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From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Risdolle. It is Wednesday, today the 20th of November. It is always to have you along, everybody. We begin today with a question that is going to sound ridiculous on its face, but we here go where the news takes us. When the question goes, is $35 billion worth of revenue in three very short months not good enough?
For most companies, the answer to that question would be never. It is never not good enough to bring in $35 billion in a quarter. But when you're in video, the stratospheric chip design company, the 35 billion revenue you announced after the close today,
Well, I'm sorry, it's just not gonna cut it. NVIDIA, of course, the market leader in designing AI chips all under the very watchful eye of co-founder and CEO Jensen Huang. Huang and his company are the subjects of an upcoming and it must be said very timely new book by Tae Kim. It's called The NVIDIA Way Jensen Huang and The Making of a Tech Giant. Tae, it's good to have you on.
Good to be here, Guy. For those who haven't been paying attention, it does sort of seem like NVIDIA just kind of came out of nowhere when AI started getting big. Where did this company come from? It started about 30 years ago. They started making video game graphics chips for PC gamers. And it was started by three co-founders, Jensen Huang, Chris Malekowski, and Curtis Prem. And it's just one of the most amazing kind of entrepreneurial success stories of our time.
This is going to sound like a very basic question, but what do they make or what do they do? They're actually a chip designer. Taiwan semiconductor actually makes the chips, but the design chips that go into gaming computers. And now they make these AI processors that go into these massive server farms that power all the AI workloads for training and inference today. What is their edge in designing these chips? What is the secret sauce other than I suppose being the first mover, right?
They've been doing this for 30 years and they've always been on the forefront of technology and always kind of looking ahead on what's next. And the thing that really drives it is Jensen Huang's technical acronym. He always kind of sees where the mark is going to go before it happens. And I say it's similar to what Reed Hastings did with Netflix. Like he had this intuitive sense that internet video streaming was the way it's going to happen. But he kind of stuck around and did the DVD by mail.
And as the technology got better, he jumped on it. And NVIDIA has done that time and time again with video game graphics chips. This thing called CUDA, which is the foundation of how they've kind of dominated this AI wave. And they keep doing it every single time. So it's just an amazing, incredible story. What is, just to the title of this book, what is the NVIDIA way?
So in video ways, something I came up with as I was doing research on the book, I started this in May of 2023. I got this cold email from a publisher, one of his authors recommended me to write the book. And I was kind of stunned that no one has written the book on the video before because every other big internet company has like five or six books on it.
So I looked into it. I said, oh, I would love this opportunity. We got a book deal done within a few weeks. And I started interviewing NVIDIA employees. And the first thing maybe after a half dozen calls, I found like the defining characteristic wasn't like the technology or innovation host this unique work culture that Jensen Huang and his co-founders built up.
And it's about philosophy and speed and being very blunt and direct. And all these employees, when they went to other companies like Google, Microsoft, and Apple, they were like, oh my gosh, I can't work like this anymore. They got used to this NVIDIA culture that was just so much faster, more decisive, and didn't have any other kind of problems you have with internal politics.
i will say it does sound a tad brutal i mean you're working you know even in an entry-level gig you're working sixty-hour weeks uh... jensen wong apparently knows the name of like everybody walking down the hallway and has no uh... hesitation about jumping in and and questioning things or making sure that they are in line with his vision
Yes. Work ethic and long hours are part of the video culture. I was talking to this marketing person in the early years and he said that there are sleeping bags in the office and one day he decided to go, this is Titanic back in the late 90s. He said, I'm going to go out to see Titanic with my wife. He left at the office at 9.30 and one of his colleagues joked,
Oh, is this a half day handy? And so that was a mentality that people stay there super late. And I think I asked around today and people still work like crazy hours today. I think part of that is like they want to do their best work really hard. And it also comes from the top of Jensen. He considers work relaxing and fun. Wow.
One of the things he does, he loves doing emails on Sunday night with his favorite Highland Scotch whiskey, and that's what he enjoys. He just- What could possibly go wrong with the CEO of a company having a whiskey or two and sending emails? Yes, that's the way it does on Sunday evenings, I heard. And yet they retain people at some remarkable rate as you point out in this book.
