Working The Nvidia Way

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This morning, I received a copy of Tae Kim's new book about Nvidia. Tae Tae is a senior technology writer at Barron’s and previously wrote for Bloomberg, CNBC, and Yahoo Finance. Unlike most journalists, he also worked at a hedge fund before crossing the lines to the civilized world of writing (or the uncivilized world of traditional media).

Nvidia designs the chips that power innovations like ChatGPT and other generative AI products. Its products are also used for anything from drug development and high-frequency trading to drone swarms and crypto mining. The company survived the bursting of the dot-com and crypto bubbles, and is now one of the most valuable companies on earth and one of the best-performing stocks of all time.

Kim's book delves into the company's history, particularly in the context of artificial intelligence. It is well worth reading for anyone interested in business, technology, and general history. Today, I wanted to highlight a few snippets that relate directly to how Nvidia hires, manages, and retains talent.

I previously wrote about how Nvidia embraced remote and distributed work more than any other tech giant. At the heart of the COVID-19 lockdown, in May 2020, CEO Jensen Huang was asked by a journalist, "What do you think of letting employees work out of their homes forever?" Huang responded:

I got no trouble with it. And I think that there’ll be a lot of our employees who will choose to want to work from home many days during the week, and they would still want to go in because maybe they’ll have co-op meetings. Maybe there is some really close collaboration meetings that they’d have to do. Maybe go into a lab or just go hang out, take a day off. Ha, we’ll take a day off of work and go to the office...

You’re going to get all of that kind of stuff. Some of it is going to be for social reasons. Some are for collaboration. Some of it because you have to physically be there for the lab. But I think we’re going to have people who work from home a couple of days a week, three days a week, four days a week. And I’m perfectly comfortable with all that. And I think digital technology is going to continue to advance. There’s no question we’re going to do this. We’re going to do video conferencing and VR. And we’re going to get much better, much better AI-assisted video conferencing systems and augmented reality video conferencing systems. You know, there’s gonna be all kinds of new innovations in this in this area.

Post Covid, is was ironic to see financial fee collectors like Blackrock and Goldman Sachs insist they're unable to "innovate" unless everyone comes back to downtown or midtown Manhattan, while companies like Nvidia were literally reinventing the wheel by empowering teams and individuals to do what works best for them. Embracing this approach didn't just enable Nvidia to continue to innovate through lockdown; it made the company better. In 2022, CEO Jensen Huang commented on how work at Nvidia has changed:

Nvidia has moved faster in the last couple years than potentially its last 10 years combined. And it’s possible that we’re very comfortable being a digital company.

It’s possible that we’re quite comfortable working remotely and collaboratively across the whole planet. It’s quite possible that we work better actually when we allow our employees to choose when they’re most productive and let them optimise, let mature people optimise their work environment and their work timeframe and their work style around what best fits for them and their families.

And so it’s very possible that all of that is happening. It’s also absolutely true that it has forced us to put a lot more energy into the virtual work that we do. For example, the work around Omniverse really went into light speed in the last couple of years because we needed it. Instead of being able to come into our labs to work on our robots, or go on to the streets to test our cars, we had to test them in virtual worlds, in digital twins. And we found that we could iterate our software just as well in digital twins, if not better.

Imagine that. Developing physical products in a digital environment. Testing physical products in a digital environment. And not just as a gimmick but as a business that generates incredible financial returns. As Tae Kim's book illustrates, Nvidia's unique approach to talent did not begin in 2020. For decades, the company has prioritized hiring the best people, regardless of where they live, how much they cost, and how they like to work.

As Kim summarized it, "hiring raw talent is the first essential components of the Nvidia Way." Every company would tell you that the same is true for them. But Nvidia does a few things differently in the service of this motto.

It hires from anywhere and often allows people to work where they are rather than force them to move. When semidoncutor company 3Dlabs was dissolved, Intel tried to recruit its top departing employees, inviting them to move into Intel's offices elsewhere. Nvidia, in contrast, told them they were welcome to stay where they were. To make it even easier, Nvidia's CEO instructed his team to set up a new satellite office in Alabama, especially for the new recruits.
It constantly looks for ways to add more performance incentives. While most companies push back against any requests to renegotiate compensation, Nvidia seeks opportunities to do so. It does not wait for performance reviews to reward good performance. At Nvidia, the CEO routinely gives people new equity grants on the spot when they encounter remarkable performance. Such grants incentivize people to seek opportunities to excel. They also help push back the vesting schedule of employee stock options: Instead of waiting for their stocks to vest over four years from the day they were hired, the best-performing employees constantly get a "refresh" that incentivizes them to stay at the company for many more years. On the flip side, Nvidia also does not wait long before cutting anyone who doesn't fit the organization.
It encourages employees to recommend new people to the organization. More than a third of Nvidia's new hires are referred by current employees.
It seeks to increase the flow of information — including "weak signals" throughout the organization. Every employee in the company is encouraged to send a weekly email with the "top five things" they deem most important. This includes what they are currently working on, as well as their observations about what competitors are doing, new inventions they came across, or concerns they have about the company. Employees send these emails to their direct managers but also CC the CEO Jensen Huang. The CEO reads and responds to many of these emails, and it helps him discover what he calls "weak signals" about internal and external developments well before they become important enough to reach the CEOs of traditional companies.
It makes it difficult for people to hide. The "Top Five" emails enable the CEO to get to know thousands of employees by reading hundreds of emails on a weekly basis. The CEO avoids one-on-one meetings, but he routinely emails or chats with employees at all levels of the organization, calling them by name and mentioning their current projects or ideas they raised in their "top five" emails. This way, every employee feels seen and knows they can't just cruise without being noticed. That type of cruising is common in other tech giants.
It avoids cutthroat competition between employees, even in the sales department. While Nvidia tracks and rewards performance, it does not encourage employees to compete with each other. Quite the opposite, it encourages people to constantly seek help and "float" problems as early as possible.
It is critically dependent on its CEO. For better or worse, Nvidia's management and retention strategy revolves around Jensen Huang. It depends on his memory, on his unique understanding of both technical and strategic questions, and on his intensity and focus. This system enables incredibly talented people to specialize and produce their best work. However, it also makes it hard for general managers to emerge and rise within the company. The relatively flat management structures work well with Huang at the center, but it makes the company critically dependent on Huang. So far, this has been a boon for the Nvidia. But one day, Huang will step down. Before then, perhaps Nvidia would have invented a CEO chip that could pick up where the human CEO had left off.

Is your company doing anything like this? Do you think it should? Could this work in your own industry? Why or why not? I'd love to hear your thoughts and perspective.

And, once again, I'd love to see you tomorrow at my live conversation with Prakash about AI and the future of work. Sign up for free to watch it on LinkedIn or YouTube. Learn more here or here.

Best,

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