0:01 About a year ago, I read this book
0:03 called The Nvidia Way by Tay Kim. The
0:05 book is a company history and a partial
0:07 biography of Jensen. The episode that I
0:09 made on the book, the first time I read
0:11 it covered a lot of Jensen's life and
0:13 then how he built Nvidia. That was
0:16 episode 376. For this episode, I reread
0:19 the book and then I wanted to strip away
0:22 everything that wasn't ideas for how
0:24 Jensen runs his company. So, how Jensen
0:27 works and nothing else. And so what I
0:29 did is I made a list of about 20 of
0:32 Jensen's ideas that I want to run
0:34 through with you. So starting with idea
0:37 number one, which I call Professor
0:39 Jensen. So a common trait of history's
0:42 greatest founders, they spend a lot of
0:45 their time teaching their organization.
0:46 The best description of this I ever
0:47 heard actually comes from Jim Synagol,
0:49 the founder of Costco. He says, "If
0:51 you're not spending 90% of your time
0:54 teaching, you're not doing your job."
0:57 The very first sentence of this book is
1:00 in another life, Jensen might have been
1:02 a teacher. Colleagues call him Professor
1:04 Jensen for his ability to explain
1:06 complicated concepts on the whiteboard
1:09 in a way that just about anyone can
1:11 understand. There's another line in this
1:13 book that comes later on where the
1:14 author take him says, "I would become
1:18 his student much like his employees do."
1:21 Jensen's teaching is both persuasive and
1:23 pervasive. They say that you can talk to
1:26 two unrelated Nvidia employees who don't
1:28 know each other and they still will say
1:32 the same thing. Jensen has this Vulcan
1:34 mindmeld with everybody inside of his
1:36 company. He spends a great deal of his
1:38 time communicating with his employees
1:40 and ensures that everyone at the company
1:42 knows the overall strategy and vision
1:45 which leads us ties into idea number two
1:47 which I've already mentioned and that is
1:49 whiteboard. Jensen wants the whiteboard
1:51 to be used as the primary form of
1:54 communication in meetings. Why? Because
1:56 it forces employees to demonstrate their
1:59 thought process in real time in front of
2:01 an audience and there's no hiding.
2:04 Jensen wants drawing and talking at a
2:05 whiteboard to be the center of every
2:07 meeting. Whiteboarding forces people to
2:10 be both rigorous and transparent. It
2:11 requires them to start from scratch
2:14 every time they step up to the board and
2:15 therefore to lay out their thinking as
2:18 thoroughly and clearly as possible. It
2:21 becomes immediately apparent when
2:22 someone hasn't thought something
2:25 through. At the whiteboard, there is no
2:27 place to hide. And I would say there's
2:29 this beautiful underlying tie-in to his
2:31 overall company building philosophy. And
2:32 it's the fact that he just believes in
2:34 constant reinvention. So it says the
2:36 whiteboard represents both possibility
2:39 and ephemererality. the belief that a
2:41 successful idea, no matter how
2:44 brilliant, must eventually be erased and
2:48 a new one must take its place. So this
2:51 deep belief in constant reinvention as
2:53 mandatory, as not optional, something I
2:54 think that Jensen has in common with
2:56 Michael Dell, one of my favorite things
2:57 that Michael Dell ever said was this. He
2:59 said, "I stood up and told the company
3:01 that 5 years from now, we will have a
3:03 new competitor. And that new competitor
3:05 is going to be in every business that we
3:07 are in except they're going to be
3:09 faster, more efficient, and more
3:11 capable. And they're going to put us out
3:14 of business. And the only way that we're
3:17 going to prevent that is if we become
3:20 that company. It is gut-wrenching stuff
3:23 to reinvent and reimagine your business,
3:25 but if you don't do it, you'll go out of
3:28 business. Which leads to idea number
3:31 three, which is complacency kills.
3:33 Jensen repeats this belief over and over
3:35 again throughout the book. Complacency
3:37 kills. I would say that Jensen has this
3:40 combination of extreme self-confidence
3:42 and charisma matched with this inner
3:44 voice that says that he sucks. An inner
3:47 voice that says nothing he ever does is
3:49 good enough. And I I truly believe for a
3:50 lot of history's greatest founders that
3:53 inner voice is impossible to satisfy.
3:55 And there's a great line in the book on
3:57 how this manifests. It says at Jensen's
4:00 company, innovation is a necessity, not
4:03 an option. I don't know what Jensen's
4:04 answer would be if you ask him like what
4:06 is his biggest fear? I would highly
4:09 suspect that complacency taking root
4:10 inside of his company is going to be
4:13 towards the top of that list. And so
4:14 throughout the entire book, he's just
4:17 constantly hounding on this. Here's one
4:19 example. Jensen resists overly positive
4:21 accounts of Nvidia's startup period and
4:23 his own missteps. When we were younger,
4:26 we sucked at a lot of things.
4:28 And video wasn't a great company on day
4:31 one. We made it great over 31 years. And
4:33 so in addition to rereading this book
4:34 for the second time, I also watched
4:36 Jensen's commencement speech that he
4:38 gave at Caltech. And as with any
4:39 commencement speech, they're going to
4:40 give you a nice introduction. They're
4:41 going to give you like a short
4:43 biography. And after the nice
4:46 introduction, he begins his speech by
4:47 saying, "Thanks for the kind
4:50 introduction. It really makes me cringe
4:52 listening to all of that. I hate hearing
4:54 about myself." In the book, he
4:59 summarizes his first 15 years as CEO.
5:01 This is what it says. He slipped into
5:04 the third person. If Jensen wasn't even
5:06 involved in the first 15 years of our
5:09 company, I would really like that. He
5:11 wasn't proud of how the company was
5:14 managed then, or his own naive and lack
5:16 of strategic thinking. Jensen runs the
5:18 company the way he does because he
5:20 believes that Nvidia's worst enemy is
5:23 not the competition, but itself. The
5:25 worst enemy is the complacency that
5:28 grips any successful company. That is
5:30 yet another thing that Jensen has in
5:32 common with a lot of history's greatest
5:33 founders. They all believe that
5:35 complacency kills. In fact, Andy Grove,
5:38 he had a mantra. His mantra was success
5:41 breeds complacency. Complacency breeds
5:44 failure. Only the paranoid survive. This
5:46 idea of complacency killing your company
5:47 just reappears over and over again.
5:49 Here's another example. Herb Keller,
5:50 founder of Southwest Airlines, he has a
5:52 great way to describe this. A company is
5:54 never more vulnerable to complacency
5:55 than when it's at the height of its
5:58 success. We must not let success breed
6:01 complacency, cockiness, greediness,
6:04 laziness, indifference, preoccupation
6:07 with bureaucracy, hierarchy, or
6:10 obliviousness to threats posed by the
6:13 outside world. I read this great profile
6:16 on the founder of LVMH, Bernard. It
6:19 says, "He abhores complacency so much."
6:21 Warren Buffett would repeat this over
6:22 and over again in his shareholder
6:24 letters. He says, "You need the ability
6:27 to fight off the ABCs of business decay.
6:31 Arrogance, bureaucracy, and complacency.
