Jen-Hsun Huang: Stanford student and Entrepreneur, co-founder and CEO of NVIDIA

this presentation is delivered by the Stanford center for professional development the entreprene thought leader lecture series oh my gosh now I'm being projected all over um I am Tina seelig and Tom buers Tom raise your hand We Are The Faculty hosts for this quarter's Draper Fisher derson ental thought leader lecture series and I have a few announcements and things to tell you as you can see we've got a really full room and for those who are still coming in there's an overflow room upstairs uh it's 191 is that right yes 191s and there are probably

some seats up there and we've got it live feed so if you want a seat uh you can go upstairs we have a very special day today um as you see there are a lot of people who you might not see on campus uh before some from some new faces we have a whole group here of 47 students from around Asia who are here could you all the folks who are here with the Asis Summit raise your hand okay welcome I know you're having a terrific week we also have an entire delegation of students from

Latin America can you believe this who are over here okay maybe we should we like have a like a soccer game or something outside but uh anyway so this is true and then if you're a Stanford student raise your hand okay so great so the bulk of the room is Stanford students and as you know this is a um lecture series that goes on every quarter all of you should have a sheet that looks like this with all the lineup for this quarter as you can see we have an amazing lineup of speakers um and

take a look at this I managed to sneak in at the bottom but so don't tell anyone hopefully people will show up for that one too uh the only important thing to note is when Steve balmer's here we're actually going to move to Memorial Auditorium there will even be tickets and it'll be a whole different process so you'll learn about as we get closer but uh we are delighted to have you here and I am now as you know uh this is all videotaped and podcast so I'm going to start the formal introduction uh for

everyone who's out in uh the digital world okay great okay great so um I would like to welcome you to the first lecture of the Draper Fisher Json entrepreneurial thought leer lecture series brought to you every week by the Stanford technology Ventures program and by basis The Business Association of Stanford engineering and entrepreneurial students it is brought to Us online by scpd and it is generously underwritten by Draper Fisher Json uh I want to tell you we have an incredible group of people here in this audience not not just in this room but in our

overflow room and so for all of those who want to follow we also are now on Twitter so you can uh follow us online at eorner and in fact um we encourage you if you want to go and listen to any of the archived podcasts if you go to EC corner. stanford.edu you can listen to all the podcasts of the pro past lectures for the past I don't know five or six years uh it is my extreme pleasure to introduce Our Guest today we have Jensen Wang who is the co-founder of Nvidia and I wanted

tell you 18 years ago he was sitting in your seat he was an MS student Master student here in electrical engineering only two years after he graduated he founded the company and he has been the president CEO and a member of the board of directors since its Inception one of the most wonderful things about having him here today is our kickoff of spring quarter is he is also the incredibly generous donor to the School of Engineering the new building that you see going up just outside is going to be named the rank building and he

gave 30 million to name that building so hopefully 18 years from now you guys will be doing the same so uh without further Ado we have Jensen M thank you thank you Tina I gave my last last pennies to Jim plumber to build that building I am now officially broke so um instead of giving you a company presentation today what I thought I would do is just have a conversation with you uh you know at any time if you have a question uh if you would like to change the direction of our of our conversation

just raise your hand and we we'll we'll talk about whatever comes up um a lot of people talk about and write about uh building companies and I can tell you firsthand that building a company is extraordinarily gratifying it is also incredibly hard and so the things that that um uh that you want to talk about uh with respect to the company building process uh is rather uh expansive you could talk about company building processes uh from a lot of different perspectives and so I'm going to try to touch on a few of them that I

think are are particularly uh important in my experience so 16 years ago uh Nvidia had three people three engineers and still on did I did I do something was it me uh we had a perspective that um uh that if I was just and they go um you think it's me that connection how about I just did that see it's you can't be you can't be you can't control user stupidity you know you're good you're good it was probably me I was sitting on it all right so so um uh 16 years ago uh we

started Nvidia and um the the uh the Insight that we had uh some people call it Vision um uh vision is an awfully big word to me vision is an awfully big word to me because I I believe first of all Vision matters let me tell you that Vision matters and I'll help you understand that in a second um but I like to use the word perspective because it makes it possible for anyone to have one when you say Vision it feels like only a few selected Visionaries of the world can have one but everyone

has a perspective and that's in fact All Vision means that you see the world uh in a way that is either uh different um or uh otherwise okay than than somebody else uh and you see opportunities that I think are that you believe are particularly important to go in and address that you can address uh in a particular way and so perspective um our perspective at the time this is 1993 uh you guys won't won't remember this but uh the uh the PC um was Windows 3.1 uh CD ROM uh was uh about to be