Yeah, I mean, 18 players attract 18 players and winning begets winning, right? So no one wants to work four years on the chip project and then have a fail in the marketplace. And the video has this track record of success. And the money isn't bad either. I mean, we're talking about an extraordinary outcome. They're literally the best performing stock in US history with a company with 20 years of returns. I think the turnover is less than 3% in the industry that has like 15% turnover on average.
It sounds vaguely Steve Jobsian, right? Jobs always said, you know, A-grade people want to work with A-grade people and we're not going to hire C-people and all of that stuff, right?
It's almost very similar. There's really great corollaries. In the same way, he's very tough on people, like Steve Jobs was tough on people. There's this one story about the Tegra 3, which was this chip for automobiles and small internet devices, and the guy that was in charge of the project was late.
And there was this company-wide meeting, and he made the person in charge of the camera, zero in on his face multiple times in the meeting, and said, you really need to finish this, right? You need to get this chip back on schedule, and just repeatedly kind of dress him down and humiliate him in front of everyone.
And part of that is he thinks that's how you learn. All these other companies where people coddle executives and do one-on-ones on the side, so you don't embarrass the person. He wants to embarrass the person, so everyone learns not to make that mistake. And that's what you're dealing with. He has very high expectations, and he keeps people accountable.
we should say here uh... it has not always been sunshine and light for this company and and at various points as you detail in this book he has said in company all steps were thirty days from going out of business right which is which is a peculiar way to motivate people
I think he's very worried about becoming complacent as a company. He's a student of technology industry where all the top companies eventually get disrupted. So he wants to instill that kind of fear and paranoia about being complacent. And he did that almost like the first 10 years, every company meeting which was held about monthly, he would say we're 30 days from going out of business.
And part of that was sometimes it was true. Some executives still made it in 1998 and their first two chips, it was true. But it's also to instill that, you know, we never can rest our laurels. We really have to move fast and move forward as much as possible.
He is, you point out, the longest tenured Silicon Valley founder and CEO. All you have to do is read the headlines. He has at the apex of his company's power. Clearly, he's going to stick around for a while, right?
He, I mean, every major conference that he does talks at and speaks at, he has this annual conference called GTC every year. And he says, there's nothing else I want to do. He considers all the employees as family. And he repeatedly says, I love NVIDIA. This is the love of his life. It's his company.
It's a book called The Nvidia Way, Johnson Huang, and the making of a tech giant. It drops on the 10th of December. Take him at Barron's Road. Take thanks a lot. I really appreciate your time. Interesting book.
Thanks, Guy. Thanks for having me.
The weather this fall has been somewhat less than entirely autumnal. The National Oceanic and Atmospheric Administration says last month's average temperature in the lower 48 was 59 degrees. Cool in some places, perhaps, but it's almost five degrees above average, which makes last month the second warmest October.
ever. September was warmer than usual, too. And all that temperate weather has been affecting what consumers are buying and not buying. On its earnings call this morning, Target said that apparel sales were down about 1% for the quarter, thanks, in part to the temperature. Marketplaces Stephanie Hughes looks at what retailers do when it seems like winter's not coming. When the weather can be described as balmy, you don't really feel like buying something woolen. It's not appealing. You're not even thinking of it.
Katie Thomas studies consumer behavior at the consulting firm, Carney. She says a lot of retailers have had a hard time moving coats and sweaters this fall and expects they'll end up discounting them. She also says with a climate that's warming up, it's time for the retail industry to have a good long think about what it sells and when. You know, I think we tend to just do a little bit of the status quo, which is, oh, it's the fall season. It's the fall assortment. We need to have sweaters in it.
Thomas is also having some conversations that border on the existential, like in the future, will we need winter scarves at all? And if we do, what will they be like? Do they somehow look different? You know, is it that they're not quite so oversized? Are there, you know, other ways that, you know, you think about what a scarf could be? But with climate change, it can be really hard to know what's coming. Sonia Lipinski is with Alex Partners. We could have a blizzard next year on October 1st. We have no idea right now.
Lipinski says to plan for a potential blizzard or potential bombing us retailers should take a cue from the fast fashion industry and develop more flexible production schedules. Where they can order very small batches, get it into stores and kind of test it before they commit to a really large production run where they're going to be sitting on a lot of inventory.
