The secrets of the world’s richest company

0:00This is The Guardian.

0:09Today, the secrets of the richest company in the world.

0:21You've heard of Apple and Microsoft, of course, and of Amazon and OpenAI. But what about NVIDIA? It's more valuable than all of them. The richest company on the planet. The chipmaker Raw has passed$3 trillion in value, leapfrogging Apple. If you've ever asked ChatGPT a question, or played on a Nintendo Switch, you've used an NVIDIA product. They might not be as covetable as a brand new iPhone, or as talked about as Tesla. But NVIDIA's microchips power the modern world and are crucial to our artificial intelligence-fuelled future. Behind it all for the past 30 years is a relentless Taiwanese-American guy in a leather jacket with a shock of white hair and wire-framed glasses.

1:10We have a superstar in-house. We do. Please welcome to the stage Jensen Huang. A man whose fortune is now at risk because of Donald Trump's tariff regime. and particularly due to Trump's trade war with China.

1:29This week, Jensen Huang took the surprising step of offering to pay the US 15 % of the money that NVIDIA makes by selling AI chips to China, a deal like nothing else in modern trade history. A highly unusual deal, maybe even unprecedented. So I said, listen, I want 20%. He said, would you make it 15? So we negotiated a little deal. 15 % of NVIDIA's revenue from selling H20 chips to China could amount to billions of dollars. But why did he do it? And how did he build a multi-trillion dollar company without most of us even noticing? From The Guardian, I'm Helen Pidd. Today in Focus, Jensen Huang and the NVIDIA story.

2:13Tay Kim, you're a journalist and writer who has been looking at NVIDIA for many years now, ever since the 1990s when you were a self-confessed computer game nerd. Thanks so much for coming on the show. It's great to be here. Thanks for having me. You've written a book about NVIDIA called The NVIDIA Way, which charts the company's 32-year history and the man behind it, Jensen Huang. And a bit like Madonna, he tends to just go by his first name, so we're going to call him Jensen too. Tell me about his upbringing. Jensen was born in Taiwan in 1963, and they moved around. The father moved to Thailand before he sent Jensen and his brother to the States.

2:50It's the classic American dream story. His parents loved America. Like his father came to New York City for training once and said, I want to bring my kids here someday. This is the land of opportunity. He was sent early when he was about nine years old to a boarding school, a reform school in Kentucky. thinking that he could get a good education there. But it turned out to be a school for misfits and juveniles. He talks about how he cleaned bathrooms and cleaned the dorm. It's almost like a Goodwill Hunting's movie in a way. He talks about how he played chess with a janitor and ate apples off the apple tree.

3:29Oh, wow. I can picture the Hollywood adaptation of his life already. Yes. I could totally see it. There's so many cinematic stories like that. I compared him to Michael Jordan in the sense that he always had a chip on the shoulder to prove himself. Ironically, a chip, given what we're going to be talking about. Yes, exactly. He was a teenage ping pong champion. Love it. The ping pong center that he played at talked about how he worked harder than anyone. Even though he didn't have the money, he would work at the ping pong center so he could pay his way to all these tournaments. So he was a teenage ping pong prodigy, but he also had to work kind of minimum wage jobs, right, just to get by.

4:08Yeah, he talks about working at Denny's. It's a big chain in the U.S. where most people go there to eat breakfast, omelets, and you can get burgers. My first job before CEO was a dishwasher, and I did that very well. he talks about how he learned social skills uh his work ethic being able to manage you know multiple coffee cups and dishes at the same time and he said he was the best he took pride in all the work that he did at denny's including cleaning the bathrooms he always talks about cleaning the bathrooms for some reason at every job and he he's famous for saying like he's he's positive he's cleaned more bathrooms than any ceo in history you know i cleaned a lot of toilets i've cleaned more toilets than all of you combined.

4:55And some of them just can't unsee.

