AI: Nvidia's 'Missionary' Culture. RTZ #462

...long-term employees working through the extraordinary success

The test of a company’s true mettle over time is in its people in good times especially. From startup to successful, established companies, it’s the culture, work ethic and team spirit of its people that make the real, long-term difference. Through thick and thin of course, but as important to track in the thick of things too.

After 31 years of its ‘overnight success story’, it looks like Nvidia for now has what it takes. Despite its extraordinary financial performance, which can be as stressful as dreadful financial performance.

Nvidia of course has been driven to this point of success, where it delivers over 90% of the AI chips and infrastructure in this AI Tech Wave, by its ultra-paranoid Founder/CEO Jensen Huang. They’re on a mission of an ‘Accelerated AI Computing’ Strategy that I’ve outlined.

And Nvidia’s well-rewarded employees for now seem to be ‘missionaries’, not ‘mercenaries’. This Bloomberg piece “Nvidia Rally Mints Millionaires Too Busy to Bask in New Wealth”, provides a glimpse:

“Nvidia stock has gained 3,776% since the start of 2019 as the company benefits from selling the main chip necessary for artificial intelligence work, minting many new multimillionaires in the process. But the work hours are just as grueling and high-stress, current and former employees said, leaving little time for the jet-setting, homebuying and leisure many can now afford.”

“The 31-year-old chipmaker has piled on market cap faster than any other company in history. Founder and Chief Executive Officer Jensen Huang has established expectations of scrappiness and overworking, with a chaotic structure where one manager can have dozens of direct reports, the current and former employees said. Rather than firing employees like his competitors, Huang has said he prefers to “torture them into greatness.”

“Nvidia hasn’t had any trouble keeping its employees in recent years, in part because its stock grants typically vest — or become available — over a four-year period, giving workers incentive to stay to earn their whole pay package. In 2023, 5.3% of employees left the company, but after its valuation topped $1 trillion, that same turnover rate dropped by nearly half, to 2.7%, according to its 2024 sustainability report. The overall semiconductor industry’s turnover rate is much higher, at 17.7%, according to Nvidia.”

“The explosive stock rally also means that many Nvidia employees are sitting on bigger nest eggs than peers at other chipmakers. Chief Financial Officer Colette Kress, who joined the company 11 years ago, owns stock worth about $758.7 million. Her Intel Corp. counterpart Dave Zinsner, who has a larger pay package but has a shorter tenure, owns stock worth just $3.13 million. At Advanced Micro Devices Inc., Nvidia’s nearest rival, which has also seen rapid share growth, CFO Jean Hu, who joined in 2023, owns stock worth $6.43 million.”

As a twenty year Wall Street veteran engaged with tech companies through multiple tech waves, I’ve first-hand witnessed the stresses of success on tech company employees. From Microsoft to Apple to America Online (AOL) to Yahoo! to Ebay to Google and many others. The forces at work on Nvidia’s employees are unusual only in the extraordinary concentration of its performance over the last couple of years.

But the team work, and work culture depicted in the piece, worth reading in full, reminds me of my days at Goldman Sachs. The Firm had a similar flat culture, where every one pitched in to do what was needed, whenever and wherever it was needed. The focus was always on doing the work for customers with integrity and quality. Being ‘Long-term Greedy’ was in the DNA of GS folks, at every level.

Nvidia seems to have developed a similar culture over its three plus decades. Which is a good thing, since as I’ve outlined recently, Nvidia is just at the beginning of its opportunities in this AI Tech Wave. it’s potential destiny is far more than ‘a chip company’.

Nvidia’s got quite the moat as I described in the piece, but it still all depends on the people in the Castle.

So their current and future people have a lot more work to do manning the ramparts as a team. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)