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- [00:02]
Kyle Rysdal
Computer chips gang. AI computer chips in particular. That is where the money is. From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Wednesday today, the 20th of November. Good as always to have you along, everybody. We begin today with a question that is going to sound ridiculous on its face, but we here go where the news takes us. When the question goes, is $35 billion worth of revenue in three very short months not good enough? For most companies, the answer to that question would be never. It is never not good enough to bring in $35 billion in a quarter. But, but when you're Nvidia, the stratospheric chip design company, the 35 billion revenue you announced after the close today. Well, I'm sorry, it's just not going to cut it. Nvidia, of course, the market leader in designing AI chips, all under the very watchful eye of co founder and CEO Jensen Huang. Huang and his company are the subjects of an upcoming and it must be said, very timely new book by Take him. It's called the Nvidia Way. Jensen Huang and the Making of a Tech Channel Giant. Tay, it's good to have you on.
- [01:29]
Tay Him
Good to be here, Kai.
- [01:30]
Kyle Rysdal
For those who haven't been paying attention, it does sort of seem like Nvidia just like kind of came out of nowhere when AI started getting big. Where did this company come from?
- [01:41]
Tay Him
It started about 30 years ago. They started making video game graphics chips for PC gamers. And it was started by three co founders, Jensen Huang, Chris Malikowski and Curtis Prem. And, and it's just one of the most amazing kind of entrepreneurial success stories of our time.
- [01:57]
Kyle Rysdal
This is going to sound like a very basic question, but what do they make or what do they do?
- [02:03]
Tay Him
They're actually a chip designer. Taiwan Semiconductor actually makes the chips, but they design chips that go into gaming computers and now they make these AI processors that go into these massive server farms that power all the AI workloads for training and inference today.
- [02:19]
Kyle Rysdal
What is their edge in designing these chips? What is the secret sauce other than, I suppose, being the first mover? Right.
- [02:27]
Tay Him
Yep. They've been doing this for 30 years and they've always been on the forefront of technology and always kind of looking ahead on what's next. And the thing that really drives it is Jensen Huang's technical acronym. He always kind of sees where the market's going to go before it happens. And I'd say it's similar to what Reed Hastings did with Netflix. He had this intuitive sense that Internet video Streaming. Streaming was the way it's going to happen. But he kind of stuck around and did the DVD by mail. And as the technology got better, he jumped on it. And Nvidia has done that time and time again with video game graphics chips. This thing called Cuda, which is the foundation of how they've kind of dominated this AI wave. And they keep doing it every single time. So it's just an amazing, incredible story.
- [03:15]
Kyle Rysdal
What is just to the title of this book? What is the Nvidia Way?
- [03:21]
Tay Him
Nvidia Way is something I came up with as I was doing research on the book. I started this in May of 2023. I got this cold email from a publisher. One of his authors recommended me to write the book. I was stunned that no one has written the book on Nvidia before because every other big Internet company has five or six books on it. I looked into it, I said, oh, I would love this opportunity. We got a book deal done within a few weeks and I started interviewing Nvidia employees the first thing. Maybe after a half dozen calls. I found the defining characteristic wasn't a technology or an innovation. It was this unique work culture that Jensen Huang and his co founders built up. It's about just velocity and speed and being very blunt and direct. All these employees, when they went to other companies like Google, Microsoft and Apple, they were like, oh my gosh, I can't work like this anymore. They got used to this Nvidia culture that was just so much faster, more decisive, and didn't have any other kind of problems you have with internal politics.
- [04:31]
Kyle Rysdal
I will say it does sound a tad brutal. I mean, you're working, you know, even at an entry level gig, you're working 60 hour weeks. Jensen Huang apparently knows the name of like everybody walking down the hallway and has no hesitation about jumping in and questioning things or making sure that they are in line with his vision.
- [04:50]
Tay Him
Yes, work ethic and long hours are part of the Nvidia culture. I was talking to this marketing person in the early years and he said that there are sleeping bags in the office. And one day he decided to go. This is Titanic. Back in the late 90s, he said, I'm going to go out to see Titanic with my wife. He left at the office at 9:30 and one of his colleagues joked, oh, is this a half day, Andy? And so that was a mentality that people stay there super late. And I think I asked around today and people still work like crazy hours today. I think part of that is they want to do their best Work really hard. And it also comes from the top with Jensen. He considers work relaxing and fun.