5:01Was he always a computing prodigy? No, he wasn't. I asked him directly, when did you get your first computer? And since their family wasn't well off, he had to use the computers from his friends or at school. And he never really had a computer growing up. So unlike a lot of the other computer prodigies, Bill Gates had access to a computer at his famous private school, and he didn't really have access to computers growing up, which is amazing in the sense that he became such a technical genius later. And how did he get his start in Silicon Valley? So his first job at school was as a chip designer at AMD, which is the main competitor to Intel.

5:40And then he went to a company called LSI Logic, which helped companies design their own custom chips. In 1993, Jensen returned to Denny's, this time in San Jose in Silicon Valley, for a meeting that changed his life. By then, he was a married father of two and had built a reputation not just for engineering prowess, but also business acumen. He met up with two fellow engineers, Chris Malachowski and Curtis Preem. He persuaded him to leave his job and start a new company with them, with the goal of designing the best microchip in the world. So we came here, right here to this Denny's, sat right back there, and the three of us decided to start the company.

6:21Frankly, I had no idea how to do it. And nor did they. None of us knew how to do anything. While their rivals, like Intel, were making their own chips, the new firm was going to focus all of its efforts on engineering, outsourcing the manufacturing abroad. He officially joined them on his 30th birthday. On the 17th of February 1993, NVIDIA was born. And why NVIDIA? What does the word mean? And what was NVIDIA initially setting out to do? NVIDIA, it was the first code for one of their prior chips, Envy. And it also means in Latin, Envy, which they thought was a good name for a company. Quite a prophetic name, as it turned out, given how jealously they are watched now by everybody else in the industry.

7:10Yes. So NVIDIA was a 3D graphics startup, and all three engineers decided that the video games business is going to be a big business on the PC side. 3D graphics were taking off. Jensen loved to play video games and knew it was going to be a great entertainment medium. He saw something that's obvious that's going to happen, and he knew there will be graphics chip companies that will do well in that area. And the graphics chips are needed, what, literally to just make how a video game looks, to make it look as realistic as possible. It renders the graphics onto the screen. And back then, most of the video games were 2D graphics, where it kind of looks like Nintendo and Super Nintendo, like Mario, very flat.

7:53I remember it, yeah. 3D graphics, everything is rendered in a way where you're moving around in a 3D dimensional space. Let's go back to the 90s. How did their first venture go? So their first chip called the ND1 was a complete disaster. And Jensen talks about how they made this mistake of trying to be the jack of all trades. So instead of just doing graphics, they added sound capability. They added a joystick game port. So they tried to do all different features at once. And the lesson that Jensen learned was you really need to focus your marketing on one thing. Gamers just want great performance at a good price.

8:30So the first graphics chip was a disaster. It didn't sell. Almost every graphics card they sold got returned to them. And then the second chip, the NV2, was a chip they made for Sega. And Sega decided not to go with the NV2. So now you have two chips that didn't succeed. And the thing about Jensen is every time NVIDIA is about to go bankrupt or is facing an existential crisis, he is insanely resilient and comes up with a solution. Right. And what was the solution? What was the breakthrough moment that set it on this path to becoming the richest company in the world? So we put something in the contract with Sega that if we delivered a prototype of a chip that you would pay us a million dollars.

9:14So that was kind of a life-saving move where they had a million dollars when they're practically out of money. And then they decided to do a business innovation called chip emulation. They didn't have enough money, so they only had one shot. They needed to send a chip design that was perfect from the beginning and basically had no bugs. So they bought this chip emulation box, which costs a lot of money, and they tested their chip design in this emulator. which was unprecedented at the time because people just usually did multiple revisions of a chip. So they did this, and when they got back the chip, it worked.

9:53That saved the company. NVIDIA was the first company to really do, and it gave them a huge advantage in the ensuing years because other companies didn't really do this. This is mainly for 3D graphics, and it played Quake really well, which was the game that really took off at the time. It's in a fantasy universe and you go around and kill monsters and aliens. Sounds fun. It's amazing in the sense that it was the first game where you could go up and down, left and right. It's considered as the kind of original game before other 3D games like Halo for Xbox and Call of Duty. Oh, okay. Quake was the first one that started that long line of first-person shooters.