There are certain retailers benefiting from the warmer weather. The charmery makes ice cream and sells it at six stores in Baltimore and DC. Owner David Alima says sales are up 7% so far this year from 2023. So to see a line out the door in September and October, it's just, it's the best.
Aleema says one thing that's been a little strange is selling what he calls hoodie weather flavors, like spiced pumpkin, sari-kai, and apple butter, when the temperature only calls for a t-shirt. But he doesn't mind. And he doesn't think customers do either. I'm Stephanie Hughes.
There is another ratchet today in the changing gears of the television and streaming economy. Comcast said it's going to spin off most of its cable channels, MSNBC, CNBC, Oxygen, E. That's the one with the exclamation point, the Golf Channel 2. They're all going into a separate company. Comcast is going to hang on to NBC News, Sports, Telamondo and Bravo, as well as Peacock at streaming service.
The company's film and TV studios and theme parks. Marketplaces, Smith Fields has more now on the split. And what it tells us about what we watch. This is a story about the rise of streaming in the fall of cable and how big media companies are still trying to figure out what to do with that shift. Just 10 years ago, Paul Verna at research firm eMarketer says his company found there were four times as many households that paid for cable than households that didn't.
By next year, those numbers will actually cross, and there will be more households in the US that do not subscribe to pay TV than once they do. So that's like a massive shift. And he says, that's what's driving this move by Comcast. Companies that have these cable networks, they just really don't know what to do with them. Comcast is going with a spin-off company. Why not just sell its cable channels? I think there's probably a lack of buyers.
Frank Loudon at Raymond James says cable is still making money, but less than it used to. The old model where you bundled in a significant number of cable networks is going to see its end of days at some point. But he says it's a different calculus for Comcast with NBC's broadcast networks and Bravo. They have a lot of valuable shows that people want to stream real housewives, top chef, law and order, the Olympics, other live sports.
That's a lot of content that they can get to put on Peacock. And it's highly valued content, which is really important, which gets them more subscribers. And these days, Gregory Stoller at Boston University's Questram School of Business says companies have to work harder than ever to attract and keep subscribers because consumers have more choices than ever.
Instead of spending a couple hundred dollars a month on cable for a few channels they want and hundreds they don't, he says people can spend the same or less on streaming and get more of what they want. Paul Verna at eMarketer says everyone realizes that's the future, even though so far it hasn't been easy for companies to monetize streaming. To the extent that they did with their cable networks when those were in their prime. But those challenges will eventually be worked out.
And he says companies are following the audiences where they're going. Over to streaming. I'm Samantha Fields for Marketplace.
Coming up. I enjoy seeing people really joyful of having found their forever instrument. Music to my ears. But first, let's do the numbers.
Dow industrials up 139 points today, a third of 1%, 43,408, and Azdak off 21 points, about a 10%, ended things at 18,966, the S&P 500, basically flat 59 and 17. Williams Sonoma jumped more than 27% today,
The home furnishings chain beat expectations on third corner earnings and revenue target slump 21.4% after sliding sluggish demand cut out as Stephanie used was just telling us by warmer weather. Smith Fields was telling us about Comcast. That stock brightened one and six tenths percent. Today other streamers Netflix up 1.4% the Walt Disney Company picked up one and two thirds percent. Bond prices fell the yield on the tenure treasury notes up 4.41% you're listening to marketplace.
This is Marketplace, I'm Kai Risdale. Inflation. Lower though it may be, it is still not quite where the Federal Reserve wants it to be, and the Central Bank is reading all the economic tea leaves it can to figure out what to do with interest rates.
We got the Atlanta Fed's survey of business inflation expectations over the next year this morning. It held steady at 2.2% in November, same as a month ago. The consumer price index by way of comparison, 2.6% over the past year. Fed Chair Jay Powell and his colleagues talk a lot about how determined they are to get inflation down to their target of, as we all know, 2%. And they say also that this last mile is going to be bumpy.
Marketplace's Mitchell Hartman has more now on how inflation expectations might wind up affecting that bumpy path.
Americans' inflation expectations certainly do seem to be well-anchored, as Fed Chair Jerome Powell said in recent speech. Consumers predict prices will rise 2.9% over the next year, according to the New York Fed. Businesses expect inflation to be 2.2% overall, though they predict they'll raise their own prices for customers by 3%. And Bernard Baumal, at the Economic Outlook Group, sees warning signs on the horizon.