6:32 When these corporate cancers
6:35 metastasize, even the strongest of
6:37 companies falter." And so, there's so
6:39 many examples in the book of Jensen
6:41 fighting back against complacency. One
6:43 example early in their history says that
6:45 each monthly company meeting, Jensen
6:46 would say, "We're 30 days from going out
6:50 of business." all the way back in 97. He
6:51 talks about making sure that we're
6:53 acting with a sense of urgency because
6:54 one of the biggest companies in the
6:56 world is trying to kill us. He says we
6:58 need to kill Intel. Make no mistake,
7:00 remember saying this in 97. Make no
7:03 mistake, Intel is out to get us and put
7:05 us out of business. They have told their
7:07 employees and they have internalized
7:09 this. They are going to put us out of
7:12 business. Our job is to go kill them
7:14 before they put us out of business. We
7:18 need to kill Intel. I also wanted to
7:19 include this in here because obviously
7:22 he's a extremely unusual person and he's
7:24 at the top right now, but he was like
7:27 this for decades. At the time he just
7:29 said this, he's telling his company,
7:31 "We're going to go kill Intel." At that
7:35 time, Intel was 860
7:38 times larger than Nvidia in terms of
7:42 revenue. Jensen abhores complacency.
7:43 Only the paranoid survive. Again, that's
7:45 a quote from Andy Grove. What's
7:47 interesting about that is Andy Grove
7:49 mentored Steve Jobs and Steve Jobs had a
7:52 very clear philosophy about what to do
7:54 after achieving something great and it's
7:56 a way to again avoid complacency taking
7:58 root in your company. This is what Steve
8:00 said. I think if you do something and it
8:01 turns out pretty good then you should
8:04 just go do something else wonderful and
8:07 not dwell on it for too long. Just
8:09 figure out what's next. That is a
8:11 mentality that history's greatest
8:12 founders have. This is the way I
8:14 summarize it. No rearview mirror. No
8:16 resting on laurels or sleeping on wins.
8:19 Make something great, then do it again.
8:20 And one of the things I admire most
8:22 about Jensen is this relentless
8:25 dedication to improving his craft. In
8:28 fact, craft is the word that he uses in
8:29 that commencement address that he gave
8:32 at Caltech. And Jensen's dedication to
8:33 constantly improving his company reminds
8:35 me of my friend Kareem, who's the
8:37 co-founder and CTO of RAMP. Ramp is the
8:40 presenting sponsor of this podcast. And
8:41 Kareem is one of the greatest technical
8:44 minds working in finance. I spend a lot
8:46 of time talking to Kareem and every
8:48 single conversation centers around his
8:50 obsession with crafting a highquality
8:52 product and using the latest technology
8:54 to constantly create better experiences
8:57 for his customers just like Jensen does.
8:58 Kareem is running one of the most
9:00 talented technical teams in finance and
9:02 they use rapid relentless iteration to
9:05 make their product better every day. So
9:07 far this year, RAMP has shipped over 300
9:09 new features. Ramp is completely
9:11 committed to using AI to make a better
9:13 experience for their customers and
9:15 automate as much of your business's
9:17 finances as possible. In fact, Kareem
9:20 just wrote this. AI is all I think about
9:22 these days. It is our duty to be first
9:24 movers and push limits so we can make
9:26 the greatest possible product experience
9:28 for our customers. Many of the fastest
9:30 growing and most innovative companies in
9:31 the world are running their business on
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9:36 learn how they can help your business
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9:49 ramp.com. Number four, Jensen insists on
9:53 a flat organization. Jensen has 60
9:55 direct reports and he doesn't do
9:57 one-on-one meetings. And so he talks
9:59 about why he designed a flat
10:01 organization. When we were a small
10:03 company, we were plenty bureaucratic and
10:05 plenty political. Jensen thought about
10:06 how he could create an ideal
10:09 organization from scratch. He realized
10:11 he would choose a much flatter structure
10:13 so that employees could act with more
10:15 independence. He also saw a flat
10:16 structure would weed out lower
10:19 performers who were unaccustomed to
10:21 thinking for themselves and to acting
10:23 without being told what to do. This is
10:25 what he said. I wanted to create a
10:27 company that naturally attracts amazing
10:29 people. A flat structure fights against
10:32 the danger of slow decision-making. It
10:34 is very interesting that Jensen picked
10:37 up on how dangerous slow decision-m is.
10:38 Jeff Bezos in one of his biographies
10:40 said this. You can drive great people
10:42 away by making the speed of decision-m
10:44 really slow. Why would great people stay
10:46 in an organization where they can't get
10:48 things done? Jensen will describe his
10:50 flat organization structure in the book
10:51 and also a bunch of interviews. Here's
10:53 an interview. In one of the interviews,
10:54 he actually compared how he runs his
10:56 company to what happens and what will
10:58 happen when humanity is surrounded by
11:00 all these AI agents that are smarter
11:02 than they are. And he was talking about
11:03 the fact that he gets that question like
11:03 what's going to happen if you're
11:05 surrounded by all these AIs are doing
11:06 things so incredibly well and they're so
11:07 much better than you. And he says when I
11:10 reflect on that that's already my life.
11:12 I have 60 direct reports. The reason why
11:14 they're on my e staff is because they're
11:17 world class at what they do and they do
11:19 it better than I do. Much better than I
11:21 do. And I have no trouble interacting
11:24 with them. I have no trouble prompt
11:26 engineering them. I have no trouble
11:27 programming them. And what is
11:30 fascinating is he refuses to change his
11:32 management philosophy. He constantly
11:34 insists on maintaining this flat
11:36 structure. Says he did not want to spend
11:37 time on career coaching because the
11:39 majority of them had already reached the
11:41 pinnacle of their careers. Instead, he
11:42 focused on providing them collectively
11:44 with information from across the
11:46 organization as well as with his own
11:48 strategic guidance. Jensen had
11:51 steadfastly refused to change his
11:53 management philosophy, even when new
11:55 board members joined and recommended
11:58 that he hired a chief operating officer
12:00 to reduce his administrative burden.
12:02 This part made me laugh. No thanks,
12:05 Jensen replied. This is a great way to
12:07 make sure everybody knows what's going
12:08 on, referring to his direct
12:10 communication with the rest of the
12:11 company. And so when I'm reading to it,
12:13 like I'm pulling all these these quotes
12:15 and ideas are not in one section of the
12:16 book. They are repeated over and over
12:17 again throughout different sections of
12:18 different time periods. That's how you
12:20 know it's important important to him.
12:22 And one of the ways I would summarize
12:23 what he's about to say here is like, oh
12:25 my god, Jensen made like an F1
12:28 organization. Ultimately, my E staff is
12:30 something that I have to know how to
12:32 work with. The company's organization is
12:35 like a race car. It has to be a machine
12:38 that the CEO knows how to drive. Jensen
12:40 created a company he could manage
12:42 directly. That sentence is very
12:44 important. Jensen created a company that
12:46 he could manage directly. He created a
12:48 company building philosophy that fit
12:50 him. It doesn't matter what other people
12:52 are doing. The root principle is to do
12:54 things your way. And so he would repeat
12:55 over and over again all the benefits of
12:57 keeping his company flat. It turns out
12:59 by having a lot of direct reports, not
13:01 having one-on ones, we made the company
13:05 flat and information travels quickly and
13:07 therefore employees are empowered. That
13:09 algorithm was wellconceived. You want a
13:12 company that's as large as necessary to
13:14 do the job, but to be as small as
13:16 possible and not bogged down by
13:19 overmanagement and process. Now, idea
13:21 number five works very well with idea
13:23 number four. Public criticism works well
13:25 with a flat organization. Jensen does
13:27 not believe. You hear this like a common
13:29 trope that's repeated. And maybe it
13:31 makes sense if your idea is to get along
13:32 with people, which I think Jensen is
13:34 like the the quality of the work
13:36 obviously goes it's like top priority
13:37 more than you know other people's
13:38 feelings. Jensen doesn't believe in
13:41 praise publicly criticized privately. He
13:43 criticizes publicly so the entire
13:45 organization can learn from a single
13:47 person's mistake. Again, this is another
13:49 reoccurring theme throughout the book.