10:40And they sold, I think, a million units in a year.

10:49Tell us a bit about the culture in the company. What kind of a place is it to work? From the beginning, the first thing I found out while I was doing my research and the thing that really differentiates NVIDIA to other companies is the work culture. Part of it is the work ethic. You have to work very long hours. And Jensen is very demanding as a boss. So you're going to have to just work harder than any other place. Is work-life balance just not a thing at NVIDIA? No, it's not a thing. The second thing is it's very flat. There aren't that many managers. Most CEOs might have 68 direct reports. Jensen has 60 direct reports.

11:31and the way decisions get done is everyone goes into a room with Jensen. Jensen kind of peppers the key engineers what's happening, where should we go and they make a decision. So the big difference at NVIDIA, they don't get mired in the corporate internal politics, endless meetings upon meetings where no decisions are made at most companies and at that bureaucracy, none of that is there. At NVIDIA, everything's just speed and velocity, decisions are made And all this comes from Jensen, who's on top of things and just works harder, like I said, than any other CEO. Sometimes the way how you describe it could be described as micromanaging somebody who is just not good at delegating.

12:14And that can often slow down business. Yes, but Jensen also trusts people to do the work. And if you're doing a good job, he'll let you do your thing. Jensen has this also this thing called top five emails. It could be anything that you think is like the top five most important things that are happening. So every employee at NVIDIA has to write an email, maybe every week or every other week, depends on the team. How many people are at NVIDIA now? It's about 40 ,000 people right now. So 40 ,000 people have to write an email? Yes, yes, yes. So they write an email every week or every two weeks to their team members and their managers.

12:53What are you seeing out there? What are the competitors doing? How is the project going? What academic papers and AI are really doing well and are kind of resonating? But the thing that's different here is Jensen also reads these emails. Not 40 ,000 emails. He reads 100 of them every day. Maybe on the projects that he's very interested in, but he also has something in his outlook that filters 100 emails at random. So every day he's getting a real-time sense of what's happening inside the company. I think this is really what separates Jensen from other CEOs because he loves reading and learning about new technology.

13:34He's doing this over the weekend too. Like one of his favorite things to do on Sunday evenings is take out his laptop, have his favorite Scotch Highland Park whiskey, and read those top five emails. And because NVIDIA is a place where you get in trouble if you're not honest, if something's going bad, you need to tell your boss, you need to tell your team members up front. So he's kind of like tapped into a hive mind. It's almost like a matrix. Wow, okay. Sounds like quite an intense guy. Well, there's a story where, you know, he loves to talk to people and get, you know, the saddest of how things are going.

14:08And there's this one story about this technical manager in the late 90s was in the bathroom and Jensen went to the stall next to him, which is kind of awkward and asked him so how are things going what's up and he said oh not much because he didn't want to talk because it's kind of awkward and then he saw jensen's kind of eye and face change because that's not really a good answer to the ceo he wants to know what's going on and you know what's happening and what are you doing so then he saw jensen's kind of frown on his face and this oh no i'm doing this i'm doing that i'm doing this technical demo for these guys So, you know, he felt like he had to say something to show that he's a diligent employee and doing well.

14:46Let me tell you what some of the people who you work with said about you. Demanding. Perfectionist. Not easy to work for. Will that sound right? Perfectly, yeah. It should be like that. If you want to do extraordinary things, it shouldn't be easy. Oh, it sounds quite stressful working at NVIDIA. But let's fast forward a bit in the story to the COVID pandemic. So the COVID pandemic hit in 2020. And I think that was something of a boom time for NVIDIA. Tell me about that. Yes. So COVID hit 2020 and a lot of people were doing remote work for their jobs. And they were buying a lot of video games because people are at home.

