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How Jensen Works | Founders Podcast | YouTubeToText
YouTube Transcript: How Jensen Works
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Summary
Core Theme
The core theme is an analysis of Jensen Huang's leadership and company-building philosophy at Nvidia, extracted from "The Nvidia Way," focusing on his principles for driving innovation, maintaining a competitive edge, and fostering a culture of relentless improvement.
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About a year ago, I read this book
called The Nvidia Way by Tay Kim. The
book is a company history and a partial
biography of Jensen. The episode that I
made on the book, the first time I read
it covered a lot of Jensen's life and
then how he built Nvidia. That was
episode 376. For this episode, I reread
the book and then I wanted to strip away
everything that wasn't ideas for how
Jensen runs his company. So, how Jensen
works and nothing else. And so what I
did is I made a list of about 20 of
Jensen's ideas that I want to run
through with you. So starting with idea
number one, which I call Professor
Jensen. So a common trait of history's
greatest founders, they spend a lot of
their time teaching their organization.
The best description of this I ever
heard actually comes from Jim Synagol,
the founder of Costco. He says, "If
you're not spending 90% of your time
teaching, you're not doing your job."
The very first sentence of this book is
in another life, Jensen might have been
a teacher. Colleagues call him Professor
Jensen for his ability to explain
complicated concepts on the whiteboard
in a way that just about anyone can
understand. There's another line in this
book that comes later on where the
author take him says, "I would become
his student much like his employees do."
Jensen's teaching is both persuasive and
pervasive. They say that you can talk to
two unrelated Nvidia employees who don't
know each other and they still will say
the same thing. Jensen has this Vulcan
mindmeld with everybody inside of his
company. He spends a great deal of his
time communicating with his employees
and ensures that everyone at the company
knows the overall strategy and vision
which leads us ties into idea number two
which I've already mentioned and that is
whiteboard. Jensen wants the whiteboard
to be used as the primary form of
communication in meetings. Why? Because
it forces employees to demonstrate their
thought process in real time in front of
an audience and there's no hiding.
Jensen wants drawing and talking at a
whiteboard to be the center of every
meeting. Whiteboarding forces people to
be both rigorous and transparent. It
requires them to start from scratch
every time they step up to the board and
therefore to lay out their thinking as
thoroughly and clearly as possible. It
becomes immediately apparent when
someone hasn't thought something
through. At the whiteboard, there is no
place to hide. And I would say there's
this beautiful underlying tie-in to his
overall company building philosophy. And
it's the fact that he just believes in
constant reinvention. So it says the
whiteboard represents both possibility
and ephemererality. the belief that a
successful idea, no matter how
brilliant, must eventually be erased and
a new one must take its place. So this
deep belief in constant reinvention as
mandatory, as not optional, something I
think that Jensen has in common with
Michael Dell, one of my favorite things
that Michael Dell ever said was this. He
said, "I stood up and told the company
that 5 years from now, we will have a
new competitor. And that new competitor
is going to be in every business that we
are in except they're going to be
faster, more efficient, and more
capable. And they're going to put us out
of business. And the only way that we're
going to prevent that is if we become
that company. It is gut-wrenching stuff
to reinvent and reimagine your business,
but if you don't do it, you'll go out of
business. Which leads to idea number
three, which is complacency kills.
Jensen repeats this belief over and over
again throughout the book. Complacency
kills. I would say that Jensen has this
combination of extreme self-confidence
and charisma matched with this inner
voice that says that he sucks. An inner
voice that says nothing he ever does is
good enough. And I I truly believe for a
lot of history's greatest founders that
inner voice is impossible to satisfy.
And there's a great line in the book on
how this manifests. It says at Jensen's
company, innovation is a necessity, not
an option. I don't know what Jensen's
answer would be if you ask him like what
is his biggest fear? I would highly
suspect that complacency taking root
inside of his company is going to be
towards the top of that list. And so
throughout the entire book, he's just
constantly hounding on this. Here's one
example. Jensen resists overly positive
accounts of Nvidia's startup period and
his own missteps. When we were younger,
we sucked at a lot of things.
And video wasn't a great company on day
one. We made it great over 31 years. And
so in addition to rereading this book
for the second time, I also watched
Jensen's commencement speech that he
gave at Caltech. And as with any
commencement speech, they're going to
give you a nice introduction. They're
going to give you like a short
biography. And after the nice
introduction, he begins his speech by
saying, "Thanks for the kind
introduction. It really makes me cringe
listening to all of that. I hate hearing
about myself." In the book, he
summarizes his first 15 years as CEO.
This is what it says. He slipped into
the third person. If Jensen wasn't even
involved in the first 15 years of our
company, I would really like that. He
wasn't proud of how the company was
managed then, or his own naive and lack
of strategic thinking. Jensen runs the
company the way he does because he
believes that Nvidia's worst enemy is
not the competition, but itself. The
worst enemy is the complacency that
grips any successful company. That is
yet another thing that Jensen has in
common with a lot of history's greatest
founders. They all believe that
complacency kills. In fact, Andy Grove,
he had a mantra. His mantra was success
breeds complacency. Complacency breeds
failure. Only the paranoid survive. This
idea of complacency killing your company
just reappears over and over again.
Here's another example. Herb Keller,
founder of Southwest Airlines, he has a
great way to describe this. 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. I read this great profile
on the founder of LVMH, Bernard. It
says, "He abhores complacency so much."
Warren Buffett would repeat this over
and over again in his shareholder
letters. He says, "You need the ability
to fight off the ABCs of business decay.
Arrogance, bureaucracy, and complacency.