13:50 That's what he said. Over the years, I
13:52 realized what was happening and how
13:53 people protect their turf and they
13:55 protect their ideas. I created a much
13:57 flatter organization. Jensen's anecdote
13:59 to the backstabbing, the gaming of
14:02 metrics, and to political infighting is
14:04 public accountability and if needed,
14:06 public embarrassments.
14:08 I just say it out loud. He said, I've
14:11 got no trouble calling people out. And
14:13 so, here's an example of Jensen's public
14:15 criticism so the entire company can
14:17 learn from the mistake. And I think it
14:19 also ties together with that constant
14:21 fight against complacency. Jensen was
14:22 furious at the poor planning and
14:25 execution of the chip. He called out its
14:27 engineers at an all company meeting. Is
14:29 this the piece of that you intended
14:31 to build? He said, "The architects did a
14:34 shitty job putting the product together.
14:35 How could you not see the issue before
14:37 it happened? Someone should have raised
14:39 their hand and said, "Hey, we have a
14:42 design issue here." Jensen's criticism
14:44 didn't end after a single meeting. He
14:46 invited an executive from Best Buy to
14:48 speak to his employees. The executive
14:51 spent much of the session talking about
14:54 the NV30's poor performance and customer
14:58 complaints. Jensen agreed. He's right.
15:00 This is crap. Jensen reflected on the
15:03 NV30s failure. Ultimately, it was his
15:06 responsibility to ensure that Nvidia's
15:08 teams collaborated effectively no matter
15:11 how large the company got. Again, what I
15:12 think is remarkable about reading these
15:15 books about, you know, you obviously
15:16 know this, like I'm obsessed with people
15:19 that do things for a long time. Jensen
15:21 is the longest running founder CEO of a
15:23 tech company in the world. And the
15:24 result of hopefully this podcast and
15:26 obviously the book is we get to benefit
15:30 from Jensen's pain and experience. All
15:31 of these ideas that you and I are
15:33 talking about today come from over three
15:35 decades of him building his company into
15:37 one of the best companies in the world.
15:39 Now the way he thinks about this, it's
15:40 very similar because I I do think this
15:42 is one of the most unique ideas that you
15:43 will hear and it reminded me of this
15:45 conversation. I was watching this
15:46 interview with uh Johnny IV one time and
15:48 this is after Steve Jobs passed away. He
15:49 talked about one of the most important
15:51 lessons that Steve told him and it
15:53 sounds exactly Jensen's not trying to
15:54 hurt people's feelings just to hurt
15:56 their feelings. He's trying to refine
15:59 the character of his company. Listen to
16:01 Johnny Iive talk about this. I remember
16:03 asking Steve about this. I said it could
16:05 be perceived that his critique of a
16:07 piece of work and that in his critique
16:09 of a piece of work he was a little harsh
16:10 and we had been putting our heart and
16:12 soul into this and so I asked him could
16:14 we not moderate the things we said a
16:17 little bit and he asked why and I said
16:20 because I care about the team and then
16:23 Steve said this brutally brilliant
16:25 insightful thing. He said no Johnny
16:28 you're just really vain. You just want
16:30 people to like you. I'm surprised at
16:33 you. I thought you held the work up as
16:35 the most important, not how you believe
16:38 you were perceived by other people. And
16:39 Johnny replied, "And I was terribly
16:43 cross because I knew he was right."
16:44 Going back to why Jensen does this. He
16:46 offers employees direct criticism in
16:48 large meetings so more people can learn
16:50 from a single mistake. I give feedback
16:53 in front of everybody. Feedback is
16:55 learning. For what reason are you the
16:57 only person who should learn from this?
16:59 We should all learn from that opportunity.
17:01 opportunity.
17:03 I don't take people aside. We are not
17:05 optimizing for not embarrassing
17:07 somebody. We're optimizing for the
17:10 company learning from our mistakes.
17:13 Idea number six, tortured into
17:15 greatness. A habit of self-criticism.
17:18 Jensen is not just publicly criticizing
17:20 others. He does this to himself. He
17:22 actually has a great line about this. He
17:23 calls it tortured into greatness. And so
17:25 I mentioned earlier that Jensen has this
17:26 combination of extreme self-confidence
17:28 and charisma matched with this inner
17:30 voice that says, you know, he sucks. An
17:32 inner voice that says nothing ever that
17:34 nothing he ever does is going to be good
17:35 enough. And what you learn by reading
17:38 this book is that he admittedly tortures
17:40 his team into greatness. In fact, he has
17:41 a line about this. He says, "I don't
17:43 like giving up on people. I'd rather
17:45 torture them into greatness." And it's
17:47 clear from that that he sees this as a
17:49 guard against complacency. He feels
17:50 praise is a distraction and the
17:52 deadliest sin is looking back on past
17:55 accomplishments. But after you read this
17:57 book, you realize that he has tortured
17:59 himself into greatness as well. That it
18:02 started with him. And so there's this
18:04 great story in the book about this habit
18:06 of self-criticism that he has. And it's
18:08 told by an executive at the company. He
18:09 says, "I'll never forget this. We had
18:11 done a fantastic job. We just blew the
18:13 doors off the quarter." And Jensen stood
18:16 up in front of us and said,"I look in
18:18 the mirror every morning and say, "You
18:20 suck." The executive was struck by how
18:23 someone so manifestally successful could
18:25 still think in such terms. You and I
18:27 have seen that idea over and over and
18:29 over again. And I think it's tied again.
18:31 He talks about one of my favorite maybe
18:32 my all-time favorite maximum from the
18:34 history of entrepreneurship is
18:36 excellence is the capacity to take pain.
18:38 I've never heard Jensen speak in that
18:40 exact terms, but it's the same idea. I'm
18:42 going to give you two examples. I'm
18:43 going to pull two quotes that he said.
18:45 One is from a speech at Caltech, which I
18:47 referenced earlier, and another is a
18:48 speech at Stanford. This is what he said
18:50 at Caltech. This is my favorite thing he
18:52 said in the entire commencement address.
18:54 I hope you will see setbacks as new
18:56 opportunities. Your pain and suffering
18:58 will strengthen your character, your
19:00 resilience, and agility, and they are
19:03 the ultimate superpowers. This is my
19:04 really my favorite part of my favorite
19:07 part of all the things that I value most
19:09 about my abilities, intelligence is not
19:12 top of that list. My ability to endure
19:14 pain and suffering. My ability to work
19:16 on something for a very very long period
19:19 of time. My ability to handle setbacks
19:21 and see the opportunity just around the
19:24 corner. I consider to be my superpowers
19:27 and I hope they're yours. Says something
19:29 very similar to that when he gave a talk
19:30 at Stanford. I think one of the great
19:32 advantages is I have very low
19:34 expectations. Most of the Stanford
19:37 graduates have very high expectations.
19:39 People with high expectations have very
19:41 low resilience. And resilience matters
19:44 in success. I don't know how to teach it
19:46 to you except that I hope suffering
19:49 happens to you. I was fortunate that I
19:51 had plenty of opportunities for setbacks
19:53 and suffering. To this day, I use the
19:56 phrase pain and suffering inside of our
19:59 company with great glee. And I mean that
20:01 in a happy way because you want to
20:03 refine the character of your company.
20:05 Now, let me pause there. I think that's
20:09 exactly what a lot of Jensen's ideas do.
20:11 They refine the character of your
20:12 company. So let's go back to that. I
20:14 mean that in a happy way because you
20:16 want to refine the character of their
20:19 company. You want greatness out of them.
20:21 Greatness is not intelligence. Greatness
20:23 comes from character. And character is
20:25 not formed out of smart people.
