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- [00:09]
A
It's May 2023, and in Manhattan, a stock trader hunches over his terminal, eyes glued to the stock updates flashing across the screen. Nvidia is about to release its quarterly results, and this trader hopes to make a killing from it. Nvidia designs microchips. It started out creating chips that made video games look better. These days, its chips power the AI boom, and its competitors trail far behind. Nvidia owns nearly 90% of the market for AI chips. If generative AI is like the California gold rush, well, Nvidia is the guy selling shovels to miners. You know, the one who makes the real money. The question today isn't whether Nvidia is doing well, it's how well it's doing. But this trader needs to move quickly. Today's stock markets are run by computers that trade at lightning speed, often with the help of Nvidia chips against these machines, a blink that delays his trade even by a split second could cost millions. The trader's terminal flashes the breaking news. Nvidia second quarter revenue estimate 7.0 the trader stares in shock. Nvidia's projected revenues are $4 billion higher than expected. Nvidia hasn't just beaten projections, it crushed them. By the time the trader recovers, the computers have already pounced and made their trades. His chance to make a big profit from the news has vanished in an instant. The next day, Nvidia's stock price rises so high that the company's market valuation increases by $184 billion. Nvidia is now the world's sixth most valuable company, ahead of Visa and Walmart combined. In 13 months time, it will leapfrog Apple and Microsoft to become the most valuable company on the planet. And. And it's all because Nvidia is the arms dealer of the artificial intelligence wars. It doesn't care if Microsoft, ChatGPT, Deepsea, Google, Anthropic, or Apple emerge victorious. Because no matter who does, Nvidia wins. But how did a company that set out to make games look prettier become the biggest winner in the AI revolution?
- [02:38]
B
Being a serious business owner takes hard work, patience, and a drive to keep moving forward. So it's important to find a serious business card that goes the extra mile. With the VentureX business card from Capital One, you earn unlimited double miles on every purchase. And with big purchasing power, you can spend more and earn more. This is your sign to take your business to the next level. The Capital One VentureX business card. What's in your wallet? Terms apply. See capitalone.com for details, Claude is the.
- [03:09]
A
Go to AI assistant for millions of people and businesses around the world. Whether you're brainstorming a loan, drafting a business plan for your next big idea, preparing for a crucial negotiation, or building with a team of thousands, Claude is here to help. By using Claude as your personal or business AI assistant, you'll be in great company with organizations like Salesforce, Figma, and Coinbase. All use Claude in their products. Try Claude for free@claude.com that's claude.com. From wondery. I'm david brown, and this is business wars. With his signature black leather jacket uniform, Nvidia CEO Jensen Huang has become one of tech's most iconic leaders. He's taken Nvidia from startup to superstar. And now, riding the wave of AI mania, it's become the world's most valuable company, worth trillions of dollars. But Huang's success is an against the odds story. Nvidia entered a crowded market, stumbled badly, and nearly went under. And its ultimate victory came from an expensive bet on a product no one seemed to want. So how did Huang take Nvidia to the top? And now that it's there, can he protect its monopoly from rivals? This is episode one, Light Speed or Bust. It's 1992, and in Mountain View, California, Curtis Priam is in shock. Priam is in his early 30s. He's an engineer at Sun Microsystems, one of Silicon Valley's hottest tech firms. And he's just learned that the team he leads could be dissolved. Sun makes workstations, powerful computers used by technical professionals in fields like industrial design, engineering, and animation. These customers often use their workstations to create and manipulate 3D images. But 3D graphics require lots of computing power. Every pixel, every movement requires complicated calculations that take time to process. So Priam and his team came up with a solution. Graphics accelerators. Specialized microchips that handle the heavy 3D calculations and take the burden off the main processor, the CPU. Priam believes graphics accelerators are the future. Without them, 3D graphics will forever be limited by CPUs processing power. But his bosses at sun aren't interested in graphics accelerators, so they're shutting down his team. That's when Priam and his colleague Chris Malachowski hatch a plan. They'll start their own business making graphics accelerators, not for corporate computer workstations, but for home PCs. In fact, they think the time is perfect for a graphics revolution in home computing. People can now easily upgrade their PCs just by plugging in expansion cards. These cards are circuit boards that offer Enhancements like better sound chips, modems, or extra memory. And with video games starting to transition from 2D to 3D graphics, Priam and Malachowski believe gamers will soon want to add graphics accelerator cards to their PCs. There's just one problem. Priam and Malachowski know how to engineer chips, but they don't know how to market them, how to raise