Nvidia announced Thursday that Jensen Huang had resigned as CEO and board member, effective immediately, after two weeks of allegations and revelations about his behavior and questions about his judgment.1
I’ve spent the morning collecting my own thoughts on this whole chapter and talking with other comms pros. While the situation is still very fresh and we don’t know much for certain, there are lessons here, some obvious and some less so.2
I have some experience with this kind of situation, albeit not at one of the most valuable companies in the world. In 2017, I was VP of communications and public policy at SoFi when reports surfaced alleging that our co-founder and CEO had inappropriate relationships with employees that bred a toxic culture. He resigned that September.
The truth that situation crystallized for me was that, as a comms person, you have to discern when an executive’s interests and incentives have diverged from the company’s. Being able to judge that is the rub of being a great comms person and doing the job well. At Nvidia, it became clear over the last couple of days that those interests had diverged.
That means you stop operating as a unit with that executive and start mentally preparing for the work that will need to happen if the board takes action. That doesn’t mean working in advance of the board or putting anything in motion. Telling an agency to draft materials announcing an executive’s removal before the board reaches that conclusion would be exactly that. But contingency planning that puts you and the company in the best place for success, without dictating anything to the board, is just prudent. That means asking things like, what kind of support do we have around the comms team? If this goes a certain way, do we have what we need internally, or do we want agency support? How much confidence does the board have in you as the head of comms?
My general observation is that when comms doesn’t have a strong direct line of communication, boards tend to go their own way. They say they don’t really know the comms team’s perspective, how it handles things, or how up to snuff it is, so the default reflex is to bring in some other entity to control this. Sometimes that’s a valid reason. The board could believe the current comms team is too aligned with the executive in question, or too loyal to him to be impartial. But some of it comes from a need to cover one’s ass, to be able to say we did what boards are expected to do here.
At this point, you also serve as a counselor. You’re there to give the board and the other execs a read on what’s actually going to happen. What are the scenarios, what will the immediate consequences be for the company’s reputation and the public dialogue, and what will the longer-term effects be?
There was no scenario where Jensen stayed and this became a non-issue. You’re signing yourself up for it in every press interview, every place he travels, every time he’s asked a question about China, and every time he goes before Congress. That is a never-ending hell for the company reputationally, and it goes beyond dragging the company’s name into a sordid place. You lose the ability to tell a different story. You can’t get any other message out, because this simply becomes the focus.
And that’s to say nothing about how corrosive and standstill-inducing it is within the company to keep somebody like that around under those circumstances. Suppose Nvidia had kept him in place while Wachtell Lipton ran its investigation. There would be no end to internal second-guessing about strategy and operational decisions. Are we doing this because Jensen wants to, or because this decision will outlast him? Who is actually in charge?
Then there’s the message it sends to every employee: it’s okay to break your own rules if you have enough power. Nvidia’s code of conduct says, “Managers serve as role models.” It lists personal relationships among the things that can create a conflict of interest. And it opens with a letter from Jensen asking employees to review the code “to ensure that each of us upholds the principles that are essential for preserving Nvidia’s reputation as a distinguished and exceptional company.”
Once you’ve shown people that the rules you set for everyone in the company don’t apply to you, that starts to eat away at the culture from the inside. And it sets a precedent for the board. Once you’re willing to let these things slide, what else will you let slide? Where are you actually drawing the line?
The other scenario is that you draw a line under it. You realize the cloud is not going away, that strong governance demands this, and that Jensen isn’t the only living person on earth capable of running this company. Once you draw a line under it, you can start to rebuild. That’s not to say it’s easy. It’s extraordinarily hard and extraordinarily painful. But it’s the only way it’s possible to move on.
Nothing I’ve said so far touches on the internal communications behind all this, and that’s partly because of the nature of the situation. There’s not much to say, because not much is known. What a board will do, or what it’s deliberating, isn’t known until it happens. To offer employees conjecture or probabilities is disastrous. So some of the silence is dictated by the circumstances.
But once the decisions are clear, you have to over-index heavily on internal communications. You have to reassure employees that the company knows what it’s doing, that the board and leadership have a plan, and that someone is thinking about the rank and file. Attention naturally focuses on the business, the executive, and the external picture. Someone also has to explain what this means for everyone inside, so they know they aren’t just ancillary bystanders or collateral damage.
