Jensen Huang Resigns

0:00Hello, listeners, and welcome to another Semi-Doped episode. I'm Austin Lyons of ChipStrat. I write a newsletter for institutional investors and tech executives. Hey, I'm Vik Shaker. I write a Substack newsletter called Vicks Newsletter, and I run an advisory firm for financial institutions called SemiExponent. And today we are here because there is very big news in the chip world, and we thought we'd have a quick newsflash about this and talk about it. Jensen Huang is no longer the CEO of NVIDIA. That's it. That's the big news. That's the news. Let's break it down.

0:41We don't normally talk about this type of content. Normally we focus on like technology and product and business strategy and stuff. And obviously today the topic is going to, we're going to stick with questions like, should the board, if the board forced him to resign, he resigned. That's the news. He resigned. If the board forced him to resign, was that the right decision? We can, well, let's debate that. And then we'll also talk, maybe we can debate kind of lighthearted who might fill him in next or like who might be the next NVIDIA CEO. We know that Colette Kress, the CFO, is the interim CEO, but let's talk through who it could be.

1:23We should set the stage for anybody who's listening to this, not following this stuff as closely as some other people listening to this podcast or us included follow this kind of stuff very closely. but essentially we have to set the stage on why we are in this situation and I say we because NVIDIA is now the face of AI and what happens to NVIDIA and its leader Jensen Huang affects all of us in some way shape or form. Also NVIDIA is a large part of the S &P 500 and if something is going to move, the entire world wants to know. So we are in this situation and we will cover this very briefly because a lot of personal lives are involved and we don't want to make fun of it.

2:12It's a hard time for a lot of people. So we want to be respectful of that and then go to talking about the technology and what we think is going to happen in the future. So essentially, some time back, reports surfaced that Jensen had extramarital affairs with an executive from this company called Megaspeed, which is Singapore-based. The whole problem with that was Megaspeed supposedly had relations to China, and therefore this whole thing became a national security concern whether this company is using Jensen's personal ties to supply leading-edge NVIDIA chips to China. So that became the first big concern at the national level.

3:00And while that investigation is still underway to figure out what exactly is the impact, and there is some movement regarding what policy changes will come towards China on that front. It is unclear still, but we might expect more tighter restrictions on China going forward because of this. But then I think a couple of days ago, another report surfaced that there was another extramarital affair with an internal NVIDIA employee. and then essentially that became a problem and for anybody who's worked in professional environments and companies and such, companies generally frown upon this kind of stuff very severely, especially you don't want to have relationships with somebody who's like reporting up to you and the reason for that is simple because a workplace is supposed to be fair and equitable and it's based on merit And of course, when this kind of stuff happens, people don't like it.

4:05And companies have policies against these things. And so when Jensen was faced with this, in my opinion, I think the company and the board was left with no choice but to stick to corporate policy because even the CEO is not an exception. Jensen Huang is not above the law. Nobody is. And whether it's the company policy, they had to do what they had to do. Of course, none of this is what NVIDIA said is the reason why Jensen Huang resigned. But I think everybody kind of sees this, the second incident as basically something he was not going to recover from. So we have lost the leader of a big company that is well-respected.

4:48And Jensen Huang was the brainchild of NVIDIA for 35 years and is probably his baby that he's seen grow up to a$4 trillion company. And so that accomplishment, regardless of his shortcomings or his mistakes or whatever you want to call it, that accomplishment of growing a company for multiple decades to become one of the biggest companies of the world today and one of the most important companies is something that we can't forget and something we have to respect as a technologist and as a visionary. So we always have Jensen as a leader of the AI movement, and we will remember him proudly on that as his leadership that took us to where we are today.

5:39But now that we have an interim CEO, and NVIDIA is now looking for an alternative CEO to take his place, whether it's internal or external, we don't know. But that's where we are today. This episode of Semi-Doped is presented by Crusoe, where you can fine-tune and serve open models without managing a single GPU. When we sat down with Crusoe's serverless fine-tuning product team, we asked the question every AI user wonders. What will you do with my data? Crusoe has a simple answer. They don't touch it or see it. Your data is yours to fine-tune models with or simply store for future use. Their fine-tuning is designed so that both your training data and the fine-tuned model itself remain your property.

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7:40Back to the show. What's your thought when this came out? Which is, this news even dropped only like a couple of hours ago and we got to recording immediately. So I haven't had a chance to talk to you about what you think about it. So what do you think? Yes, this will be fresh and raw and honest. So yes, right now we're recording. It's Thursday, November 12th. It's 10 a.m. Central Time. So this news came out about two hours ago and we have not talked about it. So when I read, okay. And by the way, the news about the direct report extramarital affair thing came out just yesterday, Wednesday. And so this has all gone down very quickly.