money, or how to how to negotiate business deals. Luckily, they know someone who does. It's late 1992 in East San Jose, California. Inside a Denny's at a booth with a view of the freeway, Priam tries to ignore the bullet holes in the window and his breakfast. This is a sketchy neighborhood, and he's not thrilled about the food either. But the man he and Malachowski want to run their startup insisted on meeting here. That man is Jensen Huang. He was born in Taiwan and moved with his family to the US when he was nine. He likes Denny's. He worked there during high school. He credits the job with bringing him out of his shell and teaching him to find satisfaction in his work, no matter the task. These days, he works for LSI Logic, a company that helps other companies build microchips. He's only 29, but he's already seen as future leadership material. Priam and Malachowski worked with Huang when they were building their graphics accelerator for Sun. He can be prickly, but they like him. And they know he has the drive and business experience their startup needs. But Huang isn't sold on joining them.
- [08:31]
C
Look, I know you hate your jobs, but I love mine. Why would I quit?
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A
Priam leans forward because this is a chance to build something big.
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C
How big?
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A
I don't know, but big. You play video games, right?
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C
Yes.
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Then you know games are moving into 3D graphics. It's already happening in arcades. It'll happen for PCs, too, but PCs gotta have graphics acceleration.
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C
I agree, but like I told you last time, I'm not interested unless this business can deliver sales of $50 million a year. And I'm not seeing that.
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Huang pulls out his laptop and shows Priam and Malachowski the spreadsheet he's built. It's a detailed model of the business and offers projections of annual revenues years into the future. But right now, the projections fall short of Huang's magic number.
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The numbers don't work. I can't tell my wife I'm quitting my job for this unless it has major potential. She just gave up her career because we couldn't find reliable childcare. How can I tell her I want to leave a good job to chase some dream.
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Priam stares into his coffee. This isn't going to plan. But then Huang notices his disappointment.
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Look, my main concern right now is the competition. I've identified 35 companies who are already developing graphics accelerators. Does the world really need a 36th?
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Priam looks up, hopeful again. We can out engineer them. You know that. Huang shuts his laptop.
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Yes, but Betamax was better than vhs and we all know how that ended. Engineering is not enough.
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So you're out?
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C
No, but I need to do more research before deciding.
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A
After a few more weeks of research and refining his model, Huang's spreadsheet shows this business can meet his 50 million dollar target. Hey, you see what happened there? Huang spread. She killed a dream, then brought it back to life. That's a lesson in what separates a hunch from a business. Most founders fall in love with their ideas. The smart ones make the math, do the talking. It's not that the vision doesn't matter, but a vision you can't model, that's just a daydream. In April 1993, armed with the new spreadsheet, Huang, Priam and Malachowski found Nvidia. The name is a shortened version of Nvidia, the Latin word for envy, which is what they hope their rivals will feel. But now they need investors. It's summer 1993 and Nvidia's co founders are pitching their idea to venture capitalist Don Valentine. He's the founder of Sequoia Capital and a legend in the tech world. The man who saw the potential in Atari, in Apple, Electronic Arts, Oracle and more. But today, he's not seeing much to love in Nvidia. They've spent most of this pitch showing him a hacked together prototype hooked up to a virtual reality headset. And Valentine's main takeaway is confusion. He zeros in on Prem. What are you trying to be? A gaming console maker, A graphics firm, or an audio company? We're all of them. We can integrate it all into one chip. Well, you have to pick one. Otherwise you're gonna fail because you don't know who you are. It's a good point. When you're building something new, it's tempting to be everything to everyone. But customers and investors can smell confusion a mile away. A clear value proposition beats a clever one every time. Pick your lane, own it, and only then think about the next highway. Valentine's colleague Mark Stevens jumps in and tries to move past Nvidia's unfocused pitch. Let's talk practicalities here. Your plan is to design the chips and license them to a manufacturer who will supply them to graphics card manufacturers, who will handle the marketing and distributing to stores. Is that correct? Huang responds, that's right.