introduced uh there were no PCS with networks um Wireless technology uh the no if you said some if somebody said radio uh I think you would the word that would come to mind is FM radio uh and so Wireless technology didn't exist uh the fastest microprocessor uh in the world was a 66 mahz 46 dx2 uh and I don't think any of you would even use it uh in your tennis shoes today um and we would run our computers with that uh and uh the PC was was uh becoming used uh for uh desktop or

for office automation uh our perspective was that this particular uh device was going to be unique in the sense that it has the ability to run programs and what if uh we uh gave it the benefit of running 3D Graphics programs so that um uh you could uh explore new worlds play games um you know play games and so uh we started a a company and and the business plan uh basically read something like this we're going to take uh technology that was available only in the most expensive workstations we're going to try to make

it reinvent the technology and make it inexpensive and um uh the killer app was video games uh and so I I took this idea to San Hill Road uh and um uh and they told me there was no video game Market people don't start companies to play games and um uh my parents might I remember calling my mom and telling her that I'm going to start this company and she says you know what do you what do you guys do and I said we built these things called 3D Graphics chips and and um uh people

would use them to play games and and then she she said why don't you go get a job and so and and so um uh now of course of course games was was we believe uh going to be a very large part of the marketplace now we had that perspective um for very obvious reasons we grew up in the video game generation I was the video game generation that was the beginning of the video game generation and so the the entertainment value of video games uh computer games was very obvious to me and I can

imagine how it could be a very large market and a very large industry for a lot of the people that were older that sensibility didn't exist and so notice I just described to you a perspective about the world that we had that is apparently obviously now true because video games is the world's largest digital media industry today um it is apparently true and yet at the time uh our Common Sense was unique nobody would have created the technology nobody would have created the company with the sole purpose of Building Technology to make video games possible

and so that was our perspective now we felt that that um video games would would of course feel the technology uh development uh but you could could use this technology for a whole bunch of other other reasons and um uh one of my favorite favorite uh applications uh this happened about um I guess about 5 years ago uh a small company struggling company here in Silicon Valley uh called Keyhole and um uh they were they created a a 3D virtual world and it had no application this 3D virtual world you start out in space you

see the Earth you zoom into to any location you wanted just by typing in the address I thought it was such a fabulous way of exploring the world going to places you've never been and they couldn't raise a penny and so uh we uh we uh um I was so excited about the company we put money into the company and I went everywhere and show that demonstration I would tell people that this is the way we're going to do search someday if you want to search for something uh look for an address you would type

it in and we would fly you there okay and and satellite images will continue to download and before you know it you're right there on the street and you might even see some buildings uh that that small company uh was eventually purchased by Google and became Google Earth Google Earth is now uh the single largest downloaded most frequently downloaded application in the history of mankind over 200 plus million downloads um so three 3D Graphics could be used for a lot for a lot more than video games now that that Vision if you will that perspective

um was unique at the time and hard to sell and so we had to go and explain it to venture capitalists who had to figure out whether the technology was going to be possible how big was the market because it was Z billion dollars at the time so how do you extrapolate how do you Scope the size of a market when when its apparent size was Zero at the time and you look at um analyst reports and uh you study market research and all of it would say approximately zero it would never show up it's

a non-category a non-market uh and so uh you know it's incumbent upon uh the uh the venture capitalist uh and of course the founders to try to figure out how to inspire each other into doing something together and so uh sequa capital and Sutter Hill were our Venture capitalists um and um we got the company going with $2 million now the the question about perspective uh becomes uh very interesting uh in other uh in other opportunities in the company other uh other circumstances in the company and let me give you some examples um many years

later sequa Capital came to me and said you know there's a couple of kids at Stanford and they have this thing and it's a it's an internet thing and you just type in you know what you're looking for and it shows up you know puts up the web website and um I said yeah Yellow Pages I mean you know no dot right we use it we and there's a variety of of um versions of it on the web at the time uh we use the internet just like everybody else to do FTP and also to

um uh visit various websites uh and um and they said should we invest in this company and I said there's no freaking way they're going to make money that stuff is free right and so they said well you know we can't figure it out ourselves but it doesn't cost much to give them a million or two uh and uh and they invested in a small company called what eventually became Jerry's company called Yahoo um notice although I had the perspective about one thing I didn't have the perspective about something else just because you're a Visionary

doesn't mean you're a Visionary about everything your perspective stems from your life experiences what's common sensical about you what's interesting to you um and uh and so that's important to to realize that you have perspective too therefore you have Vision too now what's interesting about these websites like to to to follow on the Yahoo story if you remember there were several other searches out there um Alta Vista at the time um excite at the time lios at the time time right and now the question is they're all doing search and they all did a reasonably