8:20When I saw the announcement this morning that Jensen was resigning, I thought to myself, the question I had was, if I was on the board, what would I do? I think everyone's chiming in on X. And you can tell everyone's biases, at least the people talking on X, where I think there's a lot of NVIDIA bag holders, you could call them, you know, people with financial interest and investment, a lot of people, right? Because, by the way, not only to your point, is NVIDIA, you know, whatever, 8 % of the S &P 500. Also, there's a lot of other companies in the S &P 500 that also benefit from NVIDIA, whether it's HBM makers or, you know, CPU makers, other people in the industry.

9:00So there will be, it's not just one company, but everyone's kind of intertwined. So anyway, so the question is, you know, what should the board do? and you know there's one argument that's like hey the best thing for shareholder value is to let jensen keep running the company because he's built it he has the most context he's gotten it to where it is yes you know he made some mistakes but that's the best thing in shareholder um interest of course to that i would say sure in the short run you know you can make the argument hey the stock's down whatever percent and it'd probably be down less if he was not resigning i sort of have a different zoomed out sort of longer term perspective, which is, you know, and you kind of alluded to this a little bit, but what message does it send if Jensen stays?

9:47I think it sends the message that it's okay for the leader of the company to lie, which is what happened with the Alice Wong situation where he said, Hey, there's nothing going on here. And then it comes out. The Megaspeed employee. The first Megaspeed employee. Exactly. Exactly. Um, so one, it's okay to lie to obviously with the Megaspeed thing, there's the are you above the government law if there's some export controls that we're getting around. But let's even assume that none of that was happening. Let's just say, hey, the extramarital affair with the executive of another company that you lied about.

10:20And then two, you can break company rules. And this is the point that you made, which is the company rules are you cannot sleep with subordinates, especially a direct report. But I can. That would be the message that they'd be sending if Jensen stays, which is, you know, he can lie and he can break company rules because we think it's the best thing for the future of the company and for shareholders and returns. And so I think, you know, that's the framing that I had in my mind, which was like, of course, if you're at the board, You have to say that as even if he is the best person to make, you know, technology and product and business decisions for the company, he's not above the rules and he's not above the law.

11:03And I think we can debate, too, when there's failings like this in one part of his life, you have to ask the question, can he does can he make the best decisions going forward for the company if he were to stay? again speaking candidly like my my first thought was like oh i'm i'm really bummed because it feels the question is how could you make these type of decisions and it feels to me like if i was in that position it it would feel like maybe there's power fame glory money these things that have gotten to a person's head where they have a confidence that everything they've decided to this point has gotten into this place and so then there's confidence that you can just do things And so, again, I think that confidence would be sort of reinforced if the board said like, yeah, you made mistakes, don't do it again, but you can stay.

11:53And so, again, I think that the only thing the board could do is say, we can't condone this behavior. And we're not confident that other decisions like this wouldn't continue to be made by maybe a dangerous overconfidence. Right. So I'll pause there. What's your reaction? I have a counter take to what you say, actually, because I recently saw this interview of Jensen Huang with Bloomberg Original, I believe. And it was a very well-produced interview. And he was explaining basically what it takes to be a CEO of a company like NVIDIA. The interviewer asked him, would you put your kids up to it? He was hesitant.

12:38He was like, I think they should be very careful in the decisions they make because the kind of pressure, the stress, and the responsibility that you have to run the ship is enormous. And whoever the successor is, and in that interview, which was actually now come to think of it as kind of sad, he says, in 20 years, there's going to be a successor. And I hope that person can handle this job. you know and then the moment I saw that and two days later we are looking for a successor it's kind of a it's a sad situation to be in but to the point that he was saying is I think that it's a very difficult position a very hard job to actually hold and you and I run a small outfit right like we run a podcast we run our sub stacks you know how many decisions we have to make on our day-to-day thing our listeners probably don't really see all the gnarly details of running a tiny business like ours now you know multiply that and make it a four trillion dollar company it is insane right so i feel like okay why do all like these rich people like somehow get into this kind of like scandals right so i feel like at some level which i don't really know and i don't think i ever will understand truly is that they have some need for an emotional connection somewhere.