When these corporate cancers
metastasize, even the strongest of
companies falter." And so, there's so
many examples in the book of Jensen
fighting back against complacency. One
example early in their history says that
each monthly company meeting, Jensen
would say, "We're 30 days from going out
of business." all the way back in 97. He
talks about making sure that we're
acting with a sense of urgency because
one of the biggest companies in the
world is trying to kill us. He says we
need to kill Intel. Make no mistake,
remember saying this in 97. Make no
mistake, Intel is out to get us and put
us out of business. They have told their
employees and they have internalized
this. They are going to put us out of
business. Our job is to go kill them
before they put us out of business. We
need to kill Intel. I also wanted to
include this in here because obviously
he's a extremely unusual person and he's
at the top right now, but he was like
this for decades. At the time he just
said this, he's telling his company,
"We're going to go kill Intel." At that
time, Intel was 860
times larger than Nvidia in terms of
revenue. Jensen abhores complacency.
Only the paranoid survive. Again, that's
a quote from Andy Grove. What's
interesting about that is Andy Grove
mentored Steve Jobs and Steve Jobs had a
very clear philosophy about what to do
after achieving something great and it's
a way to again avoid complacency taking
root in your company. This is what Steve
said. I think if you do something and it
turns out pretty good then you should
just go do something else wonderful and
not dwell on it for too long. Just
figure out what's next. That is a
mentality that history's greatest
founders have. This is the way I
summarize it. No rearview mirror. No
resting on laurels or sleeping on wins.
Make something great, then do it again.
And one of the things I admire most
about Jensen is this relentless
dedication to improving his craft. In
fact, craft is the word that he uses in
that commencement address that he gave
at Caltech. And Jensen's dedication to
constantly improving his company reminds
me of my friend Kareem, who's the
co-founder and CTO of RAMP. Ramp is the
presenting sponsor of this podcast. And
Kareem is one of the greatest technical
minds working in finance. I spend a lot
of time talking to Kareem and every
single conversation centers around his
obsession with crafting a highquality
product and using the latest technology
to constantly create better experiences
for his customers just like Jensen does.
Kareem is running one of the most
talented technical teams in finance and
they use rapid relentless iteration to
make their product better every day. So
far this year, RAMP has shipped over 300
new features. Ramp is completely
committed to using AI to make a better
experience for their customers and
automate as much of your business's
finances as possible. In fact, Kareem
just wrote this. AI is all I think about
these days. It is our duty to be first
movers and push limits so we can make
the greatest possible product experience
for our customers. Many of the fastest
growing and most innovative companies in
the world are running their business on
RAMP. Make sure you go to ramp.com to
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ramp.com. Number four, Jensen insists on
a flat organization. Jensen has 60
direct reports and he doesn't do
one-on-one meetings. And so he talks
about why he designed a flat
organization. When we were a small
company, we were plenty bureaucratic and
plenty political. Jensen thought about
how he could create an ideal
organization from scratch. He realized
he would choose a much flatter structure
so that employees could act with more
independence. He also saw a flat
structure would weed out lower
performers who were unaccustomed to
thinking for themselves and to acting
without being told what to do. This is
what he said. I wanted to create a
company that naturally attracts amazing
people. A flat structure fights against
the danger of slow decision-making. It
is very interesting that Jensen picked
up on how dangerous slow decision-m is.
Jeff Bezos in one of his biographies
said this. You can drive great people
away by making the speed of decision-m
really slow. Why would great people stay
in an organization where they can't get
things done? Jensen will describe his
flat organization structure in the book
and also a bunch of interviews. Here's
an interview. In one of the interviews,
he actually compared how he runs his
company to what happens and what will
happen when humanity is surrounded by
all these AI agents that are smarter
than they are. And he was talking about
the fact that he gets that question like
what's going to happen if you're
surrounded by all these AIs are doing
things so incredibly well and they're so
much better than you. And he says when I
reflect on that that's already my life.
I have 60 direct reports. The reason why
they're on my e staff is because they're
world class at what they do and they do
it better than I do. Much better than I
do. And I have no trouble interacting
with them. I have no trouble prompt
engineering them. I have no trouble
programming them. And what is
fascinating is he refuses to change his
management philosophy. He constantly
insists on maintaining this flat
structure. Says he did not want to spend
time on career coaching because the
majority of them had already reached the
pinnacle of their careers. Instead, he
focused on providing them collectively
with information from across the
organization as well as with his own
strategic guidance. Jensen had
steadfastly refused to change his
management philosophy, even when new
board members joined and recommended
that he hired a chief operating officer
to reduce his administrative burden.
This part made me laugh. No thanks,
Jensen replied. This is a great way to
make sure everybody knows what's going
on, referring to his direct
communication with the rest of the
company. And so when I'm reading to it,
like I'm pulling all these these quotes
and ideas are not in one section of the
book. They are repeated over and over
again throughout different sections of
different time periods. That's how you
know it's important important to him.
And one of the ways I would summarize
what he's about to say here is like, oh
my god, Jensen made like an F1
organization. Ultimately, my E staff is
something that I have to know how to
work with. The company's organization is
like a race car. It has to be a machine
that the CEO knows how to drive. Jensen
created a company he could manage
directly. That sentence is very
important. Jensen created a company that
he could manage directly. He created a
company building philosophy that fit
him. It doesn't matter what other people
are doing. The root principle is to do
things your way. And so he would repeat
over and over again all the benefits of
keeping his company flat. It turns out
by having a lot of direct reports, not
having one-on ones, we made the company
flat and information travels quickly and
therefore employees are empowered. That
algorithm was wellconceived. You want a
company that's as large as necessary to
do the job, but to be as small as
possible and not bogged down by
overmanagement and process. Now, idea
number five works very well with idea
number four. Public criticism works well
with a flat organization. Jensen does
not believe. You hear this like a common
trope that's repeated. And maybe it
makes sense if your idea is to get along
with people, which I think Jensen is
like the the quality of the work
obviously goes it's like top priority
more than you know other people's
feelings. Jensen doesn't believe in
praise publicly criticized privately. He
criticizes publicly so the entire
organization can learn from a single
person's mistake. Again, this is another
reoccurring theme throughout the book.
