The Nvidia Way: Jensen Huang and the Making of a Tech Giant

by Tae Kim

According to the two authors, potential buyers didn’t want to be persuaded. They wanted to be seduced. But seduction requires a simple message, and Nvidia’s message with the NV1 was far too complicated. It wasn’t superior to the competition in any obvious way, and it was actually inferior under some circumstances.

“The customer’s always thinking of alternatives,” Jensen said. And in the customer’s mind, the alternatives could do what the NV1 could not—they could play DOOM. No amount of complaints about how the game used older graphics standards, or didn’t to take advantage of the NV1’s performance-boosting capabilities, would offset that one, easy-to-understand, negative message.

Knowingly or not, 3dfx followed the exact principles laid down by Al Ries and Jack Trout in Positioning. The company pitched its product as a clear alternative to the other cards in the marketplace and appealed to its customers’ emotions—the feeling of “beating the system” by getting outsized performance at a great price—rather than try to convince them with facts and performance statistics.

Second place is the first loser,”

“We tried to resolve the dispute. I forgot the details,” Tsai said. “But it really hit me. Jensen taught me his philosophy of doing business called ‘rough justice.’ ” Jensen explained that “rough” meant the relationship was not flat but rather had ups and downs. Justice was the important part. “After a certain period of time, let’s say a few years, it would net out to roughly equal.” To Tsai, this was a way of describing a win-win partnership, though one that acknowledged there wouldn’t be a win-win every single time. Sometimes one side would get the better of a specific deal or incident, and the next time it would be the other side. As long as it was roughly 50-50 after a few years—not 60-40 or 40-60—it was a positive relationship. He remembers thinking Jensen’s approach made a great deal of sense.

“We don’t sell on cost. We don’t believe our products are commodities,” Moore’s sales leader told him. “We believe that we bring exceptional value to the customer, and we extract value for our brand.”

“We always have a PIC for every project. Whenever Jensen talks about any project or any deliverables, he always wants the name. Nobody can hide behind, ‘such and such a team is working on that,’ ” former finance executive Simona Jankowski said.11 “Everything has to have a name attached to it because you have to know who’s the PIC, who’s accountable.”

“Nvidia doesn’t constantly fire people and rehire them,” said Jay Puri, head of global field operations.12 “We take people that we have and we are able to redirect them into a new mission.” Managers at Nvidia were trained not to get territorial or feel like they “own” their people and instead got used to them moving around between task groups. This practice removed one of the main sources of friction at large companies. “Managers don’t feel like they get power by having large teams,” Puri continued. “You get power at Nvidia by doing amazing work.”

It was the thing he did for fun: “I drink a scotch, and I do e-mails.”

As a technology enthusiast who had built several computers and spent considerable time on the then-nascent Internet, it was clear to me that Levin had little understanding of how AOL’s products actually worked. I found myself wondering how a business executive with such limited technical knowledge could find himself running one of the largest media and technology companies in the world. Yet as I learned soon enough, Levin was not an outlier. Activist investor Carl Icahn has a theory that much of corporate America mismanages the succession process in choosing new CEOs. He calls it anti-Darwinian—the very antithesis of the ruthless process of natural selection that allows only the best equipped of a species to survive and reproduce.1

Icahn observed that competent executives often get sidelined in favor of more likeable but less capable ones because of behavioral incentives inside companies. The personalities who ascend the corporate ranks resemble college fraternity presidents. They become friendly with the board of directors and are not threatening to the current CEO. They’re not prodigies, but they’re affable, always available for a drink when you are feeling down. As Icahn put it, these figures (they are mostly men) are “not the smartest, not the brightest, not the best, but likeable and sort of reliable.”

CEOs want to survive. Naturally, then, they prefer not to oversee a direct subordinate who is brighter and could potentially replace them. They tend to opt for someone slightly less astute than they themselves are. But when the CEO eventually departs, the glad-handing executive who is now on good terms with the board of directors frequently gets el...

“Jensen looks at stock like his blood,” said former head of human resources John McSorley. “He pores over the stock-allocation reports.”