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We think it's more efficient to sell our chips to third parties who can market them to end consumers.
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A
And who will manufacture your chips?
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We intend to work with SGS Thompson.
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Valentine and Stevens shake their heads. SGS Thompson is a company riddled with problems. They expected Huang to say tsmc, which is fast becoming the world's leading microchip manufacturer. Valentine sighs, he's heard enough. Well, I think that's all for today. I have to confess, I didn't find your pitch to be very good, and I think you know it already. The Nvidia team leaves crushed, but Valentine and Stevens sense there's something there. Yes, the pitch was messy, but its founders are talented, and from its previous investments in gaming and graphics, Sequoia knows a potential market exists. But most importantly, Huang came recommended by the founder of LSI Logic. So after more meetings, Sequoyah decides to take a Chance and invests $1 million. Nvidia gets another million from Sutter Hill Ventures. The company opens an office in a strip mall next to a Chinese takeout restaurant and begins developing its first graphics chip, the NV1. Priam wants the NV1 to be revolutionary. Most 3D graphics are created using lots of small triangles and other polygons. The polygons are then combined to form bigger objects like cars, trees, or people. This is called polygonal rendering. But Priam thinks there's a better way. Quadratic rendering. Instead of using polygons, quadratic rendering builds 3D objects out of curved shapes. As a result, it's better for creating more lifelike images. Priam doesn't stop there. The NV1 can also handle audio, so PC owners won't need to buy a separate sound card. And he finds ways to make the chip use less memory than rival graphics accelerators. Which matters because in 1993, computer memory costs around $50 per megabyte. That's a lot. If Nvidia's chips use less memory, they can undercut their competitors prices. In May 1995, Nvidia announces the NV1, and it rapidly generates buzz. Sega hires Nvidia to help develop the graphics chip for its next games console. It also agrees to adapt its hit arcade game virtual fighter for PCs so it can act as a showcase for the NV1. Nvidia's retail partner, Diamond Multimedia, orders 250,000 NV1 chips and delivers them to stores just in time for Christmas. But by then, cracks are showing. In Nvidia's plan, the price of memory has fallen from 50 to $5 per megabyte, wiping out the company's price advantage. The NV1 also lacks support from most game makers. Few game developers want to spend time and money learning about quadratic rendering or adapting their games to make use of NV1's unique sound features. As a result, games run poorly on the NV1, and unimpressed gamers start returning their cards to stores. Then comes the death blow. Microsoft introduces new standards that graphics accelerators have to follow if they want to be supported by Windows. And these standards require using polygonal rendering instead of the quadratic rendering used by Nvidia's chip. Following Microsoft's decision, all demand for the NV1 evaporates. No one wants a graphics accelerator that doesn't work with Windows and makes games look sound and play worse. See, Nvidia changed innovation so hard, it forgot about compatibility. For small businesses, that's like inventing the perfect frozen pizza. Unless someone's got an oven, it's kind of worthless. The best product seldom wins. The most adoptable one often does. But Nvidia's learning that lesson way too late. By the end of 1995, the company is facing a quarter of a million returns. It over engineered its product and misjudged the market. And now it's going bust.
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In 1993, three 8 year old boys were brutally murdered in West Memphis, Arkansas. As the small town local police struggled to solve the crime. Rumors soon spread that the killings were the work of a satanic cult. Suspicion landed on three local teenagers, but there was no real evidence linking them to the murders. Still, that would not protect them. Hi, I'm Lindsey Graham, the host of Wondry show American Scandal. We bring to life some of the biggest controversies in US History. Presidential lies, environmental disasters, corporate fraud. In our latest series, three teenage boys are falsely accused of a vicious triple homicide. But their story doesn't end with their trials or convictions. Instead, their plight will capture the imagination of the entire country and spark a campaign for justice that will last for almost two decades. Follow American Scandal on the Wondria or wherever you get your podcasts. You can binge all episodes of American scandal. The West Memphis 3 early and ad free right now on Wondery.
