do you know what the eighth largest
company in the world is you may not be
able to guess it off the top of your
head but you could be pretty sure that
regardless of which company it exactly
is the brand is probably ubiquitous
something like facebook or jpmorgan
chase or alibaba but what if i told you
that the 8th largest company in the
world is actually nvidia
now we all know that nvidia is a large
company but no way they're the 8th
largest in the world don't they serve a
super niche demographic of gamers and
professionals
well you're right as nvidia comes in at
rank 386 in terms of revenue pulling in
21.89 billion dollars annually
but nvidia's profit margins are actually
so high and investors are so bullish on
the future of nvidia that despite only
pulling in 21.89 billion dollars in
revenue nvidia is valued at upwards of a
trillion dollars at 757 billion making
them the eighth largest company in the
world
to put that in perspective if apple is
valued like nvidia apple would be worth
12.65 trillion dollars if apple had such
fat profit margins the media would be
all over it but with nvidia they don't
bat an eye so here's how jensen wong
created a 757 billion cash cow that
lurks in the shadows
taking a look back jensen huang was born
on february 17th 1963 in tainan city
taiwan jensen spent many of his early
years in taiwan but when he turned nine
years old his family would immigrate to
kentucky
in kentucky jensen and his brother
attended a baptist boarding school
called onita baptist institute but this
didn't last that long as his family
would move to oregon and jensen would
end up attending aloha high school from
a very young age jensen was quite an
overachiever and his specialties were
academics and table tennis when he was
15 years old he placed third and junior
doubles at the us table tennis open
championship anyway jensen graduated in
1980 and he would find himself at oregon
state university where he majored in
electrical engineering at oregon state
jensen's lab partner was a woman named
laurie and these two would eventually
get married
after graduating in 1984 jensen would
score a job at a young startup called
lsi logic the company was founded just
three years before his graduation so
jensen was able to secure a high-level
position as director straight out of
college he didn't stick around for long
though as he would jump to amd and to
become a microprocessor designer at this
point an outsider would think that
jensen was killing it and objectively he
was he had a solid job at amd and he was
presumably building his relationship
with laurie jensen was clearly way ahead
of the average broke college graduate
but jensen wasn't actually that happy
jensen was having some sort of early
life crisis in his late 20s and he
longed to do something that was much
bigger he suppressed this feeling
throughout most of his 20s but
eventually he gave in and took the
plunge
in 1990 jensen returned to school to get
his masters in electrical engineering
from stanford and after graduation he
co-founded a startup with curtis prime
and chris malachovsky
the trio had no clue what to name the
company or how exactly they were going
to fund development but one thing they
were sure of from the very beginning was
that they were going to produce gpus or
graphics processing units
they felt that video games created some
of the world's most computationally
challenging problems and if they could
sell video games they could solve nearly
any computing problem out there aside
from offering a great challenge video
games offered a massive opportunity
gaming was just in its infancy and the
original playstation hadn't even come
out yet so there was plenty of growth
left but the problem was that these
three weren't the only ones trying to
capitalize on this upcoming boom by 1994
there were already over two dozen
graphics card companies and this number
would balloon to over 70 by 1997.
despite the significant competition one
of the best and worst parts of the
semiconductor industry is that brand
value doesn't mean all that much unlike
apple and microsoft who can afford to be
complacent for years and sometimes even
decades being complacent in the
semiconductor industry results in a
pretty quick demotion from number one
regardless of how established you are i
mean just take a look at intel they're
getting obliterated by amd and they
haven't set an all-time high in 21 years
on the bright side this meant that
jensen could easily break into the
market if he created a superior product
the problem though is that it's not
actually that easy to create said
product especially when you only have
forty thousand dollars despite the
difficulty and low budget the trio got
to work on iterating through gpus which
they called nv
nv simply stood for next version and it
wasn't until they incorporated the
company that they came up with a name
for the company itself given that they
were naming all of their prototypes nv
they felt that it was only fitting to
find a name that started with envy for
the company they never found such a word
but they did find a latin word nvidia
which translates to envy they simply
dropped the eye and that's how any video
was born
anyway about a year after finding the
company and many years of working on
their product the trio was ready to
launch their first product in 1994
nvidia formed a partnership with autry
manufacturer sgs thompson and the
diamond multimedia systems to produce
the nv1 sgs was tasked with
manufacturing the chip itself and the
diamond multimedia was tasked with
installing the chips onto multimedia
accelerator boards
the nv1 would launch in 1995 as the
diamond edge 3d and it didn't take long
for video game companies to leverage the
hardware
sega became the first company to port a
3d game called virtual fighter onto the
new gpu over the next few years nvidia
would form a couple of partnerships and
launch a few bits of software and
hardware
but their biggest release by far was in
1999.
