Nvidia had no succession plan. Did the board consider Jensen Huang an immortal god?

Detailed summary

The company was on its way to AI giant status, but kept a lean structure that left the founder’s power unchecked

In many ways, the Nvidia sex-spy scandal is delicious good fun. Some of the Jensen Huang memes, no doubt generated by Nvidia’s own AI chips, are laugh-out-loud outrageous. The stories about Mr. Huang and his extramarital love affairs, including one with an alleged Chinese spy, filled the media outlets. Ukraine, Gaza and the Republicans’ drubbing in U.S. midterm elections largely disappeared from the news.

The scandal is less entertaining if you are a Nvidia NVDA-Q shareholder. It’s doubly worse when you, the shareholder, realize that the company treated Mr. Huang, who is Nvidia’s co-founder and was its CEO for 33 years until his ouster this week, as an immortal god and had no succession plans.

Nvidia is not going away. But shorn of its visionary and effectively leaderless – chief financial officer Colette Kress is the interim CEO – it faces even more value-destroying turmoil. Already, the company has shed more than US$1-trillion in market capitalization since the first reports in late October linked Mr. Huang to Alice Huang (no relation), who U.S. intelligence officials suspected was a Chinese espionage asset.

Why did a company so essential to the AI industry’s technology avoid planning for a future without its leader? Nvidia did not even have a formal chair of the board of directors until Mr. Huang walked out the door. Instead, it gave every board member equal voice. Clearly, none of them dared mention that the boss’s shelf life would not be forever.

To be sure, many Silicon Valley startups that evolve into proper businesses rely on the founder business model, where the kid with the big idea retains tight control of the company. That was the course taken by Mr. Huang at Nvidia. The then tiny company focused on graphics-based processors for video games.

Nvidia became a public company in 1999, listed on Nasdaq, and made a breakthrough in 2007 when it launched CUDA – Compute Unified Device Architecture.

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Opening of the article, excerpted from The Globe and Mail (Report on Business). To read the rest, open the article on the publisher's site.