That's what he said. Over the years, I
realized what was happening and how
people protect their turf and they
protect their ideas. I created a much
flatter organization. Jensen's anecdote
to the backstabbing, the gaming of
metrics, and to political infighting is
public accountability and if needed,
public embarrassments.
I just say it out loud. He said, I've
got no trouble calling people out. And
so, here's an example of Jensen's public
criticism so the entire company can
learn from the mistake. And I think it
also ties together with that constant
fight against complacency. Jensen was
furious at the poor planning and
execution of the chip. He called out its
engineers at an all company meeting. Is
this the piece of that you intended
to build? He said, "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, "Hey, we have a
design issue here." Jensen's criticism
didn't end after a single meeting. He
invited an executive from Best Buy to
speak to his employees. The executive
spent much of the session talking about
the NV30's poor performance and customer
complaints. Jensen agreed. He's right.
This is crap. Jensen reflected on the
NV30s failure. Ultimately, it was his
responsibility to ensure that Nvidia's
teams collaborated effectively no matter
how large the company got. Again, what I
think is remarkable about reading these
books about, you know, you obviously
know this, like I'm obsessed with people
that do things for a long time. Jensen
is the longest running founder CEO of a
tech company in the world. And the
result of hopefully this podcast and
obviously the book is we get to benefit
from Jensen's pain and experience. All
of these ideas that you and I are
talking about today come from over three
decades of him building his company into
one of the best companies in the world.
Now the way he thinks about this, it's
very similar because I I do think this
is one of the most unique ideas that you
will hear and it reminded me of this
conversation. I was watching this
interview with uh Johnny IV one time and
this is after Steve Jobs passed away. He
talked about one of the most important
lessons that Steve told him and it
sounds exactly Jensen's not trying to
hurt people's feelings just to hurt
their feelings. He's trying to refine
the character of his company. Listen to
Johnny Iive talk about this. I remember
asking Steve about this. I said it could
be perceived that his critique of a
piece of work and that in his critique
of a piece of work he was a little harsh
and we had been putting our heart and
soul into this and so I asked him could
we not moderate the things we said a
little bit and he asked why and I said
because I care about the team and then
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 other people. And
Johnny replied, "And I was terribly
cross because I knew he was right."
Going back to why Jensen does this. He
offers employees direct criticism in
large meetings so more people can learn
from a single mistake. I give feedback
in front of everybody. Feedback is
learning. For what reason are you the
only person who should learn from this?
We should all learn from that opportunity.
opportunity.
I don't take people aside. We are not
optimizing for not embarrassing
somebody. We're optimizing for the
company learning from our mistakes.
Idea number six, tortured into
greatness. A habit of self-criticism.
Jensen is not just publicly criticizing
others. He does this to himself. He
actually has a great line about this. He
calls it tortured into greatness. And so
I mentioned earlier that Jensen has this
combination of extreme self-confidence
and charisma matched with this inner
voice that says, you know, he sucks. An
inner voice that says nothing ever that
nothing he ever does is going to be good
enough. And what you learn by reading
this book is that he admittedly tortures
his team into greatness. In fact, he has
a line about this. He says, "I don't
like giving up on people. I'd rather
torture them into greatness." And it's
clear from that that he sees this as a
guard against complacency. He feels
praise is a distraction and the
deadliest sin is looking back on past
accomplishments. But after you read this
book, you realize that he has tortured
himself into greatness as well. That it
started with him. And so there's this
great story in the book about this habit
of self-criticism that he has. And it's
told by an executive at the company. He
says, "I'll never forget this. We had
done a fantastic job. We just blew the
doors off the quarter." And Jensen stood
up in front of us and said,"I look in
the mirror every morning and say, "You
suck." The executive was struck by how
someone so manifestally successful could
still think in such terms. You and I
have seen that idea over and over and
over again. And I think it's tied again.
He talks about one of my favorite maybe
my all-time favorite maximum from the
history of entrepreneurship is
excellence is the capacity to take pain.
I've never heard Jensen speak in that
exact terms, but it's the same idea. I'm
going to give you two examples. I'm
going to pull two quotes that he said.
One is from a speech at Caltech, which I
referenced earlier, and another is a
speech at Stanford. This is what he said
at Caltech. This is my favorite thing he
said in the entire commencement address.
I hope you will see setbacks as new
opportunities. Your pain and suffering
will strengthen your character, your
resilience, and agility, and they are
the ultimate superpowers. This is my
really my favorite part of my favorite
part of all the things that I value most
about my abilities, intelligence is not
top of that list. My ability to endure
pain and suffering. My ability to work
on something for a very very long period
of time. My ability to handle setbacks
and see the opportunity just around the
corner. I consider to be my superpowers
and I hope they're yours. Says something
very similar to that when he gave a talk
at Stanford. I think one of the great
advantages is I have very low
expectations. Most of the Stanford
graduates have very high expectations.
People with high expectations have very
low resilience. And resilience matters
in success. I don't know how to teach it
to you except that I hope suffering
happens to you. I was fortunate that I
had plenty of opportunities for setbacks
and suffering. To this day, I use the
phrase pain and suffering inside of our
company with great glee. And I mean that
in a happy way because you want to
refine the character of your company.
Now, let me pause there. I think that's
exactly what a lot of Jensen's ideas do.
They refine the character of your
company. So let's go back to that. I
mean that in a happy way because you
want to refine the character of their
company. You want greatness out of them.
Greatness is not intelligence. Greatness
comes from character. And character is
not formed out of smart people.