20:27 Character is formed out of people who
20:31 suffered. I wish upon you ample doses of
20:34 pain and suffering. Idea number seven,
20:37 speed of light. Not only has he derived
20:39 really great ideas from three, you know,
20:40 over three decades of experience, but
20:42 he's good at naming them and branding
20:44 his ideas. So Jensen's speed of light
20:46 idea is basically, hey, the only
20:47 benchmark that we're going to judge how
20:49 fast we move will be the absolute
20:52 maximum speed possible. What does that
20:54 mean? Jensen insists that all employees
20:56 work at the speed of light. He wants
20:58 their work to be contained only by the
21:01 laws of physics. Sounds like Elon. Each
21:03 project must be broken down into
21:05 component tasks and each task must have
21:07 a target time to completion that assumes
21:11 no delays, no cues and no downtime. This
21:13 sets the theoretical maximum, the speed
21:15 of light that it is physically
21:18 impossible to exceed. We will then judge
21:21 ourselves against the speed of light,
21:23 not what we used to do or what other
21:26 companies are doing. As he saw it, he
21:27 needed to prevent the kind of internal
21:29 rot that he observed at other companies.
21:31 Again, what's that reference to? That's
21:32 a reference to idea number three.
21:35 Complacency kills. Jensen would not let
21:36 his employees think about what was
21:38 likely to work or what they could
21:40 reasonably achieve. He only cared about
21:42 what would be possible with the maximum
21:45 amount of effort and minimum amount of
21:49 wasted time. Minimum amount of wasted
21:50 time. Before we get into idea number
21:52 eight, there is another tool and
21:53 technology that I need to tell you about
21:56 that does exactly that. And RAMP
21:58 actually uses this tool. It is Vanta. I
22:00 just told you earlier how RAMP has the
22:02 best technical talent in their industry.
22:03 And knowing that the team at RAMP trusts
22:05 Vanta was a huge positive signal for me.
22:07 And then when I talked to Vant's
22:09 founder, Christina, it became obvious
22:11 why Ramp uses Vanta because Vanta's
22:13 value prop is very clear. Vanta helps
22:14 your company prove that you're secure so
22:16 more customers will use your product or
22:18 service. Many companies won't sign
22:20 contracts unless you're certified and
22:22 this is causing you to lose out on
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23:08 Idea number eight. This is a combination
23:09 of reoccurring themes as you see
23:10 throughout the book. Jensen is
23:13 unapologetically extreme. He is extreme
23:15 in all things. He works all the hours,
23:18 and he insists that no one will outwork
23:20 him. Jensen is so relentless that he
23:23 will grill you at the urinal. It's one
23:25 of the the funniest uh stories in the
23:27 book. No place in in company
23:30 headquarters was safe from a driveby
23:32 grilling from Jensen. Kenneth Hurley was
23:34 at a urinal when Jensen walked up to the
23:36 one next to him.
23:38 I'm not the kind of guy who likes to
23:39 talk in the bathroom, Hurley said.
23:41 Jensen had other ideas. Hey, what's up?
23:44 He asked. Hurley replied with not much,
23:46 which earned him a sidelong glance from
23:48 Jensen. Hurley panicked, thinking, "I'm
23:49 going to get fired because he thinks I'm
23:51 not doing anything." He proceeded to
23:53 list 20 things he was working on.
23:55 "Okay," Jensen replied, satisfied with
23:57 the answer. So, Jensen is described as
23:59 extremely hardworking by everybody that
24:01 runs into him. And he also describes
24:03 himself that way. He says, "There may be
24:05 people that are smarter than me, but no
24:06 one is ever going to work harder than
24:08 me." This is very interesting. And I was
24:10 reading the way that Jensen thinks about
24:12 his own work ethic and he has a great a
24:13 bunch of great lines that now me and my
24:14 friends have also used from the first
24:15 time uh the first episode the first time
24:17 we read the book. But for some reason
24:19 when I got this to this part the second
24:21 time I was reading it it there's this
24:22 idea that I thought was fascinating
24:24 where like Larry Ellison likes having an
24:26 enemy. He says that he would pick an
24:29 enemy and then he would use that to push
24:32 himself and his company. And one enemy
24:33 that he picked was Bill Gates. in the
24:35 whole thing that Larry Larry's point was
24:37 like, you want a a foe worthy of your
24:40 steel. You want a formidable enemy. And
24:42 so in the middle of this war that's
24:43 going on, this battle between Ellison
24:45 and Gates, Ellison gives this interview
24:47 and he talks about he understands Bill
24:49 Gates very well. And this is how he
24:50 described Bill Gates. He says there are
24:51 a lot of people in the world smarter
24:53 than Bill Gates. There are very few
24:54 people in the world that have his focus
24:57 and endurance. He is utterly relentless.
25:00 He is indehaticable. He is absolutely
25:02 focused and he wants it all. Barry
25:05 Diller said that Bill is young and he's
25:08 mean and he's not tired. That is a high
25:11 compliment coming from Barry Diller.
25:13 That's like Jensen. Very few people that
25:16 I've ever come across have Jensen's
25:18 focus and endurance. And he doesn't hide
25:21 this. He is unapologetically extreme.
25:23 Jensen said that he works all the hours
25:25 and any hour that he is not working, he
25:27 is thinking about work and he has a very
25:28 low tolerance for anybody complaining
25:30 about work. So there's a bunch of
25:31 employees that were griping about long
25:34 work hours and Jensen's response was
25:35 typically direct. People who train for
25:37 the Olympics grumble about training
25:39 early in the morning, too. Jensen was
25:41 sending a message. Long hours were a
25:43 necessary prerequisite for excellence.
25:45 To this day, he has not deviated from
25:48 that view. He also was unapologetically
25:50 extreme in his desire and his need, his
25:53 deep need to be number one. The first
25:55 time we came in second place, Jensen
25:58 sternly told me, "Second place is the
26:00 first loser." I realized I'm working for
26:02 a boss who believes that we have to win
26:04 at everything. Jensen's guidance was
26:08 direct. Just go win. The idea was
26:10 whoever could run faster would get all
26:12 of the land. And Jensen is extreme in
26:14 all things, including recruiting. He was
26:16 trying to recruit the chief engineer
26:18 from Silicon Graphics. So he invites the
26:20 guy out to lunch and he goes for again
26:22 his direct approach which I think is
26:23 probably the only approach I think
26:25 direct is the only way he approaches
26:27 anything and he tells him he goes,
26:28 "John, you should really think about
26:30 coming to our company because ultimately
26:33 I'm going to put SGI out of business."
26:35 He is absolutely relentless about work.
26:37 This is what he says. You have to allow
26:39 yourself to be obsessed with your work.
26:41 I work every day. There's not a day that
26:43 goes by that I don't work. If I'm not
26:46 working, I'm thinking about working.
26:48 Working is relaxing for me. That line me
26:50 and my friends repeat to each other.
26:53 Working is relaxing for me. And then
26:54 just one more line about him being
26:56 unapologetically extreme. As Jensen put
26:58 it when looking directly into my eyes,
27:00 the secret to his company's success is
27:04 nothing more than sheer will.
27:06 Idea number nine, Jensen's top five
27:09 email idea. It's a genius way to get
27:11 unfiltered information from the entire
27:13 company. As companies grow, as they
27:15 become more successful, bad leaders wind
27:16 up surrounding themselves with sickop
27:18 fans or executives who are not
27:20 incentivized to tell you the truth. In
27:22 fact, I just started doing this new show
27:23 where I actually sit down and talk to
27:24 extreme winners in business. It's called
27:26 David Sunra. And the very first episode
27:28 was with my friend Daniel Ek, who is the
27:30 founder of Spotify. And you got to
27:31 listen to it if you haven't listened to
27:33 it yet. He because he tells a hilarious
27:34 story about this. And this story
27:36 happened years ago, but one of Daniel's
27:38 employees who now he was the head of
27:39 product at Spotify. His name's Gustaf,
27:41 but now he's one of the co-CEOs. After a
27:43 product meeting, he pulled Daniel aside
27:44 and he's like, "Hey, you really suck at
27:46 this." And Daniel had a very human, he
27:48 tells the story, he had a very human
27:49 reaction where he goes home, he's like,
27:52 "Oh my god, I have to fire this guy."
