Nvidia Part III: The Dawn of the AI Era (2022-2023) (Audio)

1. BGBen Gilbert0:00

   You like my Buck's T-shirt?

2. DRDavid Rosenthal0:02

   I love your Buck's T-shirt.

3. BGBen Gilbert0:03

   I went for the first time, what, two weeks ago, when I was down for a meeting at Benchmark, and the nostalgia in there was just unbelievable.

4. DRDavid Rosenthal0:10

   I can't believe you hadn't been before. I know Jensen is a Denny's guy, but I feel like he would meet us at Buck's if we asked him.

5. BGBen Gilbert0:17

   Or at the very least, we should figure out some Nvidia memorabilia to get on the wall at Buck's.

6. DRDavid Rosenthal0:22

   Totally.

7. BGBen Gilbert0:23

   Fit right in. All right, let's do it.

8. DRDavid Rosenthal0:25

   Let's do it.

9. SPSpeaker0:26

   Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?

10. BGBen Gilbert0:43

    Welcome to Season 13, Episode 3 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

11. DRDavid Rosenthal0:52

    I'm David Rosenthal.

12. BGBen Gilbert0:53

    And we are your hosts. Today, we tell a story that we thought we had already finished: Nvidia. But the last eighteen months have been so insane, listeners, that it warranted an entire episode on its own. So today is a part three for us with Nvidia, telling the story of the AI revolution, how we got here, and why it's happening now, starting all the way down at the level of atoms and silicon. So here's something crazy that I did a transcript search on to see if it was true. In our April 2022 episodes, we never once said the word "generative." That is how fast things have changed.

13. DRDavid Rosenthal1:29

    Unbelievable.

14. BGBen Gilbert1:30

    Totally crazy. And the timing of all of this AI stuff in the world is unbelievably coincidental and, uh, very favorable. So recall back to eighteen months ago. Throughout 2022, we all watched financial markets, from public equities to early-stage startups to real estate, just fall off a cliff due to rapid rise in interest rates. The crypto and Web3 bubble burst, banks fail. It seemed like the whole tech economy, and potentially a lot with it, was heading into a long winter.

15. DRDavid Rosenthal2:04

    Including Nvidia.

16. BGBen Gilbert2:06

    Including Nvidia, who had that massive inventory write-off for what they thought was over-ordering.

17. DRDavid Rosenthal2:12

    Yep. Wow, how things have changed.

18. BGBen Gilbert2:14

    [chuckles] Yeah. But by the fall of 2022, right when everything looked the absolute bleakest, a breakthrough technology finally became useful after years in research labs. Large language models, or LLMs, built on the innovative transformer machine learning mechanism, burst onto the scene, first with OpenAI's ChatGPT, which became the fastest app in history to a hundred million active users, and then quickly followed by Microsoft, Google, and seemingly every other company. In November of 2022, AI definitely had its Netscape moment, and time will tell, but it may have even been its iPhone moment.

19. DRDavid Rosenthal2:55

    Well, that is definitely what Jensen believes.

20. BGBen Gilbert2:58

    Yep. Well, today, we'll explore exactly how this breakthrough came to be, the individuals behind it, and of course, why the entire thing has happened on top of Nvidia's hardware and software. If you wanna make sure you know every time there's a new episode, go sign up at acquired.fm/email. You'll also get access to two things that we aren't putting anywhere else: one, a clue as to what the next episode will be, and two, follow-ups from previous episodes from things that we learned after release. You can come talk about this episode with us after listening at acquired.fm/slack. If you want more of David and I, check out our interview show, ACQ2. Our next few episodes are about AI, with CEOs leading the way in this world we are talking about today, and a great interview with Doug Demuro, where, uh, we wanted to talk about a lot more than just Porsche with him, but, uh, you know, we only had eleven hours or whatever we had-

21. DRDavid Rosenthal3:50

    [laughing]

22. BGBen Gilbert3:50

    ... in Doug's garage, so a lot of the, uh, car industry chat and learning about Doug and his journey and his business we saved for ACQ2, so go check it out. One final announcement, many of you have been wondering, and we've been getting a lot of emails: When will those hats be back in stock? Well, they're back. For a limited time, you can get an ACQ embroidered hat at acquired.fm/store. Go put your order in before they, uh, go back into the Disney vault forever.

23. DRDavid Rosenthal4:18

    [laughing] This is great. I can finally get Jenny one of her own, so she stops stealing mine.

24. BGBen Gilbert4:24

    [chuckles] Yes. Well, without further ado, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only. David, history and facts.

25. DRDavid Rosenthal4:36

    Oh, man. Well, on the one hand, we only have eighteen months to talk about.

26. BGBen Gilbert4:40

    Except that I know you're not gonna start eighteen months ago. [chuckles]

27. DRDavid Rosenthal4:43

    On the other hand, we have decades and decades of foundational research to cover. So when I was starting my research, I went to the natural first place, which was our old episodes from April 2022, and I was listening to them, and I got to the end of the second one, and, uh, man, I had forgotten about this. I think Jensen maybe wishes we all had forgotten about this. In one of Nvidia's earnings slides in 2021, they put up their total addressable market, and they said they had a one trillion dollar TAM, and the way that they calculated this was that they were gonna serve customers who provided $100 trillion worth of industry, and they were gonna capture just 1% of it. And there was some stuff on the slide that was fairly speculative, you know, like autonomous vehicles and the omniverse, and I think robotics were a big part of it.

28. BGBen Gilbert5:33

    And the argument is basically like, well, cars plus factories plus all these things added together is $100 trillion, and we can just take 1% of that, 'cause surely their compute will amount to 1% of that, which I'm not arguing is wrong, but it is a very blunt way to analyze that market.

29. DRDavid Rosenthal5:51

    Yeah, it's usually not the right way to, um, think about starting a startup. You know, "Oh, if we can just get 1% of this big market," blah, blah, blah.

30. BGBen Gilbert5:59

    It's the toppiest-down way I can think of to size a market.

Episode duration: 2:54:09