Character is formed out of people who
suffered. I wish upon you ample doses of
pain and suffering. Idea number seven,
speed of light. Not only has he derived
really great ideas from three, you know,
over three decades of experience, but
he's good at naming them and branding
his ideas. So Jensen's speed of light
idea is basically, hey, the only
benchmark that we're going to judge how
fast we move will be the absolute
maximum speed possible. What does that
mean? Jensen insists that all employees
work at the speed of light. He wants
their work to be contained only by the
laws of physics. Sounds like Elon. Each
project must be broken down into
component tasks and each task must have
a target time to completion that assumes
no delays, no cues and no downtime. This
sets the theoretical maximum, the speed
of light that it is physically
impossible to exceed. We will then judge
ourselves against the speed of light,
not what we used to do or what other
companies are doing. As he saw it, he
needed to prevent the kind of internal
rot that he observed at other companies.
Again, what's that reference to? That's
a reference to idea number three.
Complacency kills. Jensen would not let
his employees think about what was
likely to work or what they could
reasonably achieve. He only cared about
what would be possible with the maximum
amount of effort and minimum amount of
wasted time. Minimum amount of wasted
time. Before we get into idea number
eight, there is another tool and
technology that I need to tell you about
that does exactly that. And RAMP
actually uses this tool. It is Vanta. I
just told you earlier how RAMP has the
best technical talent in their industry.
And knowing that the team at RAMP trusts
Vanta was a huge positive signal for me.
And then when I talked to Vant's
founder, Christina, it became obvious
why Ramp uses Vanta because Vanta's
value prop is very clear. Vanta helps
your company prove that you're secure so
more customers will use your product or
service. Many companies won't sign
contracts unless you're certified and
this is causing you to lose out on
sales. That is why the average Vanta
customer reports a 526% return on
investment after becoming a Vanta
customer. Vanta helps your company
automate compliance, security, and
trust. Vanta helps your company pass
audits without tons of manual work. So,
not only do you make more money with
Vanta, but you save more time. Manual
compliance is slow and painful. The best
companies and the best founders will not
tolerate wasting valuable company time
doing something with labor when
technology can help you move faster,
maybe even move at the speed of light
even. And Vanta helps you do just that.
Vanta will help you win trust, close
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Idea number eight. This is a combination
of reoccurring themes as you see
throughout the book. Jensen is
unapologetically extreme. He is extreme
in all things. He works all the hours,
and he insists that no one will outwork
him. Jensen is so relentless that he
will grill you at the urinal. It's one
of the the funniest uh stories in the
book. No place in in company
headquarters was safe from a driveby
grilling from Jensen. Kenneth Hurley was
at a urinal when Jensen walked up to the
one next to him.
I'm not the kind of guy who likes to
talk in the bathroom, Hurley said.
Jensen had other ideas. Hey, what's up?
He asked. Hurley replied with not much,
which earned him a sidelong glance from
Jensen. Hurley panicked, thinking, "I'm
going to get fired because he thinks I'm
not doing anything." He proceeded to
list 20 things he was working on.
"Okay," Jensen replied, satisfied with
the answer. So, Jensen is described as
extremely hardworking by everybody that
runs into him. And he also describes
himself that way. He says, "There may be
people that are smarter than me, but no
one is ever going to work harder than
me." This is very interesting. And I was
reading the way that Jensen thinks about
his own work ethic and he has a great a
bunch of great lines that now me and my
friends have also used from the first
time uh the first episode the first time
we read the book. But for some reason
when I got this to this part the second
time I was reading it it there's this
idea that I thought was fascinating
where like Larry Ellison likes having an
enemy. He says that he would pick an
enemy and then he would use that to push
himself and his company. And one enemy
that he picked was Bill Gates. in the
whole thing that Larry Larry's point was
like, you want a a foe worthy of your
steel. You want a formidable enemy. And
so in the middle of this war that's
going on, this battle between Ellison
and Gates, Ellison gives this interview
and he talks about he understands Bill
Gates very well. And this is how he
described Bill Gates. He says there are
a lot of people in the world smarter
than Bill Gates. There are very few
people in the world that have his focus
and endurance. He is utterly relentless.
He is indehaticable. He is absolutely
focused and he wants it all. Barry
Diller said that Bill is young and he's
mean and he's not tired. That is a high
compliment coming from Barry Diller.
That's like Jensen. Very few people that
I've ever come across have Jensen's
focus and endurance. And he doesn't hide
this. He is unapologetically extreme.
Jensen said that he works all the hours
and any hour that he is not working, he
is thinking about work and he has a very
low tolerance for anybody complaining
about work. So there's a bunch of
employees that were griping about long
work hours and 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.
To this day, he has not deviated from
that view. He also was unapologetically
extreme in his desire and his need, his
deep need to be number one. The first
time we came in second place, Jensen
sternly told me, "Second place is the
first loser." I realized I'm working for
a boss who believes that we have to win
at everything. Jensen's guidance was
direct. Just go win. The idea was
whoever could run faster would get all
of the land. And Jensen is extreme in
all things, including recruiting. He was
trying to recruit the chief engineer
from Silicon Graphics. So he invites the
guy out to lunch and he goes for again
his direct approach which I think is
probably the only approach I think
direct is the only way he approaches
anything and he tells him he goes,
"John, you should really think about
coming to our company because ultimately
I'm going to put SGI out of business."
He is absolutely relentless about work.
This is what 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. That line me
and my friends repeat to each other.
Working is relaxing for me. And then
just one more line about him being
unapologetically extreme. As Jensen put
it when looking directly into my eyes,
the secret to his company's success is
nothing more than sheer will.
