It’s never easy to admit you made a mistake, or ask for help fixing it — but doing both of those things once saved tech giant Nvidia from collapse, according to CEO and co-founder Jensen Huang.
Nvidia is currently valued at more than $2.2 trillion, powered partially by the tech industry’s artificial intelligence boom and high demand for its computer chips. But in 1996, it was three years old, facing layoffs and close to going out of business as a contract with a major partner — video game company Sega — fell apart.
Huang’s strategy to keep Nvidia afloat involved a rare amount of humility for a CEO, he told graduating students in a May 2023 commencement speech at National Taiwan University: “At Nvidia, I [have] experienced failures. Great big ones — all humiliating and embarrassing.”
As part of the Sega contract, Nvidia needed to make chips for rendering 3D graphics on gaming consoles, Huang explained. The contract was a big deal for the young business and it essentially “funded our company,” he added.
The company took an experimental approach to that goal, building low-cost chips that diverged from the rest of the industry’s software standards. “After one year of development, we realized our architecture was the wrong strategy. It was technically poor,” Huang said.
Worse, during that period, Microsoft rolled out its DirectX software interface, which became a standard for gaming platforms — and it wasn’t compatible with Nvidia’s chips.
“If we completed Sega’s game console, we would have built inferior technology, [been] incompatible with Windows and be too far behind to catch up,” Huang said. “But we would be out of money if we didn’t finish the contract. Either way, we would be out of business.”
Huang decided at the time that the best course of action would be to come clean with Sega, and tell that company to find another partner. At the same time, he noted, “I needed Sega to pay us in whole, or Nvidia would be out of business.”
“I was embarrassed to ask,”…
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