good job now comes the question is what was their perspective how did they how was their perspective different from one another one website thought that they were a destination do you guys remember that we would be a destination kind of like a channel uh somebody said in fact since we're going to be a destination we would serve up content and therefore the search part of it is a commodity well Outsource that so all of the search engines which started out a search turned into destinations or portals and they outsourced the search to someone else which

made it possible for Google to start and so notice two companies doing exactly the same thing started with the exact same fundamental core technology ended up in radically different places because they had different perspectives they saw the world differently so perspective matters Vision matters now in our industry uh shortly after we were started uh 3D graphics for PCs and and consumer 3D Graphics became the hottest hottest thing and so everybody in Silicon Valley was starting a 3D Graphics Company we were um in 1993 the only consumer 3D Graphics Company in the world silicon Graphics uh

up the street was the professional if you will 3D Graphics Company by the end of a couple of years or so 1995 uh there were probably 50 70 startups doing exactly the same thing we were trying to do and over time we competed with about 200 companies Nvidia today is the only surviving computer Graphics Company in the world and so the question is then why happened competition is intense everybody has smart people everybody has money we competed with IBM we competed with HP we competed with silicon Graphics competed with Sony 3dfx S3 serious logic big

small international local we competed with companies all over the world so the question is what happened um I would argue that that um uh 300 companies armed with exactly the same technology armed with exactly the same people the company that wins and let's say they all execute and they did with 300 companies you know 50% of them are going to execute at any given point in time and so the question is why does one survive well I think that it matters to have perspective and let me give you some examples um I always believed that

uh you need to understand the reason why your business work what is the essence of your business what makes it work now the foundation of my business uh at its core is semiconductor technology here in Silicon Valley we we usually like to refer to semiconductor technology as mors law mors law is not so much a physical law as it's a law of competition it is a law of um challenging Engineers um it's a law almost of setting pace and Mo's law approximately gives you twice the performance every year or two and so understanding that the

fundamental ingredient of our of our business improves by a factor of two every year and simultaneously reduces in cost by a factor of two every year the question is what makes a survivable business and so our first perspective was that 3D Graphics was insatiable it was insatiable that if I made something twice as good every year even if the customer never asked for it even if the customer told us it was too expensive even if the customer when you went to float that product specification to them told you that they're not interested and in fact

that was the case I took I took our product spec to uh to Dell and HP and IBM and Gateway and they all told me it was too much money you're well outside of the boundaries of what they were willing to pay for when your customers all tell you not to do something the question is then what do you do in our case because we had this unique perspective that 3D Graphics was insatiable and Moors law was our friend therefore uh we should make our graphics processor is twice as good every year and so for

the first 5 years of our company we just turned off our blinders and said we're going to ignore customers now which one of your of you guys are going to go through your marketing marketing courses and the lesson that it teaches you is ignore your customers well sometimes you have to ignore your customers and the reason for that is because they don't know the nature of your business and while the industry is being created before there's common sense about the rules of that business there is no way they can possibly know and so we uh

I I took the last few million dollars of the company's money and uh built a chip that is way way way too big and uh our customers told us they we were way out of bounds on cost and they weren't going to buy any until the day we showed up with the processor we were in allocation through throughout the entire life of that project until our next Generation product which was twice its price cannibalized the previous one and so we grew and grew and grew for several years then the question became uh what now now

you guys are going to learn that Innovation is rather dangerous thing on the one hand once you discover a great idea once you disc discover a great idea you rinse and repeat rinse and repeat and you make that idea better and better and better whether it's a laptop computer that you guys have here or uh a car or a microprocessor or in our case a graphics processor we made it better and better every year at some point it becomes good enough Moors law is a wonderful thing semiconductor technology enables you to make amazing Leaps and

Bounds in technology and at some point it becomes good enough and so in the um this is probably in the late '90s about 7 years into our company maybe six seven years into our company I came to the conclusion um that 3D Graphics was not going to be sustainable as a uh accelerator or a fix function device that renders texture maps and polygons on the screen that we had to change the company to make the 3D graphics processor programmable so that it could be an artistic medium for expression now this is a weird word here

we are an engineering company and we now want to change this chip to become an artistic expression an artistic medium so that all of the video games so that all of the applications that were developed on our chip would be stylistically different and we believed unless we could figure out a way to make the cont richer and more interesting and stylistically different from one game developer to another game developer to you know another uh we would limit the life of our medium and if our medium reached this end we as the the world leader uh

would also uh would also see our end and so we decided to make the GPU programmable and um make it a medium for artistic expression and invented a technology called programmable Shader almost every single video game that you guys see today has our fingerprint on it whether it's a Xbox 360 or PS3 or any PC game today you could see elements of what programmable shaders made possible that started a whole new innovation curve for us and kept our industry vibrant but the Crossing from one generation of technology to the Next Generation almost killed the company

