Attacking Goliath requires a radically better product

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 4:15

   This is my fifth. And the team had been together, the founding team had been together at the last one. And we had some really clear sort of philosophies on what you should do. And our view is that if you're going to attack Goliath, if there's a giant standing in the market, like NVIDIA was even at that time, that being a little bit better or a little bit cheaper is not an available strategy, right? They had high margins. So if you come in and even if you're two-thirds the price, they can just cut costs. They can just charge less. They can bundle it.

2. 4:55

   They can do a hundred other things. What that means is you have to go out with something way better. Ten, a hundred, five hundred times faster. You have to come up with a product that has a value proposition that even if the other guys give it away, they can't compete. And so that's sort of one direction of our thinking. And the other building off that is we want to do hard things that produce that advantage, right?

3. 5:27

   That we want all that hard stuff within the building because that's under our control. All the other stuff's not under our control. But if we can build something that is so fast nobody else can do it, you can't give away your parts to achieve what we can achieve, then you're on to something. And the only way to do that, in our opinion, is radical innovation. You can't incremental your way to vastly better.

4. 5:51

   So what has to be in your control? You have to have all aspects of the design, the implementation. You have to understand the manufacturing. You have to understand every part. And for us, that meant chip, board, system, software, all the way up to the API. And that was not easy. That makes it more expensive. It makes it take longer. It means there are more ways to fail there. When you do radical innovation, there are no vendors waiting for you. When you build a chip the size of a dinner plate, you can't go to a catalog and find a heat sink because nobody had ever built one bigger than a postage stamp. So nobody has stuff ready for you. And so you end up investing an enormous amount of time in building things that support your thing, the surrounding components. But the result of that is you develop this

5. 6:53

   extraordinary expertise. We didn't start world leaders in packaging. We're right now the best in the world of packaging. We earned it, failure after failure, year after year until we got it and so what you want to do is you want to think about sort of how you can innovate across the the the various elements of of the full solution and push as hard as you can i i think like andrew taught me this in in in semis and everything else just to like make this like what you need to be shooting for concrete so if you think of whoever the incumbent is in whatever market, you know, they're getting, say, twice as good every year in a market like this.

6. 7:38

   It's very dynamic. For a new company to get to scale, to start to get to scale, it's going to take five years at least. Let's say with everyone moving as fast as they can, AI tools, you nail everything, first tape out works, first bring up works, you know, everything goes right five years, okay, to like to get to scale. And so you're basically at two to the... the fifth. So that puts you at 32X. And then you need at least a multiple advantage of that.

7. 8:06

   So you say 3X. So you're basically at 100X. So one of the things that happens when you hear a lot about these new ideas is they're like, hey, we're going to be 50% better. We're going to be two times as better. But what they are, they're like, once we have this design, it's going to be even 10 times better than what exists today. But what exists today isn't the target. Because if you're looking at the companies that are out there right now, these big companies with a lot of resources are actually doing, they're doing great work.

8. 8:37

   NVIDIA is advancing the ball materially every year, like very significantly. NVIDIA and Google and Tranium, they're moving the ball. And so you got to aim at 100, 500,000 times better if you're going to arrive, if you're going to intersect the market ahead of them. And so that – just like when you realize that, you're like, oh, wait, it can't be small changes in something. There has to be a very big underlying like architectural change, a big thought.

9. 9:12

   Like there has to be something materially different, whether it's wafer scale, SRAM, whatever it is. Like those things matter. You can't get there with a collection of modest improvements, right? Your biggest competitor buys silicon for less than you. They buy manufacturing capacity for less than you, right? They probably pay less for their EDA tools. And so you can't go at them. You can't run it at Goliath straight on.

10. 9:39

    I mean, you've got to think about how you can deliver something profoundly different.