15:27So the video game business really took off. It was very good for video game software companies. And since most of the video games out there were running on NVIDIA graphics cards, NVIDIA's business boomed, like most other kind of digital services and digital hardware companies at the time. So they were doing really well throughout the pandemic. And then in late 2022, AI really hit the global consciousness with the launch of ChatGPT. Was ChatGPT using NVIDIA chips? Yes. So OpenAI has been using NVIDIA from the beginning. And a month before ChatGPT was launched in November of 2022, nvidia launched an ai chip called hopper which had a special transformer engine software that was perfectly made to run you know transformer type ai models and chatbots did nvidia deliberately set out to ride the ai wave yes which is amazing because one of the key unique things about nvidia is jensen always kind of sees what's going to happen before it's happening so if you look back in 2019, he bought this company called Mellanox, which is a networking company in Israel.

16:40And in that press release, when he bought that company, he talked about how someday AI workloads would be run on tens of thousands of servers with GPUs. And Mellanox's networking technology will be critical to make it all happen. And GPUs remind me that that's NVIDIA's chips. Yes, yes. Graphics processing units. So this is something that happened in 2019. He spent $7 billion for a company for this vision of AI running on tens of thousands of servers filled with NVIDIA GPUs using Mellanox's top-of-the-line networking technology. This is 2019. This is what exactly happened in just a few years later.

17:19And this was all set off by ChatGPT in late 2022. Right. And in real kind of layman's basic terms, what is it about NVIDIA's chips that makes them so amazing and important for AI? So if you're putting your computations and tasks on NVIDIA, you know that NVIDIA chips are going to be able to run it the fastest and the best. And it's actually a very similar kind of business strategy when he did with video game graphics chips. Usually a chip took about 18 months, so they would come out with a new chip every 18 months. Jensen was like, that's not fast enough. We're going to come out with a chip every six months.

17:58Okay. So then that basically drove a lot of their video game graphics chip companies out of business. In the exact same way, Jensen two years ago said the typical time frame for AI chip to come out was every two years. And two years ago, he said, no, we're not going to do that anymore. We're going to come out with a new chip every year. Each chip now costs$20 billion to$30 billion to develop every year. I mean, that's just a size and amount of resources that you can't fathom if you're a smaller company. And of course, the performance. You're confident a year from now and the year after that, NVIDIA is going to come out with a chip that's even faster and can process things faster.

18:42To the other side of the AI coin, or a lot of coins, AI chip maker NVIDIA hit a first-in-the-world milestone. became the first company ever to have a market valuation of$4 trillion. Last year, NVIDIA became the richest company in the world, and in July became the first company to have its market value past$4 trillion, which is about£3 trillion. And I actually find the size of the company hard to fathom. It is now worth more than 97 % of the world's economies and all of the world's military spending, with Jensen still at the helm. Now, Jensen has become something of a cult figure. But for those of us who haven't met him, and I know that you have for your book, where does he sit on the Elon Musk, Bill Gates, Steve Jobs scale?

19:27I think he's up there right with them or maybe above all of them. Wow, really? I mean, the only person I would compare him at the same level is Steve Jobs. They had a very similar kind of work ethic and demanding work culture. They both have a sort of uniform, don't they? Or did. Yes. So Steve Jobs has a black turtleneck and Jensen is famous for wearing his black leather jacket to all speaking events and functions. And you can't really argue with the results. I mean, if you put$10 ,000 in NVIDIA stock in 1999, that stock, if you did not sell it, would be worth about$47 million today. And I think it's the best stock performance in that time period of any other company in the world.

20:24And after the launch of ChatGPT, there has been a global race for AI supremacy. And under Joe Biden, the U.S. became so worried that the Americans might not win this race and the Chinese might beat them to it, that Joe Biden brought in an export ban on these chips. The U.S. Commerce Department rolling out sweeping regulations on Friday that restrict the sale of semiconductors and chip making equipment to Chinese customers. How did that affect NVIDIA? Their latest, most advanced chips were banned in terms of being able to be sold to China. And then NVIDIA made a weaker chip called the H20, which was able to be sold to China.