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E
Hey basketball fans. Steve Nash here. Ready to elevate your basketball IQ? I'm teaming up with LeBron James to bring you the latest season of Mind the Game and we're about to take you deeper into basketball than you've ever gone before. We're breaking down the real game, the X's and O's that actually matter. In every episode we'll share elite level strategy, dive into career defining moments and explain the why behind plays that change the game. A team or a championship? LeBron and I have lived this game at the highest level for decades. We've been in those pressure moments and made those game changing decisions and learned from the greatest basketball minds in history. Now we're pulling back the curtain and sharing that knowledge with you. Time to go beyond the highlights and get into the real heart of basketball. Watch Mind the game now on YouTube Prime Video or listen wherever you get your podcasts.
- [19:39]
A
It's 1996, and computer graphics consultant David Kirk has just pulled into a strip mall in Sunnyvale, California. It's his first day as an advisor to Nvidia, and he's not expecting this gig to last very long. He walks past the Chinese takeout and enters the unit next door, Nvidia's headquarters. Inside, the vibe is grim. CEO Jensen Huang has just fired more than half of the company's 100 employees. The employees who remain look broken. This is a startup on a deathbed. Kirk's relieved. He insisted Nvidia pay him weekly. Juan greets Kirk and leads him to the back office. Inside is a huge, ugly machine. It's as big as a refrigerator, with exposed circuits and cables that snake out of it like tendrils. This is also Nvidia's last hope. The machine is a hardware emulator, a computer that can simulate how a microchip design might behave in reality. It cost a million dollars, almost all the money Nvidia has left. Huang bought it out of desperation. Usually it takes two years to bring a new graphics accelerator chip to market, but Nvidia can't wait that long. If it fails to get a new chip out within a year, the company will run out of money, so Huang's looking for shortcuts. Usually, developers make several prototype chips so they can test and fix bugs before putting the chips into production. Huang plans to skip this stage by testing everything virtually, using the hardware emulator to root out flaws. Kirk thinks this plan is crazy. What Huang's proposing is like trying to hit a hole in one in golf. It's possible, but improbable. The emulator can only approximate a chip's real world performance. If a serious flaw is missed, the whole production run could be ruined. Huang shrugs. If that happens, Nvidia will go bust. But if he doesn't take the risk, it'll go bust anyhow. The need to get a new chip made quickly leads Huang to push an approach he calls speed of light. The idea is to start every task by imagining the fastest way possible to complete it, even if it's only achievable in theory. Then work backwards to see how close to this speed you can realistically get, and finally go all out to meet that time scale. The hardware engine emulator is just one way to save time. Huang also licenses tech from other companies to shrink development time and harangues employees who don't live up to his demanding expectations. He also scales back Nvidia's vision. Instead of revolutionizing computer graphics, Nvidia will focus on making the best possible chips for playing first person shooter games. Co founder Curtis Priam objects to this approach, but Huang and the board overrule him. You see that pivot? That's survival over pride. Huang wasn't abandoning the vision. He was buying time. In a crisis, the smartest play might not be to double down on genius, but just live long enough to use it. Under the new plan, Nvidia starts developing chips twice as fast as its rivals, which gives them a powerful edge in the 3D graphics arms race. Game developers compete by creating games with ever flashier visuals. And gamers want the latest tech so they can get the best experience possible. By getting to market quicker, Nvidia can offer the latest advances sooner. But to really turn heads, Nvidia has to outshine the market leader, 3DFX. It's April 1997, and the computer Game Developers Conference is about to get underway in Santa Clara, California. In the exhibit hall, Nvidia's team is setting up their booth when an exhibitor wanders over. His badge, says he works for 3DFX, and there's a smirk on his face. Whoa, you guys are still around? Who knew? The Nvidia team fumes as he walks off chuckling. They know their credibility is shot, but still they're feeling confident. Nvidia's new chip, the Revo 128, was built in record time, and it's performing great. The only problem is that the demo software