Idea number nine, Jensen's top five
email idea. It's a genius way to get
unfiltered information from the entire
company. As companies grow, as they
become more successful, bad leaders wind
up surrounding themselves with sickop
fans or executives who are not
incentivized to tell you the truth. In
fact, I just started doing this new show
where I actually sit down and talk to
extreme winners in business. It's called
David Sunra. And the very first episode
was with my friend Daniel Ek, who is the
founder of Spotify. And you got to
listen to it if you haven't listened to
it yet. He because he tells a hilarious
story about this. And this story
happened years ago, but one of Daniel's
employees who now he was the head of
product at Spotify. His name's Gustaf,
but now he's one of the co-CEOs. After a
product meeting, he pulled Daniel aside
and he's like, "Hey, you really suck at
this." And Daniel had a very human, he
tells the story, he had a very human
reaction where he goes home, he's like,
"Oh my god, I have to fire this guy."
And then he thought about it more and
more and when his emotions calm down,
he's like, "Oh my god, Gustaf is right."
And so Daniel's point is that you want
people to tell you the truth. Well,
Jensen has tens of thousands employees.
How is he going to make sure that he
gets unfiltered true information from
the entire company? He does this with a
top five his top five email idea. So,
Sister Jensen asked employees at every
level of the organization to send an
email that detailed the top five things
they were working on and what they had
recently observed in their markets,
including customer pain points,
competitor activities, technology
developments, and the potential for
project delays. The ideal top five email
is five bullet points where the first
word is an action word. It has to be
something like finalize, build, or
secure. To make it easier for himself to
filter these emails, Jensen had each
department tag them by topic in the
subject line. That way, if he wanted to
get all his recent emails on, say,
hyperscaler accounts, he could easily
find them through a keyword search. The
top five emails became a crucial
feedback channel for Jensen. He would
tell his employees when asked why he
liked the top five process. It's easy to
pick up on the strong signals, but I
want to intercept them when they are
weak. Every day, he would read about a
hundred top five emails to get a
snapshot of what was happening within
the company. There's another article uh
written by the Wall Street Journal that
I read about this. It says, "Employees
have been sending notes known as T5Ts or
top five things for decades, and Jensen
has been reading them. The top five
emails have become his preferred method
of flattening hierarchy. Strategy isn't
what I say, it's what they do," Jensen
said. So, it's really important that I
understand what everybody else is doing.
And one way he does that is by reading
these top five emails. He doesn't want
information that's already made its way
through layers of management. What he
wants is information from the edge. That
is a direct quote from him. He wants
information from the edge. He's looking
for the next 0 billion market, a
frontier that hasn't been explored
because it barely exists, but could one
day be a thing. One of the weak signals
that he intercepted years ago was a
wonky but exciting development in
machine learning that kept popping up in
the emails. Jensen decided that Nvidia
needed to invest more in tools for
accelerating workloads on its GPUs.
These days, those GPUs are the brains
for artificial intelligence. Reading
these emails is the thing that he did
for fun. He says, "I drink a scotch and
I do emails." Idea number 10, Jensen's
communication style. It is blunt,
concise, and direct. Jensen believes in
direct, blunt communication. Jensen's
emails are short and sweet like a ha
coup. Napoleon was the exact same way.
There's a great quote from this
biography Napoleon I read. Long orders
which require much time to prepare, to
read and to understand are the enemies
of speed. Napoleon could issue orders of
a few sentences which clearly expressed
his intentions and required little time
to issue and to understand. This is yet
another thing that Jensen had in common
with Steve Jobs. There's this great book
called Creative Selection which was
written by a person that demoed directly
to Steve. I covered the book all the way
back on episode 281. Here's the quote.
Steve was always easy to understand. He
would either approve a demo or he would
request to see something different next
time. Whenever Steve reviewed a demo, he
would say, often with highly detailed
specificity, what he wanted to happen
next. He was always trying to ensure the
products were as intuitive and
straightforward as possible. And he was
willing to invest his own time, effort,
and influence to see that they were. I
chuckle to myself over how much time
I've spent thinking about this iPad demo
and how much Steve taught me in one
meeting where he spoke just four
sentences. Think about that. Get your
point across and make it memorable in
four sentences. That is worldclass
communication. Idea number 11, Lua. When
an employee starts rambling, Jensen will
say Lua. Lua is a warning sign that
Jensen's patience is growing thin. When
he says it, Jensen wants the employee to
stop and do three things. Number one,
listen to the question. Number two,
understand the question. Number three,
answer the question. Everyone who works
for Jensen has heard Lua.
And so, just like Steve Jobs, Jensen is
easy to understand. And when a person
and their ideas are easy to understand,
their ideas are easy to spread. The best
storytellers know this and you'll find a
lot of the best founders are also great
storytellers. The best story wins and
that is exactly what my partner
collateral helps you do. Don Valentine
who's the founder of Sequoia said one of
my favorite things ever. He says the art
of storytelling is critically important.
Most of the entrepreneurs who come to
talk to us can't tell a story. Learning
to tell a story is incredibly important
because that's how the money works. The
money flows as a function of the
stories. And that is exactly what
Collateral does. Collateral can
transform your complex ideas into
compelling narratives. I need you to
remember their website, which is easy to
remember because it's collateral.com.
Collateral crafts institutional-grade
marketing collateral. And they do this
for private equity, private credit, real
estate, venture capital, family offices,
hedge funds, oil and gas companies, all
kinds of corporations. There are big
companies now using collateral because
they discovered it from this podcast. I
have friends that have used collateral
for their marketing collateral that have
raised billions of dollars of capital
and have made hundreds of millions of
dollars. I will leave a link down below,
but make sure you go to collateral.com
and improve the way that your company
tells its own story. Storytelling is one
of the highest forms of leverage and you
should invest heavily in it. And you can
do that by going to collateral.com.
Number 12, the mission is the boss and
pilot in command. Jensen tells his
employees that the ultimate boss is the
mission itself. This is what he said.
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.
organization.