and so that process of Reinventing the company the perspective that led us to a new idea also risks the company in the process and those are interesting conversations that we can have so there's perspective matters when a company gets larger uh you guys are you guys are going to learn that that um uh as the the founder or as the CEO uh you have to learn new things and many of the new things that you'll learn has to do with um I'm building products at first and I've just talked to you about building products soon

you'll be talking about and learning about building companies and building companies means things that are soft and hard to explain like building a company with a culture what does that mean how does the culture of one company different from a culture of another company and why is it that this particular culture is better for your company and not for another so the culture of a company is important to find out to to to to put your arms around and to create and develop um how do you organize are you we were just talking earlier with

one of the guys are you functionally organized are you organized in business units how do you deal with multiple products and multiple geographies and multiple customers and so that's the company building process it's mechanical it's interesting um lots of trial and error it's organic people matter personalities matter um and if you guys are interested in talking about that I'm happy to talk about that as well and then um I would say probably the the um the most important thing uh above that is to realize that um uh building a when you're building a company and

building a product skill matters intellect matters training matters but it's not enough the part of it that that um that is important to to realize about building companies is that it's a challenging and painful and uh often times um extraordinarily scary thing to do and so unless you have passion unless you really love the process of building the company and what you're trying to do uh it's going to be incredibly incredibly challenging and so what I would I would um uh I would leave you with is um when you're building a company if you decide

to build a company you have to ask yourself what is the purpose that you're building the company for is it that you would like to build a company so that you can sell it make a fortune uh is it that you would like to build a company so you can take it public um you're just a Serial entrepreneur you want to build something let somebody else run it build something sell it um whatever your reason is be honest to yourself turns out that um in my case I just love the process of building things and

I love being part of something you know being part of Nvidia and being part of a a um a people and being part of a cause that is um uh that's inspiring to me uh keeps me vibrant and and it's something that I'm willing to do for a very long period of time and so I've been in in it now for 16 years and um I've learned learned a lot in the process of being the CEO and the founder of the company and so maybe the thing to do is why don't I open it up

now and um let you guys ask me uh whatever type of questions you guys have yes sir what did your invent what did your investors say about your idea of uh Reinventing Your company to include programmable uh CPUs and J could you please question the question is what did our investors uh say about uh about us um uh taking the big risk of adding programmable shaders and Reinventing uh Reinventing that product category and Reinventing our company um first of all it's not a it's not a conversation you really have with your with your shareholders but

you do have the conversation with your uh your management team first uh your employee second your board of directors third typically is the way the process that I I take um and and um when you're in when you're in high-tech when you're in a technology industry when the technology moves this fast if you're not Reinventing yourself you're just slowly dying you're just slowly dying unfortunately at at the rate of Mo's law which is the fastest of any rate that we know right the compounded rate of Mo's law is pretty unbelievable very successful product that does

generating a lot of money I know so it's scary and so you have to um uh and this is so the question is but we have a product that's generating a lot of money and it's very successful how do you cannibalize it um there is there is a there is a theory that if you don't cannibalize it someone will and it surely will be cannibalized and so um if you want to be a market leader you have to take the initiative to cannibalize your own products and have your ideas cannibalize your own ideas um when

we when we um went from a fixed function graphics accelerator a texture mapping engine for games like Quake 3 and doom and those kind of games um to a programmable shading architecture our first chip almost killed the company it was called GeForce effects I don't know if any of you have have ever um owned one of those GeForce effects is a is a chip is a processor that you know it's a baby only a mother could love I mean it's we uh we we took enormous chance in building GeForce effects um but it almost broke

our back but if it if we didn't build that chip uh I am sure Nvidia would be dead today I am absolutely certain we'd be dead it was one of the one of the biggest gambles in our history U we had to create in in instead of a an API uh we had to go to a processor with a language we call it CG and a compiler so it's kind of like a like a processor uh we introduced a new programming Paradigm to the world that it never understood in the beginning and so it took

a lot of evangelism a lot of marketing uh a lot of Education um but CG inventing CG uh took us to unbelievable places and um one of one of our most important uh work today uh is related to using gpus for general purpose Computing and it's um uh extraordinary that the results of what we're seeing and it wouldn't have been possible it wasn't because of CG that we we started them okay so you you have to take these leaps questions yes sir um some people are sort of see that gaming is sort of moving more

towards consoles and away from PCS yeah is it harder to make profit with you know when you have to negotiate with Sony or Nintendo whoever some big company than it would be when you sell individual cards yeah um the economics the economics of it uh of um building anything ultimately comes down to the amount of competition you have you don't set the price the competition sets the price the market doesn't set the price the competition does and so so um uh if your competitor uh wishes to build PlayStation 3 um as much as you do

