Is Everyone at Nvidia a Millionaire?
In this episode of "The Blind Ambition with Jack Kelly" podcast, Jack Kelly and Rick Chen react to a viral Blind poll that found that 76% of Nvidia professionals claim to be millionaires, and 33% may have a net worth of $20 million or more as a result of Nvidia's incredible stock price appreciation since 2019.
Rick reveals how much stock you might have gotten depending on when you joined Nvidia, how stock-based compensation works and why employers have set up stock grants to unlock over long periods of time.
We look into how companies purposefully try to create golden handcuffs and lock in their employees. Jack explores what it might be like when many of your coworkers are millionaires and what Nvidia's work culture is like.
Rick Chen (0:04): Hey everybody, and welcome to this special episode of "The Blind Ambition with Jack Kelly." It's your friend Rick from Blind, and today, I want to talk to Jack and you all about this crazy Blind poll you might have seen go viral on social media.
A user asked Nvidia professionals, what does your net worth look like with this kind of AI hype. Nvidia shares have obviously been trading at such a tear.
A majority, 60%, 70%, claiming to be millionaires based on the compensation that they're earning, the stock grants.
14% say their net worth is now between $1 million and $3 million. 76% say they are millionaires in terms of net worth, and in terms of how many folks have a net worth of $10 million or more, that is about 44%, according to the verified Nvidia employees that participated in this Blind poll.
What do you think, Jack? All these millionaires at work.
Jack Kelly (1:13): Well, I thought also was $20 million. Wasn't there a data point for that as well, or no?
Rick Chen (1:18): Yes, 37% of Nvidia professionals on Blind say they have a net worth now of $20 million or more.
Jack Kelly (1:28): And when they say the net worth, is that the net worth just from Nvidia, or does that include— Do you know of other holdings?
Rick Chen (1:35): It's their net worth, period. So we're going to assume a lot of that is coming from their Nvidia stock.
Jack Kelly (1:44): This is what I see. This is what's amazing about the tech sector. You could just make a fortune if you're at the right company at the right time. Boom, $20 million. I mean, that's that's just so awesome. You don't get that working as a teacher, you don't get that. You know, as a regular person, it doesn't happen.
I mean, this is amazing. America is a great place for a lot of reasons. That's why a lot of people come here, right? Not everyone could be very rich, but damn, sometimes this is crazy.
Rick Chen (2:23): Jack, will you indulge me? Can we get a little nerdy? Can I break it down for everyone?
So Nvidia, when you join, just like many other tech companies, you have your cash, your base salary, but you also have this stock-based compensation. So, in your offer letter, you'll have a hard dollar amount, let's say $500,000, and at Nvidia, it's over four years. So each year, you're getting $500K divided by four, you're getting $125,000 worth of stock. And what ended up happening is, if you joined Nvidia in 2020, the stock price for most people that joined that year, the average is about $13 per share. So you think about $13 versus what it's trading at now, over $100, you're seeing, you know, an 8x, 9x increase of your stock grant just by sitting at the company, doing your work.
In 2021, the average stock price grant for these new hires was $29. In 2022, it's $15, and then last year, 2023, the average stock grant was $50, so even if you joined last year and you got stock at a price of $50, now that it's at $100-plus, you're still sitting on an over 100% gain in that stock-based compensation portion. So, let's say you got $500,000 in your offer letter. Well, now it's a million dollars over four years, and so in that one year alone, that first year, total compensation has increased by so, so much.
Jack Kelly (4:19): My head is exploding here. This is crazy. It's so nuts. It's so wild that this could happen. Now, what I'm really curious about, what I'm really interested is this. From an outside perspective, now, you're going to have a certain cohort that has, you know, $20 million net worth. Let's not even put, put aside the $20 million net worth because, let's say you're a person of a certain age, and you've been in the tech sector for a long period of time, and you're making, let's just say $500,000 a year, plus stock what have you. So you already have a lot of money. Now, on top of that, you have Nvidia money because presumably, and you know, these people in tech are smart, so they're probably diversified and have other things going on too, so they're probably well off to begin with. Now they're super well off.
Well, how does this work in the context of the company, where now you have this group of people who are multi-millionaires, and where is the drive for them to keep going, as opposed to putting their feet up on the desk and say, hey, I'm peacing out, you know, I'm done. Look at this. Why am I going to kill myself? You know, I have $20 million. I have $30 million; if nothing else, let me just, you know, cruise for a little bit, you know, take some time off.
