Telltales: NVIDIA - From Denny's to Dominance

How Jensen Huang's resilience and vision transformed a fledgling startup into a tech giant

The following document was written by Holly Miller, and is intended for research purposes only. It does not constitute investment advice.

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Nvidia (NVDA 0.00%↑) is now one of the biggest names in the technology industry, both as a market leader in desktop GPUs in the gaming industry and one of the pioneers of generative AI. However,  the company had much more humble beginnings. Born in Taiwan in 1963, Jensen Huang, one of the founders of Nvidia and longtime CEO, lived an early life marked by frequent moves. When he was five years old, his family briefly moved to Thailand. They would not be there for long, however, as Huang’s father would go on to work in the U.S. Upon seeing the opportunities that were available there, he made a promise to send his children to America. In preparation for the move, Huang’s mother decided to teach Jensen and his brother English. With no working knowledge herself, she chose to teach them both ten words a day, and slowly they learned to speak the language. When they arrived in Tacoma, Washington in 1972, the brothers were able to communicate with other Americans. Jensen started high school a few years later, after a move to Portland, Oregon. Although he had some trouble fitting in with some of his American-born classmates, he was an incredibly strong student. One of his formative experiences at this time was his part time job working at the local Denny’s (DENN 0.00%↑) , where he says he learned to handle stress in a productive way and thrive under pressure. 

He would take these skills with him during his time at Oregon State University, where he studied electrical engineering and eventually earned his bachelor’s degree. After graduation, he worked at AMD (AMD 0.00%↑) for just over a year, where he designed microprocessors, small processing units that contain all the functions of the central processing unit in a computer. He then went on to work at LSI Logic, a semiconductor manufacturer, just two years after its IPO (later acquired by AVGO 0.00%↑) . Huang worked in various roles at the company, ranging from engineering to marketing and eventually holding general management positions. While working full time at LSI Logic, Huang studied during evenings and weekends to earn his masters degree in electrical engineering from Stanford in 1992. His studies coupled with his wide range of experience from LSI Logic would ultimately set him up for success in the future.¹ 

It would be Huang’s work at LSI Logic that would lead him to meet the cofounders of his future company, Chris Malachowsky and Curtis Priem. Around this time, computers were still heavy, expensive, and only available to businesses that could afford a major investment. Sun Microsystems (acquired by ORCL 0.00%↑ ) manufactured high-end computer works stations, and LSI Logic specialized in semiconductors. In line with the race to advance the computer revolution was the race to create the most sophisticated computer chips. This drive for innovation led these two companies specializing in separate but related aspects of computer technology to collaborate as Sun Microsystems ventured into building semi-custom chips for their computers. Jensen Huang was assigned by LSI Logic to work with two Sun engineers, Chris Malachowsky and Curtis Priem. 

Born in Ocean Township, New Jersey in 1959, Chris Malachowsky had a vastly different start in life from Huang. Yet after receiving his B.S. in electrical engineering from the University of Florida and his master’s degree from Santa Clara University, the pair’s lives converged, as Malachowsky went on to work at HP (HPE 0.00%↑ , HPQ 0.00%↑ ) and hold a technical leadership position there prior to working at Sun Microsystems.² Their other co-founder, east coast-born Curtis Priem, graduated from Rensselaer Polytechnic Institute in 1982 with a degree in electrical and computer engineering. Among his most impressive accomplishments is his early work on the first graphics processor for the PC, IBM’s Professional Graphics Adapter (IBM 0.00%↑) . From there, he went on to work with Malachowsky at Sun for seven years.³

After a few years of exceptional collaboration, Malachowsky and Priem started to consider starting their own company. Huang was initially hesitant; they did not have a solid idea of what exactly it was they wanted to do, so Huang was wary of leaving the stability that LSI Logic provided him. Eventually, he agreed to meet the pair at Denny’s, his first employer from back in high school, and talk through some of their ideas. Their Denny’s trips became part of their routine; according to Malachowsky, the trio would “show up… order one bottomless cup of coffee, and then, you know, work for four hours.”⁴ 

The trio’s work ethic would prove vital, as their team faced multiple challenges in getting the company off the ground. They started the company with $40,000 in starting capital, and were in desperate need of external investments. Huang describes Nvidia during this time as a company with “a market challenge, a technology challenge, and an ecosystem challenge with approximately 0% chance of success,” adding that he would not have funded Nvidia during the company's infancy.⁵ Despite Huang’s concerns, Don Valentine, one of the most influential venture capitalists in the technology industry at the time, decided to take a chance on the company, and it was with this money that Nvidia would launch their first project, one that would almost cost them the company.

 A lover of video games, Huang thought that there was a market for more advanced graphics chips, ones that used three-dimensional quadrilaterals for video game design instead of the more conventional triangles. Unfortunately, this risk was a mistake, as shortly after Nvidia released their product, Microsoft (MSFT 0.00%↑) announced that their graphics software would only support triangle pixels, leaving Nvidia’s chip useless. Huang quickly pivoted, laying off more than half of his workforce to scrape together enough money to produce a series of untested chips using the conventional triangle approach, hoping to beat the competition to market. According to Huang the company was “thirty days from going out of business,” as they only had enough money to pay a month of payroll. The risk paid off, as they were able to sell about a million copies of their product, RIVA 128, in the first four months after they launched it. Huang’s comfort with working under pressure largely contributed to the company’s success, as they could have just as easily decided to fold the company after their first disappointment.⁶ Huang credits a large part of his professional success with resilience, stating that it is important to “build a tolerance to failure.”⁷

In the months following the release of RIVA 128 in 1996, Nvidia adopted the unofficial motto, “our company is thirty days from going out of business.” The instability and uncertainty of the time brought with it a desperation to persevere that ultimately increased the focus and productivity of the company’s employees. Their ability to thrive under pressure would propel the company to make the two major breakthroughs that cemented Nvidia’s legitimacy. In 1999, the same year the company went public, they would release The GeForce line, a line of GPUs. At the time when Nvidia was founded, the industry was just beginning to understand the importance of CPUs, but Nvidia's founders were convinced that there was a burgeoning market for specialized hardware for more accelerated computing. The product they built to fill this market was the Graphics Processing Unit (GPU), which is able to solve more complex computational problems than a CPU can. Once again, investing in the research to create this project was a large risk, but Huang was confident in his vision. Ultimately, the GeForce line became Nvidia’s flagship product, setting the company up for a future of success.⁸ 

From its modest beginnings and early struggles, Nvidia’s founding story was shaped by Jensen Huang’s visionary leadership and remarkable leadership. As Nvidia continues to be a leader at the forefront of technological innovation, its origins can serve as  an example of the critical role of adaptability and team determination in the success of a company.

1. https://quartr.com/insights/business-philosophy/the-story-of-jensen-huang-and-nvidia

2. https://nvidianews.nvidia.com/bios/chris-a-malachowsky

3. https://www.forbes.com/sites/phoebeliu/2023/11/26/this-nvidia-cofounder-could-have-been-worth-70-billion-instead-he-lives-off-the-grid

4. https://www.sequoiacap.com/podcast/crucible-moments-nvidia/#the-story-of-nvidias-founding

5. https://quartr.com/insights/business-philosophy/the-story-of-jensen-huang-and-nvidia

6. https://www.newyorker.com/magazine/2023/12/04/how-jensen-huangs-nvidia-is-powering-the-ai-revolution

7. https://www.cnbc.com/2024/03/15/nvidia-ceo-huang-at-stanford-pain-and-suffering-breeds-success.html

8. https://quartr.com/insights/business-philosophy/the-story-of-jensen-huang-and-nvidia