they have on display is buggy and prone to crashing. They just hope it will hold together today. As the conference begins, game developers trickle into the exhibition hall. Most shun Nvidia, but a few take an interest in its tech demo, which showcases the Revo 128's graphics capabilities while also displaying the Real time performance data and the number of triangles the new Nvidia chip is moving around is impressive. By lunchtime, word is spreading that Nvidia's new chip is twice as powerful as the average graphics accelerator. More people start to drop by the stand, and they leave as converts. By late afternoon, the buzz has reached three DFX co founder and research chief Scott Sellers. So he heads to Nvidia's stand to see it for himself. Hey there, Scott Sellers, 3DFX can I get a demo? The Nvidia rep gulps. He knows Sellers will be looking for ways to convince people people that Nvidia's new chip doesn't live up to its hype. The obvious line of attack is to say the demo is fake. The only way to prove it's real is to reboot the demo in front of him. But the buggy software is so unstable, the demo might fail to reload. It's a big gamble, but the rep doesn't have much of a choice. He reboots the PC and smiles awkwardly at Sellers as he waits to see if it will reload. To his relief, the demo restarts without a glitch. Sellers leans in, watching the performance stats on screen. 5 million triangles per second. Wait, that. No, no, no, that can't be right. The Nvidia rep grins. No, that. That's correct. Seller's space balls. This morning, he thought Nvidia was just another failed competitor. Now it's back with a vengeance. Even worse, it'll take his company two years to develop a new chip that can match it. Four months later, Nvidia's Riva 128 chip reaches stores. By then, the company's just 30 days away from running out of money. But it's not just counting on performance to win gamers over. It's lowering prices, too. Graphics cards powered by three DFX and other rival chips usually retail at more than $200. But gamers can get Nvidia's new chip for as little as $160. By the year's end, around 1 million graphics cards based around Nvidia's new chip have been sold. It's enough for Nvidia to claim an estimated 24% of the market. But just as things look like they've turned a corner, intel strikes. It's the world's largest microchip company, and it dominates the microprocessor market. Now it wants to muscle in on the booming market for 3D graphics cards, which is estimated to be worth up to $3 billion a year. In February 1998, it releases its first 3D graphics chip, the Intel 740. Intel's move sends a chill through the 3D graphics industry. With its massive size and close ties to PC manufacturers, the company seems unstoppable. Within weeks of the 740's release, demand for Nvidia's chips starts to slow. Then disaster strikes. Production problems at Nvidia's manufacturing partner, SGS Thompson, leave the company unable to fill orders from big customers like Dell. By the summer, Nvidia is just weeks away from running out of money again. Jensen Huang scrambles. He secures a short term loan from Nvidia's biggest customers. That saves the day. Most leaders would be shaken by this brush with near bankruptcy. But Huang seems to thrive on adversity. He starts opening staff meetings by telling everyone that the business is just 30 days away from bankruptcy. And he keeps repeating it even after the crisis has passed. He sees it as a safeguard against complacency. But the threat from intel is short lived. Intel's graphics chip underperforms in games, and gamers do notice. Instead of crushing the competition, intel only narrowly outsells Nvidia. The following year, intel bows out of the market altogether, allowing Nvidia to focus on beating 3DFX. The Riva 128 gave Nvidia credibility, but 3DFX is still most gamers top choice. And its latest accelerator, the Voodoo 2, is making waves. To boost performance, 3Dfx added a second texture mapping unit, a chip that paints the polygons, making up a 3D image. With two chips, the Voodoo 2 can paint two polygons at once, which creates richer, more realistic visuals. Nvidia considers copying this strategy. But then consultant David Kirk points out a problem. PCs only have so much physical space for graphics cards. Adding more chips might help now, but at some point they'll run out of space for more chips. 