Under the mission is the boss
philosophy, Jensen would start every new
project by designating a leader, which
he calls a pilot in command. That pilot
in command will report directly to
Jensen. We always have a pilot in
command for every project. Whenever
Jensen talks about any project, he
always wants the name. Nobody can hide
behind such and such team is working on
that. Everything has to have a person's
name attached. The pilot in command is
accountable. I just did this episode,
episode 399 on how Elon works. In that
episode, it talks about Elon's algorithm
that has five commandments that he uses
and applies relentlessly and repeats it
over and over again. In the first
commandment, it says this, "Question
every requirement. Each should come with
the name of the person who made it. You
should never accept that a requirement
came from a department such as the legal
department or the safety department. You
need to know the name of the real person
who made that requirement. In other
words, find out who is accountable.
Jensen organized his employees into
groups centralized by function. So like
sales, engineering, operations, and so
on. They were treated as a general pool
of talent and not divided by business
units or divisions. We take the people
that we have and we're able to redirect
them into a new mission. That is mission
is the boss and pilot in command. Number
13. Strategy is not words. Strategy is
action. This is what Jensen said.
Strategy is not words. Strategy is
actions. We don't do a periodic planning
system. The reason for that is because
the world is a living breathing thing.
We just plan continuously. There's no
five-year plan. So strategy is not
words. Strategy is action. That's one of
my favorite lines in the book. It
reminds me very much of Henry Singleton.
So Henry Singleton had this very
distinct philosophy about planning. I
discovered Henry Singleton because
Charlie Mer said that Henry Singleton
was the smartest person he ever met. And
Warren Buffett said that it's a crime
that business schools don't study
Singleton. And Singleton famously said,
"I know a lot of people have very
definitive plans, but we're subject to a
great number of outside influences on
our businesses and most of them can't be
predicted. So my plan is to stay
flexible. My only plan is to keep coming
to work every day. I like to steer the
boat each day rather than plan way into
the future. And so Jensen has that in
common with Singleton. He also has
something in common with Michael
Bloomberg. That line where Jensen says,
"There's no fiveyear plan. We just plan
continuously. There's no five-year
plan." That is exactly the same line of
thinking that Michael Bloomberg used to
build his company. In Bloomberg's
autobiography, he wrote this. Life, I
found, works the following way. Daily,
you're presented with many small and
surprising opportunities. To succeed,
you must string together many small
incremental advances rather than
counting on hitting the lottery jackpot
once. As a practical matter, constantly
enhance your skills, put in as many
hours as possible, and make tactical
plans for the next few steps. Then,
based on what actually occurs, look one
more move ahead and adjust the plan.
Don't devise a five-year plan or a great
leap forward. Central planning didn't
work for Stalin or Mao, and it won't
work for an entrepreneur either. Number
14, ship the whole cow. The innovator's
dilemma is one of Jensen's favorite
books. One of the things that he learned
from the book is that the threat often
comes from the low end of the market.
So, this is what he said. We build
Ferraris. All of our chips were designed
for the high-end, the best performance.
I don't want to let someone come in and
be the price leader, lock me out of the
bottom, and then climb their way to the
top. And so, Jensen saw that they could
stop throwing away parts that failed
quality tests. These parts were not
suitable for the company's Ferrari grade
chips, but they were otherwise
functional at lower speeds. Nvidia could
repackage them into a less capable and
cheaper version of the company's
mainline products. This looked like a
clear opportunity to make something out
of nothing. rejected parts were
generating no revenue. Nvidia could
create a whole new derivative product
line that could turn a profit without
the expensive and time-consuming process
of research and development. That line
would serve as defense against
competitors for whom the lowcost chip
was the main product. Nvidia could
easily afford to price its chips down so
much that its competitors would be
forced to sell at a loss.
This strategy was dubbed ship the whole
cow, a reference to how butchers find
ways to use almost every part of the
carcass, not just the prime cuts. Number
15, go to school on everybody. There's a
line in a biography of Jeff Bezos that
says, "Jeff went to school on
everybody." Jensen goes to school on
everybody. There's a story in the book
where he shows up at this conference.
It's an academic conference where
machine learning and neuroscience
experts are presenting their latest
findings. He runs into one of his
employees who knew that Jensen wasn't
scheduled to speak and then asked him,
"What are you doing at the conference?"
Jensen replied, "I'm here to learn."
Jensen had not assigned someone else to
attend and take notes on his behalf. He
had shown up himself so he could absorb
the recent developments in artificial
intelligence. He wanted to be deeply
involved. There's a great story. So
Mitch Rails is the co-founder of
Danahir. Danahir is this like $150
billion company. And a friend of mine
was at this like small intimate
conference with Mitch recently and he
was blown away by how focused Mitch was.
He says that the entire time that Mitch
Rails was there. He was listening to the
speakers and he was taking pages of
notes. And my friend had this thought
which he relayed to me where he's like,
"Mitch, you're more successful than
anybody else here. Why are you taking
notes?" And when my friend told me that
story, I go, "No, no, no, wrong answer.
There's a great line in Bill Walsh's
book, The Score Takes Care of Itself,
that I think is very important and
related to this." And Bill Walsh wrote,
"Champions behave like champions before
they're champions." I guarantee you that
Mitch didn't build $150 billion company
and then start taking notes. I guarantee
you that Mitch was doing this way before
he was quote unquote the most successful
person in the room. There's a million
examples of Jensen just being an
absolute learning machine in the book
and consuming in enormous amounts of
information that will help his company.
You can distill down to that maximum
that the good ones know more. And what I
loved about reading this book is you'll
realize that Jensen is in the details.
He's paying attention to things that
surprise everyone else around him. Let
me give you an example from the book.
