I ask him what he believes is the next major application of artificial intelligence technology—the next billion-dollar opportunity for Nvidia, category competitors like Intel and Qualcomm, and players like Google, Facebook, and Baidu.
“Nobody is the boss,” says Huang, explaining his egalitarian approach to problem-solving. “The project is the boss.”“The thing that I believe is going to be really incredible that’s going to happen next is the ability for artificial intelligence to write artificial intelligence by itself,” he replies.
Given all the "synthetic" AI training going on as we run out of "natural" data to feed into these systems, this is now essentially happening.
My eyes widen at the prospect as Huang continues. “In the future, companies will have an A.I. that is watching every single transaction—every business process—that is happening, all day long,” he says. “Certain transactions or patterns that are being repeated. The process could be very complicated. It could go through sales to engineering, supply chain, logistics, business operations, finance, customer service. And it could be observed that this pattern is happening all the time. As a result of this observation, the artificial intelligence software writes an artificial intelligence software to automate that business process. Because we won’t be able to do it. It’s too complicated.”
By now my head is spinning, lost in a bizarre vision that somehow combines the films Office Space, The Matrix, and Inception.
But Huang is still rolling. “We’re seeing early indications of it now,” he adds. “Generative adversarial networks, or GAN. I think over the next several years we’re going to see a lot of neural networks that develop neural networks. For the next couple of decades, the greatest contribution of A.I. is writing software that humans simply can’t write. Solving the unsolvable problems.”
The future is now.
One more thing: Huang points out in the profile that the name "NVIDIA" stems from the co-founders early use of "NV" or "next version" in their filenames. This lead them to the Latin word "Invidia", which means "Envy".2 I'll say.
1 And actually, the company had another 4-to-1 stock split prior to this one but after this article in July of 2021.
2 Can you imagine if they had gone with "Invidia" to underscore the future rivalry with Intel? Damn.