Jensen Huang – Ignore your customers to build a trillion dollar company

Jensen Huang grew Nvidia to a 3 trillion dollar company behemoth! If you ask him what is his secret to success, he will tell you: ignore your customers!

Huh?

Isn’t that the opposite of what every successful business book and course teaches? Isn’t it the purpose of a business to serve its customers?

When Nvidia was still a very young and struggling company, Huang had developed a spec sheet of their future graphic card product that they were working on. He took it to Dell and they showed zero interest in it. He took it to IBM. And Gateway. And HP. And got the same response from all of them: they wouldn’t be interested in buying the product. It was way too powerful than what they needed, and way too costly. They were looking for what was already there in the market but at a much lower cost.

So what did Huang do? He ignored them all and ploughed in the last funds of the company in making the better, much more expensive product. And it worked.

Nvidia started capturing market share for their GPUs from their competitors. People who had shown no interest in the product came back to them a few months later and bought it!

Was it a risky move?

It sounds risky. What if there really wouldn’t be a growing need for better yet more expensive GPUs? Wouldn’t Nvidia have gone bankrupt?

But it wasn’t a risky move if you understood what Huang understood. That there was Moore’s Law who had his back. 

Moore’s Law

Gordon Moore, before he started Intel, had made an observation: that the number of transistors in an integrated circuit would double every 2 years. But Moore had also made a not as well known second observation: that the cost to build the chips would double every 4 years.

The trend that Huang had seen is that the doubling of cost had never mattered. The speed with which technology progressed created new demand even if the cost was higher.

And so, instead of going with the flow and doing what all his competitors were trying to do: reducing cost, he decided to follow Moore’s Law and swim to his own goal. Focus on doubling the speed disregarding the cost.

Flowing with the tide can be effortless in the short term. But over the long term, you need to find and swim towards your own goal. 

The saga of Leif Erikson

Half a millennium before Christopher Columbus sailed to America, there was Leif Erikson. The first European to set foot in America. Erikson was a Viking who had heard the story of Bjarni. Bjarni was a viking merchant sailor who had lost his way in fog and missed the tip of Greenland. Without a compass, he reached all the way to America before he realized something was amiss. He however turned around without setting foot on the new lands.

Erikson thought of exploring this new land. And embarked on a journey with 35 others on his ship. But how did Erikson sail across the oceans? With the help of the North Star. The Polaris.

The North Star is nearly fixed in the sky directly above the North Pole. Every other star moves across the sky throughout the year as the Earth revolves. But the North Star is aligned to the axis of the Earth which makes it stay over the North Pole. Because its place is fixed, it could be used reliably to know the directions in the middle of the ocean.

Find an unchanging object and you can traverse through unknown lands. Moore’s Law was Huang’s North Star. His unchanging truth that guided him to his destination.

How do you find your North star – your unchanging truth?

You’ve got to look at history. Patterns of the past. But isn’t change the only constant in life?

You don’t want to look at change. You want to look at the rate of change historically. As long as the rate of change is predictable, it can guide you to your destination.

Even in the fast moving world of technology, Huang found a rate of change that was stable.

Action Summary:

  • Study the patterns in history that don’t change. Or at least their rate of change is constant. Find your unchanging truth.
  • Follow the truth even when it’s hard.