- [05:37]
Kyle Rysdal
Wow.
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Tay Him
One of the things he does, he loves doing emails on Sunday night with his favorite Highland Scotch whiskey. And that's what he enjoys.
- [05:45]
Kyle Rysdal
What could possibly go wrong? The CEO of a company having a whiskey or two and sending emails.
- [05:50]
Tay Him
Yes, that's the way it does on Sunday evenings, I heard.
- [05:54]
Kyle Rysdal
And yet they retain people at some remarkable rate, as you point out in this book.
- [05:59]
Tay Him
Yeah, I mean, 18 players attract 18 players and winning begets winning. Right. So no one wants to work four years on the chip project and then have it fail in the marketplace. And Nvidia has this track record of success. And the money isn't bad either. I mean, we're talking about an extraordinary outcome. They're literally the best performing stock in US history. With a company with 20 years of returns, I think the turnover is less than 3% in an industry that has like 15% turnover on average.
- [06:28]
Kyle Rysdal
It sounds vaguely Steve Jobsian. Right. Jobs always said a grade people want to work with a grade people and we're not going to hire C people and all of that stuff. Right.
- [06:38]
Tay Him
It's almost very similar. There's really great corollaries. I mean, in the same way, he's very tough on people. Like Steve Jobs was tough on people. There's this one story about the Tegra 3, which was this chip for automobiles and small Internet devices. And the guy that was in charge of the project was late and there was this company wide meeting and he made the person in charge of the camera zero in on his face multiple times in the meeting and say, you really need to finish this Ray. You need to get this chip back on schedule and just repeatedly kind of dress him down, humiliate him in front of everyone. And part of that is he thinks that's how you learn. Like all these other companies where people coddle executives and do one on ones on the side so you don't embarrass the person. He wants to embarrass the person. So everyone learns not to make that mistake. And that's what you're dealing with. He has very high expectations and he keeps people accountable.
- [07:38]
Kyle Rysdal
We should say here it has not always been sunshine and light for this company. And at various points, as you detail in this book, he has said in company, all staffs were 30 days from going out of business, which is a peculiar way to motivate people.
- [07:54]
Tay Him
I think he's very worried about becoming complacent as a company. He's a student of technology. Industry where all the top companies eventually get disrupted. So he wants to instill that kind of fear and paranoia about being complacent. And he did that almost like the first 10 years. Every company meeting, which was held about monthly, he would say, We're 30 days from going out of business. And part of that was sometimes it was true. Some executives told me in 1998, their first two chips, it was true. But it's also to instill that we never can rest on our laurels. We really have to move fast and move forward as much as possible.
- [08:37]
Kyle Rysdal
He is, you point out, the longest tenured Silicon Valley founder and CEO he has now, you know, all you have to do is read the headlines. He is at the apex of his company's power. Clearly, he's going to stick around for a while, right?
- [08:54]
Tay Him
I mean, every major conference that he goes, he does, talks at and speaks at, he has this annual conference called GTC every year. And he says, there's nothing else I want to do. He considers all the employees his family. And he repeatedly says, I love Nvidia. Like this is the love of his life is his company.
- [09:16]
Kyle Rysdal
It's a book called the Nvidia Way, Jensen Huang and the Making of a Tech Giant. It drops on 10th December. Take him at Barron's. Rodent Tay, thanks a lot. I really appreciate your time. Interesting book.
- [09:27]
Tay Him
Thanks, guy. Thanks for having me.
- [09:29]
Kyle Rysdal
Nvidia shares today down about 8, 10% before the earnings call off 2% ish after hours as that $35 billion just wasn't what Wall street had been expecting elsewise in American come see, come saw. Details, numbers. You all know the drill. The weather this fall has been somewhat less than entirely autumnal. The national oceanic and Atmospheric administration says last month's average temperature in the Lower 48 was 59 degrees. Cool in some places, perhaps, but it's almost 5 degrees above average, which makes last month the second warmest October ever. September was warmer than usual, too. And all that temperate weather's been affecting what consumers are buying and not buying. On its earnings call this morning, Target said that apparel sales were down about 1% for the quarter, thanks in part to the temperature. Marketplace's Stephanie Hughes looks at what retailers do when it seems like winter's not coming.
