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Nvidia CEO: Smart, successful people struggle with these 2 traits, but they kept my $2 trillion company from collapsing


It’s never easy to admit you made a mistake or ask for help to fix it, but doing both of those things has already saved the tech giant. Nvidia of collapse, according to CEO and co-founder Jensen Huang.

Nvidia is currently valued at over $2.2 trillion, fueled in part by the tech industry. Artificial intelligence boom And strong demand for its computer chips. But by 1996, the company was three years old, facing layoffs and on the verge of bankruptcy because a contract with a major partner – video game company Sega – fell apart.

Huang’s strategy for keeping Nvidia afloat involved a rare dose of humility from a CEO, he told graduate students in a May 2023 keynote speech at National Taiwan University: “At Nvidia, I experienced failures. Very big failures, all humiliating and embarrassing.”

Under the Sega contract, Nvidia was to make chips for rendering 3D graphics on game consoles, Huang said. The contract was a big deal for the young company and it “basically funded our business”, he added.

The company took an experimental approach to achieving this goal, building low-cost chips that deviated from other industry software standards. “After a year of development, we realized that our architecture was not a good strategy. It was technically poor,” Huang said.

Worse still, during this period, Microsoft deployed its DirectX software interfacewhich became a standard for gaming platforms – and it was not compatible with Nvidia’s chips.

“If we had finished Sega’s game console, we would have built inferior technology, incompatible with Windows and we would be too behind to catch up,” Huang said. “But we would run out of money if we didn’t complete the contract. Either way, we would be out of business.”

Huang decided at the time that the best solution would be to tell Sega the truth and tell that company to find another partner. At the same time, he noted, “I needed Sega to pay us in full, otherwise Nvidia would go bankrupt.” »

“I was embarrassed to ask,” Huang said. “The CEO of Sega, to his credit and my great astonishment, agreed. His understanding and generosity gave us six months to live.”

Sega bought out its Nvidia contract and used Imagine Technologies’ PowerVR chips for its Dreamcast consoles. Huang used money from the Sega contract to abandon Nvidia’s initial efforts and build a new chip – the RIVA 128 – compatible with DirectX.

The new chip supported higher graphics resolutions than its competitors, and Nvidia sold over a million units in four months in 1997, marking the company’s first successful product and reversing its fortunes.

It wasn’t easy to admit Nvidia’s mistake and humbly ask a customer to understand, Huang said: “These features are the hardest for the brightest and the most successful, like you.” »

He was also adamant that swallowing his pride was the right thing to do for his business.

“Facing our mistake – and, with humility, asking for help – saved Nvidia,” Huang said.

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