27:53 And then he thought about it more and
27:54 more and when his emotions calm down,
27:57 he's like, "Oh my god, Gustaf is right."
27:59 And so Daniel's point is that you want
28:00 people to tell you the truth. Well,
28:03 Jensen has tens of thousands employees.
28:04 How is he going to make sure that he
28:06 gets unfiltered true information from
28:09 the entire company? He does this with a
28:12 top five his top five email idea. So,
28:13 Sister Jensen asked employees at every
28:15 level of the organization to send an
28:16 email that detailed the top five things
28:18 they were working on and what they had
28:20 recently observed in their markets,
28:21 including customer pain points,
28:23 competitor activities, technology
28:24 developments, and the potential for
28:28 project delays. The ideal top five email
28:30 is five bullet points where the first
28:33 word is an action word. It has to be
28:35 something like finalize, build, or
28:37 secure. To make it easier for himself to
28:40 filter these emails, Jensen had each
28:42 department tag them by topic in the
28:44 subject line. That way, if he wanted to
28:45 get all his recent emails on, say,
28:47 hyperscaler accounts, he could easily
28:50 find them through a keyword search. The
28:52 top five emails became a crucial
28:55 feedback channel for Jensen. He would
28:57 tell his employees when asked why he
29:00 liked the top five process. It's easy to
29:02 pick up on the strong signals, but I
29:04 want to intercept them when they are
29:06 weak. Every day, he would read about a
29:08 hundred top five emails to get a
29:09 snapshot of what was happening within
29:11 the company. There's another article uh
29:12 written by the Wall Street Journal that
29:14 I read about this. It says, "Employees
29:16 have been sending notes known as T5Ts or
29:18 top five things for decades, and Jensen
29:19 has been reading them. The top five
29:21 emails have become his preferred method
29:23 of flattening hierarchy. Strategy isn't
29:25 what I say, it's what they do," Jensen
29:28 said. So, it's really important that I
29:29 understand what everybody else is doing.
29:30 And one way he does that is by reading
29:32 these top five emails. He doesn't want
29:33 information that's already made its way
29:35 through layers of management. What he
29:37 wants is information from the edge. That
29:38 is a direct quote from him. He wants
29:40 information from the edge. He's looking
29:43 for the next 0 billion market, a
29:45 frontier that hasn't been explored
29:47 because it barely exists, but could one
29:49 day be a thing. One of the weak signals
29:51 that he intercepted years ago was a
29:53 wonky but exciting development in
29:55 machine learning that kept popping up in
29:57 the emails. Jensen decided that Nvidia
29:59 needed to invest more in tools for
30:01 accelerating workloads on its GPUs.
30:04 These days, those GPUs are the brains
30:06 for artificial intelligence. Reading
30:08 these emails is the thing that he did
30:10 for fun. He says, "I drink a scotch and
30:14 I do emails." Idea number 10, Jensen's
30:16 communication style. It is blunt,
30:19 concise, and direct. Jensen believes in
30:21 direct, blunt communication. Jensen's
30:23 emails are short and sweet like a ha
30:26 coup. Napoleon was the exact same way.
30:27 There's a great quote from this
30:29 biography Napoleon I read. Long orders
30:32 which require much time to prepare, to
30:34 read and to understand are the enemies
30:36 of speed. Napoleon could issue orders of
30:38 a few sentences which clearly expressed
30:40 his intentions and required little time
30:43 to issue and to understand. This is yet
30:45 another thing that Jensen had in common
30:46 with Steve Jobs. There's this great book
30:48 called Creative Selection which was
30:50 written by a person that demoed directly
30:52 to Steve. I covered the book all the way
30:55 back on episode 281. Here's the quote.
30:58 Steve was always easy to understand. He
31:00 would either approve a demo or he would
31:01 request to see something different next
31:04 time. Whenever Steve reviewed a demo, he
31:06 would say, often with highly detailed
31:08 specificity, what he wanted to happen
31:11 next. He was always trying to ensure the
31:12 products were as intuitive and
31:14 straightforward as possible. And he was
31:16 willing to invest his own time, effort,
31:19 and influence to see that they were. I
31:21 chuckle to myself over how much time
31:24 I've spent thinking about this iPad demo
31:26 and how much Steve taught me in one
31:29 meeting where he spoke just four
31:31 sentences. Think about that. Get your
31:34 point across and make it memorable in
31:37 four sentences. That is worldclass
31:40 communication. Idea number 11, Lua. When
31:43 an employee starts rambling, Jensen will
31:47 say Lua. Lua is a warning sign that
31:49 Jensen's patience is growing thin. When
31:51 he says it, Jensen wants the employee to
31:54 stop and do three things. Number one,
31:56 listen to the question. Number two,
31:58 understand the question. Number three,
32:01 answer the question. Everyone who works
32:05 for Jensen has heard Lua.
32:07 And so, just like Steve Jobs, Jensen is
32:09 easy to understand. And when a person
32:11 and their ideas are easy to understand,
32:14 their ideas are easy to spread. The best
32:16 storytellers know this and you'll find a
32:17 lot of the best founders are also great
32:20 storytellers. The best story wins and
32:22 that is exactly what my partner
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32:25 who's the founder of Sequoia said one of
32:27 my favorite things ever. He says the art
32:29 of storytelling is critically important.
32:31 Most of the entrepreneurs who come to
32:33 talk to us can't tell a story. Learning
32:35 to tell a story is incredibly important
32:38 because that's how the money works. The
32:40 money flows as a function of the
32:42 stories. And that is exactly what
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33:01 hedge funds, oil and gas companies, all
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33:05 companies now using collateral because
33:07 they discovered it from this podcast. I
33:09 have friends that have used collateral
33:10 for their marketing collateral that have
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33:14 and have made hundreds of millions of
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33:20 and improve the way that your company
33:22 tells its own story. Storytelling is one
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33:31 Number 12, the mission is the boss and
33:34 pilot in command. Jensen tells his
33:35 employees that the ultimate boss is the
33:37 mission itself. This is what he said.
33:39 The concept of the mission is the boss
33:41 makes a lot of sense because ultimately
33:43 we're here to realize a particular
33:45 mission, not in service of some organization.
33:46 organization.
33:48 Under the mission is the boss
33:50 philosophy, Jensen would start every new
33:52 project by designating a leader, which
33:55 he calls a pilot in command. That pilot
33:57 in command will report directly to
33:58 Jensen. We always have a pilot in
34:00 command for every project. Whenever
34:02 Jensen talks about any project, he
34:05 always wants the name. Nobody can hide
34:08 behind such and such team is working on
34:10 that. Everything has to have a person's
34:13 name attached. The pilot in command is
34:15 accountable. I just did this episode,
34:18 episode 399 on how Elon works. In that
34:20 episode, it talks about Elon's algorithm
34:22 that has five commandments that he uses
34:24 and applies relentlessly and repeats it
34:25 over and over again. In the first
34:27 commandment, it says this, "Question
34:29 every requirement. Each should come with
34:31 the name of the person who made it. You
34:32 should never accept that a requirement
34:34 came from a department such as the legal
34:36 department or the safety department. You
34:38 need to know the name of the real person
34:40 who made that requirement. In other
34:41 words, find out who is accountable.
