In 1996 Intel was worth >$100B and practically owned the semiconductor industry. Nvidia was unknown.
Now Nvidia is worth $3 Trillion, 30X the market cap of Intel.
How did Jensen Huang take on Intel and win?
It’s the 21st Century David vs Goliath story.
Intel didn’t lose because they sucked.They made state-of-the-art CPUs, had incredible fabrication technology, and economies of scale. Intel put the Silicon in Silicon Valley.
It was impossible to compete with them.So Jensen picked a game he knew he could win.
Jensen did what every David needs to do in a David vs Goliath match-up.
Let me explain.
Goliath was 9-foot-tall with a 200-pound armor.One day, he challenged the enemies to pick someone for a one to one fight.David, a weak, 4-foot-tall shepherd, decided to face him.
When the day arrived, Goliath showed up with a spear, but David went with a sling and 5 stones.
As soon as Goliath started running towards him, David charged his sling and shot.The stone sank into Goliath’s forehead and he dropped dead.
&People were shocked!
When the day arrived, Goliath showed up with a spear, but David went with a sling and 5 stones.
As soon as Goliath started running towards him, David charged his sling and shot. The stone sank into Goliath’s forehead and he dropped dead.
People were shocked!
Intel had always been focused on CPUs, which process things sequentially.
Huang knew he couldn’t compete with Intel’s monopoly, so he bet the company on the rise of GPUs 25 years ago.
When 3D graphics for gaming emerged in the 90s, demand for more efficient and faster processing followed.
That’s when GPUs were created.
Graphic processing units (GPUs) differ from CPUs in that they do parallel processing. Many things at the same time.
By now, almost all computing-power-intensive processes are handled by GPUs.
Why couldn’t Intel adapt and compete with Nvidia?
The market for GPUs began with the small Gaming market. It didn’t move the needle for a hundred-billion-dollar corporation.
Steve Jobs explains that when a product is already the best, growth doesn’t come from innovation.
Product people can maintain the lead. But growth comes from sales.So salespeople take over management. And sales people don’t want to take risks or innovate.
With no immediate threat or incentive, why would Intel risk everything
to change direction?
Steve Jobs had the vision to kill the iPod with the iPhone. Not Intel.After ignoring GPUs for 10 years, Intel can’t catch up with Nvidia’s CUDA ecosystem, talent density, and brand.
Big tech fails because:
1) New markets are too small to move the needle. By the time they get big enough to be ‘worth pursuing’, it’s too late.
2) Bureaucracy is too protective of what ‘has been’ to focus on what ‘can be’. Can’t U-turn with 4 people simultaneously steering.
You’ll see this play out again and again in tech.
1. Microsoft won PCs with Windows but lost Phones to Google’s Android.
2. Nokia won keypad phones but lost to Apple on touch smartphones.
3. Ford and GM won gas cars but lost to Tesla on electric and autopilot.
I wrote this lie e because –
In spirit, Nvidia vs Intel is the same as David vs Goliath.
Its biblical, almost prophetic, story arc carries a deeper message.
It’s the story of every underdog vs incumbent.
of rebel vs establishment.
of the rise and fall of nations.
Once you reach the top, you lose the values that got you there.
You’re enjoying the lead. You’re too good. You can’t be beaten.Until some shepherd-looking boy named David changes the game.