You also have to recognize that people will have a variety of feelings about it. One person told CNBC on Thursday that Nvidia employees were in tears. Some people probably wanted Jensen to stay around, and some vociferously did not, and are not happy but at least satisfied with the outcome.
Who is most certainly not satisfied with the outcome here are other powerful men in Jensen’s milieu. Shaun Maguire of Sequoia Capital called Jensen “irreplaceable for America’s AI leadership.” After he resigned, Tim Sweeney called it “a sad day for Nvidia, developers, America, and all humanity.”
Without a doubt, Jensen was and is an exceptional talent and entrepreneur. But these folks are taking the great man theory of history and putting it on speed. It used to take a great man to lead these companies. Now there’s only one man who can do it, and it’s apparently a crime against humanity to move on from him. That has no grounding in history.
Plenty of examples go the other way, and we need look no further than Apple. Tim Cook took over Apple when Steve Jobs resigned, six weeks before his death. Different circumstances, obviously: a real tragedy and not a scandal. And the company thrived. Apple was worth about $350 billion when he became CEO and about $4 trillion when he handed it off this year. The case that gets made is that Cook wasn’t a product guy, and that if Jobs had lived the company would have come out with all kinds of crazy, wonderful products. But you can’t prove the counterfactual. All we can judge is what the record says, and the record says he led it extraordinarily well.
My SoFi example fits the facts at Nvidia more neatly, albeit at a much smaller scale. The CEO was the co-founder and the day-to-day leader of the company. My former Twitter colleague Anthony Noto took over as CEO in March 2018 and steered the ship. He took the company into the public markets and got the company a bank charter, which SoFi had applied for in 2017 and withdrew in the wake of the scandal. And Anthony expanded the franchise into many new product areas.
The last thing I’d point to is the Uber situation with Travis Kalanick. Mike Isaac reported an illuminating scene in his book Super Pumped. It’s February 2017, the day the video of Kalanick arguing with one of his own drivers comes out, and Kalanick tells my former Google colleagues Rachel Whetstone, Uber’s head of communications, and Jill Hazelbaker, her second-in-command, that they aren’t “strategic or creative enough to help us get out of this situation.” In other words, the problem was bad comms. They walk out, he chases them down the hotel hallway, and Jill tells him, “I’ve walked through fire for you and this company! You did this to yourself!”3
Jensen did this to himself.
There are bad comms and there are bad facts. Uber had bad facts, and so does Nvidia. A relationship with an executive at a customer that’s under investigation for moving banned chips into China is a bad fact. So is a reported relationship with a subordinate. You could say the latter was consensual, but how consensual can something be when someone is your boss? That’s at the heart of the policies companies have banning this behavior.
Some fact patterns are beyond comms. They just have to play out.
Maybe that sounds fatalistic. But the alternative is the mood tech has been in for the last couple of years, the one that says we don’t have to worry about bad facts, because we, the ruling class, have all the money and all the power. The posts this week asking who cares if a tech CEO has an affair read that way to me. It’s the same mood that says if people lose their jobs to AI, that’s their fault, because they didn’t reskill or didn’t embrace the moment, but if somebody like Jensen stands to lose his job, it’s a great injustice.
That isn’t even a different set of morals. It’s the lack of morals. Then the industry wonders why Americans are increasingly disdainful of, and distrustful of, tech and AI.
Maybe it was true for a moment that they had all the money and all the power, and that let this class act with impunity. It isn’t true anymore. And it never meant the public respected those who did so. That’s not a great way to comport yourself if you want long-term relationships with your audiences and customers, public trust and admiration, or to be seen not just as a business leader but as a sector leader and a beacon for moving technology forward.
If there’s anybody to blame, it’s Jensen himself. He made these decisions, and he dug his own grave.
I’ve written admiringly about Jensen and his communications talents before, and all of that still holds. On the stage, he’s a top-notch showman.
Full disclosure: I have advised both partners and competitors of Nvidia, though I am not actively doing so.
It should also be noted Uber has fared well under Travis’ replacement Dara Khosrowshahi, who successfully took the company public, and Jill has been tapped to run comms for OpenAI after her long tenure at Uber.