21:05And NVIDIA did that for a while, for a couple of years. But then the Trump administration effectively banned H20 earlier this year. So NVIDIA had to take like a huge write off of like$78 billion of inventory they built up. NVIDIA shares still lower and dragging down the rest of the semis after that surprise five and a half billion dollars. Right. But then just a few days ago, after months of lobbying the White House, NVIDIA, as well as another chip maker called AMD, struck an actually extraordinary deal with Trump that has shocked many in the business world. And the deal is this. They agreed to give the US government 15 % of their revenue from the advanced chips that they sell to China in return for export licenses.

21:47What do you make of it? Why would NVIDIA agree to this? One analyst said about this agreement, 85 % of something is better than 100 % of nothing. The agreement is a bit unusual and unprecedented. I think it's another example of uncertainty and the mercurial nature of dealing with the Trump administration. But in terms of for NVIDIA, the actual amount of revenue is pretty negligible. I think it'll come out to about a few billion dollars a year. NVIDIA's estimated run rate for the year is about 200 billion. So we're talking 1 to 2 percent of overall revenue. And some critics of the deal are arguing that it's basically a national security issue, that it allows China to get ahead in the AI war.

22:30The Chinese might use it, for example, for military purposes. What do you think about that? This H20 chip was actually designed to fit under the Biden administration's limitations for GPU exports to China. So it's a hobbled chip. So this is not a national security issue in any sense. And it just shows that dealing with the Trump administration is filled with uncertainty. And what about Trump's big drive to force companies to make more of their products in the US? Wasn't it just last week that he was threatening to put 100 % tariff on chip companies? NVIDIA has already committed to produce more chips in the U.S.

23:06They're partnering with TSMC to make some of their chips in Arizona. I think they're going to make about$500 billion over the next four or five years of AI servers. So they've already committed to the administration. And part of this 100 % chip tariff is that there's broad exemptions for companies that have committed to build manufacturing or chips in the U.S. And NVIDIA seems to fit that. Oh, so they can import their chips from Taiwan? Yeah, as long as they commit to build more manufacturing capacity in the US, which NVIDIA has done. So I assume, you know, who knows with Trump, he might change his mind every other day.

23:56I'll be honest with you. The first time I heard of NVIDIA was back in January this year when a brand new AI product came on the market called DeepSeek. It was made by Chinese developers and it was being pitched as a true rival to ChatGPT. And that caused a certain amount of panic on the stock market because this Chinese company seemed to be using far fewer chips than were necessary for ChatGPT and the like. And hence it was going to be much cheaper to scale the product in future. Essentially, they seem to be getting ahead in the AI race. What do you think about that? So DeepSeek actually used older version of NVIDIA chips to develop their model.

24:33And it kind of broke out on the scene in January. And this narrative started to come out where somehow DeepSeek was able to create an advanced AI model and not have to spend a lot of money to make that model. Maybe all the spending that American companies did to make these models wasn't needed anymore. Well, those two narratives turned out to be completely false and misleading. And if you actually read the paper where that figure came from, it wasn't even a real number. It was a theoretical number and didn't incorporate the costs of all the research and development and infrastructure they built.

25:10So right now, DeepSeek isn't even in the top 200 apps on the iPhone store. No one's talking about it. Okay. And so you're saying that DeepSeek hasn't quite lived up to all of the hype earlier in the year, but are the Chinese presumably still that they're trying to refine that and they want to win the AI war? And are they trying to do so without NVIDIA? Are they developing Chinese made chips that can rival them? There are AI chip companies in China developing technology. Huawei is the main one, which is famous for their telecommunications networking devices too. But they're far behind NVIDIA in capability, in power efficiency.