On May 24th (Thursday) Eastern Time, NVIDIA released its first quarter of fiscal year 2025 (as of April 28th, 2024), with the company's performance and outlook exceeding expectations. Boosted by news, the stock price hit a historic high and closed at $1064.69 on Friday, with a market value of $2623.1 billion, exceeding the sum of Amazon and Tesla. The market value surged by $377.4 billion during the week.
During the reporting period, Nvidia's revenue increased by 262% year-on-year to $26 billion, far exceeding the market's generally expected $24.5 billion and reaching a historic high; Net profit increased by 620% year-on-year to 14.88 billion US dollars; Adjusted earnings per share were $6.12, a year-on-year increase of 461%. Meanwhile, the company expects its second quarter revenue to reach $28 billion, with a market expectation of $26.8 billion.
Driven by the stock price, Nvidia CEO Huang Renxun's net asset value rose to $93.6 billion, ranking 17th on Forbes Global Rich List.
It is worth mentioning that this is Nvidia's third consecutive quarter with a year-on-year revenue growth rate exceeding 200%. Huang Renxun said in the subsequent financial report conference call: "The next industrial revolution has begun... In addition to cloud service providers, generative AI has also expanded to consumer Internet companies, enterprises, sovereign AI, cars, healthcare and other fields of customers, creating multiple vertical markets worth billions of dollars. We are at the beginning of the next wave of growth."
Why can Nvidia continuously break analyst expectations and reach new revenue highs? What is Huang Renxun's outstanding management skills in his sixties?
Within NVIDIA, Huang Renxun directly manages 60 subordinates. Andrew Sorkin, a senior journalist for The New York Times, once asked Huang Renxun about this at the 2023 DealBook Summit. What is the significance of this arrangement? Sorkin said that most people believe that having 6-10 think tank members in a conference room is the limit, Tesla CEO Musk has 28 direct subordinates, and Apple CEO Cook only has 17 people.
In Huang Renxun's view, a flat organizational structure can give employees more autonomy, and he believes that the less management executives receive, the better. The characteristic of this management approach is that there is no plan, no reporting, and even no clear hierarchy.
According to American business magazine Inc, Huang Renxun strongly disagrees with many CEOs who believe that "CEO information should be valuable and confidential, and can only be shared with two or three other people. This information is so priceless and confidential that it can only be shared with a few people." He said, "I don't believe in a culture or an environment where the information you have is the reason you have power."
On the contrary, he believes that the role of management should be to empower employees to do their best. "It is my mission to create conditions that enable them to engage in lifelong work," he said.
Although he currently manages a team of 60 executives directly, he still avoids one-on-one meetings and instead engages in group discussions, which ensures that everyone (with access to information) is on the same line starting from the top.
Moreover, Nvidia's meetings are not limited by position or level, and everyone from vice presidents to junior employees has access to all company information and the right to attend any meeting. "If we set a strategic direction, why is it limited to a few people? Tell all employees, and we can brainstorm. We just send out ideas to everyone as soon as we have them, and then wait for everyone to give us feedback, and we will improve based on these feedback," he said.
In his view, sharing strategic direction with all employees of the company is to utilize the wisdom and professional knowledge of the entire company to develop more comprehensive and thoughtful strategies.
In addition, Huang Renxun also dislikes making plans and asking employees to write reports. He believes that such reports often deviate from the basic facts when they reach his hands. In order to keep up with the latest situation of the company, Huang Renxun encourages all employees to write him an email with the theme of "the five most important things" in their minds. Every morning, Huang Renxun would read about 100 such emails.
Under the leadership of Huang Renxun, Nvidia's organizational structure has three core goals, which are to attract the best talents in the industry, form the most efficient and efficient team for operation, and ensure the rapid and effective flow of information throughout the company.
Although this kind of management is somewhat unique and even crazy, it retains the flexibility only found in startups and avoids the bureaucracy and rigidity commonly found in large enterprises. It is precisely this management model that has propelled Nvidia's market value to $2.6 trillion, making it the third largest company in the world in terms of market value, second only to Apple and Microsoft.