1709447803 In Nvidia39s Museum of the Future Business

In Nvidia's Museum of the Future | Business

Many Silicon Valley companies were born in a garage. Nvidia did it in a fast food restaurant. Denny's is open 24 hours a day and is famous for dishes like its Grand Slam breakfast. At Denny's, Jensen Huang, who was from Taiwan as a child, ate his first hamburger and tried his first milkshake. The current king of the technology industry began working as a dishwasher in a branch of this chain at the age of 15. And when he was 30, he decided to start Nvidia with two friends at Denny's, a company that closed on the stock market for the first time this Friday with a value of more than two billion dollars.

“I was a dishwasher, a busboy, I waited tables. “Nobody can carry more cups of coffee than me,” Huang said during a recent visit to the San Jose restaurant at an intersection on Interstate 680 in the heart of Silicon Valley, which has become a strange technological pilgrimage destination. “When you start your first job in the restaurant industry, you learn humility, you learn to work hard, you learn hospitality,” he explained as he installed a plaque the company was responsible for distributing.

In 1993, Huang, Chris Malachowsky and Curtis Priem met at Denny's to discuss developing a chip that would enable realistic 3D graphics in personal computers. According to Huang, who lived nearby with his wife and children at the time, it was the perfect place to start a business. “I had all the coffee you could drink and no one could kick you out,” he remembers.

When the company was founded in 1993, it had no name, so the partners, NV, began using the initials for “Next Version” or “next version.” When it came time to give a final name, they looked for words that began with the letters nv. Finally, they deleted the first letter from the Latin invidia (envy) to indicate their final name.

In Nvidia39s Museum of the Future Business

Nvidia was a pioneer in graphics processing for computers and video game consoles. In 1999 he invented the GPU, the graphics processor, and thereby laid the foundation for profound change in the industry. To produce better and better images, the power of its processors has been increased exponentially, with capabilities for robotics, cloud computing, the aerospace industry, weapons manufacturing, the metaverse, cryptocurrencies, autonomous driving, image recognition and artificial intelligence.

The company's H100 accelerators are legendary in the tech world, and customers are rushing to get their hands on as many of them as possible in the heat of the generative artificial intelligence race. OpenAI's ChatGPT is powered by tens of thousands of Nvidia microprocessors.

Kelli Valade, CEO of Denny's, and Jensen Huang, CEO and co-founder of Nvidia, at Denny's restaurant in San Jose, California, in September 2023.Kelli Valade, CEO of Denny's, and Jensen Huang, CEO and co-founder of Nvidia, at Denny's restaurant in San Jose, California, in September 2023. Don Feria (AP)

“The table where a billion-dollar company was founded,” says the plaque at Denny's that was installed in September and is already starting to show its age. That's right, a billion dollars old. Nvidia has emerged as a big winner in the rise of artificial intelligence thanks to the computing power of its microprocessors. Microsoft, Amazon, Google, Apple, Oracle, OpenAI, Anthropic and many others are vying for leadership in artificial intelligence, but they are all customers of Nvidia, as are companies in robotics, autonomous driving and biotechnology. “Right now it's much harder to get GPUs [microprocesadores gráficos de gran potencia] what drugs,” said Elon Musk a few months ago. “Although that doesn’t mean much in San Francisco,” he joked.

The rise of the company with the Green Eye logo to the sky was partly predictable and partly unexpected. The final explosion occurred in May, when the results were presented. “In the more than 15 years we've been doing this work, we've never seen guidance like the one Nvidia just presented, with second-quarter outlooks that by all accounts were astronomical and shattered expectations .”, Bernstein analysts wrote in a report sent to clients. Basically, the company said it forecast second-quarter revenue of around $11 billion, while the market had expected less than $7.2 billion. The stock skyrocketed and a few days later the Denny's badge was earned.

Some saw it coming sooner than others. Iván Bofarull, Director of Innovation at Esade Business School, chose Nvidia as one of the key visits to a digital transformation program for managers that Esade taught in April 2017 in Silicon Valley in collaboration with Singularity University. “In 2017, Nvidia was a “We founded the company at a unique time in terms of potential learning for a group of managers from across Europe,” explains Bofarull, who was the academic director of the program almost seven years later. “It was an established company in the gaming industry that was in the process of transformation and acting as a new player in the then emerging AI industry. This dual character, that of an incumbent defending his current business pie but at the same time developing an alter ego as a new player opting for a different business pie, was a dilemma in which the majority of managers present were very much “I think at that moment about it,” he says.

According to Bofarull, Nvidia also beautifully illustrates the potential transformation process of a company. On the one hand, the company's now famous chips have popularized parallel computing instead of serial computing, making it more suitable for AI. On the other hand, because “Nvidia has used a magic formula in the transformation processes: by opening its computing platform (Cuda) to third parties, it has discovered how new use cases emerge, for example in the world of computational biology.” Autonomous vehicles and this accumulation of use cases founded the new one Nvidia as an AI company.”

The magical moment of the visit occurred in a dark room where the company demonstrated its technology with high-resolution screens, image recognition demonstrations, autonomous driving experiments and some of its microprocessors. In some images it was impossible to distinguish between fiction and reality.