And then I wonder, Rick, how is it for the other people who maybe didn't get any stock or got very little stock, and now you're sitting next to someone who's a multi-millionaire? That dynamic has to be just so crazy because we're humans. The jealousy factor, the frustration, of course, like I should have, could have, would have. How can everyone get along together? Seriously, think about, like, how can you not be a little envious of somebody who just hit it so big, and you didn't, and you got to live with them every day. What do you think about that? Am I the only one who thinks about these things?
Rick Chen (6:22): No.
Jack Kelly (6:26): So this is a somewhat common thing, not like to this degree, but just this is what goes on?
Rick Chen (6:31): It's a common thing, even when the stakes and the increase haven't been this large. Look on Blind, and you see folks that are jealous of people that joined Meta at 2019, or 2020, right before you know the metaverse change and all of that. I don't think people realize this, but back a few years ago, Meta shares were languishing, right? They really were not doing really well, and obviously, now you look at the turnaround.
So, can you imagine if you had joined a year before that share price drop, you're thinking, oh, gosh, my stock price is at such a high level during that one year, you're kind of sweating bullets. You know, everyone's kind of making fun of you. The morale at the company must have been so poor, and now you're just coping and praying that the share price goes back up. In Meta's case, it has. But can you imagine, if you're at another company where that isn't the case? Surely, you're going to be upset now at work when you have this kind of situation, whether it's up or down; it really has to do with the company culture in terms of how you're going to motivate everyone, how to get actual work that needs to get done. Because, obviously Nvidia, they want to ship out all of these chips. Their technology is in such a high demand. And Jack, you've written about this for Forbes, the culture at Nvidia is really intense. It is not necessarily a rest and vest kind of place.
Jack Kelly (8:10): What surprises me a little bit is this. Jensen, who is the founder and CEO, comes across as this, like, you know, he has a nice silvery hair and he has a leather jacket, but not like, not trying to be too cool, but just trying to be a little hip, right? And he comes across whatever I've seen him speak, very nice, fatherly kind of person, right? But then you peel back some layers, and he's like, we torture our employees to, you know, get the best out of them. You know, working till one in the morning in two in the morning. So there's this weird juxtaposition, where to me, I look at this guy, and he looks, oh, what a nice guy. He seems like it would be a great uncle, you know, to be with or what have you, you know. But evidently, he runs a strict regiment to get these people working all hours of the day, and the results speak for themselves, right? So, it seems to be working.
Rick Chen (9:07): That's clear cause and effect, right?
Jack Kelly (9:10): I don't you know, is it because of that, or is it just, you know, what, they had the right chips at the right moment, at the right time, and it all clicked in you know, is it that they're that that much smarter, or are they just that much lucky, or a little bit of everything?
Rick Chen (9:24): It has to be everything right. You have to be at the right place at the right time. Sure, there's definitely a bit of that. But Nvidia is not a company that's been around for the last two, three years. They've been around for much longer. And so there's all of this like infrastructure, all of this research, all of this hard work, all of this hardcore mode, this intense 1, 2, 4 am that Jensen requires from his team that had to build up to this moment.
I imagine it's really intense over there, right, where maybe there's this feeling of, back to your point, a little bit of greed. And everyone's like, hey, we now have a net worth of $10 million, $20 million, can we get it higher? I'm sure there's a lot of folks out there that are thinking, hey, it's great that Jensen's a billionaire, but what about me?
Jack Kelly (10:23): You know, this reminds me of when we just mention it, where in music or in other areas you're you say this person was an overnight success, but it really took 10 years, just like you were planning out, you know, with Jensen. So yeah, you were an overnight success, but it took you 20 years to get there. So if you look at like, the stock chart, you know you would see it just like, you just like, kind of flatlining. And then it was like right up, and it's wild.
