Jensen Huang on Nvidia's first 6 months: Sometimes you have to ignore your customers.
Summary
TLDRThe script narrates the intense competition in the 3D graphics industry, highlighting the journey of a company that thrived amidst numerous competitors. It emphasizes the importance of understanding the core of one's business, in this case, semiconductor technology, and the relentless pursuit of improvement, as dictated by Moore's Law. The speaker recounts the strategy of ignoring customer feedback that deemed their products too expensive or advanced, trusting in the insatiable demand for better graphics and the transformative power of technological progress.
Takeaways
- 🚀 The 3D graphics industry in the early 1990s was booming, leading to a surge in startups in Silicon Valley.
- 🌟 In 1993, the speaker's company was the only consumer 3D graphics company globally, with Silicon Graphics being the professional counterpart.
- 📈 By 1995, the industry saw an influx of competition, with 50-70 startups entering the same market space.
- 🏆 Nvidia stands as the sole surviving computer graphics company today, outlasting approximately 200 competitors.
- 🤔 The speaker poses a critical question about what factors led to their company's survival amidst intense competition.
- 💡 The importance of perspective in business is emphasized, suggesting that understanding the core of one's business is essential for success.
- 📚 The foundation of the speaker's business was semiconductor technology, governed by Moore's Law, which doubles performance and halves cost every year or two.
- 🛑 The company chose to ignore customer feedback for a time, believing in the insatiable demand for better 3D graphics, despite initial resistance.
- 🔮 The speaker believed in pushing the boundaries of technology, even when it meant creating products that customers initially deemed too expensive or unnecessary.
- 🛍️ Customers' understanding of the business's nature was limited, especially during the industry's formative years, justifying the company's decision to push forward with innovation.
- 💰 The speaker recounts taking a risk with the company's last few million dollars to build a chip that was considered too advanced for the market at the time.
Q & A
What was the state of the 3D graphics industry in 1993 according to the script?
-In 1993, there was only one consumer 3D graphics company in the world, with Silicon Graphics being the professional 3D graphics company located up the street.
How did the 3D graphics industry evolve from 1993 to 1995?
-Between 1993 and 1995, the industry saw a rapid increase in the number of startups, with around 50-70 companies entering the market to do the same thing as the original consumer 3D graphics company.
What is the significance of 'Mo's law' in the context of the 3D graphics industry?
-Mo's law, not a physical law but a law of competition, challenges engineers to improve semiconductor technology, doubling performance approximately every year or two while also reducing costs by a factor of two.
Why did the company decide to ignore customer feedback about their product specifications?
-The company believed that 3D graphics was insatiable and that following Mo's law to make their graphics processors twice as good every year was more important, even if customers initially said it was too expensive or not needed.
What was the company's strategy in the face of intense competition from about 200 companies?
-The company focused on the insatiable demand for better 3D graphics, doubling the performance of their products annually, and relying on Mo's law as their guiding principle, despite initial customer resistance.
How did the company differentiate itself from competitors during the intense competition period?
-The company differentiated itself by adhering to a unique perspective on the insatiable nature of 3D graphics and the continuous improvement promised by Mo's law, even when it meant going against immediate customer feedback.
What does the speaker suggest is the key to surviving in a competitive industry?
-The speaker suggests that having perspective on the nature of the business and understanding the underlying technology, such as semiconductor technology and Mo's law, is key to survival in a competitive industry.
Why did the speaker believe that sometimes it is necessary to ignore customers?
-The speaker believed that ignoring customers is sometimes necessary because they may not fully understand the nature of the business or the potential of the technology, especially during the creation of a new industry.
What was the outcome for the majority of the 3D graphics companies that started during the boom period?
-The majority of the 3D graphics companies that started during the boom period did not survive, with Nvidia being the only surviving computer graphics company in the world today.
What was the company's approach to product development based on the script?
-The company's approach to product development was to focus on making their graphics processors significantly better each year, regardless of immediate customer demand or feedback.
How did the company's perspective on the 3D graphics market influence their business decisions?
-The company's perspective that the 3D graphics market was insatiable influenced their business decisions to continually improve their products based on Mo's law, even in the face of customer objections or lack of interest.
Outlines
🚀 Rise of 3D Graphics and Intense Competition
This paragraph discusses the emergence of 3D graphics as a dominant industry in the early 1990s, particularly in Silicon Valley, and the subsequent rise of numerous companies attempting to capitalize on this trend. The speaker reflects on the intense competition that ensued, with approximately 200 companies competing in the same space. Despite the competition, the company Nvidia stands out as the sole survivor in the computer graphics industry. The speaker ponders the reasons behind this survival and success, setting the stage for a deeper discussion on business strategy and competition.
🤔 The Essence of Business and the Role of Perspective
The speaker delves into the importance of understanding the core of one's business and the essence that makes it successful. They highlight the role of semiconductor technology, specifically referencing Moore's Law, which dictates the pace of technological advancement and cost reduction. The paragraph emphasizes the need for businesses to have a clear perspective on their industry's growth potential and the importance of innovation, even when it seems that customers are not asking for it or are resistant to change.
🛠️ Ignoring Customer Feedback for Innovation
In this section, the speaker recounts a strategy that involved ignoring customer feedback to some extent, which is counterintuitive to conventional marketing wisdom. The company chose to focus on making their graphics processors significantly better each year, regardless of immediate customer demand or willingness to pay. The speaker shares an anecdote about presenting product specifications to major tech companies, all of which rejected the idea as too expensive. Despite this, the company continued to innovate, driven by the belief in the insatiable nature of 3D graphics and the benefits of Moore's Law.
Mindmap
Keywords
💡3D Graphics
💡Silicon Valley
💡Consumer 3D Graphics Company
💡Professional 3D Graphics Company
💡Startups
💡Mo's Law
💡Semiconductor Technology
💡Competition
💡Insatiable
💡Perspective
💡Ignore Customers
Highlights
3D graphics for PCs and consumer 3D became a hot trend in Silicon Valley in the early 1990s.
In 1993, the company was the only consumer 3D graphics company in the world.
Silicon Graphics was the professional 3D graphics company located nearby.
By 1995, there were 50-70 startups in the same 3D graphics industry.
Nvidia is the only surviving computer graphics company today.
The company faced intense competition from IBM, HP, Silicon Graphics, and others.
Mo's Law, doubling performance every year or two, was a key factor in the company's strategy.
The company's core business was based on semiconductor technology.
Understanding the essence of the business was crucial for survival.
3D Graphics was seen as insatiable, with potential for continuous improvement.
The company decided to ignore customer feedback for a time to focus on technological advancement.
Customers were not always aware of the potential of the business.
The company's perspective was that Mo's Law was a friend, driving innovation.
The decision was made to make graphics processors twice as good every year.
The company took a bold step by investing in a chip that was considered too advanced for the market.
The importance of having a unique perspective on the nature of the business for success.
The company's strategy was to push the boundaries of what was considered possible by customers.
Transcripts
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 uh 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
what
happened competition is
intense everybody has smart
people everybody has money we competed
with IBM we competed with HP we competed
with silicon
Graphics we competed with son 3d effect
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 were
going to execute on 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 Mor's 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 Mo's law was our friend
therefore uh we should make our Graphics
processors 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
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
uh 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
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