Perspectives On Jensen Huang, AI Maturity, Why The AI Market Is So Crazy

0:00Good morning, everyone. I'm in Europe, and I just spent a little bit of time in the Middle East and heading over to Workday Rising, and I want to fill you in on a couple of big things from us. Many of you probably saw that we announced the availability of Galileo in Workday, a new product where Galileo will be embedded within the Workday experience through SANA. So every Workday employee, manager, HR professional will have all of the features and benefits and advantages and intelligence of Galileo at your fingertips. I won't spend a lot of time on this right now. I'll wait till after the conference and then give you guys an update on where that's at and try to sell it to you.

0:40But more interesting stuff's going on for most of you, the upheaval in the AI market and the upheaval in the political market. And the reason I want to mention it is not because I wanted to get into politics at all, but I want to talk about what it implies in organizational culture and really your job in governance and HR. So Jensen Wong was a long-term entrepreneur, engineer at NVIDIA, appears to be a great guy, really built that company from its early days, and then took on this role for the last two or three years as the global spokesperson for AI, pushing the story that we all should be investing in this new industrial revolution and buying and building data centers and taking out debt and, you know, really leveraging up the whole global economy around AI.

1:37And he was very successful at that. We have a 10 trillion investment in the United States. We have 350 data centers being built, companies being formed. Every IT department is throwing money at this, and we're all using the Copilot or Claude or ChatGPT. I don't need to tell you how big it is. Elon Musk is into it. And there's this business of global competitiveness, of course, that the U.S. government believes that if the United States is not ahead, this is a global threat to our position in the world, which I suppose is true. And then, of course, around that is the fears that we're going to lose our jobs, or the AI is going to do something horrible and destroy humanity, which I don't buy any of that.

2:20And we talk, you know, all of those issues are covered in our new book, Superpowered, which I recommend you read. It's available for pre-order right now, and it'll be shipping the end of this month. But let's talk about Jensen. So then we find out that, you know, he's been having an affair, multiple affairs. And in addition to that, there's this company called Lightspeed that was founded in Taiwan, I believe, or Singapore, that's taking a bunch of chips, or they're really not chips, they're really computer systems, they just call them chips, and billions of dollars of them have been sold to this company, this intermediary company, and then apparently going to China.

2:57So Jensen, who's a businessman, is now getting involved in global politics, which has happened to a lot of business people, and in a sense lobbying Trump, who agreed that this is a good idea. And we're now finding out that it was a significant amount of money, and one of the analysts thinks it could be as much as$20 billion of chips that were sold this way. And, of course, this is all blown up. And luckily enough, Jensen was enough of a mensch, if you know that term, it's a Yiddish word, but he decided to resign, which was really the right thing to do because culturally, regardless of how important he is to NVIDIA, it's a bad example.

3:37It's really going to hurt customer and employee and partner brand for NVIDIA. And he's more than capable of doing other things with his life. And of course, the issues of having affairs with employees is another untouchable issue inside of a company that nobody wants to support. All very clear. All of that happened within 24 to 48 hours. Now, you go to CNBC or the Wall Street guys, and they're already past this. and they're trading on AMD and they're trading on other semiconductor stocks and to some degree pontificating about what they think is going to happen to NVIDIA. Nobody knows what's going to happen to NVIDIA.

4:16This is a company. There's thousands of people working there. There's lots of R &D and culture and management and people issues to deal with. But what it points out is something that I have talked about before, and I talked about it briefly last week, but I want to reinforce it just for a few minutes, is this idea that companies are not just profit-making enterprises. Now, one of the capitalist debates that comes up often is that Milton Friedman, who was a guy who wrote a bunch of economics textbooks, promoted and people adopted the idea that the role of business in a capitalist country is to make a profit, and that is it.

4:59and that it is the government's role or the consumer's or customer's role to align or adjust the business's practices so that they are positive and not harmful to people. So if you're a tobacco company and you're selling cigarettes, that's fine if you're making a profit. It's up to the government or the customers to say, no, I'm not going to buy cigarettes because they cause cancer. Or if you're Monsanto and you're selling Roundup. Or if you're Meta and you're selling Facebook or Instagram and your kids are using it and it's hurting them. And the government is supposedly, in this model, going to represent us, do research, study these problems, and create rules like airbag rules, crumple zones in cars, food safety rules.

5:54You know, there's thousands and thousands of these. And then the private companies will operate within this system of rules. It's a very clear story. Everybody understands this. But the details are extremely tricky because in the United States, at least, I think this is true in a lot of countries, political leaders are elected through campaign contributions and money. And money and lobbying has become bigger and bigger and bigger in the United States. This is one of the issues in the election we just had. So whether this rule is enforced or not has something to do with how much money the stakeholders, the businesses have put into it.

