Book review: The Nvidia Way

The biggest news story about stock markets over the last three years has probably been the dramatic rise of technology stocks, and particularly those related to AI. And among those stocks, one of the standout performers has been computer chip maker Nvidia. The success of Nvidia now hides the fact that the company had many close calls, where it was literally on the verge of closing down. That is one of the key facts that I learned from reading The Nvidia Way, by Tae Kim.

Kim was previously a technology columnist at Bloomberg, and he tells us he wrote several comments critical of Nvidia. Nevertheless, Nvidia allowed him to have unprecedented access to Nvidia staff, but more importantly, to CEO Jensen Huang. And that is important, because the story of Nvidia, and 'the Nvidia way' is undeniably a story of Jensen Huang. Huang wasn't the only founder of Nvidia, but he has been the face of the company, the driving force behind its successes, and the person most responsible for picking up the pieces after its frequent failures. Kim writes that:

In all my years covering business, as a consultant, an analyst, and now as a business writer, I have never met anyone quite like Jensen. In the field of graphics, he is a pioneer. In the harsh technology market, he is a survivor. And he has been a CEO for more than thirty years - marking him, as of this writing, the fourth-longest currently-serving CEO in the S&P 500...

Kim clearly has a lot of respect for Huang, and this shines through the whole book. Even where other authors would press on the more negative aspects of Huang's personality, such as his ultra-competitive nature, Kim is more measured:

Jensen was so competitive that he challenged other employees even when he was at a disadvantage. In high school, CFO Geoff Ribar had ranked among the top fifty chess players in the country. His boss, however, would not accept that someone else was better than him...

Jensen attempted to close the gap between his and Ribar's chess skills through brute-force learning. He memorized chess openings and sequences of moves, so that he would control the board. Yet Ribar round his playing style predicable... Every time he lost, Jensen would swipe his arm across the board, knocking over the pieces, and storm away. He would sometimes later insist on a rematch on the ping-pong table. Ribar graciously accepted, knowing Jensen was purposely shifting the competition onto more favorable territory.

It is worth noting that Huang was a champion table tennis player. His competitiveness has clearly served him well in business, and is one of the key factors in Nvidia's success.

So, what is 'the Nvidia way', after which the book is titled? Kim notes that it has several characteristics, including the hiring raw talent especially through aggressive hiring methods, its emphasis on retaining high-quality employees, its strong focus on a culture of excellence, the high demands it in turn places on those employees, and the leadership of Huang himself. Not all of these characteristics, especially not Huang, could necessarily be replicated at other companies. However, there is a lot that budding leaders could nevertheless learn from this book.

Having said that, there is one element where the book could have explored deeper. There were many occasions where Nvidia was close to failure, including following the release of one of its very first chips. Obviously, Nvidia is wildly successful as a company now. But should we interpret the company's success in spite of its challenges as the result of good management, culture, and hard work, or should it be interpreted as luck? In other words, how much of Nvidia's observed success is simply survivor bias? Kim obviously sides with attributing the company's success to its own good efforts, but it would have been good for him to turn a more critical eye to just how lucky they had been at key points.

Despite that gripe, I really enjoyed this book. I distinctly remember buying an Nvidia GEForce graphics card many years ago. Kim does a great job of bringing to life all of the characters and their contributions to the story, as well as the key events in the life of the company. If you're interested in understanding the rise of Nvidia, this book is recommended.