14:00Their family is there for them, yes. But I don't know why it seems like they need something more. Maybe it's lonely at the top. I don't know. I'll never find out. I'm never going to be a CEO of like NVIDIA or anybody of that caliber level, really. I don't think so. But yeah, that's my counter-argument. I don't think it's so much as confidence as people need some kind of emotional connection to deal with the stress they have, maybe. But yeah, you know, who knows what's going on in his head? I don't know. It's all speculation. Right, right. I do acknowledge it's got to be one of the hardest jobs in the world for sure.

14:36There's still like rules, for example, that you can and can't break. And so regardless of how hard your job is, you know, I want the leader that I report to or the leader that I look up to, the leader of my company to bring to be held to the highest standard, not the lowest standard. And I think, you know, if it's like, yes, he's in the highest pressure job and therefore he can break company rules or he can lie. That's like because it's a hard job, we're going to lower the standard for him. And so I think it's like, yeah, yeah, this is what you signed up for. You're taking the hardest job and you're held to the highest standard.

15:12It's not easy. And, you know, the benefits that come with it as a CEO, the respect, you know, like when you walk through this Computex. We were at Computex earlier this year when he walked on the floor. We couldn't even stand. We had to leave the show floor because so many people piled in to see Jensen, right? That kind of thing, that kind of fame and fortune comes at a price, I suppose. But anyway, what do you think is going to happen to the AI trade? Let's get to the brass tacks of what everybody's thinking about. Well, I'm still using Claude today. I'm still using OpenAI today. uh it's still very productive for me i'm still believing that nvidia's roadmap will happen with uh ruben ultra and with fineman um i think i'll still use a x86 laptop and i think amd will still compete with gpus so on the one hand again as as we've been saying this is the story of the sort of AI trade, which is always just like the value's real, the demand is real.

16:21The stock market moves up and down on various things because they're pricing in a future value of a company. So obviously, what's going to happen to NVIDIA's future? Well, all we know in the short term is, right, Jensen Huang is not leading it. In the interim, Colette is leading it. You would like to think that it's just like, okay, run and maintain mode. Let's not make any drastic changes. Just execute on the roadmap for the next year. In the meantime, we're going to go figure out who the CEO, the next CEO will be. And we'll figure that out. Maybe it's someone internal, maybe it's someone external.

16:53We can talk through that. But you would like to think that the ship in the near term, maybe for the next year or so could continue to keep going as long as, because it, right, it's obviously Jensen's the face of the company and he's got the 60 direct report and clearly he has a say in everything, sort of like a Steve Jobs. On the other hand, there are lots of really smart people that work in NVIDIA. And so even if the captain is not on the ship anymore, clearly everyone rowing knows the direction they're heading and can still row and the ship will continue to go. So on the one hand, I'd like to believe that regardless of the stock price and what the weighing machine of the stock market thinks, that NVIDIA can put their heads down and keep rowing and keep going.

17:41But what do you think? So yeah, short term, I agree that the demand hasn't gone away. The technology hasn't fundamentally changed. Nothing has changed. All the projects internally will progress as planned, I hope. But from having worked at big companies, and I'm sure you have the same perception of this kind of stuff, is that when there is a vacancy at the helm, especially a vacancy like this one, there are going to be a lot of contenders. And there's going to be a lot of, you know, infighting, politics. All of this takes away from what the job is at hand, which is to continue to maintain NVIDIA at the leading edge of AI hardware.

18:28People lose track of that when they lose a leader like him. You know, he had a relatively flat organization. I was reading that he has like 60 direct reports, right? he's not like I have three direct reports who then have 20 each or something like that, right? He's like he had 60 direct reports. So he was a very hands-on, you know, culture. The culture of NVIDIA was driven by his founder approach to doing things. He's just, you know, go directly and get it done kind of an environment. My fear, okay, in the short term, I don't have any fear. Like I think everything's going to be fine. I don't know.

19:01A new CEO will come and do this and that. All the sales pipelines are set up. Good positions are there. Long-term agreements are in place. The scenario I fear is that somehow NVIDIA sinks into the managerial type, the spreadsheet CEO types who came and took over Intel. Right, right, right. So you make the very good point here, which is just the difference between a founder CEO and anyone else, any other CEO that comes in. Obviously, you want to have like a founder mindset, high ownership. And I think, you know, for example, Lit Bhutan, he came in and I think people thought like, oh yeah, he's, he like, he's, you know, he's crying because he cares so much about Intel and he has that same type of mindset.

