• Nvidia’s CEO Jensen Huang answered a question about employees in “semi-retirement” mode during last month’s all-hands meeting.
  • The question spotlights an unusual byproduct of Nvidia’s explosive success.
  • Some insiders believe Nvidia’s employee-first and hands-off culture may be contributing to internal tension.

Nvidia’s stratospheric rise this year has engendered an unusual problem: Some of the longer-tenured employees, sitting on a wealth of company stock, are no longer doing their fair share of work.

It’s a big enough issue that Nvidia’s CEO Jensen Huang felt the need to address it during last month’s internal all-hands meeting, people who were in attendance told Business Insider. From a list of pre-submitted employee questions, Huang picked one that asked what to do about the old-timers who appear to be in “semi-retirement” mode.

Huang answered that working at Nvidia is like a "voluntary sport," so every employee should act like the "CEO" of their own time. He acknowledged that some employees have been at Nvidia for a very long time, and jokingly called them out. These are judgment calls to be made by adults, he added. His broader message was each person should determine how hard they work, but do it responsibly, these people said.

Many Nvidia employees have become incredibly rich after the company's stock is up by about 1,200% over the past five years. One unexpected byproduct of that success has been the growing tension between employees, where some staffers feel the old-timers are simply not pulling their weight. BI talked to 13 current employees and two HR professionals familiar with the company's reputation.

Nvidia employees almost religiously support Huang as the CEO, who founded the company in 1993. Still, these people blame the overly employee-centric culture he's created, coupled with a relatively hands-off management style and the company's newfound, near dominance in the advanced chip market.

It's also possible the newly minted, stock-rich millionaires at Nvidia are simply less motivated to work as hard.

The brewing discord among Nvidia's corporate ranks could one day become a more serious risk as the company faces intensifying regulatory pressure and competition from rival chip-designers, AMD and Intel, as well as other big tech firms, like Amazon and Microsoft.

"Jensen's making a serious point, which is 'do your damn job,'" one of the people told BI.

Nvidia's spokesperson declined to comment.

'Harder to get hired than fired'

Almost every tech company at some point faces a similar problem, where long-time employees who know their way around the company "coast" through their jobs. Silicon Valley has a word for it: "rest and vest," for employees who get paid without doing too much work, waiting for their stock awards to vest.

But at Nvidia, the company's famously pro-employee culture can further accentuate this type of behavior.

For example, Nvidia has a history of avoiding layoffs during tumultuous times. During the early parts of Covid in 2020 and the crypto collapse of 2022, when Nvidia's stock wildly fluctuated, Huang repeatedly assured company staff there would be no layoffs. The last formal job cuts took place 15 years ago in 2008, at the height of the financial crisis.

Company lore is that the top executives took pay cuts during those down periods to reduce the impact on rank-and-file employees. One employee told BI that they received additional stock awards in 2022 to make up for the drop in compensation as Nvidia's share price declined.

Nvidia employees are also rarely put on performance improvement plans, unlike some of its competitors, like Amazon. If someone is underperforming, the company tries to find a new team for that person, instead of quickly moving them to a coaching plan or terminating them, employees said. Huang is known for telling employees at all-hands meetings that he does not wish to fire anyone.

While this type of culture can breed intense loyalty, it can lead to some people taking advantage of it.

"It's harder to get fired than hired here," one of the people said.

And people have no reason in this moment to quit. Jim Herd, CEO of executive search firm Herd Freed Hartz, told BI that, in his experience, Nvidia has lower attrition than other tech firms. He said Nvidia has built a "very strong culture" that leads to higher employee satisfaction, and there's simply no incentive for them to seek other opportunities now.

"Nvidia should continue to have lower attrition than its peers," Herd said. "There is too much momentum and financial gain to leave now."

'No competition'

The explosive demand for Nvidia's advanced chips is only adding to the complacency. Nvidia's GPU chips have become one of the most sought-after products in tech this year, as they serve as the backbone of many generative AI services, like ChatGPT.

That popularity is making some Nvidia employees' jobs easy. One person said Nvidia now has more leverage than ever with their customers, as cloud providers and AI companies are desperate to get its GPU chips. Prospects jump to answer their calls and current customers are willing to spend more money on Nvidia's technology, a dramatic shift from even last year.

One proxy for this change shows up in Nvidia's latest financial statement. In its third quarter (August - October, 2023), Nvidia generated $18.1 billion in revenue, a whopping 207% increase from the $5.9 billion it recorded in the same period of last year. That growth came almost organically, by spending just 15% more on operating expenses, like R&D and marketing ($3.0 billion this year vs. $2.6 billion last year).

Despite a growing number of companies launching their own in-house chips, Nvidia employees say they don't feel the competitive pressure yet. Amazon and Microsoft, for example, have recently unveiled new chips that directly compete with Nvidia's own products. Three Nvidia employees, however, told BI that those chips never come up in customer conversations because, in their view, of Nvidia's superior performance.

"We have no competition," one of the people said. "But we're slowly getting bloated. There are these guys who don't do anything."

Huang, the CEO, seems to be worried about Nvidia's advantage getting into employees's heads. At other recent all-hands meetings, Huang told employees that the stock market is very unforgiving, and that being a $1 trillion company comes with expectations of consistently delivering strong results, people who were at those meetings told BI.

'Wake up worried and concerned'

Nvidia's relatively hands-off management style could be another factor. Huang shared his thoughts on this during an interview with the No Priors podcast in April. He said he currently has over 40 direct reports, an unusually high number for any CEO, because it reduces unnecessary layers at the company. His direct reports have "great business acumen" and "excellent vision," Huang said, so they require very little guidance, or any career coaching from him.

Nvidia also allows full-time remote work and gives unlimited vacation time, including two companywide "free days" per quarter.

The newfound riches among Nvidia employees may also be dulling motivation. One person estimated that even middle managers are now making over $1 million a year in total compensation from the skyrocketing value of stock awards. Like many tech firms, Nvidia pays part of its employee compensation in company stock, which is up roughly 230% this year.

"Stock will go up and there will be more money in the future," another person said. "Everybody has Nvidia pride."

In other ways, Nvidia employees haven't let their riches go to their heads. Unlike the bitcoin millionaires who splurged on fancy cars and homes during the cryptocurrency boom, Nvidia employees who spoke to BI stuck to a relatively frugal lifestyle, paying off mortgages and student loans rather than buying a new Lamborghini.

"We're a bunch of nerds. It's not like your internet crypto f–kboys," one person said.

All this is leading to exceptional support for Huang as CEO. Every Nvidia employee BI spoke to showed complete trust in Huang's leadership. They appreciate the way he puts "human value" at the center of company culture. And they said Huang still finds the time to closely monitor the weekly list of five things employees are working on that are submitted to leaders. According to Glassdoor, Huang boasts a CEO approval rating of 98%, far higher than some of his peers at Alphabet (81%), Amazon (69%), and Meta (54%).

Even with all the success, Huang appears to be the one who is most paranoid about the future. He's very vocal about being mindful of the possibility of one day going out of business. At last month's DealBook Summit, Huang said his experience of facing "real adversity" while running Nvidia has conditioned him to be "partly desperate, partly aspirational" about those uncertainties.

"I don't wake up proud and confident," Huang said. "I wake up worried and concerned."