#403 How Jensen Works

**David Senra** (0:00)
About a year ago, I read this book called The Nvidia Way by Tae Kim. The book is a company history and a partial biography of Jensen. The episode that I made on the book the first time I read it covered a lot of Jensen's life and then how he built Nvidia. That was episode 376 For this episode, I reread the book, and then I wanted to strip away everything that wasn't ideas for how Jensen runs his company. So how Jensen works and nothing else. And so what I did is I made a list of about 20 of Jensen's ideas that I want to run through with you. So starting with idea number one, which I call Professor Jensen. So a common trait of history's greatest founders, they spend a lot of their time teaching their organization. The best description of this I ever heard actually comes from Jim Senegal, the founder of Costco. He says, if you're not spending 90% of your time teaching, you're not doing your job. The very first sentence of this book is, in another life, Jensen might have been a teacher. Colleagues call him Professor Jensen for his ability to explain complicated concepts on the whiteboard in a way that just about anyone can understand. There's another line in this book that comes later on where the author Tae Kim says, I would become his student much like his employees do. Jensen's teaching is both persuasive and pervasive. They say that you can talk to two unrelated Nvidia employees who don't know each other, and they still will say the same thing. Jensen has this Vulcan mind meld with everybody inside of his company. He spends a great deal of his time communicating with his employees and ensures that everyone at the company knows the overall strategy and vision, which leads us, ties into idea number two, which I've already mentioned, and that is whiteboard. Jensen wants the whiteboard to be used as the primary form of communication in meetings. Why? Because it forces employees to demonstrate their thought process in real time in front of an audience and there's no hiding. Jensen wants drawing and talking at a whiteboard to be the center of every meeting. Whiteboarding forces people to be both rigorous and transparent. It requires them to start from scratch every time they step up to the board, and therefore to lay out their thinking as thoroughly and clearly as possible. It becomes immediately apparent when someone hasn't thought something through. At the whiteboard, there is no place to hide. And I would say there's this beautiful underlying tie-in to his overall company-building philosophy. And it's the fact that he just believes in constant reinvention. So it says the whiteboard represents both possibility and ephemerality. The belief that a successful idea, no matter how brilliant, must eventually be erased. And a new one must take its place. So this deep belief in constant reinvention, as mandatory as not optional, is something I think that Jensen has in common with Michael Dell. One of my favorite things that Michael Dell ever said was this. He said, I stood up and told the company that five years from now, we will have a new competitor. And that new competitor is going to be in every business that we are in, except they're going to be faster, more efficient and more capable. And they're going to put us out of business. And the only way that we're going to prevent that is if we become that company. It is gut wrenching stuff to reinvent and reimagine your business. But if you don't do it, you'll go out of business. Which leads to idea number three, which is complacency kills. Jensen repeats this belief over and over again throughout the book. Complacency kills. I would say that Jensen has this combination of extreme self-confidence and charisma matched with this inner voice that says that he sucks. An inner voice that says nothing he ever does is good enough. And I truly believe for a lot of history of founders, that inner voice is impossible to satisfy. And there's a great line in the book on how this manifests. It says, at Jensen's company, innovation is a necessity, not an option. I don't know what Jensen's answer would be if you ask him like, what is his biggest fear? I would highly suspect that complacency taking root inside of his company is going to be towards the top of that list. And so throughout the entire book, he's just constantly hounding on this. Here's one example, Jensen resists overly positive accounts of Nvidia's startup period and his own missteps. When we were younger, we sucked at a lot of things. Nvidia wasn't a great company on day one. We made it great over 31 years. And so in addition to rereading this book for the second time, I also watched Jensen's commencement speech that he gave at Caltech. And as with any commencement speech, they're going to give you a nice introduction. They're going to give you like a short biography. And after the nice introduction, he begins his speech by saying, thanks for the kind introduction. It really makes me cringe listening to all of that. I hate hearing about myself. In the book, he summarizes his first 15 years as CEO. This is what it says. He slipped into the third person. If Jensen wasn't even involved in the first 15 years of our company, I would really like that. He wasn't proud of how the company was managed then or his own naivete and lack of strategic thinking. Jensen runs the company the way he does because he believes that Nvidia's worst enemy is not the competition, but itself the worst enemy is the complacency that grips any successful company. That is yet another thing that Jensen has in common with a lot of history's greatest founders. They all believe that complacency kills. In fact, Andy Grove, he had a mantra. His mantra was, success breeds complacency. Complacency breeds failure. Only the paranoid survive. This idea of complacency killing your company just reappears. Remember again, here's another example. Herb Kelleher, founder of Southwest Airlines. He has a great way to describe this. A company is never more vulnerable to complacency than when it's at the height of its success. We must not let success breed complacency, cockiness, greediness, laziness, indifference, preoccupation with bureaucracy, hierarchy, or obliviousness to threats posed by the outside world. I read this great profile on the founder of LVMH, Bernardo Nol. It says he abhors complacency so much. Warren Buffett would repeat this over and over again in his shareholder letters. He says you need the ability to fight off the ABCs of business decay. Arrogance, bureaucracy and complacency. When these corporate cancers metastasize, even the strongest of companies falter. And so there's so many examples in the book of Jensen fighting back against complacency. One example early in their history says that each monthly company meeting, Jensen would say, we're 30 days from going out of business. All the way back in 97, he talks about making sure that we're acting with a sense of urgency because one of the biggest companies in the world is trying to kill us. He says, we need to kill Intel. Make no mistake, remember saying this in 97 Make no mistake, Intel is out to get us and put us out of business. They have told their employees and they have internalized this. They are going to put us out of business. Our job is to go kill them before they put us out of business. We need to kill Intel. I also wanted to include this in here because obviously, he's an extremely unusual person and he's at the top right now, but he was like this for decades. At the time he just said this, he's telling his company, we're going to go kill Intel. At that time, Intel was 860 times larger than Nvidia in terms of revenue. Jensen abhors complacency, only the paranoid survive. Again, that's a quote from Andy Grove. What's interesting about that is Andy Grove mentored Steve Jobs and Steve Jobs had a very clear philosophy about what to do after achieving something great. And it's a way to, again, avoid complacency taking root in your company. This is what Steve said. I think if you do something and it turns out pretty good, then you should just go do something else wonderful and not dwell on it for too long. Just figure out what's next. That is a mentality that history's greatest founders have. This is the way I summarize it. No rear view mirror, no resting on laurels or sleeping on winds. Make something great, then do it again. And one of the things I admire most about Jensen is this relentless dedication to improving his craft. In fact, craft is the word that he uses in that commencement address that he gave at Caltech. And Jensen's dedication to constantly improving his company reminds me of my friend Kareem, who's the co-founder and CTO of Ramp. Ramp is the presenting sponsor of this podcast, and Kareem is one of the greatest technical minds working in finance. I spend a lot of time talking to Kareem in every single conversation, centers around his obsession with crafting a high quality product and using the latest technology to constantly create better experiences for his customers, just like Jensen does. Kareem is running one of the most talented technical teams in finance, and they use rapid relentless iteration to make their product better every day. So far this year, Ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and automate as much of your business' finances as possible. In fact, Kareem just wrote this, AI is all I think about these days. It is our duty to be first movers and push limits so we can make the greatest possible product experience for our customers. Many of the fastest growing and most innovative companies in the world are running their business on Ramp. Make sure you go to ramp.com to learn how they can help your business save time and money today. Let AI chase your receipts and close your books so you can use your time and energy building great things for your customers. Get started today by going to ramp.com.