19:49But at the end of the day, it's just different than the Elon, Zuck, you know, Jensen type people who started the company. They can just make decisions differently and they can think very long-term and take different risks than anyone else who comes in and you're now the new CEO, right? Correct. I love the example of Elon you brought up because I feel like Elon and Jensen have very similar traits. In fact, they are like extreme executors of a vision, right? Like they have a vision and they executed to the last breath they have. Like Jensen was one such guy. Like I've seen his earlier interviews and he says, I was on vacation all the time.

20:29I never stopped working. My family was on vacation. I never stopped working. I kept, you know, there was some note about how many emails he could answer in an hour and something like hundreds or something like that. I'm like, how do you even read hundreds? And this was before AI, right? Like, how do you even read hundreds? So he's that kind of like a crazy execution guy. And I like the Elon example because supposing Elon was removed from his companies, like, do you think any of that stuff will run the way it does, right? Like, do you think somebody else could run Elon's business the way he does?

20:58It would definitely, definitely, definitely be different. Because to your point, right, like the 60 direct reports, when Jensen's not there to just make the executive decision, now how are they going to decide who gets more budget and who gets flat budget next year, right? So it will fall into a bureaucracy red tape like situation where you're like, oh, you need to get approval from this VP or you need to get that approval. And then, you know, those all flow upwards to another decision maker, moves to another decision maker. And by the time, you know, the whole execution and the beauty of NVIDIA is lost in this mess.

21:34Totally, totally. So no Jensen should just say yes, yes, no, no, no in his emails every Sunday. And same thing with the Elons, you know, when you think about him sleeping at the SpaceX or the Tesla or the X or whatever, just you're going to lose that. Part of why some of these companies can move so fast, too, is because they have that founder who has the long-term vision and can just make those decisions quickly. And of course you can bring in CEOs that have a vision. You know, Satya Nadella has done a nice job at Microsoft, but, but it's still, there's going to be a risk, which is like when they bring someone in, what is their vision and can they execute like that?

22:12Can they, you know? Yeah. I like your counter example of Satya Nadella. I think he really turned around Microsoft like really well. He adopted GitHub and the open source mindset, and he really took it to a new level. Yeah, that's a great example. I really hope somebody like that comes over and takes the helm here at some point. Who do you think that'll be? Give me your top pick. Okay. Yeah, let's get into it. All right. We could just close with this too. Okay. Some names that have been floating around. Someone online said Lisa Su. Now, Now, I'll tell you what, Lisa Su. So when I was thinking through the example of leaders who bring out the best in people, you can hold them to the highest standard because you can make the argument of like, oh, yeah, Austin, you're being very idealistic.

23:00You want so much from a CEO. But like, look at all these other CEOs. They have other ones have moral failings, too. But then I'm like, no, I think I can find counter arguments. And I think of like Lisa Su was the first one who popped into my mind of just like super respect. I have tons of respect for her as an engineer, as a business strategist, you know, as a leader. And so, you know, I think very highly of her. Now, would why would she come over to NVIDIA and run NVIDIA? She's doing she's running AMD and they're they're doing awesome. So to the people that put that on X, no. What? No, no, no, dude.

23:35Come on. Why? Why should Lisa Sue has always been trying to play catch up. Now, what if you're suddenly given the the race car that wins the pole position. Like as an F1 driver, would you not take that car? Oh man, she's, yeah, yeah. I think she's always had a chip on her shoulder and she's David trying to take down Goliath. Now does she just want to flip sides? No, I think this is the time for Lisa to dig in and say, hey, Intel just had a terrible quarter and we're crushing on the x86 side. NVIDIA is having a hard time. This is a huge opportunity for us. If I'm her, this is where I put my foot on the gas, not switch teams.

24:11I totally agree. Yeah. I totally agree. Look at AMD's position now. Like, Intel is all over the place. We spoke about this on a previous podcast, like what's going on here, right? And AMD comes right after that in their earnings call. You wrote a Substack post on this, and they crushed it. They're like, what happened? Like, do you not have server CPU supply problems? Like, no, we just repurposed our client, you know, server CPU. We're good. And that was like, whoa, okay. So you're like really good on the CPU front and AMD is like now their biggest competitor has lost their leader. And I'm like, this is the time to go all in, right?

24:50Yes, yes, totally. So I don't think it'll be Lisa Su, but what do you think? What are some other names you've heard floated? I heard this is totally not going to happen, but I'm going to say it because it's really funny. Somebody thought like Tim Cook might be the CEO. What was the rationale? I don't know. Just because he came in behind Steve Jobs and Steve Jobs was the founder. He's so rational to these kinds of things. It's just, okay, maybe, I don't know, he is a leader of a very big company and he's a guy who sat, but why would you get a guy who sat out of the sidelines the whole time for the AI?