34:44 Jensen organized his employees into
34:46 groups centralized by function. So like
34:48 sales, engineering, operations, and so
34:50 on. They were treated as a general pool
34:53 of talent and not divided by business
34:55 units or divisions. We take the people
34:57 that we have and we're able to redirect
35:00 them into a new mission. That is mission
35:03 is the boss and pilot in command. Number
35:06 13. Strategy is not words. Strategy is
35:08 action. This is what Jensen said.
35:10 Strategy is not words. Strategy is
35:13 actions. We don't do a periodic planning
35:15 system. The reason for that is because
35:19 the world is a living breathing thing.
35:22 We just plan continuously. There's no
35:24 five-year plan. So strategy is not
35:26 words. Strategy is action. That's one of
35:27 my favorite lines in the book. It
35:29 reminds me very much of Henry Singleton.
35:31 So Henry Singleton had this very
35:32 distinct philosophy about planning. I
35:34 discovered Henry Singleton because
35:36 Charlie Mer said that Henry Singleton
35:38 was the smartest person he ever met. And
35:39 Warren Buffett said that it's a crime
35:41 that business schools don't study
35:43 Singleton. And Singleton famously said,
35:44 "I know a lot of people have very
35:47 definitive plans, but we're subject to a
35:48 great number of outside influences on
35:51 our businesses and most of them can't be
35:53 predicted. So my plan is to stay
35:56 flexible. My only plan is to keep coming
35:58 to work every day. I like to steer the
36:01 boat each day rather than plan way into
36:03 the future. And so Jensen has that in
36:05 common with Singleton. He also has
36:06 something in common with Michael
36:08 Bloomberg. That line where Jensen says,
36:11 "There's no fiveyear plan. We just plan
36:13 continuously. There's no five-year
36:16 plan." That is exactly the same line of
36:18 thinking that Michael Bloomberg used to
36:20 build his company. In Bloomberg's
36:22 autobiography, he wrote this. Life, I
36:24 found, works the following way. Daily,
36:25 you're presented with many small and
36:27 surprising opportunities. To succeed,
36:29 you must string together many small
36:31 incremental advances rather than
36:33 counting on hitting the lottery jackpot
36:36 once. As a practical matter, constantly
36:38 enhance your skills, put in as many
36:40 hours as possible, and make tactical
36:42 plans for the next few steps. Then,
36:44 based on what actually occurs, look one
36:47 more move ahead and adjust the plan.
36:49 Don't devise a five-year plan or a great
36:51 leap forward. Central planning didn't
36:54 work for Stalin or Mao, and it won't
36:56 work for an entrepreneur either. Number
36:59 14, ship the whole cow. The innovator's
37:01 dilemma is one of Jensen's favorite
37:02 books. One of the things that he learned
37:03 from the book is that the threat often
37:05 comes from the low end of the market.
37:07 So, this is what he said. We build
37:09 Ferraris. All of our chips were designed
37:11 for the high-end, the best performance.
37:13 I don't want to let someone come in and
37:15 be the price leader, lock me out of the
37:17 bottom, and then climb their way to the
37:19 top. And so, Jensen saw that they could
37:21 stop throwing away parts that failed
37:23 quality tests. These parts were not
37:24 suitable for the company's Ferrari grade
37:26 chips, but they were otherwise
37:29 functional at lower speeds. Nvidia could
37:31 repackage them into a less capable and
37:33 cheaper version of the company's
37:36 mainline products. This looked like a
37:38 clear opportunity to make something out
37:40 of nothing. rejected parts were
37:43 generating no revenue. Nvidia could
37:45 create a whole new derivative product
37:48 line that could turn a profit without
37:50 the expensive and time-consuming process
37:52 of research and development. That line
37:54 would serve as defense against
37:56 competitors for whom the lowcost chip
37:59 was the main product. Nvidia could
38:01 easily afford to price its chips down so
38:04 much that its competitors would be
38:07 forced to sell at a loss.
38:09 This strategy was dubbed ship the whole
38:12 cow, a reference to how butchers find
38:14 ways to use almost every part of the
38:19 carcass, not just the prime cuts. Number
38:21 15, go to school on everybody. There's a
38:23 line in a biography of Jeff Bezos that
38:24 says, "Jeff went to school on
38:27 everybody." Jensen goes to school on
38:28 everybody. There's a story in the book
38:30 where he shows up at this conference.
38:31 It's an academic conference where
38:32 machine learning and neuroscience
38:33 experts are presenting their latest
38:35 findings. He runs into one of his
38:37 employees who knew that Jensen wasn't
38:39 scheduled to speak and then asked him,
38:40 "What are you doing at the conference?"
38:42 Jensen replied, "I'm here to learn."
38:44 Jensen had not assigned someone else to
38:47 attend and take notes on his behalf. He
38:49 had shown up himself so he could absorb
38:51 the recent developments in artificial
38:53 intelligence. He wanted to be deeply
38:54 involved. There's a great story. So
38:56 Mitch Rails is the co-founder of
38:58 Danahir. Danahir is this like $150
39:00 billion company. And a friend of mine
39:01 was at this like small intimate
39:04 conference with Mitch recently and he
39:06 was blown away by how focused Mitch was.
39:08 He says that the entire time that Mitch
39:10 Rails was there. He was listening to the
39:12 speakers and he was taking pages of
39:14 notes. And my friend had this thought
39:15 which he relayed to me where he's like,
39:17 "Mitch, you're more successful than
39:18 anybody else here. Why are you taking
39:20 notes?" And when my friend told me that
39:23 story, I go, "No, no, no, wrong answer.
39:24 There's a great line in Bill Walsh's
39:26 book, The Score Takes Care of Itself,
39:27 that I think is very important and
39:30 related to this." And Bill Walsh wrote,
39:32 "Champions behave like champions before
39:34 they're champions." I guarantee you that
39:36 Mitch didn't build $150 billion company
39:38 and then start taking notes. I guarantee
39:41 you that Mitch was doing this way before
39:43 he was quote unquote the most successful
39:45 person in the room. There's a million
39:47 examples of Jensen just being an
39:49 absolute learning machine in the book
39:51 and consuming in enormous amounts of
39:53 information that will help his company.
39:54 You can distill down to that maximum
39:57 that the good ones know more. And what I
39:58 loved about reading this book is you'll
40:01 realize that Jensen is in the details.
40:03 He's paying attention to things that
40:05 surprise everyone else around him. Let
40:07 me give you an example from the book.
40:09 Peter Young was first introduced to
40:11 Jensen at a party for new hires. Jensen
40:14 already knew who he was. You're Peter
40:15 Young, Jensen said. You've been here for
40:17 about a year before you were at Sony
40:20 PlayStation and 3D FX prior to that. He
40:23 had a similar recall of biographical
40:26 details for all 50 attendees of the
40:29 party. There is a great quote from Walt
40:31 Disney himself that says, "If we lose
40:34 the details, we lose it all." Jensen is
40:36 in the details. Jensen manages his
40:38 company directly involving himself
40:40 deeply in product decisions, sales
40:43 negotiations, investor relations, and
40:45 more. Number 16, we need to create the
40:48 market, not fight over share of an
40:50 existing market. Jensen believed that
40:52 Nvidia was nothing like any other
40:54 company that had ever existed. Jensen
40:56 doesn't believe in building commodity
40:58 products because commodities are subject
41:00 to downward pricing pressure as
41:03 competition increases. Jensen has always
41:05 said that we should be doing things that
41:08 other people cannot. Jensen believes we
41:09 need to bring unique values to the
41:11 marketplace and he feels that by doing
41:13 work that is cutting edge and
41:15 revolutionary, it allows the company to
41:18 attract the best people. We do not have
41:20 a culture of just going after market
41:22 share. We would rather create the
41:24 market. And there's many examples of him
41:25 doing this in the book. In that
41:27 commencement address at Caltech, he
41:28 mentioned their move into robotics and
41:30 he explained the decision-m behind it.