- [10:56]
Stephanie Hughes
When the weather can be described as balmy, you don't really feel like buying something woolen. It's not appealing. You're not even thinking of it. Katie Thomas studies consumer behavior at the consulting firm Carney. She says a lot of retailers have had a hard time moving coats and sweaters this fall and expects they'll end up discounting them. She also says with a climate that's warming up, it's time for the retail industry to have a good long think about what it sells and when. You know, I think we tend to just do a little bit of the status quo, which is, oh, it's the fall season, it's the fall assortment. We need to have sweaters in it. Thomas is also having some conversations that border on the existential. Like, in the future, will we need winter scarves at all? And if we do, what will they be like? Do they somehow look different? You know, is it that they're not quite so oversized? Are there, you know, other ways that, you know, you think about what a scarf could be? But with climate change, it can be really hard to know what's coming. Sonja Lipinski is with Alex Partners. We could have a blizzard next year on October 1st. We have no idea right now. Lipinski says. To plan for a potential blizzard or potential balminess, retailers should take a cue from the fast fashion industry and develop more flexible production schedules where they can order very small batches, get it into stores and kind of test it before they commit to a really large production run where they're going to be sitting on a lot of inventory. There are certain retailers benefiting from the warmer weather. The Charmeri makes ice cream and sells it at six stores in Baltimore and D.C. owner David Alima says sales are up 7% so far this year from 2023.
- [12:36]
Tay Him
So to see a line out the.
- [12:37]
Kyle Rysdal
Door in September, in October, it's just, it's the best.
- [12:42]
Stephanie Hughes
Aleema says one thing that's been a little strange is selling what he calls hoodie weather flavors like spiced pumpkin sorry, Kai and apple butter when the temperature only calls for a T shirt. But he doesn't mind, and he doesn't think customers do either. I'm Stephanie Hughes from Archipelastics.
- [13:21]
Kyle Rysdal
There was another ratchet today in the changing gears of the television and streaming economy. Comcast said it's going to spin off most of its cable channels. MSNBC, CNBC, Oxygen, etc. That's the one with the exclamation point. The Golf Channel 2. They're all going into a separate company. Comcast is going to hang on to NBC News, Sports, Telemundo and Bravo, as well as Peacock, its streaming service. Also the company's film and TV studios and theme parks Marketplace. Samantha Fields has more now on the split and what it tells us about what we watch this is a story.
- [13:53]
Samantha Fields
About the rise of streaming and the fall of cable and how big media companies are still trying to figure out what to do with that shift. Just 10 years ago, Paul Verna at research firm Emarketer says his company found there were four times as many households that paid for cable than households that didn't.
- [14:10]
Kyle Rysdal
By next year, those numbers will actually cross and there will be more households in the US that do not subscribe.
- [14:16]
Tay Him
To pay TV than ones that do.
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Kyle Rysdal
So that's like a massive shift.
- [14:21]
Samantha Fields
And he says that's what's driving this move by Comcast.
- [14:25]
Kyle Rysdal
Companies that have these cable networks, they just really don't know what to do with them.
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Samantha Fields
Comcast is going with a spinoff company. Why not just sell its cable channels?
- [14:34]
Mitchell Hartman
I think there's probably a lack of buyers.
- [14:37]
Samantha Fields
Frank Lowden at Raymond James says cable is still making money, but less than it used to.
- [14:42]
Mitchell Hartman
The old model, where you bundle in a significant number of cable networks is gonna see its end of days at some point.
- [14:50]
Samantha Fields
But he says it's a different calculus for Comcast. With NBC's broadcast networks and Bravo, they have a lot of valuable shows that people want to stream. Real Housewives, Top Chef, Law and Order, the Olympics, other live sports.
- [15:03]
Mitchell Hartman
That's a lot of content that they can get to put on Peacock. And it's highly valued content, which is really important, which gets them more subscribers.
- [15:11]
Samantha Fields
And these days, Gregory Staller at Boston University's Questrom School of Business says companies have to work harder than ever to attract and keep subscribers because consumers have.