in 1999 nvidia launched the geforce 256
which they like to call the world's
first gpu
this doesn't really mean much though
given that they invented the term
themselves
nvidia defined gpu as a single chip
processor that could process a minimum
of 10 million polygons per second to put
that in perspective modern gpus are able
to process 7 billion polygons per second
so there was still a long way to go but
this is where it all started
before nvidia could focus on reaching
those insane numbers though they needed
to focus on survival because the dot-com
crash was rolling around nvidia was
founded right before the dock on bubble
really started to pick up steam so their
rise up was like a rocket ship but now
it was time to see if nvidia could reach
orbit or if they were going to crash
back to earth the dot-com crash didn't
initially impact nvidia as they were
more of a background player as opposed
to a consumer brand
in fact nvidia was named the
fastest-growing company in america in
2002
ironically though nvidia would get
crushed that same year within just 12
months nvidia would crash 90 percent and
nearly return to ipo levels
to make things worse curtis prime would
retire from nvidia the following year
so it was up to jensen and chris to lead
the company through the wreckage
jensen started off by acquiring some
discounted companies including 3dfx and
media q but nvidia's biggest development
during this time was no doubt sli
nowadays sli is mostly a joke and there
is very little use for it but back in
2004 this was a game changer as a lie or
scalable link interface allowed multiple
gpus to work together and produce a
singular output
if you had two gpus and sli each gpu
would render alternating frames so the
workload of each gpu was cut in half now
this didn't mean that the system was
twice as powerful as a single gpu but it
was a substantial improvement
also this invention resulted in gaming
enthusiasts to buy multiple gpus each
time they built a pc so it was quite
lucrative aside from sli nvidia also
formed a handful of strategic
partnerships
in 2004 nvidia formed a partnership with
nasa where they helped nasa reconstruct
the train of mars using nvidia gpus that
same year nvidia would also team up with
blizzard entertainment to create 3d
graphics for world of warcraft
nvidia followed up these great
partnerships with the nail in the coffin
which was a partnership with sony on the
ps3 in 2005. with all of these
acquisitions partnerships and sli nvidia
was able to survive the dot-com crash
remember how there were 70 companies in
1997 targeting the gpu market well by
2006 nvidia was the only independent gpu
company that was still standing it
seemed like it was finally just blue
skies ahead and forbes would even name
nvidia as the company of the year in
2007
and then the 2008 financial crisis
rolled around after a fortune named
nvidia the fastest growing company of
the year in 2002 nvidia crashed 90
percent
after forbes named nvidia the company of
the year in 2007 2008 happened
fortunately 2008 wasn't nearly as bad as
a dotcom crash for nvidia
in terms of stock price nvidia still
crashed 85 percent but fundamentally the
company was much stronger the company
did have a couple of negative quarters
but they were back up on their feet by
2010 and that brings us into modern day
nvidia
throughout the first half of the 2010s
nvidia was more or less stagnant their
revenue and profits didn't change all
that much and the company wasn't really
growing this wasn't really their fault
though as they had simply reached market
saturation they needed the market itself
to grow larger before they could grow
again
fortunately for nvidia the market would
not only grow but it would explode in
2016 and 17 due to cryptocurrencies
as you all probably know bitcoin made a
mad dash at 20 000 and they took all the
all coins with it to the moon of 2017.
graphics cards happen to be perfect for
cryptocurrency mining and especially
ethereum mining
miners ate up the gpu market as they
were willing to pay anything to get
their hands on gpus
double triple quadruple the price miners
didn't care
they were making thousands if not tens
of thousands from their mining rigs and
paying a premium to get a gpu was not a
problem nvidia saw a supply shortage
like never before and they were able to
jack up prices through the roof between
2016 and 2018 nvidia's quarterly profits
jumped from 200 million a quarter to 1.2
billion dollars per quarter and this was
just the beginning given that nvidia had
reached market saturation with gamers
jensen was shifting his focus to other
markets which led him to deep learning
and ai they formed a partnership with
the tesla and provided them with the
initial hardware for self-driving they
also launched a bunch of commercial
cards like the titan and quattro that
appealed to institutional buyers just as
bitcoin was blowing up and their
expansion efforts were paying off amd
was resurrecting the stagnant pc gaming
community the launch of ryzen cpus made
pcs much more affordable which attracted
a lot of console gamers by the end of
2018 and throughout 2019 though the
effects of these catalysts were starting
to wear off but then 2020 and the supply
shortage hit and nvidia was sent up on
another rocket ship and they haven't
gotten off yet
today jensen stands at 27.9 billion
dollars which makes him part of the top
100 richest people in the world
looking forward it's not clear how much
more nvidia can grow in the immediate
future as they've already bloomed 129
over the past year
but as long as jensen is ceo i think
it's just a matter of time until nvidia
recovers from the next setback and
becomes a trillion dollar company and
then nvidia will be the trillion dollar
shadow company do you guys own an nvidia
gpu comment that down below
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see more questions logically answered
but until then i'm hari and i'll see you
guys on the next one