6:37So in California, for example, we have higher gas prices than most states because we have lots of environmental rules. And we have very strict rules on car emissions, which, by the way, the Trump administration, I think, rolled back. So a lot of the car companies have to build special versions of their cars for California, which in turn, you know, make the cars better for everybody else. And the argument that the Californians would make is, we're going to push the rules so that the rest of you guys can get the benefits of our work, and then the rest of the country says, we don't want your rules.

7:10So anyway, this is the way it works. But so we apply all that to AI. And nobody knows whether AI is really dangerous or not. It certainly can be used for very nefarious things. And so if we're going to sell AI stuff, hardware and innovation to China, there's a lot of political questions about whether that's good or bad. But it does appear that in this particular case, Jensen was successful in convincing either Trump directly or the whole Commerce Department that it would be fine for them to sell billions of dollars of chips to China. Now, why did he do that? I think it's pretty clear that he did it for business reasons.

7:51He simply wanted to keep the company growing, which leads me to the point of this podcast. One of the things that I've learned over the many years of doing this and talking to so many of you is that growing a business and focusing on growth is a dangerous strategy. In other words, if you're sitting around all day talking about why we're not selling more, why we're not getting products to market faster, what can we do to improve revenue, what can we do to increase market share? That's all fine. I mean, that's a very important job and part of a company because it drives up the stock price and it makes the investors happy.

8:33Now, investors are not your only stakeholder. You may think they are if you're the CEO because if the stock goes down, you're probably gonna get fired. But in reality, investors are very disloyal stakeholders. They can sell their stock in five seconds and move on. Your customers cannot, your employees definitely cannot, and your channel partners also cannot. So if you think about your business as a way to make more and more and more money, to attract more and more and more investors, you're putting yourself on a rat race process that is very hard to sustain. Now, when you go to the CNBC website or you watch CNBC on TV or you talk to any of these financial analysts, their jobs or their careers are based on buying and selling companies or stocks.

9:28So are PE firms, for that matter. So there's a very large financial services industry that makes a profit on the behaviors of your company financially. So in a sense, their motivation and their lifestyle in a sense is to pay attention to what you say and do and act on that before everybody else. So there's this feeding frenzy of information, stock recommendations, commissions, margins, all sorts of things that are dependent upon this frenzy of growth or non-growth from different companies. And the point I'm making is, I really think what's been going on under the covers of NVIDIA, and this is the same thing that's going to happen with Anthropic and OpenAI, is these companies have become so focused on the financial businesses around their operations that they're starting to push themselves into what I used to call growth at any cost.

10:27And, you know, you look at Enron, you look at what Volkswagen did, you look at Boeing. I mean, many, many of the companies that have made operational or strategic mistakes made them because they had opportunities to grow. The pharmaceutical companies, all sorts of things. They shipped a product that wasn't ready. They shipped something that was not safe. They built something that wasn't safe and they hid the information. You know, this goes on a lot. because they're looking for Milton Friedman's reality in his life or his mind that if the stock price goes up, I'm doing the right thing. And unfortunately in AI, this is all about the money right now.

11:08Now, for those of you in my world, it's all about the solutions and getting this stuff to work and figuring out how to apply it and scaling it up as an enterprise. And that is a work-in process that's coming along, and we've talked a lot about it, and we're very far along with this. We actually had a lot of meetings in Dubai this week with a lot of big companies. And there's a lot of emerging maturity starting to form in the AI world for corporate uses. And in the consumer world, AI is gonna be huge. It's really gonna replace our search and buy experience. We're gonna be talking to agents that do things on our behalf.

11:45Obviously, that's obviously coming. But because the most prominent executive in AI is now resigning and we're seeing under the covers of behavior that maybe some of us don't emulate. I want to remind you something that I've learned over the years in my own business experience is that growth is an outcome, not a strategy. The reason your company grows or can grow, there's lots of operational issues in growth. Running sales and marketing and customer service and brand and support and consulting and partnerships is a big deal. And I think what Jensen did, in my mind, is build an infrastructure of partners and blueprints and software around their technology to help the company grow.

12:34Oracle did that. A lot of great companies do this. But the reason a company grows is because there's demand. And the reason there's demand is because the products and services are trusted, valuable tools. And I want to remind you that just growing isn't enough. Because what happens to companies that just grow is at some point in that growth trajectory, things don't work. And I've seen this over and over again. When companies grow fast, at Sidebase we used to call it get big fast. It probably comes out of Silicon Valley. You hire people that are not ready. You have management and roles that are not clearly defined.