Participants remember that this space was like a small museum of the future, with a somewhat theatrical atmosphere. The microprocessors looked like iconic objects and the prototypes gave us a taste of the future. “I was surprised by the realism of their video games, the image recognition exercise they did and the topic of autonomous driving,” recalls Jaime Martín Juez, a Repsol manager who took part in the visit. Paco Requena, then an executive at Seat and now at Navantia, highlights the company's “brutal computing power” and emphasizes that “its products have been a great help for any virtualization needs,” referring to Metaverse and digital twins. There are great applications both in the automotive industry (design of cars in all its facets, appearance, assembly…) and in the military industry (digital twin of the ship, combat system, maintenance, attention to the life cycle…).

Jorge Calvo, vice dean of Globis University Graduate School of Management in Japan, recalls that “the visit to Nvidia was eagerly anticipated.” He already knew the company from his previous professional experience. It highlights its “impressive graphical processing power.” “I saw how Nvidia GPUs were positioned to dominate the upcoming growth of AI in the cloud, distributed AI, and autonomous vehicles,” he says, noting that “this was a disruptive innovation.” “The development of specialized hardware requires not only advanced technological capabilities but also sophisticated manufacturing, creating high barriers to entry and creating a market with an oligopolistic character,” he points out. “Nvidia is for AI, like Intel is for personal computers,” concludes Calvo, who bought shares in the company.

Some other participants also invested, although they preferred to keep it private. Others joke about it: “It is unacceptable that they introduced the company to us without forcing us to buy shares at the time.” Nvidia was trading for the equivalent of $25 at the time. It closed at 822.79 on Friday. Since listing in 1999, the revaluation has been 100,000%. “The truth is that back then no one could have imagined what Nvidia is today,” says Gloria Batllori.

The company reported its annual results on February 21st. Expectations were so high that many were betting that he would disappoint them, and not only that, he exceeded them. Nvidia's full-year 2023 revenue rose 126% to $60,922 million, while profit rose 581% to $29,760 million. And in the first quarter of this year, sales are expected to reach 24,000 million, more than three times the 7,192 million last year, with a gross margin of 76%. Brutal, more than brutal.

Bernstein analysts described the results as “outstanding”: “The company is, frankly, printing money. And the growth prospects from here continue to be good. “It seems clear that demand continues to grow,” a report said. “New products (H200, B100, etc.) are on the verge of breakthrough (presumably at higher prices). And in the long term, the company expects not only to accelerate computing power from the current 1TB data center infrastructure installed, but also to double that installed base to 2TB over the next five years (which seems almost frightening, but if this is true, “This would indicate absolutely enormous growth potential),” they argue.

“Computing acceleration and generative artificial intelligence have reached a tipping point. Demand is growing worldwide, across companies, industries and countries,” said Huang when presenting the results. His message is that we are at the beginning of a new wave. Nvidia's rise in the stock market has made Huang the 20th richest man in the world, with a fortune of more than $70 billion. You never see him in public without his black leather jacket.

Nvidia, the third largest company in the world in terms of market value, acted as a locomotive for other companies in the industry and also benefited from the boom in demand for computing capacity. TSMC is the tenth most capitalized company and Broadcom is the eleventh. There are many others behind it, including AMD, Arm and Qualcomm. Intel even resurfaces, up 67% in 12 months.

What will the next Nvidia be? “Of course no one has a crystal ball or the gift of futurology,” answers Bofarull. “Still, we could draw a parallel between the state of the AI ​​industry today and that of personal computing in the 1970s. So far we have focused on hardware, but it is possible that in the coming years companies that work together with Nvidia will dominate the industry, whether they are companies that develop operating systems and software, like Microsoft did back then Office, which represent an interface, a kind of translator between the goals of AI and hardware. In this area, a European company like the British Graphcore could play a key role in the coming years,” adds the author of the innovation book Moonshot Thinking.

A display case at Nvidia's headquarters in April 2017 containing awards for the company.A display case at Nvidia headquarters in April 2017 with awards for the company.Miguel Jiménez Cabeza

Nvidia's headquarters are just a 15-minute drive from Denny's in neighboring Santa Clara. The company's headquarters were in April 2017, when Bofarull included it in the Esade program, which was very different from the current one. On a wall near the entrance, plaques and company awards hung in a display case that looked like every high school's sports trophies. The architecture didn't stand out. At that time, the expansion of the Nvidia campus was built, which now shines in all its splendor with its futuristic design. Nvidia's success has caused real estate prices in the region to skyrocket.

Aerial view of Nvidia's headquarters in Santa Clara, California, in an image provided by the company.Aerial view of Nvidia's headquarters in Santa Clara, California, in an image provided by the company.Jason O'Rear

The new campus looks like a film set. The new buildings resemble two large spaceships, named Endeavor and Voyager in reference to the Star Trek saga. They are connected by a walkway that can be crossed in a few minutes and leads through a park. Indoor vegetation is rich and there are several recreational areas. Everything is made of triangles, the geometric shape on which three-dimensional graphics are based. There are huge, open interior spaces for the thousands of Nvidians who work there, but also closed lab areas where new designs and prototypes are worked on.

Nvidia is already thinking about building a third spaceship. And by using artificial intelligence in its design.

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