Peter Young was first introduced to
Jensen at a party for new hires. Jensen
already knew who he was. You're Peter
Young, Jensen said. You've been here for
about a year before you were at Sony
PlayStation and 3D FX prior to that. He
had a similar recall of biographical
details for all 50 attendees of the
party. There is a great quote from Walt
Disney himself that says, "If we lose
the details, we lose it all." Jensen is
in the details. Jensen manages his
company directly involving himself
deeply in product decisions, sales
negotiations, investor relations, and
more. Number 16, we need to create the
market, not fight over share of an
existing market. Jensen believed that
Nvidia was nothing like any other
company that had ever existed. Jensen
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. Jensen believes we
need to bring unique values to the
marketplace and he feels that by doing
work that is cutting edge and
revolutionary, it allows the company to
attract the best people. We do not have
a culture of just going after market
share. We would rather create the
market. And there's many examples of him
doing this in the book. In that
commencement address at Caltech, he
mentioned their move into robotics and
he explained the decision-m behind it.
He says, "We decided to build something
where we are sure there are no
customers." And everybody laughed and he
was serious. He's like, "This is why
it's important. Where there are no
customers, there are also no
competitors. That is a 0 billion dollar market.
market.
something that barely exists, maybe
doesn't exist at all, but one day will
be giant. And I think Edwin Lan is a
good comparison here. You know, I'm
obsessed with Edwin Land. He's one of my
personal heroes. He was Steve Jobs
personal hero. And if you think about
it, this is exactly the strategy Edwin
Lan had. When Edwin Lan targeted the
instant photography market, there were
no customers and therefore no
competitors because he invented the
market. And by inventing the market,
that allowed Edwin Lan to build a
monopoly. And one advantage of Edmund
Lan's approach and of Jensen's approach
is pricing power. Here's an example from
the book. Jensen understood that gamers
who buy Nvidia's cards are willing to
pay for performance. As long as they
look at the screen and see something
radically different, they're going to
buy it. He made the same case to
Nvidia's investors. He said that Nvidia
would be a unique semiconductor company
where products average selling prices
rise. We are going to be the only guy
where ASPs go up over time when everyone
else's ASPs will go down. He said number
17. I will choke you with gold. I found
a story in one of the books I read on
David Ogrevi where he talks about that
the Medici family was trying to persuade
this sculptor to move to Florence and to
enter into their service. And one member
of the Medici family is writing this
sculptor a letter laying out why he
should come to Florence. And he
concludes this letter with this
following line. Come, I will choke you
with gold.
Jensen wants to work with the best
people. And to do so, Jensen is willing
to choke you with gold. Jensen looks at
his stock like his blood. He pours over
the stock allocation reports. Managers
can refer an employee for special
consideration to senior executives.
Jensen will then review this list of top
contributors and give out special
one-off grants that also vest over a
4-year period. When the grant is
approved, the employee will receive an
email. The subject line says, "Special
grant authorizing the RSU grant in
recognition of your extraordinary
contributions with a clear description
of the rationale behind the award."
Jensen can also reach down into the
organization at any time and award 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. It
is yet another sign of his interest in
every aspect and level of his company.
Number 18, work on your highest priority
first. This is what Jensen says. I have
a very clear priority list and I start
from the highest priority work first.
Before I even get to work, my day is
already a success. I've already
completed my most important work and can
dedicate my day to helping others.
Ruthlessly prioritize your time is what
he's saying there. Focus on the most
important activity at all times. Larry
Ellison shares this belief that that you
should only focus relentlessly on your
most important goal. Here's a quote from
a biography of Larry Ellison that I
read. Ellison made no apologies for his
quirks. If anything, he seemed amused at
Jenny's concern about his time
management. Jenny was his longtime
assistant. Jenny and I approach things
very differently, Ellison said. Jenny
feels if there are a thousand things
you're doing, you have to do all
thousand of them. My view is different.
My view is that there are only a handful
of things that are really important and
you should devote all your time to those
and forget everything else. If you try
to do all thousand things, answer all
thousand phone calls, you will dilute
your efforts in those areas that are
really essential. Jensen would tell
others to focus on the most important
activity at all times and not be
beholden to a schedule. And then related
to 18 is finally number 19. Swarm your
greatest opportunity. Obviously, a huge
part of this book is about the fact that
Jensen recognized the AI trend early,
invested heavily, and maneuvered his
company into the position to take
advantage of it better than anyone else
in the world. And there's probably 80
pages on this swarming of his greatest
opportunity, this march toward this
unlimited AI opportunity. And so I just
pulled out a few examples, a few
decisions he made that put him in a
position so he could swarm the greatest
opportunity of his life. And I think one
of the most important lessons is this
plays out over two decades. And he's
doing this when people tell him not to.
He does this at a great expense. And he
does this over a long period of time.
So, the idea that turns Nvidia into a
multi-trillion dollar company actually
came from their customers coming up with
unique ways to use their product. The
first reference to using GPUs for
non-graphical purposes was in a 2002
research paper on using computers to
simulate the movement of clouds. And he
picks up on this really early. An
increasing number of computer science
researchers were using GPUs for
non-graphics applications. They reported
significant speed improvements over
computers that relied on CPU power only.
In other words, the researchers had
hacked their GPUs. Jensen sees this as a
way to expand the market for his
products and he works on making it
easier for this to happen. And so number
one, he hires the guy who discovered
this. And then number two, he makes it a
priority to make it easier for people
like him to find more non-graphical
applications for GPUs. That is a
principle and idea that you and I have
seen over and over again in these books
that anytime you make something easier
for people to do, the market expands.
Anytime you make something easier for
people to do, the market expands. The
guy he hires, his last name is Harris,
also coined the phrase GPGPU, general
purpose computing on GPUs to describe
this phenomenon that he was witnessing.
Jensen was quick to grasp that GPGPU had
the potential to open up the market for
GPUs far beyond mere computer graphics.
And so in order to generate more demand,
Jensen decides they have to make it so
their cards are easier to program. This
is when they create the new programming
model called CUDA, which stands for
compute unified device architecture.