uh then then the economics will be challenging and so so um uh there you just need to decide is it a is it an economic decision for you uh for example uh there's um uh there are rumors that that we were not enthusiastic in building some of the game consoles and we were more enthusiastic in building other game consoles um it came down to this for me I think the um uh you have to realize what is the finite resource what is the skill resource that you have as a manager the function of a manager

is to allocate resources properly for the best return and so if you think about our resources our resource is the finite number of extraordinary engineers and how much time they have in a day to pursue whatever opportunities that are out there now if the number of opportunities that are out there is less than my supply of Engineers so therefore demand exceeds is less than my Supply then obviously I'm very enthusiastic about it but if it's the other way around then the opportunity to build a game console at terrible economics or any project at terrible economics

is simply not worth it and so I look at it irrespective of competition the competition sets the price but then I get to decide whether I want to engage in that project or not you are in charge of your own company as the CEO right and so we decide whether whether it's economic and um once you decide then you know it is what it is so you have to be thoughtful about what is your critical resource do you have more of it or less of it than the market demands do you have more opportunity or

less opportunity than than uh than your than your resource can uh support and then what's the appropriate return on that investment uh thinking about not just your cost but more importantly your opportunity cost um and so so we look at it from that perspective every single time yeah can you tell us a little bit about the culture that you tried to set at Nvidia yeah that's a good question um the question is what is the can I talk about the culture that we're trying to set at Nvidia um at the core of our company's uh

success is innovation now a lot of companies say Innovation is important to their company invention is important to their company uh however I don't believe you can fundamentally say that Innovation that you want as a CEO to nurture the spirit of innovation to encourage Innovation unless you have a culture of risk-taking we have to encourage our our Engineers excuse me our marketing people right all of our employees to take calculated risks in order to encourage them to take calculated risks first of all you have to teach them how to do that that's a skill a

matter of skill then the second part of it is a matter of Courage most people hate to fail do are you guys do you guys agree with that well unless you guys want to be successful let me say the positive way if you want to be successful I would encourage you to grow a tolerance for failure to develop a tolerance for failure now when I mean a tolerance for failure I don't mean gee what Jensen just told me is sleep in until noon okay don't do any of my homework flunk out of all my classes

because that defines failure right that's not what I said what I said is what I'm trying to say is that I want you to try things even though it is impossible to calculate precisely that it would lead to success that your instincts your intuition is something you ought to follow if it wasn't because of following my own instincts or the founders instincts or many of our employees instincts why would we be where we are today and why would we have invented things that the Market's never had before the world's never had before so you have

to have this this culture or tolerance for risk Tak but the thing about failure is this if you fail often enough you actually might become a failure and that's different than being successful and so the question is how do you teach someone how to fail but fail quickly and to change courses as soon as you know it's a dead end and the way to do that is we call intellectual honesty um we assess on a per on a continuous basis whether something makes sense or not and if it's the wrong decision let's change our mind

and you know a lot of people say CEOs are always right and they never change their mind that doesn't make any sense at all to me especially when it violates the first principles of what we want the company to become an Innovative company that invents amazing things that solves problems for the world that it sometimes didn't even know it had right if you want to do that then you have to cultivate that um tolerance for risk-taking and you have to then teach people how to fail but fail quickly and inexpensively um and how to be

direct with each other um that uh that this is the wrong approach and what's the better approach and then you know be flexible enough to change courses and quick and so that that type of culture if you will um in today's you know if you guys were to start a company and you were bu building a a website with an internet service of some kind internet-based service of some kind with the competition coming from all over the world and it's 247 and ideas take no time to experiment and it you know a particular website or

particular comp company could be throwing ideas out into the world 20 a day and so unless you are thoughtful about risk-taking and being able to change your mind reacting to the market conditions um and being flexible how are you going to stay alive and so you could you could almost see what I just described in the nature of older companies and the nature of the newer companies the modern companies um if you guys you got I'm sure you guys all go to Google's website almost every single applications in beta form they're trying all kinds of

stuff right they're trying all kinds of stuff if they call it production and it doesn't work well you guys would just be upset at them so they call it beta have you notice they call it beta so that they could try a lot of things and if it fails take it out if it's bad take it out if it works do more and so Innovation requires a little bit of experimentation experimentation requires exploration exploration will result in Failure unless you have a tolerance for failure you would never experiment and if you don't ever experiment you

