Nvidia was formed in 1993 with $40,000 in startup capital from its three founders and their family and friends. The company entered the graphics accelerator market in 1995 with the NV1, but the product’s innovative design limited market adoption and nearly sank the company. Fast forward to this Spring when the 30 year old company became just the ninth in history to reach a valuation of $1 trillion. Creating an entirely new category of product was key to the company’s success and massive value creation.
What can we learn from Nvidia’s category creating journey? In previous articles I’ve explained that category making involves three distinct phases: defining the category, establishing the category, and owning the category. We can trace Nvidia’s movement through these three phases by observing five key steps in their journey:
- Understand how the world is changing.
- Identify the potential compelling story.
- Define the category.
- Launch the category.
- Sustain category momentum and leadership.
The core value of the GPU category that Nvidia created was offloading compute-intensive processing from general purpose CPUs. In the late 1990s, the apps that benefitted the most were graphics-intensive and video-intensive apps (e.g. video games). More recently this core value has been essential to blockchain, cryptocurrency mining, and artificial intelligence. Each jump in demand for these applications has resulted in an equivalent jump in demand for the company’s GPUs.
In the article linked below, I walk through Nvidia’s history, explaining how they executed each of these steps towards creating tremendous value for its customers and its shareholders. Let me know if you need help on your own category making journey.