13:14You have products that are immature. you're not doing a good job of service, et cetera. So one of the lessons that I take away from this whole global fiasco is NVIDIA, even though NVIDIA is an old company, it's a very well-run company from what I know, may be just growing too fast. And maybe it shouldn't be growing so fast and it shouldn't be looking for revenue in places that frankly aren't in the best interest of the citizenship of the country in which it lives. And you as a company, and I've used this word a lot, are a citizen in a society. The behavior of companies affects us as citizens, as consumers, as customers.

13:54So I think what might come out of this, I'm not sure yet, but we'll find out soon, is that the behaviors of many of these companies are pushing boundaries because of this massive economic and financial market emphasis on AI. Now, the other really funny thing about AI that I find very entertaining is how the prominent executives, Sam Altman, Elon Musk, Jensen, Dario, say very odd things to the press, Alex Karp, and they're sort of inflammatory. They're weird things like, we're going to destroy the world, or this tool can be misused and destroy the banking system, or this is a tool that's 77 times smarter than humankind, or within five years, AI will be smarter than the entire planet and there will be no more jobs.

14:47I don't know why they say these things because they're not true and they don't know that they're true. They may think they are. They don't really know that much more than anybody else. They know a lot about the technology, but those of us that are using it or live in the real world, we know a lot about the world too. I mean, I think, you know, what I've learned over the years about jobs and roles and companies and structures and HR and management and leadership and operations is very different from what an AI engineer understands about the technology. And I think we need to merge this technology knowledge with our knowledge of how things get done at work.

15:25And that's the hard work that's going on right now. You know, all of the implementations of AI are much, much, much, much slower than the technology itself. I mean, we worked with, we met a lot of big companies this week and we're going to meet more. This is the reason we're working with Workday, by the way, is this transformation is going to take time. Why these guys, you know, kind of push these messages is a little bit beyond me, but I think the reality of it is a somewhat self-serving behavior. So my point in pointing this out is that as unique and interesting and entertaining as this all is, and probably difficult for Jensen and NVIDIA and the executives at NVIDIA too, we're just watching the same thing that's happened in every other large corporate failure that under the covers of a mistake or a poor decision or an ethical lapse is somebody who said we need to do this to grow.

16:23We need to do this to hit the Wall Street numbers. And I'm not trying to change our society or our country in any way. But at the same time that was going on, we wiped out the political system to start over. I mean, this is a wipeout of the MAGA movement. And I'm a little bit more blue than red. I think what we saw, and this came out from the polls, is that most Americans are a lot smarter than everybody thinks. They've seen the corruption. They've seen the poor behavior in Washington. They've seen the self-dealing. They've seen the lobbying. And they don't like it. They don't feel that it's helping them with their personal well-being.

17:03The data on U.S. standard of living and wealth and purchasing power is really shocking. How quickly the United States has become a country of haves and have-nots. Inflation, the wars, you know, the political system spoke. And I think the lesson that we can learn from that, that I talked about in the last podcast, is that the people do win in the end. They do speak up, just like employees do too. So let's look at the AI industry in a little more of a rational process if we can. For those of you that are buying these tools and using these tools and learning about these tools, I will be talking a lot about this in my 2027 imperatives.

17:45I'm doing a lot of work on that right now. I'll give you a little preview. This stuff is going fast and it does incredible things. And the more you think about agents and AI as long-term infrastructure, the better. Because even though the capabilities and the functions and the features of the AI are changing very quickly, in the real world of implementing it, you're implementing enterprise solutions that have to work over a long period of time and they have to scale. And that's why we built the HR 2030 architecture is to show you that. And we're getting, I would say, sort of rave reviews on it, and we're going to work with more and more companies.

18:22If you're in the middle of trying to get your AI transformation work off the ground and you want to think about the big picture and you want to understand the technology better, we're in a very good position to help you, particularly in HR, and I'd say mostly in HR functions, but other areas too. So talk to us, check out what we're doing with Workday. I'm really excited to be working so closely with Workday. I've admired that company from the very beginning of when it was formed in 2006, and I'm just thrilled to be able to work so closely with them. If you're coming to Workday Rising in Barcelona, we'll be there.

18:57And reach out to us for anything else that is on your mind about leadership, management, HR, and all of these cultural issues that are probably things that most of you probably you think about in your own companies too. That's it for now. I'll talk to you more soon. We've got some amazing case studies of some really fascinating companies coming out on the podcast over the next couple of weeks too. Stay tuned for that.