would never innovate if you don't innovate you don't succeed you'll just be a dweeb that's it any other questions yes sir how' you choose your co-founders in initial team um don't ever don't ever go into business with uh anyone you don't deeply trust and they were two of my two of my closest um closest colleagues and I trust them completely and and um uh they're they're wonderful friends even today yep um so by the way as a CEO selecting people is 99% of the job um what applications do you see driving demand in the general

purpose maret which is like what's going to be like the next big thing theend so the question is what is what do I see driving the demand for this thing that that we're um uh we're pushing right now called um GPU Computing using the GPU for much more than just Graphics um for graphics there's a there's a a model of Graphics that we call computational Graphics so so it's um using programs to generate the images uh the algorithms are no longer uh cast in the Silicon the algorithms are actually software and it could be ambient

collusion it could be rate tracing it could be all kinds of interesting algorithms that that um people are are going to explore for the future we observed uh and it was a it was in fact um this is give you another example of innovation uh and and and with Stanford is is fabulous um we when we invented GeForce effects although it wasn't a very successful GPU for graphics um researchers around the world noticed that it had a programming language called CG C for graphics and that you could program this GPU to do other things aside

from graphics and it had 32-bit floating Point i e compatible 32-bit floating point and so some smart some smart researchers many of them were here at Stanford just bought a graphics card from fries and started writing programs and they discovered that if they really worked hard and do all these men you know these algorithmic gymnastics they could get something an algorithm you know it could be nanomolecular Dynamics could be comput computational fluid dynamics to run 20 times faster and they couldn't believe it how do you speed up an application 20 times well the interesting observation

that we made is that we Speed Up 3D Graphics applications which is basically something you can do in software a thousand times over a CPU all the time so what if we took all of those parallel processors that were inside our gpus and make it completely programmable and expose it through a programming language called C right C and now and the near future C++ um imagine imagine the type of problems we could help solve and so whether it's weather prediction or seismic analysis or uh you know taking your your CT scans and reconstructing the human

image for the body the the the the body from it um all kinds of very computationally intensive applications we could accelerate 50 times 100 times now just to put it in perspective 100 times is a Mo's law time approximately 10 years now to put 10 years worth of computing resources in the hands of scientists researchers Engineers unbelievable benefits and so um the risk was really large however to make our GPU even more general purpose because every time you make something general purpose you know what right a Swiss army knife it's dangerous because whenever you make

something general purpose or a Swiss army knife like you move away from your core business it's much much better to have a very specific Niche to have intense focus on a particular Market segment and you guys will learn all of this in marketing when you make something general purpose you're all things to all people you become you know what is it uh ma what is it Jack of all trades master of none very very dangerous move now we we thought that it was just too important for us not to do it so we decided to

make that move and um uh it it's it's fabulous results okay so those are some of the some of the things that we're seeing now yes ma'am you mentioned your co-founders so especially in the initial stage how can you find each of your position in a company and how can you distribute the TR MH okay so her question is um we were friends uh in the beginning uh we're friends now how do we figure out uh who's the right position and how do we distribute the profits okay um and so I I won't say anything

funny just so I'm not misunderstood but but um all of our pay were identical and we all had identical share in the company um so that's that's U that's just simply fairness now the question becomes governance there's the part of it which is equity Equity as another way of saying what's fair right so we all had the same salary all all three of us were making $100,000 a year okay and we all had a percentage of the company equal percentage now you can't run a company though you can't build a great company when you have

three people who has to vote on everything and with equal share of responsibilities you simply can't that becomes a leadership question that becomes a governance question that becomes a management question right that becomes a question about building a great company um I don't recall exactly uh exactly um the the conversation but I think it kind of went like this all right Jensen you're the CEO right okay that was done that was that was basically the process um I think that some people are are uh you know I'm not particularly I'm not from a personality perspective

I'm not particularly outgoing and so uh that's not a necess necessity for being a good CEO um but um as a personality I've always been able to see around the corners if you will I can see around the fuzzy edges and I think CEOs uh and um uh leaders need to be comfortable with ambiguity ambiguity meaning that you know what does the future look like well it's hard to say some people hate that some people just say Jensen tell me what you need to have done and for how with how much resource and by when

okay some people rather uh me tell them that hey look there's this um there's this opportunity out there not sure what it is not sure how big it is but it kind of feels like this let's go figure it out and let's build a business some people can are very comfortable with that and so this this ambiguity um is is important to uh to uh to to be comfortable with I guess and I think that all CEOs that are are very successful are comfortable with ambiguity and I'm very I am very comfortable with ambiguity yes

yeah what percentage of your initial investment was yours like uh how do you get the rest and also like how many times was your proposal for for help with the investment was rejected mhm so I was 30 years old and I never taken um a single business class and and I've never taken any marketing classes um and and I've never used never used the at the time it wasn't PowerPoint it was called persuasion um on the on the Mac it was called persuasion and so um I bought a Mac so I could I could use