3DFX's strategy is not a long term scalable solution, so Kirk proposes an parallel computing. Most microchips work in a linear fashion, processing one task at a time. But with parallel computing, microchips can perform many tasks at the same time. Huang is skeptical. Plenty of startups have tried parallel computing and failed. But instead of rejecting the idea outright, he does a deep dive into what caused these repeated failures. And he discovers it's because programmers struggle to learn how to program parallel chips. Huang realizes that if Nvidia provides programmers with the right support, Kirk's plan could work. In summer 1998, Nvidia launches its first parallel chip, the Riva TNT. It erases the Voodoo 2's performance advantage. It also wins over John Carmack, the legendary developer behind best selling games like Doom and Quake. Carmack's so impressed with Nvidia's new tech that he builds his next game, Quake 3 Arena, around it. And Carmack's seal of approval persuades many PC gamers to buy Nvidia instead of 3DFX. Sales surge, convincing Huang to go on the offensive, he devises a new aggressive strategy called three teams. Two seasons and it's designed to shut out Nvidia's rivals. Competition in the PC market has led manufacturers like Dell and Compaq to update their product range every six months. As a result, they are constantly shopping around for the latest graphics chip, which gives Nvidia's rivals a chance to sneak in. Huang wants to shut that door. So instead of releasing a new graphics chip every year or two, Nvidia will release two chips every year. One in the spring, another in the fall. And to make this happen, he creates three chip engineering teams, each working on an 18 month cycle. The rapid fire release schedule leaves competitors struggling to keep up. Nvidia's product is updating faster than they can respond. It also encourages PC manufacturing to stick with Nvidia because it always has a new, better chip to offer them. Huang's strategy starts paying off. But with three teams needed to support it, his plan is an expensive one. So as 1999 approaches, he decides it's time to take Nvidia public and raise the funds needed to beat the competition for good.
- [33:01]
B
I'm Indra Varma, and in the latest season of the Spy who We open the file on Oleg Gordievsky, the spy who outran the kgb. A rising star in the heart of Soviet power, Gordievsky is secretly feeding MI6 the Kremlin's deadliest secrets. For 11 years, he he walked a razor's edge, exposing KGB threats that hastened the Cold War's end and helped prevent nuclear annihilation. But the KGB have a mole of their own. When they discover the truth, Gordievsky's world collapses. MI6 hatch a desperate, high stakes plan to smuggle him out of Moscow. An escape that could rewrite history. Follow the Spy who On the Wondery app or or wherever you listen to podcasts or you can binge the full season of the Spy who Outran the KGB early and ad free with wondry. Plus.
- [34:02]
A
In just a few years, Ozempic has gone from a diabetes drug to a global phenomenon. But behind the miracle claims, another battle is raging. Demand is exploding. Supply can't keep up. And as drug maker Novo Nordisk scrambles to produce more, its rival Eli Lilly is racing to take the crown. Meanwhile, a darker market is emerging. Shady online sellers are offering cheap, unregulated knockoffs. Now millions are injecting mystery vials with no FDA oversight. I'm David Brown, host of Business Wars. In our latest season, we're diving into the race to Ozempic and the billion dollar showdown between Big Pharma's biggest players. Can they close the supply gap before one bad vial destroys everything? Make sure to follow Business wars on the Wondery app or wherever you get your podcasts. You can binge all episodes of Business wars early and ad free right now on Wondery Plus. It's late 1998, and at 3DFX headquarters in San Jose, California, nerves are running high. Nvidia's newfound success has spooked the once dominant chip maker. 3DFX still has the performance edge, but just barely. So 3DFX decides to change its business model. Like Nvidia, it licenses its chips to graphics card manufacturers who package, distribute and market them to PC owners. This means its chips are sold under many different brand names, including 3D Blaster, Diamond Monster 3D and Jazz Adrenaline Rush. The downside is consumers know these brands better than 3DFX. Even worse, quality issues from some of its third party manufacturers are undermining 3DFX's reputation. So now the company wants to manufacture and sell graphics cards itself. 3DFX thinks this will cement its status as the leader in computer graphics. In December 1998, it buys one of the biggest graphics card manufacturers around, STB Systems, for $141 million. 