- [15:21]
Tay Him
More choices than ever.
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Samantha Fields
Instead of spending a couple hundred dollars a month on cable for a few channels they want and hundreds they don't, he says people can spend the same or less on streaming and get more of what they want. Paul Verna at Emarketer says everyone realizes that's the future, even though so far it hasn't been easy for companies to monetize streaming to the extent that they.
- [15:42]
Kyle Rysdal
Did with their cable networks when those were in their prime. But those challenges will eventually be worked out.
- [15:50]
Samantha Fields
And he says companies are following the audiences where they're going over to streaming. I'm Samantha Fields for Marketplace.
- [16:18]
Wesley Rule
Coming up, I enjoy seeing people really joyful of having found their. Their forever instrument.
- [16:25]
Kyle Rysdal
Music to my ears. But first, let's do the numbers. Dow Industrials up 139 points today, a third of 1%. 43,408. The Nasdaq off 21 points, about a 10th percent, ended things at 18,966. The S&P 500 basically flat 59 and 17. Williams Sonoma jumped more than 27% today. The home furnishings chain beat expectations on third quarter earnings and revenue target slumped 21.4% after sliding sluggish demand caught out as Stephanie Hughes was just telling us by warmer weather. Smith Fields was telling us about comcast. That stock brightened 1 and 6 10% today. Other streamers Netflix up 1.4% the Walt Disney Company picked up 1 and 2/3%. Bond prices fell, the yield on the 10 year treasury note up 4.41%. You're listening to Marketplace. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can today@marketplace.org donate hey grownups.
- [17:52]
Stephanie Hughes
Need some holiday gift ideas for the curious kids in your life? Give them a Smarty Pass subscription. It's a ticket to award winning podcast for kids about science, history, debate and more. Smarty Pass was named one of the top gifts for kids this year by the New York Times Gift Guide. With access to shows like Brains on, smashboom, Best and Forever Ago. There's a little something for everyone. For just $45 a year you get ad, free episodes and exclusive bonus content. Head to smartypass.org to sign up. Your kids will thank you.
- [18:30]
Kyle Rysdal
This is Marketplace. I'm Kai Rysdal. Inflation lower though it may be, it is still not quite where the Federal Reserve wants it to be. And the central bank is reading all the economic tea leaves it can to figure out what to do with interest rates. We got the Atlanta Fed's survey of business inflation expectations over the next year this morning. It held steady at 2.2% in November, same as a month ago. The Consumer Price index, by way of comparison, 2.6% percent over the past year. Fed Chair Jay Powell and his colleagues talk a lot about how determined they are to get inflation down to their target of, as we all know, 2%. And they say also that this last mile is going to be bumpy. Marketplace's Mitchell Hartman has more now on how inflation expectations might wind up affecting that bumpy path.
- [19:24]
Mitchell Hartman
Americans inflation expectations certainly do seem to be well anchored. As Fed Chair Jerome Powell said in a recent speech Consumers predict prices will rise 2.9% over the next year. According to the New York Fed, businesses expect inflation to be 2.2% overall, though they predict they'll raise their own prices for customers by 3%. And Bernard Baumol at the Economic Outlook Group sees warning signs on the horizon.
- [19:52]
Kyle Rysdal
Just keep an eye on inflation expectations. That could very well be one of the surprises in the next couple of months.
- [19:58]
Mitchell Hartman
Looking at current inflation rates, the Fed is right to be planning further interest rate cuts, says Brian Railing at the Wells Fargo Investment Institute. But looking forward, he says, investors are less confident. Inflation will keep falling and the Fed will keep cutting.
- [20:13]
Kyle Rysdal
The market sees some of the policies that may be implemented with the new.
- [20:18]
Tay Him
Administration and concern starts some of those.
- [20:21]
Kyle Rysdal
Policies may eventually lead to inflation down the road.
- [20:25]
Mitchell Hartman
Specifically, President elect Trump has pledged steep new tariffs on imports, mass deportations that could lead to labor shortages and tax cuts and deregulation that could juice the economy. Bernard Baumol says the Fed will be watching to see do businesses think they have to pay higher wages to find workers or raise prices to offset tariffs?
