The Thinking Machine - Stephen Witt

Introduction:

“This is the story of how a niche vendor of video game hardware became the most valuable company in the world. It is the story of a stubborn entrepreneur who pushed his radical vision for computing for thirty years, in the process becoming one of the wealthiest men alive. It is the story of a revolution in silicon and the small group of renegade engineers who defied Wall Street to make it happen. And it is the story of the birth of an awesome and terrifying new category of artificial intelligence, whose long-term implications for the human species cannot be known. At the center of this story is a propulsive, mercurial, brilliant, and extraordinarily dedicated man. His name is Jensen Huang, and his thirty-two-year tenure is the longest of any technology CEO in the S&P 500.

Huang is a visionary inventor whose familiarity with the inner workings of electronic circuitry approaches a kind of intimacy. He reasons from first principles about what microchips can do today, then gambles with great conviction on what they will do tomorrow.

FOUR: Thirty Days

“When David Kirk arrived at Nvidia’s offices for the first time, in 1996, he could see at once that the company was doomed. Kirk was a graphics expert who consulted throughout the Valley, which was like being a connoisseur of failure. He had watched a great many start-ups falter, including his own, and Nvidia exhibited all of the symptoms of a company hurtling toward insolvency. The employees looked haggard and demoralized, the quirky product didn’t fit with the market, and the supposedly chummy founders were now deadlocked in a “technical discussion” that was obviously more than just a discussion and obviously about more than just technology.

NINE: Cuda

“To distinguish himself, Huang had to pursue a strategy that so defied conventional business logic that ATI wouldn’t follow. He had to build an exploratory product, like a $300 entry-level scientific supercomputer that not only didn’t have competitors but also didn’t even have obvious customers. The zero-billion-dollar market, by definition, was one that only he would participate in—one that only he would even see. Huang was going to build a baseball diamond in a cornfield and wait for the players to arrive.

Disruptive technologies, Christensen had observed, often grew out of hobbyist communities. They were developed using “bootlegged resources” in which “off-the-shelf components” were redeployed for something other than their intended purpose. They started out wonky but rapidly improved along attributes of performance that established players ignored.

But even once you had absorbed this lesson, it wasn’t easy to implement. Pursuing niche markets cost profits, making investors question your sanity. This, too, Christensen had foretold: “One of the reasons managers at established firms find it difficult to serve emerging markets is that their investors and customers tell them not to.”

That was the real secret of The Innovator’s Dilemma, which readers often missed. It was not a book about how to succeed; it was a book about how not to fail. Christensen’s book wasn’t a how-to for start-ups but a counterinsurgency manual for senior managers at stagnating firms. Thirteen years in, Huang felt that Nvidia was at risk of becoming such a firm, and it was as much paranoia as optimism that led him to pursue the mad-science market.

SEVENTEEN: Money

“Like many firms, Nvidia allowed employees to purchase stock at a discount to market prices. What set Nvidia’s program apart was that employees were allowed to purchase stock at a discount to the lowest price at any point in the last two years. These purchases were capped at a certain dollar amount, but as the stock went vertical, the program basically turned into free money, and those who maxed out their contributions each year made the trade of a lifetime. With the windfall extending deep into middle management, some newer employees expressed concerns that the nouveau-riche veterans were entering a state of “semiretirement.” Executives disputed this characterization. Jeff Fisher, who ran the company’s gaming side, had been among the first thirty employees. “Many of us are financial volunteers at this point,” he said, “but we believe in the mission.”

The lure of developing this revolutionary technology offered purpose beyond what money could buy. This was especially true of the old guard, who’d spent years explaining to baffled peers why they were working for a gaming company and who constantly had to correct the pronunciation of the firm’s name. AI had not been a consideration for these veterans, and they were as surprised to be working on it as anybody. “There was no way me, or anybody else, could have dreamed at the time that this stuff that science fiction writers might come up with has become a reality,” said Jay Puri, Nvidia’s head of sales, who started work at the company in 2005. The value of Puri’s shares exceeded $700 million by 2024, but he felt that the interesting work at Nvidia was only beginning. “Maybe I’m biased, but I think it really is the most important technology company of our time,” he said.