3DFX then makes STB the exclusive seller of graphics cards with its chips. It also stops STB from selling cards with chips made by its rivals. This is a gut punch for Nvidia. STB was one of its biggest customers. But Nvidia has its own plans. The following month it goes public on the NASDAQ with a valuation of $600 million. Co founders Jensen Huang, Curtis Prem and Chris Malachowski are now worth around $180 million each. Their original goal was to build a 50 million dollar a year business. Instead, they built one, doing seven times that. The IPO brings in $42 million, enough to finally give Nvidia financial stability. But there's no party. The company is charging ahead too fast to stop and celebrate. Huang wants total victory and expects his employees to want the same. New hires are told to expect long, relentless working hours. Those who question the lopsided work life balance are told Olympic athletes also complain about early morning training. Nvidia is not for anyone wanting a 9 to 5 job and is proud of it. Many employees feel it's a sacrifice worth making. Huang's intensity can be intimidating. He's prone to angry outbursts at people who fall short. But he also inspires loyalty with his drive and ambition. Plus, Nvidia offers the chance to work at the cutting edge of computer graphics. There is also minimal hierarchy at Nvidia. Excellence in outpacing the competition take priority over internal politics and corporate structure. In October 1999, Nvidia releases the GeForce 256, a new graphics accelerator. It's the first chip they brand as a GPU, a graphics processing unit. It's a market positioning power move that sets Nvidia apart from other graphics chip makers, and it invites comparisons with CPUs. This helps consumers better understand what the chips do and makes them seem like a bargain because CPUs are more expensive. 3DFX cries foul, saying the GeForce isn't technically a GPU because it can't be programmed like a cpu. But few outside of engineering circles care. However, Nvidia is not just relying on marketing. Its new chip also outperforms 3DFX's alternative, and it's cheaper, too. 3DFX struggles to respond. Making and selling graphics cards is harder than it thought, and the company no longer earns money from licensing its chips to other card manufacturers. And it just can't compete with Nvidia's speed. For every three chips Nvidia releases, 3DFX manages just one by summer 2000, 3DFX is on track to lose $100 million in its third quarter, a loss so big it's now running out of cash. Sensing its weakness, Wang goes in for the kill. Nvidia starts poaching three DFX employees. Three DFX hits back with a patent infringement lawsuit. Huang countersues. His case is shaky at best. But it doesn't matter. The lawsuit pushes up three DFX's legal bills, further draining its cash reserves and accelerating its path to ruin. Soon after 3DFX is forced into bankruptcy, Nvidia swoops in, buying up its patents and hiring most of its engineers. The former three DFX workers arrive at Nvidia expecting to find some secret formula for success. But there isn't one. Nvidia just works harder, faster and smarter. But its fast charging strategy comes with risks. Three years later, in 2003, Nvidia launches the GeForce FX. But in its rush to get it to market, internal communication breaks down. The hardware team cut essential features to save time without telling the game developer relations team. As a result, the chip runs games slower than expected and is prone to overheating. The cooling fan has to work extra hard and is so noisy that gamers compare it to a leaf blower or a hair dryer. And as the jokes and negative reviews pile up, Sales nosedive. Huang fears this is the chance his rivals have been waiting for. He decides Nvidia must neutralize the negativity about its new chip and. And change the narrative fast. And here's a lesson we learned way back in our season on Domino's versus Pizza Hut. Social media was having a field day calling out Domino's for its cardboard flavor, remember? So what did they do? They said, yeah, you're right. They made fun of themselves and then worked to fix it. The public just ate it up. The point is, when things look bad, humor can be your parachute. Sometimes self deprecation isn't weakness. In the age of social media, it just might be your way of getting control of the narrative. And that's what Nvidia is about to do. Nvidia marketing executives film a spoof video, a fake internal meeting where they discuss how to make their chip's noisy fan a selling point. When people buy a Harley or they buy a Porsche, one of the main.
- [42:16]
E
Things they're looking for is that distinct noise that it makes.
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A
Dude, I see it. I see it. It's refreshing.
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D
Like that first cup of coffee in the morning.
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E
This is gonna be awesome, guys.
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A
We're really onto something. But do you think for, I don't know, maybe a few of the people out there, that it's too.
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B
No.
