It is very embarrassing for talented people who are successful to admit their mistake and then seek assistance to fix it. Tech giant Nvidia CEO and cofounder Jensen Huang did both this to save his company.
At present, Nvidia is valued at $2.2 trillion, and attributes its success partly to AI boom and huge demand for its GPUs. Nvidia was founded in 1993 and just three years old in 1996. It was in financial distress since its contract with a gaming company Sega had fallen apart.
Huang wanted Nvidia to remain a going concern. Under the contract, he was making chips for the gaming company Sega. Sega was a major client that funded Nvidia. Nvidia made low-cost chips deviating from the industry standards, After being into it for a year, it realized that its architecture was sub-standard. To add fuel to the fire, Microsoft rolled out DirectX software interface — it then became an industry standard for gaming platforms. However, this was not compatible with Nvidia chips.
On completing Sega’s game console, they would have introduced inferior technology incompatible with Windows. Nvidia would have become a laggard who would have been far behind to catch up. And if they violate the contract with Sega, they would be out of business. Either way, they are the losers.
It was necessary to explain the situation to Sega and make a clean breast of it. It was necessary to suggest to them to find a new partner. Despite severance, Sega should pay Nvidia in full or else they would be out of business. Huang’s situation was embarrassing, but he faced it. Sega agreed, and that gave Nvidia some breathing space.
Sega’s funds were used by Nvidia and it developed a new chip — the RIVA 128 that was compatible with Direct X. Sega used alternative chips from Imagine Technologies — Power VR for its Dreamcast consoles.
Nvidia successfully sold 1 million new chips as they had higher graphic resolutions (1997). It turned around Nvidia’s fortunes.
Admitting a mistake and asking client for empathy is so difficult. These are the hardest traits, especially for the talented and bright guys. Swallowing one’s pride was the right thing to do for Huang, and he did it.