Nvidia Part I: The GPU Company (1993-2006)

**Ben Gilbert** (0:26)
Welcome to season 10, episode 5 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and managing director of Seattle based Pioneer Square Labs and our venture fund, PSL Ventures.

**David Rosenthal** (0:41)
And I'm David Rosenthal, and I am an angel investor based in San Francisco.

**Ben Gilbert** (0:47)
And we are your hosts. It is the eighth largest company in the world by market cap.

**David Rosenthal** (0:53)
Dang!

**Ben Gilbert** (0:54)
When Nvidia began in 1993, it made computer graphics chips in a brutally competitive and low margin market. There were 90 undifferentiated competitors, all doing basically the same thing at the same time. And yet today, they have an 83% market share of standalone GPUs, that's graphics processing units, for those of you starting with us from Square One, that are supplied for desktop and laptop computers.

**David Rosenthal** (1:21)
Ben, you're telling like the whole story here.

**Ben Gilbert** (1:24)
Sorry, sorry. I'll just, I'll tease a few things here. So not only that, but of course, followers of Nvidia know that they recently pioneered a completely new market, the hardware and software development tools to power machine learning, neural networks, deep learning, all of this in the cloud and the data center, which obviously is proving to define this whole decade of computing. And as David and I begin our research, we realized this really could be a book, and like a thriller of a book, since the co-founder and CEO Jensen Huang really has bet the company, like the whole company, three separate times nearly going bankrupt each time. But obviously, as we reflect back here today, that certainly did not happen.

**David Rosenthal** (2:06)
All right, so here's everything you need to know about Jensen. The Cliffs notes, before we talk for like six hours about him, the dude used to drive a Toyota Supra, like a Fast and the Furious style, like a death machine, and he almost died. He got in like a huge accident.

**Ben Gilbert** (2:24)
Just one more way he is like Elon Musk.

**David Rosenthal** (2:26)
Oh man, crazy.

**Ben Gilbert** (2:28)
Well, because we have way too much here for one episode, we'll save the stories on machine learning for next time. Today we are going to tell the wild story of Nvidia's founding to its rise in prominence, powering the computer graphics and gaming revolution. This really is a story of true invention and innovation. It reminds you that engineering breakthroughs really do push our world forward. And in saying that, just kind of set some context, this is a story that takes place from about 1993 to kind of the mid to late 2000s.
And as hyped as Nvidia has been over the last five years, obviously with the stock run up and everyone's excitement around the company, I think Jensen is still an underrated CEO. Even rated 100% where the Nvidia bulls have put him. I think Jensen is one of those people where like, if you know about him, you know what we're talking about and you have unbelievable reverence. But I think not enough people really know.

**David Rosenthal** (3:26)
Just one more Jensen quote before we get into the episode. This is the best. My will to survive exceeds almost everybody else's will to kill me.
Amazing.

**Ben Gilbert** (3:41)
This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (3:46)
So Crusoe, as listeners know by now, is a clean compute cloud provider specifically built for AI workloads. Nvidia is one of their major partners and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (4:12)
Yes, we talked about that on our ACQ2 episode with Crusoe CEO, Chase Lockmiller.

**David Rosenthal** (4:17)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So, think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (4:35)
Yep. Obviously, it's a huge benefit for the environment and for customers on cost, since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay Nvidia for the chips. And these lower energy costs get passed on to customers.

**David Rosenthal** (4:52)
It's super cool that they can put their data centers out there in these remote locations where quote-unquote energy happens, as opposed to the other hyperscalers such as AWS and Google and Azure, who need to build their data centers close to major traffic hubs where the internet happens because they are doing everything in their clouds.