Invidious position: finding Jensen Huang’s successor

SPEAKER_1 (0:00)

With no fees or minimums on checking accounts, it's no wonder the Capital One bank guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about, in a good way. What's in your wallet?

Terms apply. See capitalone.com/bank, Capital One NA member FDIC.

SPEAKER_2 (0:32)

This Economist Podcast is sponsored by apollo.io. In a fast moving business environment, finding the right people to connect with takes time. For sales teams, prospecting, outreach and follow-up can mean juggling multiple tools and workflows. apollo.io brings these activities together in one platform, helping sales teams find the right buyers and spend less time on scattered manual tasks and more time building relationships. apollo.io. Sign up for free at apollo.io.

Jason Palmer (1:04)

The Economist. Hello and welcome to The Intelligence from The Economist.

Today on the show, a peek into how Russia is spreading its propaganda across Africa, and a tribute to Jack Preger, doctor to the destitute of Kolkata. First up, though.

What a nail-biter of a week it's been since we last talked about Nvidia on Tuesday. It was and is as juicy a story as they come. A swashbuckling chief executive's extramarital affairs, now in the alleged plural. Espionage and spycraft, also alleged. Hundreds of billions of dollars of market cap being shaved off in one lurch after another. The slipping of the world's most important technology from one superpower to another. Maybe. Yesterday, it all came to a head. Jensen Huang resigned from the company he built from the ground up, and was swiftly summoned to testify before Congress about the whole mess. And now, the daunting search for his replacement must begin.

Shailesh Chitnis (2:29)

Colette Kress, who's the company's chief financial officer, has been put in place as an interim CEO.

Jason Palmer (2:36)

Shailesh Chitnis is a global business writer for The Economist.

Shailesh Chitnis (2:39)

But I think most would agree by any measure, replacing Jensen Huang is going to be a tall order.

Jason Palmer (2:49)

Now, Shailesh, we spoke earlier in the week about the growing mess that Mr. Huang was in. Talk me through how we ended up where we are now.

Shailesh Chitnis (2:56)

Yeah, so subsequently, it also emerged that Mr. Huang had a relationship with one of his direct reports.

And from my conversations with some of the folks in the company, the feeling was if it was just the first set of allegations, which itself were quite devastating, there maybe was a way to wait it out. But I think the second one is the one that just broke the back and there was no way for him to continue it in video.

Jason Palmer (3:19)

So there had been a question as to whether or not the board would be obliged to get rid of him or wise to get rid of him. In the end, they didn't have to make that decision.

Shailesh Chitnis (3:27)

Well, we don't know exactly whether he resigned or forced to resign, so that part is still not clear. We're still learning more about it. But I think you're right. The board has not covered itself in glory in this particular incident because for a long time, they've essentially given him a free rein in terms of how he runs the company, which has worked really well until it didn't.

And I think when you look at the composition of the board, at least half of them have been there for more than 15 years. And so there was a feeling that the board was not really incentivized or doing its job as it was supposed to.

Jason Palmer (3:58)

And in the end, the board appointed Colette Krauss as a sort of caretaker leader. You said that Mr. Huang will be difficult to replace. How do you think she'll fare in the job even if it's for a short while?

Shailesh Chitnis (4:09)

I think it's going to be a very tall order for a few reasons. First and foremost is just the way Nvidia is structured.

Jensen Huang had almost 60 direct reports. He was involved in pretty much every aspect of the company's operation right from manufacturing, design, sales, policy. He had his fingers in every one of them. And so for a new person to come in with 60 direct reports, I would imagine is quite intimidating. So that's number one. That's the first challenge is just how the company has been structured.

But I think a bigger challenge is Nvidia's products are quite complex and they require a very intricate supply chain to build them, build them at scale, to be able to meet the kind of volumes. And that requires working with suppliers such as TSMC, which is a chip manufacturer in Taiwan, SK Hynex, which makes memory chips, and almost dozens of different suppliers. And that is where I think Mr. Huang really excelled in terms of his ability to be able to build these relationships. That I think is going to be a tall order to come up to pace that quickly. So there are very real and immediate challenges facing her.