Jensen Huang Says Nvidia Once Faced A Moment It Could 'Vaporize Overnight' Had A Client Not Taken A $5 Million Leap Of Faith
Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang says his company once came so close to running out of cash that it could "vaporize overnight," and survived only because a Sega executive gambled $5 million on a failing chip project.
Huang Came Clean To Sega Leadership
On an episode of "The Joe Rogan Experience," which aired recently, Huang recalled flying to Japan in the mid-1990s to tell Sega boss Shoichiro Irimajiri that Nvidia couldn't deliver the promised graphics chip for the Dreamcast console.
"First, the technology that we promised you doesn't work," he said he told Irimajiri. "Second, we shouldn't finish your contract because we'd waste all your money and you would have something that doesn't work. And I recommend you find another partner to build your game console."
$5 Million Bet That Saved Nvidia
Huang then made an audacious plea. He said he warned Irimajiri that without more cash "we'd be dead. We would have vaporized instantly," and asked Sega to convert the last $5 million payment on the contract into an equity investment instead.
He told Rogan he admitted to Irimajiri that "it is most likely to be lost," but argued that without the money Nvidia would "be out of business and we would have no chance." Irimajiri took a few days and came back with a simple answer, saying, "We'll do it."
That lifeline gave Nvidia time to pivot away from its troubled NV1 chip and build the RIVA 128, a 1997 graphics processor that finally put the company on the map in PC gaming.
A Turn In Eventual Fortunes
Sega later sold its Nvidia stake for about $15 million after the chipmaker went public in 1999, a decision Huang noted would be worth roughly $1 trillion today if the shares had been held, given Nvidia's multi-trillion-dollar valuation in the AI boom.
While Sega quit the console business after the Dreamcast's 2001 failure and reinvented itself as a third-party publisher, Nvidia has become the dominant supplier of GPUs powering modern artificial intelligence projects worldwide.
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