- [20:47]
Kyle Rysdal
If we begin to see inflation expectations pick up, that means that the Federal Reserve is even less likely to lower rates in December and obviously then into 2025. And that would mean the pain becomes even greater on especially low and middle income groups.
- [21:04]
Mitchell Hartman
And most Americans really want inflation tamed, says Chris Jackson at polling firm Ipsos.
- [21:10]
Wesley Rule
When we ask them what they want the Trump administration's priority to be in their first hundred days by a large.
- [21:17]
Tay Him
Margin, they're saying dealing with inflation.
- [21:19]
Mitchell Hartman
And what Jackson says consumers want more than anything is for prices to fall back again to pre pandemic levels, which isn't likely to happen. I'm Mitchell Hartman for Marketplace.
- [21:49]
Kyle Rysdal
So let's go from very big picture Mitchell's macro story just now on business inflation expectations to the very micro what kinds of things small business owners are thinking about that are going to affect their economic futures? Here's today's installment of our series My Economy.
- [22:05]
Wesley Rule
My name is Wesley Rule and I'm the owner of Knoxville Fine Violins along with my wife and we are in Knoxville, Tennessee. So I started at a very young age, sort of pressed into service with my father building pipe organs at the time, probably as a, as a way to rebel against my, you know, upbringing. As a father who wanted me to play piano and organ. I was playing violin. I at one point was looking at the instrument and realized I had no idea how to make one. So I looked into it and decided to go a different route with my Education and went to the Violin Making School of America in Salt Lake City. In 2020, we decided to open a shop. When we first opened the shop, it was just me and my wife and my mother helping us with the accounting. And as we grew, we started having to try to figure out what we were going to do with maybe hiring a potential employee. We were able to find Wyatt. He's been working here since February. I believe he's been absolutely fantastic. Now we can get more repairs and more violin making done, which I wasn't really able to do much making until we were able to hire. You know, recently we've been thinking about what's going to happen if there are tariffs specifically on Chinese goods. Because a lot of our lower end instruments come from China. We've been looking at replacement instruments coming maybe from Germany and Hungary. From Romania, we've also been looking at maybe American made workshop instruments. We don't want to have a gap in inventory if something were to happen. And we don't want to raise our prices for especially for our economy model instruments because, you know, at $650, while that may seem cheap to a professional, that's a lot of money that you have to shell out, especially as the cost of living is going up. My favorite part of this business, it's really hard to put a finger out because I enjoy doing all of it. I enjoy working with people. I enjoy seeing people really joyful of having found their, their forever instrument or just finding an instrument that they love to play. I'd say that my favorite part though is probably doing higher end restorations. I really love taking old historic instruments made by a luthier just like myself, you know, from 200 years ago and being able to bring life back to that instrument, that's always really fascinating for me.
- [25:00]
Kyle Rysdal
Wesley Rule with his wife, the proprietor of Knoxville Fine Violins, Knoxville, Tennessee. Of course, whether you are handcrafting fine instruments, working a desk job or doing something else entirely, this series does not happen without you. So please write to us, would you, and tell us what's happening in your economy. Marketplace.org myeconomy is where you can do that. This final note on the way out today, courtesy of the American Farm Bureau Federation. Its annual update on how much Thanksgiving dinner is is going to run you on average nationwide. Turkey for 10 trimmings included, $58.08. That is down 5% from a year ago. I'm just going to say it always seems to cost more than that at my house. Our media production team includes Brian Allison, Jake Cherry, Jessen Dueler, Drew Joste, Gary O'Keefe, Charlton Thorpe, Juan Carlos Tirado and Becca Weinman. Jeff Peters is the manager of media production and I'm Kai Rysdal. We will see you tomorrow. Everybody. This is apm. You turn to Marketplace for up to the minute news for stories that show you the connections between global events and your personal economy. And you're not alone. Marketplace is the most widely consumed business and economic news program in the country. We're proud to make fact based journalism freely accessible and Marketplace investors make it all possible. Your year end donation today will make a real difference in our nonprofit newsroom and in the lives of millions of Marketplace listeners every single day. So please contribute what you can today@marketplace.org donate.