Apple, Alphabet and Uber survived founder exits. Nvidia faces a harder test
Jensen Huang's sudden exit leaves Nvidia facing a transition experts call unique. Apple, Alphabet and Uber all survived founder departures — but each had time and a plan that Nvidia lacks.
A sudden exit with no playbook
Jensen Huang resigned as Nvidia chief executive on Thursday, ending 33 years leading the company he co-founded into the engine of the artificial intelligence boom. Chief financial officer Colette Kress stepped in as interim chief executive while the board searches for a permanent successor.
The resignation followed reports of extramarital affairs, including with a woman U.S. intelligence believes is a spy for China, and a board investigation into whether Huang had been targeted by a foreign intelligence effort. Nvidia has said its board has no reason to believe U.S. national security or company secrets were compromised. The market reaction shows how much was tied to one person: Nvidia shares are down around 30% from their October 6 high, having shed almost $2 trillion in market value in a little over a month, Reuters reported, while the S&P 500 sits only around 3% below its record high.
Three founder exits that worked — slowly
Apple faced a similar question when Steve Jobs resigned in 2011, but the company had prepared for it. Tim Cook, who had run Apple's supply chain for years, had considerable preparation for the top job, and he invested in the company's chip strategy and services business while becoming a key corporate diplomat in dealings with the U.S. and Chinese governments. Apple's market value went from about $350 billion to $4 trillion in his 15-year tenure. Alphabet's transition was even calmer: Larry Page and Sergey Brin left their executive roles in 2019, 21 years after founding Google, in a move Page called the natural time to simplify management. Alphabet shares are up more than 300% since then under Sundar Pichai.
Uber's founder exit was messier but still gradual. Travis Kalanick left in 2017 after mounting pressure over a series of scandals and governance concerns, and his departure unfolded over several months. Former Expedia chief executive Dara Khosrowshahi repaired the organization and found a path to profitability. The pattern across all three is the same: the handover was expected, prepared, or slow. Nvidia's was none of those. 'Whoever follows will face challenges that go well beyond those of a typical CEO replacing a founder,' Michael Withers, a professor of management at the University of Notre Dame, told CNBC.
What makes Nvidia harder
Huang ran Nvidia through an unusually flat structure, with 60 direct reports and fast communication instead of layered hierarchies, and the company did not appear to have a succession plan for him. He was often described as inextricably linked to the company, which was until recently the largest in the world by market capitalization. Former Goldman Sachs chief executive Lloyd Blankfein wrote on X that Huang was 'indispensable' but 'the graveyards are filled with indispensable men,' a line attributed to French leader Charles de Gaulle.
The successor must also pick up relationships only Huang managed. He cultivated a close relationship with U.S. President Donald Trump, accompanied him to China in May, and consistently pushed for the U.S. to relax export restrictions on chip sales to China. He also managed close ties with the bosses of key suppliers, from SK Hynix to Samsung. Storm Uru of Liontrust Asset Management said the two priorities were changing company culture and managing the supply chain, where Huang brought people together to expand capacity while supply chains were already tight. Competition adds pressure: AMD and the big cloud companies are developing their own chips, though investors noted the product roadmap for the next few years is unaffected. The successor also inherits the questions around Megaspeed, a Nvidia customer that reportedly facilitated the shipment of at least $7.5 billion worth of the company's advanced chips to China. Megaspeed has denied any wrongdoing. Nvidia reports quarterly results on Tuesday, November 17, its first report under Kress.
- $350 billion to $4 trillionApple's market value under Tim Cook
- More than 300%Alphabet shares since Page and Brin left in 2019
- 60Huang's direct reports in Nvidia's flat structure
- Around 30%Nvidia's fall from its October 6 high
- Almost $2 trillionMarket value shed in a little over a month