And just if I could take a little tangent because I invest a lot for myself, and when Rick mentioned Meta, I bought shares, I know exactly what you're talking about. There's a time period where they were all in on the metaverse, and all the investors freaked out, like, what are you doing? You're just wasting all this money. The PE ratio was like a normal PE ratio. The PE ratio, for people, who are not aware, it's a price-to-earnings ratio where you could kind of say, hey, this stock is reasonably priced, or overpriced or underpriced, and it was reasonably priced, and usually Meta and other FANGs are not reasonably priced, like these are huge PE because you're buying the ground. So people who bought it at that price, as Rick pointed out, did really well. What happens for people? This is what's this is just a little, you know, side note on investing because we have this investing stock sector on Blind, so definitely take a look at it. So what happens is this, it's the psychology that's really effed up. Because when things are bad, when the metaverse and all the investors were saying, hey, this is terrible. Stop with this, that's when people sell their stock and they run away from it. It's just the wrong thing to do because they panic, they freak out. They're like, Oh no, this is terrible. And then the stock shoots up later on, and when it shoots up later on, that's when most people then buy it, because now it shot up because everyone's talking about it. So you buy the hot. It's the craziest thing because when it's really low and you can get it at a discount, you don't buy it. But when it's high, and everyone else is buying, you buy. So if you're watching this, it's this kind of psychology of investing. You can't follow the herd because you follow the herd. It becomes like just following meme stocks like, you know, GameStop and whatever; you've got to have the strong stomach to make that decision and not chase after every high-flyer because everyone else is doing it. And think for yourself.
Back to Nvidia, like it's really wild, from just a humanistic standpoint, where now you're in the office, you're walking around like, is everybody just high-fiving each other? Is everybody just walking around with their chest? Is the parking lot full of Lamborghinis? Like, what? What's really? What do you think? What's going on? Do you have any plants there? You know anybody there that can tell you really what's happening on the inside, Rick?
Rick Chen (13:12): I do, but I'm glad you mentioned the psychology of stock trading because it also has to do with the psychology of the everyday worker. They're at Nvidia or these tech companies, right? Stock-based compensation is designed in a way to lock you in. They want to build these so-called golden handcuffs because if you notice, you don't get these shares in your offer letter, all at once. They get unlocked. They vest over time. So we've seen some companies like Google where they've been pretty extreme and have a low vesting period, where their vesting period is at the end of one year. And so if you work 364 days at Google, you don't get a single share of stock, even though it's given to you in your offer letter. You really do have to hit that one-year cliff, that one-year moment, to get that full unlock.
Now imagine at Nvidia, where they follow the standard tech model, where it's over four years, and you don't get anything until your first year. Employees, they might be kind of getting burnt out, right? They're working these crazy, long hours. It might be a pressure cooker at work, and they're just hoping, God, on paper, I'm a millionaire, but I need to get to my first year. Or alternatively, maybe you're after your first year. Maybe you're a veteran. You know, Nvidia is a 31-year-old company, maybe on several cycles of these stock grants, and you're thinking, gosh, could Nvidia go higher? Like, when my next quarter, when my next year's stock grant gets released? Will it be higher? Like, I'll be really stupid if I leave right now in. It goes even higher. And so there's just this lock-in effect built into these offers, how the stock-based compensation is structured, that maybe you're getting kept into a really bad working situation, this poor work-life balance, because you want that stock, and that FOMO is kicking in.
Jack Kelly (15:21): It's got to be rough. So, let's say you or I, right, we're there. We have the stock locked up, so we know it's there, but then you don't know what's going to happen. Like for instance, the stock price of Nvidia went down 10%, and I think before we went on the show, maybe it's down 3% or so. So now you're sitting there biting your nails, worrying, right? Think about it, right? You're worried. You know, just a few days ago, a week ago, two weeks ago, you're like, yeah, we're great. And now you've got to be like, oh my God, do I have to worry about this? Because nothing is worse than losing money when you're seeing your stock appreciate a value like, yeah, this is crazy, the high is good, but then when it goes down, it's doubly worse. It's like way worse than the feeling going up. So now I can imagine, as you're pointing out, because I really, even though I was writing about it, just the way you articulated, I can imagine you and I sitting in the office there, and we're thinking, oh my God, it's locked up. What's going to happen? Could something go wrong? Is there going to be a World War Three, and all of a sudden, the stock is going to go into nothing? Is there going to be a blow-up in the Middle East? Because I would have those ruminations thinking about, so what you thought was something golden. Now you're worried, and you still have to do your job.
But also I wonder, Rick, do you have these other people who aren't worried about they're like, hey, everything's returned, okay, but they still have to work, because if they goof off or they're not performing, maybe they say, Hey, Jack, Rick, you guys, we're gonna put you on a PIP, on a, you know, a performance improvement plan, right? And you're like, oh no, oh no. Well, it's good, you know, I just blew up my chances of being very wealthy.