25:26Boom, he didn't really invest in like CapEx or anything. And then now you're like, oh, you know, just come and run this company over here that does all AI. Maybe, I don't know, it doesn't seem likely. very different business. I agree that he could come in after a founder leaves and he can operationalize and make a ship work as the company grows up from, you know, startup founder and stuff to like, okay, we're like grandparents now. We're just, you know, a company that's been around for a long time. But yes, it's a totally different business. I also think he's got to be at the point in his life where he doesn't want that.

26:00I wouldn't know that if I was him, I'd be like, dude i just retired what about lip butan lip butan intel is not doing no no yep pass uh they great guy he needs to stay with intel uh who else i think i've seen floated a madison huang uh jensen's daughter and she's a vp maybe in like i can't remember exactly what org maybe what it's it's either she or his son who is like in autonomy. I don't remember what the other, like automotive autonomy. I don't know about who does that. Yeah, I don't know what their roles are. What's his son? You know, we shouldn't miss, I'm going to save the most likely one for the last, but I think we should consider Rene Haas of ARM.

26:57Yeah, so that's an interesting one because Rene Haas used to work at NVIDIA. And so he has ties to the company. He understands the company. Also, ARM, although, yes, it's an IP business, traditionally, they are getting into the Silicon game. So clearly, Rene has not lost his chops for Silicon. And also, those are big strategic business model changes. And so clearly, like, the guy has a lot of credibility as a CEO. I think he could probably do it. Today's sponsor is Meter. You've got the GPUs and the power. Now, who builds the network and who do you call when it breaks? With Meter, it's one call.

27:46Tell them your GPU or server count and they design, deploy, and run your front-end storage and management networks. Meter builds its own networking hardware, switches and all, and writes its own network OS. So that call goes to the team who built it. Running a new cloud of clusters in a colo? Go to semidope.com slash meter. Links in the show notes. You know, I wanted to think, save what I thought was a probable candidate for last. And if NVIDIA promotes anybody internally, it'll probably be Ian Buck. mm-hmm totally agreed okay i think i think two things one yes and two who else would it be uh you know i've always had a problem with uh nvidia's succession planning which is there is no succession planning and you can tell this is a failure of itself right like yes exactly have succession planning yeah 100 and i'm sure like i'm sure the board's like no no we have this on paper but you can tell like who else gets to talk at big events it's like it's always jensen yes sometimes it's Ian for a little bit here or various executives at these other little things over here.

28:56But at the end of the day, it's kind of all Jensen all the time. And you don't see it quite the same at the other companies. You can tell even AMD is grooming other people and they get on stage. And so literally the only person that it could be in my estimation is Ian Buck. Can you even name any other executives that it could be i mean you know i can maybe think of like some names for like their networking business but you know i don't know yeah i don't know yeah ian buck is the only name that comes to mind right right yeah so maybe that's that's that's the best option i don't know let's let's wait and see they have to announce something and uh next earnings call is coming up soon uh next week next tuesday yeah we'll be at tomorrow tomorrowx so maybe they should just live stream it because you know jensen was supposed to talk at give a talk as i'd be one of the keynote speakers at tomorrowx i'm guessing he won't be there now maybe they can shuffle things around and just like live stream the earnings call i think everyone would legitimately sit in and watch it together yeah or we can just ask nvidia hey send in the new guy or girl yeah yeah right right yeah totally uh like they won't have that figured out um so no if now the question and we'll just answer this later we'll see what happens the question is should it be an internal hire and i think there's lots of good reasons you know ian buck is known for being kind of the father of cuda he came out of i think stanford phd and came over and built all that um there could be arguments for bringing in an external person but both of them have big time pros and cons.

30:37So we'll just have to discuss that later. Let's see what happens. This will be a conversation that goes for a long time, I'm sure. It's true. It's true. And we shouldn't dedicate more than half an hour to this. That's all we really have to say about this. Let's see what happens. Yes. We just wanted to bring this to you quickly because it's such a hot topic in the AI industry and we want to cover it on SemiDoped just so that, you know, we have something to talk about because it's such a big event. Exactly, exactly. And we said we'd keep it to 15 or 20 minutes and naturally it's been about 28 or so.

31:10So we're gonna end it here. Thanks everyone for watching us on YouTube, for subscribing, listening on Spotify. Check out our Semi-Dope Daily newsletter that we write. Check us out on X. We see it all. So please give us your comments, send us ideas. We wanna hear your thoughts. And we'll catch you next time.

31:31You