41:32 He says, "We decided to build something
41:33 where we are sure there are no
41:36 customers." And everybody laughed and he
41:37 was serious. He's like, "This is why
41:39 it's important. Where there are no
41:41 customers, there are also no
41:44 competitors. That is a 0 billion dollar market.
41:46 market.
41:48 something that barely exists, maybe
41:50 doesn't exist at all, but one day will
41:54 be giant. And I think Edwin Lan is a
41:56 good comparison here. You know, I'm
41:57 obsessed with Edwin Land. He's one of my
41:59 personal heroes. He was Steve Jobs
42:00 personal hero. And if you think about
42:02 it, this is exactly the strategy Edwin
42:05 Lan had. When Edwin Lan targeted the
42:07 instant photography market, there were
42:08 no customers and therefore no
42:10 competitors because he invented the
42:12 market. And by inventing the market,
42:14 that allowed Edwin Lan to build a
42:17 monopoly. And one advantage of Edmund
42:19 Lan's approach and of Jensen's approach
42:21 is pricing power. Here's an example from
42:23 the book. Jensen understood that gamers
42:25 who buy Nvidia's cards are willing to
42:27 pay for performance. As long as they
42:28 look at the screen and see something
42:30 radically different, they're going to
42:32 buy it. He made the same case to
42:35 Nvidia's investors. He said that Nvidia
42:37 would be a unique semiconductor company
42:40 where products average selling prices
42:43 rise. We are going to be the only guy
42:46 where ASPs go up over time when everyone
42:49 else's ASPs will go down. He said number
42:53 17. I will choke you with gold. I found
42:54 a story in one of the books I read on
42:56 David Ogrevi where he talks about that
42:58 the Medici family was trying to persuade
43:01 this sculptor to move to Florence and to
43:04 enter into their service. And one member
43:06 of the Medici family is writing this
43:08 sculptor a letter laying out why he
43:10 should come to Florence. And he
43:12 concludes this letter with this
43:15 following line. Come, I will choke you
43:17 with gold.
43:19 Jensen wants to work with the best
43:21 people. And to do so, Jensen is willing
43:24 to choke you with gold. Jensen looks at
43:26 his stock like his blood. He pours over
43:29 the stock allocation reports. Managers
43:30 can refer an employee for special
43:33 consideration to senior executives.
43:35 Jensen will then review this list of top
43:37 contributors and give out special
43:39 one-off grants that also vest over a
43:41 4-year period. When the grant is
43:43 approved, the employee will receive an
43:45 email. The subject line says, "Special
43:48 grant authorizing the RSU grant in
43:49 recognition of your extraordinary
43:51 contributions with a clear description
43:54 of the rationale behind the award."
43:55 Jensen can also reach down into the
43:57 organization at any time and award stock
43:59 directly without waiting for an annual
44:03 compensation review. This allows him to
44:05 ensure that people who are doing great
44:09 work feel appreciated in the moment. It
44:10 is yet another sign of his interest in
44:14 every aspect and level of his company.
44:15 Number 18, work on your highest priority
44:17 first. This is what Jensen says. I have
44:20 a very clear priority list and I start
44:22 from the highest priority work first.
44:24 Before I even get to work, my day is
44:26 already a success. I've already
44:29 completed my most important work and can
44:31 dedicate my day to helping others.
44:33 Ruthlessly prioritize your time is what
44:35 he's saying there. Focus on the most
44:37 important activity at all times. Larry
44:39 Ellison shares this belief that that you
44:41 should only focus relentlessly on your
44:43 most important goal. Here's a quote from
44:44 a biography of Larry Ellison that I
44:47 read. Ellison made no apologies for his
44:49 quirks. If anything, he seemed amused at
44:51 Jenny's concern about his time
44:53 management. Jenny was his longtime
44:55 assistant. Jenny and I approach things
44:57 very differently, Ellison said. Jenny
44:58 feels if there are a thousand things
45:00 you're doing, you have to do all
45:03 thousand of them. My view is different.
45:04 My view is that there are only a handful
45:06 of things that are really important and
45:08 you should devote all your time to those
45:11 and forget everything else. If you try
45:13 to do all thousand things, answer all
45:15 thousand phone calls, you will dilute
45:18 your efforts in those areas that are
45:21 really essential. Jensen would tell
45:23 others to focus on the most important
45:25 activity at all times and not be
45:27 beholden to a schedule. And then related
45:30 to 18 is finally number 19. Swarm your
45:32 greatest opportunity. Obviously, a huge
45:34 part of this book is about the fact that
45:36 Jensen recognized the AI trend early,
45:38 invested heavily, and maneuvered his
45:39 company into the position to take
45:41 advantage of it better than anyone else
45:43 in the world. And there's probably 80
45:46 pages on this swarming of his greatest
45:48 opportunity, this march toward this
45:51 unlimited AI opportunity. And so I just
45:52 pulled out a few examples, a few
45:54 decisions he made that put him in a
45:57 position so he could swarm the greatest
45:59 opportunity of his life. And I think one
46:01 of the most important lessons is this
46:03 plays out over two decades. And he's
46:05 doing this when people tell him not to.
46:07 He does this at a great expense. And he
46:09 does this over a long period of time.
46:11 So, the idea that turns Nvidia into a
46:13 multi-trillion dollar company actually
46:15 came from their customers coming up with
46:17 unique ways to use their product. The
46:19 first reference to using GPUs for
46:22 non-graphical purposes was in a 2002
46:24 research paper on using computers to
46:27 simulate the movement of clouds. And he
46:28 picks up on this really early. An
46:30 increasing number of computer science
46:31 researchers were using GPUs for
46:34 non-graphics applications. They reported
46:36 significant speed improvements over
46:40 computers that relied on CPU power only.
46:42 In other words, the researchers had
46:46 hacked their GPUs. Jensen sees this as a
46:48 way to expand the market for his
46:51 products and he works on making it
46:52 easier for this to happen. And so number
46:54 one, he hires the guy who discovered
46:56 this. And then number two, he makes it a
46:58 priority to make it easier for people
47:01 like him to find more non-graphical
47:03 applications for GPUs. That is a
47:04 principle and idea that you and I have
47:06 seen over and over again in these books
47:08 that anytime you make something easier
47:10 for people to do, the market expands.
47:12 Anytime you make something easier for
47:14 people to do, the market expands. The
47:16 guy he hires, his last name is Harris,
47:19 also coined the phrase GPGPU, general
47:21 purpose computing on GPUs to describe
47:24 this phenomenon that he was witnessing.
47:28 Jensen was quick to grasp that GPGPU had
47:31 the potential to open up the market for
47:36 GPUs far beyond mere computer graphics.
47:38 And so in order to generate more demand,
47:41 Jensen decides they have to make it so
47:43 their cards are easier to program. This
47:45 is when they create the new programming
47:46 model called CUDA, which stands for
47:49 compute unified device architecture.
47:51 CUDA made it possible and easier for
47:53 scientists and engineers to leverage the
47:56 GPU's computing power. Why did Jensen
47:58 want to do this? Jensen believed that it
48:00 would expand Nvidia's reach into every
48:03 corner of the tech industry. Remember
48:05 what Jensen said earlier? all the things
48:06 that I value most about my abilities.
48:08 Intelligence is not at the top of the
48:10 list. One of the things that he values
48:11 most is the ability to work on something
48:14 for a very very long period of time.
