Nvidia became the world’s most valuable company out of the blue — almost.
Adding trillions to its market capitalization within just a few months in the spring of 2024, its stock price almost tripling that year, by itself it contributed almost one-quarter to the return of the S&P500 index. (Today, Apple is once again top dog, but stock prices shift fast.)
That’s not to say this rallying was a fluke: It was long in the making.
All of us ’90s kids with a penchant for gaming have heard of Nvidia — excellent graphics chips for high-end, performance video games. But what truly propelled Nvidia from a large company successful in this original niche was the AI revolution.
To most of us, the deep-learning/neural network software that we often sloppily call artificial intelligence arrived on the world scene a few years ago. While at first it had some mania tendencies of a typical Garter hype-cycle variety, it now seems here to stay, promising almost daily to overhaul this or that industry. What’s so incredible about the Nvidia-AI story is that Nvidia’s long-time CEO, Jen-Hsun “Jensen” Huang, saw this coming a mile away — well before anyone but nerdy computer scientists and chess engine builders knew what neural nets were.
Tae Kim, senior tech writer for Barron’s, spent 2023 delving deep into the history of wonderchild Nvidia, which had just celebrated 30 years as a business. The result, The Nvidia Way: Jensen Huang and the Making of a Tech Giant is an excellent feat of journalism. It’s based on hundreds of interviews that Kim made — at a breakneck pace no doubt — in the 19 months from when the publisher approached him to the finished product hit the shelves late last year.
Like a good, intricate novel there is a dizzying array of characters and more abbreviations than anyone ought to endure. (Welcome to computing history.) The writing is easy-going; the author managed to be both relatable and minimally personal. It’s not completely detached from voice — Kim makes personal remarks now and again — but readers are mostly turned into a fly on the wall in Nvidia’s various offices.
The story Kim weaves together is one of hard work and Jensen’s eccentric personality. Per the title, the Nvidia “way” is Kim’s attempt to characterize what makes Nvidia different from other companies. He identifies three components: a strive for excellence (and pretty astonishing work ethics, with workweeks in the 70-80 hours, and record-low employee turnover); hiring practices, where Nvidia goes out of its way to attract and maintain the best people; and generous and widespread stock programs, especially directly connected to achievements rather than as a vague, broad-brush end-of-year bonus. Encouraging for the revival of American corporate culture is that all the people Kim talked to “reported that the company was largely free from the internal politics and indecisiveness typical in large organizations.”
Many chapters read like they could have been long-form essays, the early ones of Nvidia’s history sometimes approaching a Wikipedia entry. The result is something between a comprehensive business history — and a puff piece of its leader. It’s obvious that Jensen comprises a big portion of Kim’s book and that his peculiar leadership style (nimble organization, flat hierarchy, open dialogue, direct communication with hundreds of employees) has been a crucial factor in Nvidia’s success.
Nvidia began out of the dejected experience of Nvidia cofounders Curtis Priem and Chris Malachowsky at Sun Microsystems in the early ’90s. In a telling explanation, symbolic for the ethos that came to dominate Nvidia, Priem “just wanted to make good graphics chips and had no interest in corporate infighting.” Both Priem and Malachowsky, both having been at Sun for a few years, quit in protest over what they saw as the wrong technical approach to building the computational graphics for a workstation.
The pair picked up a discarded project of their former employer and approached Jensen, who in 1992 managed a division of the microchip company LSI Logic and whom the pair had worked with on a Sun project. They wanted to make a demonstration chip for Samsung; in the blunt way characteristic for Jensen’s future leadership, the latter one day stopped and say, “Why are we doing this for them?”
Meddled through the pages describing the events and personalities that made Nvidia is a meta-conversation Kim is having with the reader about the relative virtues and luck and hard work:
“To those outside of the company, Nvidia’s meteoric rise seems like a miracle. Those inside it, however, consider it a natural evolution […] Nvidia wasn’t lucky; it was able to perceive the wave of demand on the horizon years in advance and had prepared for this very moment.”
“Luck has a lot to do with success,” Jensen reminisces,” and my luck was having met [Chris and Curtis].”
The company, too, was lucky to overcome the constant financing problems of the early years; lucky to recover from the failure of the NV1 and NV2 chips and production problems surrounding RIVA 128: “Nvidia barely survived its first ten years,” writes Kim summarizing part II of the book. It takes him to the second-to-last page to spell out the themes on my mind reading most of the book: “In writing the history of Nvidia, I was struck by the times it verged on failure and outright destruction. If things had gone just a little bit differently in a few instances, computing would have taken another course.”
If either of the founders had decided to take offers from established firms instead of venturing out on their own; if financing hadn’t come through in the critical summer of 1993; if rival firm 3dfx had been more aggressive in trying to acquire Nvidia when the latter was financially struggling, or when the planned IPO (and infusion of cash) was delayed; if the large order for RIVA 128s hadn’t come in when it did.
Like legendary investor Benjamin Graham exemplifies, you need to work yourself into a good enough position where luck can alter your destiny. Success, while obvious in hindsight, is delicate and vulnerable. “In a sense,” writes Kim, “Nvidia was doing what it had always done: spotting a big opportunity and racing to get its products to market before anyone else realized the potential was even there.”
There are fascinating tidbits scattered across the book, too — like the origin of the company name (a tech spin on the latin word for envy) and how the commercial profits of every era of computing have followed a Pareto principle. The dominant player, from WinTel to Apple, Google to Nvidia, 80-90 percent of industry profits have accrued to the player “who can develop a market-leading platform.” Or the story of Jeff Smith of activist fund Starboard Value, who sold over 4 million shares of Nvidia in 2013 after a neat 20 percent gain, missing out on some 33 thousand further percent gain since (or, 27,300 percent, since Nvidia shares just fell 18 percent compared to the day I first typed this). “We should never have exited the position,” Smith tells Kim in a painfully dramatic chapter ending.
The story of Nvidia is about risk-taking and how a dedicated team, laser-focused on a company’s mission can result in extraordinary feats — especially when supplemented by hard work day in and day out.
For maximum symbolism, too, in November 2024 Nvidia replaced Intel on the Dow Jones index — Intel, which was alternatingly a stable Nvidia client and rival, and for whose products Nvidia was making chips in the late ‘90s and early ‘00s. Even in tech, fate, it seems, has a sense of irony.
Kim is proud to have rushed this business history to the shelves, and surprised that so little has been written on Nvidia (certainly compared to the myriad of Apple/Steve Jobs biographies). Scanning Amazon for new and upcoming books, that won’t stay true for long.
For most of modern computing history, Nvidia has been there, powering the devices we use every day and repeatedly challenged that industry. That’s what made it, however briefly, the most valuable company in history.