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A
By poking fun at itself, Nvidia quashes most of the negative chatter. But it doesn't lift sales. That holiday season, Nvidia sales fall 30% compared to the year before. But while Nvidia saved its rep with gamers, its stockholders are unimpressed. Nvidia's Stock is down 80% from its peak demand for PC graphics cards is leveling off, and the company isn't meeting profit and revenue expectations. To investors, Nvidia seems like a company stuck in a rut. But then Huang hears about a Stanford grad student doing something wild with Nvidia chips. It's four years earlier, the year 2000, and at Stanford University, Ian Buck is setting up his PC gaming rig. Buck is studying computer graphics. And his rig is something special. It's a Frankenstein machine built out of 32 Nvidia GeForce GPUs that he's wired together and connected to eight projectors aimed at a wall. He starts the PC and the cooling fans of all those GPUs begin to whir. On the wall, the projectors display the menu screen for the first person shooter game, Quake 3 Arena. Buck starts the game and can't stop grinning. The game looks glorious. It's in 8K and is running smoothly at 30 frames per second. But he's not just enjoying the super sized spectacle, he's also making a breakthrough. Every second, the GPUs he's lashed together are doing calculations that would take a human 16,000 years to do by hand. That's NASA level computing. And Buck is doing it on a Jerry rigged PC that costs just $20,000. He's built a bargain price supercomputer. He knows if he can get these GPUs to perform tasks beyond video game graphics, they could do incredible things. So he gets a grant, assembles a team, and builds a programming language that turns Nvidia GPUs into workhorses for any complicated computing task, from modeling nuclear explosions to weather forecasting. And in 2004, Huang takes notice and hires him. Huang pairs Buck with Nvidia engineer John Nichols. Like Buck, Nichols believes that GPUs are the future, not just for graphics, but for computing itself. CPUs only carry out a few operations at once, but Nvidia's parallel processing GPUs can perform thousands. Nichols and Buck launch a new project named Cuda, which is designed to give programmers the tools they need to link up Nvidia GPUs and use them for advanced computing tasks. Huang believes it's the most important project of his career, even though he has no idea what Cuda's for. But he's not worried. He's confident that if Nvidia creates Cuda, people will figure out what to do with it. After all, what they're really offering is more computing power, and that's always proven useful. That's a pretty bold move, building a product before knowing its purpose. But sometimes innovation is an invitation, not a prediction. Ask I don't know. Steve Jobs, the co founder of Apple. He's one of those who believe the world rarely knows what it needs next until it sees it working. Still, bets like this require deep conviction and seriously patient capital. Two resources not always in great supply. In November 2006, Nvidia launched launches CUDA. Creating it cost $475 million, but that's just the initial outlay. Huang insisted on putting it into every Nvidia gpu, even though most customers will never use it. This slashes Nvidia's profit margins from 46 to 35%. CUDA is met with apathy. In its first year, the free software needed to use it is downloaded just 13,000 times. Nvidia hoped Cuda would bring parallel computing to the masses. Instead, it's just a drag on the company's finances. Then comes another disaster. Nvidia's latest graphics card launches with a major design flaw that causes PCs and Apple MacBook Pros to fail. The fallout is huge. PC gamers loyal to other chips gloat, online sales of Nvidia graphics cards crash, and its stock price hits new lows. With its graphics chips in serious trouble and huge sums wasted on Cuda, investor confidence in Huang seeps away. Wall Street's patience is running thin, and if Huang doesn't win back its trust soon, he's going to get pushed out. From Wondery this is Episode one of How Nvidia Owned AI for Business Wars. A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. We've used many sources for this season, including the Nvidia Way by Tae Kim and the Thinking Machine by Stephen Witt. I'm your host, David Brown. Our story was written and produced by Tristan Donovan of Yellow Ant Research by David Wolinski. Sound design by Ryan Platesta. Kyle Randall is our lead sound designer. Voice acting by Fyodor Chin Fact checking by Gabrielle Jollet. Our managing producer is Desi Blalock. Our senior producers are Jenny Bloom and Emily Frost. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louie. For wondering.