48:17 That is evident in this book 2002 the
48:19 first reference to using GPUs for
48:21 non-graphical purposes. What I'm about
48:24 to read to you is happening in 2007 and
48:26 2008. This is again about the importance
48:28 of doing something for a long time. So
48:30 much of entrepreneurial culture now is
48:33 start, scale, sell. And if you want to
48:36 be great, you build, retain, and own.
48:39 You find your last company. The company
48:40 you can work on for decades, just like
48:43 Jensen did. Jensen's decision here to go
48:45 all in on this will create trillions of
48:48 value for the company in the coming
48:50 decades. Imagine if he quit or sold
48:52 here. So they call this the era of the
48:54 GPU. The era of the GPU would create so
48:56 many opportunities that that Jensen saw
48:59 it as his mission to prepare Nvidia to
49:01 take advantage of it. Even if no one
49:02 could know exactly what those
49:05 opportunities would be, everything else
49:08 was secondary. He is swarming his
49:11 greatest opportunity. And it is Jensen's
49:13 way. He wants to push it everywhere. He
49:14 wants to make it a foundational
49:16 technology. And if Jensen has
49:18 conviction, he will invest heavily over
49:21 the long term. Jensen understood the
49:22 importance of saturating the market with
49:24 it. The more people who had CUDA in
49:25 their hands, the faster technology would
49:27 establish itself as a standard. we
49:29 should push this everywhere and make it
49:32 a foundational technology. This move was
49:34 extremely expensive. Remember this
49:35 happened in 2007208. The company
49:37 invested so much in converting its GPUs
49:39 for CUDA compatibility that its gross
49:42 margin fell from 45 to 35%. At the same
49:44 time it's increasing its spending on
49:46 CUDA, the global financial crisis
49:49 destroyed consumer demand and Nvidia's
49:52 stock fell by more than 80%. Jensen
49:53 believed so strongly in the market
49:55 potential that he remained committed to
49:56 the course he had chosen even as his
49:59 investors demanded a strategic course
50:01 correction. Swarm your greatest
50:04 opportunity. I believe in CUDA Jensen
50:05 said we are convinced that accelerated
50:07 computing would solve problems that
50:08 normal computers couldn't. We had to
50:11 make that sacrifice. I had a deep belief
50:14 in its potential. So what does he do?
50:15 There's another idea embedded in this
50:18 idea. Educate the market. This is also
50:21 not a new idea. If developers didn't yet
50:23 know what to do with CUDA, Nvidia would
50:25 teach them. Nvidia's chief scientist
50:27 began offering schools CUDA capable
50:28 machines if they committed to teaching a
50:30 class on the subject. He gave more than
50:32 100 talks over the course of a year. He
50:34 taught a class himself at the University
50:36 of Illinois. There was no textbook, so
50:38 he wrote one. The textbook sold tens of
50:40 thousands of copies, which translated
50:42 into several languages and was used by
50:43 hundreds of schools. It was a major
50:45 inflection point in attracting attention
50:47 and talent to CUDA. What they understood
50:50 is that we need to educate the market,
50:52 not a new idea. Intel did the exact same
50:53 thing when they invented the
50:55 microprocessor. Intel discovered that
50:57 the mark marketplace, this is from a
50:59 company history of Intel that I read for
51:01 the first time 9 years ago. Intel
51:03 discovered that the marketplace wasn't
51:04 just confused by the concept of the
51:06 microprocessor. The market had to be
51:08 educated. At one point, Intel was
51:11 conducting more seminar seminars and
51:12 workshops on how to use the
51:14 microprocessor than the local junior
51:18 college total catalog of courses. Bob
51:20 noise, Gordon Moore, and Andy Grove
51:23 became part of a traveling educational
51:26 road show. Everyone who could walk and
51:30 talk became educators. It worked. Jensen
51:32 was focused on how much of an
51:35 opportunity GPU powered deep learning
51:36 would be for Nvidia. There was
51:38 considerable debate within his executive
51:40 team on the topic. Several of Jensen's
51:42 key lieutenants were against investing
51:44 more in deep learning in the belief that
51:47 it was a passing fad. Jensen overruled
51:49 them. Deep learning is going to be
51:53 really big. We should go all in on it.
51:55 Swarm your greatest opportunity.
51:57 Everything that you and I have been
51:59 talking about today and highlighting and
52:01 studying has led up to this point right now.
52:03 now.
52:05 Jensen had built a company in the image
52:08 of his own focused yet far-ranging mind.
52:10 Now he would pull every lever at his
52:13 disposal to navigate Invidia to the very
52:15 center of the tech industry as the
52:17 company whose hardware could bring about
52:19 the AI powered future. It was definitely
52:22 not a single day when the entire company
52:24 changed forever. It was a period where
52:26 Jensen was increasingly interested and
52:28 started asking increasingly deep
52:30 questions and then started encouraging
52:33 the company to swarm to machine
52:35 learning. Jensen announced the change in
52:38 strategic focus in a company all hands
52:40 meeting. We need to consider this work
52:43 our highest priority. AI was going to be
52:45 more important than anything else they
52:48 could possibly be doing. Within a
52:50 decade, Jensen was sure that AI would
52:52 create quote the largest total
52:54 adjustable market expansion of software
52:58 and hardware that we've seen in decades.
52:59 It is hard to describe Jensen's actions
53:01 as anything other than the construction
53:02 of a competitive moat. Interesting to
53:04 know that Jensen doesn't like the term
53:07 moat. He prefers strong self-reinforcing
53:10 network. My guess is because believing
53:12 you have a moat can lead to complacency
53:14 and complacency kills. Nvidia made a
53:16 generalpurpose GPU that represented the
53:18 first major leap forward in
53:19 computational acceleration since the
53:21 invention of the CPU. The GPU's
53:24 programmable layer, CUDA, was easy to
53:26 use and opened up a wide range of
53:28 functions across scientific, technical,
53:30 and industrial sectors. As more people
53:33 learn CUDA, the demand for GPUs increased.
53:35 increased.
53:38 Jensen's strategic brilliance ensured
53:40 that competitors would have difficulty
53:43 breaking into a market that Nvidia had
53:46 created. Swarm your greatest opportunity.
53:48 opportunity.
53:50 And I started this episode with the
53:51 first sentence in the book that in
53:53 another life Jensen might have been a
53:56 teacher. Here is the last paragraph in
53:58 the book. There are no shortcuts. The
54:00 best way to be successful is to take the
54:02 more difficult route. And the best
54:04 teacher of all is adversity. It is why
54:07 Jensen still keeps going at a pace that
54:09 would see most other people burn out. It
54:12 is why Jensen still says to this day and
54:15 without any trace of hesitation or irony
54:17 or selfdoubt.
54:20 I love Nvidia
54:22 and hopefully some of these ideas help
54:25 you build something you love too. I have
54:26 made something new that I love and I'm
54:28 already obsessed with. I started a new
54:29 podcast called David Center where I have
54:32 conversations with extreme winners in
54:34 business. The first two episodes are
54:35 already out. My conversation with Daniel
54:37 Ek, the founder of Spotify, and my
54:38 conversation with Michael Dell. Both
54:40 Daniel and Michael are big fans of
54:41 Founders. And so when I reached out to
54:43 both of them, they immediately agreed
54:45 when I asked them for help to launch the
54:46 new show. And so I'm asking you for
54:48 help. I need a favor from you. Make sure
54:50 you go follow the new show. It is on a
54:52 separate feed. So whatever app you're
54:53 listening to this right now, Spotify,
54:54 YouTube, whatever it is, search for
54:57 David Center and follow the show there,
54:59 please. Thank you very much and I'll