CUDA made it possible and easier for
scientists and engineers to leverage the
GPU's computing power. Why did Jensen
want to do this? Jensen believed that it
would expand Nvidia's reach into every
corner of the tech industry. Remember
what Jensen said earlier? all the things
that I value most about my abilities.
Intelligence is not at the top of the
list. One of the things that he values
most is the ability to work on something
for a very very long period of time.
That is evident in this book 2002 the
first reference to using GPUs for
non-graphical purposes. What I'm about
to read to you is happening in 2007 and
2008. This is again about the importance
of doing something for a long time. So
much of entrepreneurial culture now is
start, scale, sell. And if you want to
be great, you build, retain, and own.
You find your last company. The company
you can work on for decades, just like
Jensen did. Jensen's decision here to go
all in on this will create trillions of
value for the company in the coming
decades. Imagine if he quit or sold
here. So they call this the era of the
GPU. The era of the GPU would create so
many opportunities that that Jensen saw
it 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. He is swarming his
greatest opportunity. And it is Jensen's
way. He wants to push it everywhere. He
wants to make it a foundational
technology. And if Jensen has
conviction, he will invest heavily over
the long term. Jensen understood the
importance of saturating the market with
it. The more people who had CUDA in
their hands, the faster technology would
establish itself as a standard. we
should push this everywhere and make it
a foundational technology. This move was
extremely expensive. Remember this
happened in 2007208. The company
invested so much in converting its GPUs
for CUDA compatibility that its gross
margin fell from 45 to 35%. At the same
time it's increasing its spending on
CUDA, the global financial crisis
destroyed consumer demand and Nvidia's
stock fell by more than 80%. Jensen
believed so strongly in the market
potential that he remained committed to
the course he had chosen even as his
investors demanded a strategic course
correction. Swarm your greatest
opportunity. I believe in CUDA Jensen
said we are 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. So what does he do?
There's another idea embedded in this
idea. Educate the market. This is also
not a new idea. If developers didn't yet
know what to do with CUDA, Nvidia would
teach them. Nvidia's chief scientist
began offering schools CUDA capable
machines if they committed to teaching a
class on the subject. He gave more than
100 talks over the course of a year. He
taught a class himself at the University
of Illinois. There was no textbook, so
he wrote one. The textbook sold tens of
thousands of copies, which translated
into several languages and was used by
hundreds of schools. It was a major
inflection point in attracting attention
and talent to CUDA. What they understood
is that we need to educate the market,
not a new idea. Intel did the exact same
thing when they invented the
microprocessor. Intel discovered that
the mark marketplace, this is from a
company history of Intel that I read for
the first time 9 years ago. Intel
discovered that the marketplace wasn't
just confused by the concept of the
microprocessor. The market had to be
educated. At one point, Intel was
conducting more seminar seminars and
workshops on how to use the
microprocessor than the local junior
college total catalog of courses. Bob
noise, Gordon Moore, and Andy Grove
became part of a traveling educational
road show. Everyone who could walk and
talk became educators. It worked. Jensen
was focused on how much of an
opportunity GPU powered deep learning
would be for Nvidia. There was
considerable debate within his executive
team on the topic. Several of Jensen's
key lieutenants were against investing
more in deep learning in the belief that
it was a passing fad. Jensen overruled
them. Deep learning is going to be
really big. We should go all in on it.
Swarm your greatest opportunity.
Everything that you and I have been
talking about today and highlighting and
studying has led up to this point right now.
now.
Jensen had built a company in the image
of his own focused yet far-ranging mind.
Now he would pull every lever at his
disposal to navigate Invidia to the very
center of the tech industry as the
company whose hardware could bring about
the AI powered future. It was definitely
not a single day when the entire company
changed forever. It was a period where
Jensen was increasingly interested and
started asking increasingly deep
questions and then started encouraging
the company to swarm to machine
learning. Jensen announced the change in
strategic focus in a company all hands
meeting. We need to consider this work
our highest priority. AI was going to be
more important than anything else they
could possibly be doing. Within a
decade, Jensen was sure that AI would
create quote the largest total
adjustable market expansion of software
and hardware that we've seen in decades.
It is hard to describe Jensen's actions
as anything other than the construction
of a competitive moat. Interesting to
know that Jensen doesn't like the term
moat. He prefers strong self-reinforcing
network. My guess is because believing
you have a moat can lead to complacency
and complacency kills. Nvidia made a
generalpurpose GPU that represented the
first major leap forward in
computational acceleration since the
invention of the CPU. The GPU's
programmable layer, CUDA, was easy to
use and opened up a wide range of
functions across scientific, technical,
and industrial sectors. As more people
learn CUDA, the demand for GPUs increased.
increased.
Jensen's strategic brilliance ensured
that competitors would have difficulty
breaking into a market that Nvidia had
created. Swarm your greatest opportunity.
opportunity.
And I started this episode with the
first sentence in the book that in
another life Jensen might have been a
teacher. Here is the last paragraph in
the book. There are no shortcuts. The
best way to be successful is to take the
more difficult route. And the best
teacher of all is adversity. It is why
Jensen still keeps going at a pace that
would see most other people burn out. It
is why Jensen still says to this day and
without any trace of hesitation or irony
or selfdoubt.
I love Nvidia
and hopefully some of these ideas help
you build something you love too. I have
made something new that I love and I'm
already obsessed with. I started a new
podcast called David Center where I have
conversations with extreme winners in
business. The first two episodes are
already out. My conversation with Daniel
Ek, the founder of Spotify, and my
conversation with Michael Dell. Both
Daniel and Michael are big fans of
Founders. And so when I reached out to
both of them, they immediately agreed
when I asked them for help to launch the
new show. And so I'm asking you for
help. I need a favor from you. Make sure
you go follow the new show. It is on a
separate feed. So whatever app you're
listening to this right now, Spotify,
YouTube, whatever it is, search for
David Center and follow the show there,
please. Thank you very much and I'll
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