Just keep an eye on inflation expectations. That could very well be one of the surprises in the next couple of months.
Looking at current inflation rates, the Fed is right to be planning further interest rate cuts, says Brian Raling at the Wells Fargo Investment Institute. But looking forward, he says investors are less confident inflation will keep falling and the Fed will keep cutting. The market sees some of the policies that may be implemented with the new administration and concern and starts some of those policies may eventually lead to inflation down the road.
Specifically, President-elect Trump has pledged steep new tariffs on imports, mass deportations that could lead to labor shortages, and tax cuts and deregulation that could juice the economy. Bernard Baumall says the Fed will be watching to see, do businesses think they have to pay higher wages to find workers or raise prices to offset tariffs? If we begin to see inflation expectations pick up, that means that the Federal Reserve is even less likely
to lower rates in December and obviously then into 2025. And that would mean the pain becomes even greater on especially low and middle income groups. And most Americans really want inflation tamed, says Chris Jackson at polling firm Ipsos. When we asked them what they want the Trump administration's priority to be in their first 100 days by a large margin, they're saying dealing with inflation.
And what Jackson says consumers want more than anything is for prices to fall back again to pre-pandemic levels, which isn't likely to happen. I'm Mitchell Hartman for Marketplace.
So let's go from very big picture, Mitchell's macro storage is now on business inflation expectations to the very micro. What kinds of things small business owners are thinking about that are going to affect their economic futures? Here's today's installment of our series, my economy. My name is Wesley rule and I'm the owner of Knoxville find by lens along with my wife. And we are in Knoxville, Tennessee.
So I started at a very young age, sort of pressed into service with my father building pipe organs. At the time, probably as a way to rebel against my upbringing as a father who wanted me to play piano in Oregon, I was playing violin.
I, at one point, was looking at the instrument and realized I had no idea how to make one. So I looked into it and decided to go a different route with my education and went to the violin making school of America in Salt Lake City.
In 2020, we decided to open a shop. When we first opened the shop, it was just me and my wife and my mother helping us with the accounting. And as we grew, we started having to try to figure out what we were going to do with maybe hiring it a potential employee. We were able to find Wyatt. He's been working here since February, I believe.
He's been absolutely fantastic. Now we can get more repairs and more violent making done, which I wasn't really able to do much making until we were able to hire him.
You know, recently we've been thinking about what's going to happen if they're tariff specifically on Chinese goods because a lot of our lower end instruments come from China. We've been looking at replacement instruments coming maybe from Germany and Hungary, from Romania. We've also been looking at maybe American made workshop instruments.
We don't want to have a gap in inventory if something were to happen, and we don't want to raise our prices for, especially for our economy model instruments because, you know, at $650 while that may seem cheap to a professional, that's a lot of money that you have to shell out, especially as the cost of living is going on.
My favorite part of this business, it's really hard to put a finger out because I enjoy doing all of it. I enjoy working with people. I enjoy seeing people really joyful of having found their forever instrument or just finding an instrument that they love to play.
I'd say that my favorite part, though, is probably doing higher-end restorations. I really love taking old historic instruments made by a luthier just like myself, you know, from 200 years ago, and being able to bring life back to that instrument. That's always really fascinating for me.
Wesley Rule, with his wife, the proprietor of Knoxville, fine violins, Knoxville, Tennessee, of course. Whether you are handcrafting fine instruments, working a desk job, or doing something else entirely, this series does not happen without you. So please write to us, would you, and tell us what's happening in your economy? Marketplace.org slash my economy is where you can do that.
This final note on the way out today, courtesy of the American Farm Bureau Federation. It's annual update on how much Thanksgiving dinner is going to run you. On average, nationwide, turkey for 10, trimmings included, $58.08. That is down 5% from a year ago. I'm just going to say it always seems to cost more than that of my house.
Our media production team includes Brian Allison, Jake Cherry, Justin Dooler, Drew Jostan, Gary O'Keefe, Charlton Thorpe, Juan Carlos Dorado, and Becca Weinman. Jeff Peters is the manager of media production, and I'm Kyle Risdell. We will see you tomorrow, everybody. This is APM.