persuasion and um uh and uh and then I try to create a a company presentation to take it to venture capitalists um the process kind of went like this we uh started my first official day of work was my 30th birthday February 17th and um uh we got the company funded and so once we got started the question is what are we going to do you know how does it all work out how do we start the company and so um we met every day the three of us uh in in one of the founders

townhouse uh in Fremont and um and we would get together and and there would be nothing do I mean what do you do you got three guys get together you just talk you know so so what did you guys do last night uh you know what did you have for dinner I mean so you talk about that for about six months okay and and the big event of the day would be um hey where do you guys want to go to for lunch and so you know Philly cheese steak today or you know Chinese food

tomorrow or whatever that would be like a big deal and then after a while it was like could you put some donuts in the fridge in the morning for when we come I mean so that would be a big deal for a while and so that lasted for a few months just a three of us like that I know it sounds pathetic but it's it's it's true because at that time I'm reading about books on how to start companies and I'm trying to figure out you know how to go raise money and you know what's

a venture capitalist and how do you incorporate the company and so those kind of things U pretty soon uh I met a met a met a lawyer Went to went to a law firm called godward and um uh they helped us incorporate the company uh and um uh the the amount of money that he he says um you know we need we need some money from you so that we could price the shares and also to incorporate the company so he says how much money do you have in your pocket I said $200 so he

says okay give me $200 I gave him $200 and um for $200 uh I bought um uh 15% I think it was 20% of Nvidia so it it was a good deal yeah 20% yeah and then went I went back to the house and then went back to the condo and and uh they all they both gave me $200 and they both got 20% and that's how it worked literally it's not not much more you know don't here here's here's the thing Nvidia I never finished my business plan I know it I know it um

we we we never finished um a business plan uh never could figure out how to finish a business plan to tell you the truth um and uh and if I if I were to finished that book and I I went to went to borders and got um Gordon Bell's book how to start a high-tech company it's like this thick if I would have read the whole thing I would have been dead now we would have run out of money ran out of time and so I I I read I read the first three or four

chapters and I you know I I got to go to work yes so so I I um uh Incorporated the company they introduced us to um two Venture capitalists um and I just went to their office and told them what I like to do uh the the thing that that gets the company funded and when you're uh when you get to that point you just have to remember a few things uh VCS don't invest in in business plans because business plans are easy to write I couldn't write it but other people could right and so

so um they invest this they invest in great people and so so the question is is do they trust you uh your reputation matters your history matters um because uh because I had done so much work with um Andy bealine which was another graduate of Stanford of Stanford and the founder of sun uh and and worked with the founders of synopsis and LS logic and the and you know we we we were all very successful and we did good work um your reputation will proceed you even if your business plan writing skills are are you

know inadequate and the second thing is you need to have a vision that's sufficiently large to invest in because they their statistics their probability of success is rather low and if they need to put in $10 million if the Market's only $20 million large they'll never get that $10 million back with with re reasonable return but if it's a $200 billion market then of course it's a rather different thing okay so the size of the market and they want to know that that um at least there is a clever idea that the market has never

never done before so they that last part is probably second you know last I said I said it last because also I think is the least important you have to you might have to reinvent yourself over time and if you want to reinvent yourself you need to have great people that's why great people so important okay yes sir who were some of the people that you considered to be your mentors when you were getting started and what was some of the best advice that you got from them um so the question is what what um

uh who are some of the mentors and uh what were the best advice I got um I I truly believe that if you want to be successful uh you you um a successful habit is to have the capacity and the willingness to learn from just about anybody and I do you know I learn from just about anybody and it could be a little thing could be a big thing um you know if it wasn't because of my kids you I I would be I would I would I would miss the whole internet age you know

I would have missed YouTube and Facebook and Twitter and you know I mean without so you need to you need to know that that um uh the world changes and and you want to be able to learn from just about anybody and so I I'm surrounded with with extraordinarily talented Executives and uh Professionals of of all walks of life and so you just have to make sure that you're you're willing to learn from just about anybody uh some of the some of the great advice uh that I've uh I've had over the years um focus

laser beam Focus you know don't do too much do do a few things well and um do it with extraordinary intensity uh and um uh you know focus focus matters if you look at what I do with my time uh I wake up in the morning and the first thing of my time is NVIDIA and the last thing I do is NVIDIA and I do that 24/7 and if I could figure out a way to do that for another 50 years we're going to be a good company yes yes ma'am a such a sucess scho

entrepreneur as well so uh what's your greatest Challenge end um is your ambiguity as CEO what's your best and worst estimation of the future of you and your company okay so um uh her question is um uh she started out by saying that that I was a successful I'm a successful entrepreneur and and uh and what are my biggest challenges now and um uh considering that I like ambiguity what's my best estimate of the future for the company or and and for myself um uh the biggest challenge with building a company is the reinvention of

the company every successful thing needs to be torn down at some point and be rebuilt it is unfortunate but true and the reason for that is because the technology either gets good enough um and therefore you have to reinvent and sometimes the invention process is disruptive sometimes it's in fact destructive and it could be it could destroy you could destroy what you have built in the past and so the reinvention process is very challenging it's gut-wrenching takes a lot of courage and um it really test your conviction in in the technology industry Reinventing the company

every 10 years is almost unnecessary thing so that's when I say challenging I don't mean bad challenging I think that's fun challenging I love the process of reinvention okay so that's fun challenging now what's my best forecast has for our company I think that Nvidia has the opportunity to become one of the most important technology company companies in the world and um I hope it I hope that it does and my best forecast for me is that um uh I am 80 years old and I'm here talking to students and I hope I'm still the

CEO yes yes sir um quick first thing about the first few years of real start is very critical you have to be survive sure your cash do yeah the Conant cash flow so you Nvidia case how do you man that um yes so the gentleman's question is has to do with in the beginning uh survival is important Cash's king um uh just so that there's no no no ambiguity about this survival is always important cash is always King and so as the CEO you're either making money saving money or raising money and and if you're

not making money raising money and saving money you ought to be doing those three things it's a simp it's just stay focused on those three things and so when you're during the beginning in the early days I was raising money all the time as soon as I was done raising this rount of money I got to raise more money you know you're always raising money just maybe maybe there was a week break in between but I was raising money all the time I was as a startup you're always going out of business right that's the

definition of a startup an Enterprise that is nearly out of business all the time that's the definition of a startup question yes ma'am how do you prepared for the leadership succession for your company well because I wanted I want this the question is how do I deal with leadership s succession uh as a CEO and and for our company well I want this job until I'm 80 I just said I'm just kidding um one of the primary roles of a CEO in order to grow the company in order to grow the company in order to

make make Nvidia one of the most important technology companies in the world and make make significant contribution to society in order to do that you have to cultivate new le ERS so that they can have new ideas and grow new businesses and and you know maybe run a different geography run a new new different product line and so I spend most of my time these days most of my time these days sitting with our general managers and sitting with our leaders and helping them think through strategies and helping them think through challenges and helping them

think through um product road maps and how through Transitions and you know um team building organization creation uh you know how to manage how to how to create processes that that last a test of time so so you know these things are are lessons that that I'm supposed to pass on and I do and I spend a lot of my time doing that I believe I believe this that succession planning by a priori picking out three people that the board should consider in the case that I get run over by a bus is a toxic

toxic process I know that it has been it has been um thought of as a a methodology ship uh um succession planning um but I think it's just very toxic for the environment because everybody's trying to figure out who got selected and who didn't um I think that it's a m much much better process to focus on ultimately developing the next generation of leaders so that in the case that something happens where I'm not the right CEO anymore there are many choices for the board to choose from including outside okay so those are I think

the company building process focusing on that is the positive way of of thinking about succession planning a good question how about I take one question and that's it okay yes yes yeah hi uh I don't know it's a good question but it's okay uh what do you think that is a problem with Latin America any question from from our Latino crowd here is fa I am I have friends who are engineers and they have many many billion ideas but they don't feel motivated because they they they have money and they were looking for for people

who who could make uh these ideas real and they are only working for other people and they don't realize this idea I I don't know what that is the mhm well first of all so so her her I think let me see if I can paraphrase the question uh you know you know friends who have a lot of ideas but they also have a lot of money and so they don't really feel that motivated to do something with those ideas um I you know you know first of all I money I hope that if I

if I leave you with anything uh money is the only singular reason not to start the company because starting companies are it's a very very unlikely probability for success and so if you're looking for if that is your reason for doing it you will likely regret the experience okay you you should start the company and build a company because you just you so believe in your idea you so you're so passionate about it and you want to build something great the only reason you want to do it just comes along um it's f i I

have I have um I have plenty of money and uh and and and and but but it doesn't motivate me nor does it demotivate me because it it wasn't and so um I would urge you to ask yourself uh and for your friends to ask ask themselves what is the purpose that they want to start a company um ideas ideas are a dime a dozen there's so many ideas if you want ideas you're going to get a lot of ideas in this room and so ideas don't really matter um you have to have a a

perspective That's Unique that you feel really strongly about it and that you're willing to persevere almost any challenge to make it happen that's the reason why you should start to okay thank you everybody I enjoy for