I guess it looks good from the outside, but it's not perfect, right? Lots of pressure, lots of stress. You really may not have that stock right away. It's going to be probably a lot of ups and downs till you find you have it. And then, I don't want to be that guy, but let's say something really does happen, like did you see the DOJ, the Department of Justice is conducting an investigation into Nvidia and others. What's that going to mean to the stock so all of a sudden, right, are you as rich as you were? Or now you're not rich, or now you're like, oh no. So what do you make of it? What do you think the net outcome of this is going to be? Do you have any clairvoyance of like, how this is going to play out?
Rick Chen (17:42): No, I wish I had this clairvoyance because then I wouldn't be talking with you, right? I'd be in retirement mode.
And I mean in that vein, I imagine that is the exact feeling Nvidia for all these professionals, where they're maybe in semi-retirement mode, we could call it, you know, they don't have enough wealth that they could just retire and, you know, not care if they get fired, but they're also still in it because they want to earn that, unlock that next tranche of stock and hope that it gets higher.
There's almost this sunk cost fallacy built-in, right, where it's just thinking like, gosh, I am being worked to the bone, but I need to stick it through because I want that stock I've been promised. The stock is a big part of my offer letter, my total compensation package.
Again, we always hear this term: golden handcuffs. They really do tie you in. Maybe these are folks that would have left to start other startups or gone to better places for their mental health; we never know, and I think that is the hidden story behind these news headlines, behind that stock ticker that you see on the bottom of your screen when you're watching the news. I think people often forget that there is this intense pressure to have to stick it through, and maybe, gosh, like, for some people, it's better that they just leave.
Jack Kelly (19:08): I'm so glad you pointed this out because you're right. When you look at the media, they're always like, the hype, oh, look, all these millions, but they don't take the time and energy to kind of look back, look into it's like, all right, what is going on actually, with the people?
Rick, you're pointing out that it's yes, you know, the average person, they'd be like, what: $10 million, $5 million, $20 million. What are you complaining about? But it is that stress level of like, can I keep it up? Is the stock price going to be up? Is it going to crash? Is it not going to crash? You know? Is it going to be another AI chip that's better than Nvidia? So it's not perfect, right? And you just have to grind away and grind away because you don't want to be that guy who says, you know what, I'm bailing out. I have enough money. And then Nvidia keeps going higher.
Rick Chen (19:59): Alternatively, you don't want to slack off and get fired before your next unlock of stock, where it's like, oh, God damn it, like all those months or all those years that I spent was actually for nothing, right stock, as I was supposed to get you just pass it.
Jack Kelly (20:16): So it's like you're constantly on that treadmill like you can't get off. And instead of having, like a carrot, you have, like, a dangling bunch of money, you know Friday right to keep going. And you don't want to be that idiot to say, I'm getting off. But then again, after a while, even if you hit the number you want, like, FIRE, how much money do you need to just say, I'm done, I'm out? And some people may want to get off, but then you're like, ah, let me just keep going, right?
Rick Chen (20:41): It just goes back to the psychology of why is this company offering this? Why do these companies structure their offer letters, their compensation in a certain way, right? Like it is not a bug. These vesting periods, whether it's one year, four years, this the cliff that you have to wait. It's all designed to create this lock-in effect for their workers. They don't want their workers to leave for another competitor or another company. They're trying to reduce attrition. And obviously, compensation is a big part of that, and that's actually why stock-based compensation is popular in a way that it's probably not as popular on Wall Street, for example, right? Because the incentives are different on Wall Street, maybe it's more of a sales role, and so they want to go heavy on the bonus because they want to incentivize their people to sell and to do it faster and quicker.
It's a good reminder for professionals out there, when they're interviewing, they're getting these job offers, they're seeing stock-based compensation. They're seeing cash-based bonuses for the first time; this is what it really means.
Jack Kelly (21:53): So do you know, by any chance, were there like psychologists that set this up, this whole hamster on the wheel effect, we'll call it, or did it just organically grow where they realized, hey, if we just keep dangling things in front of them, they're going to just keep working and working and working?
Rick Chen (22:12): It is really just about aligning incentives. A company wants their workers to stay at their company for the longest time, right? Rehiring someone, filling that butt in the seat after someone leaves. That's expensive. That costs them time and money. There's obviously that opportunity cost in terms of lost domain experience and knowledge; but it's also stock is ownership of the company, right? So you hear this kind of mantra mentioned so much in tech; it's almost become a stereotype, the saying that everyone is an owner. They want people to think of themselves as an owner in the company, to do things that would benefit everyone. So that might be working harder, staying longer, going for that next, you know, product launch, or that next big sale, they're really trying to create this certain behavior, these certain sets of actions, and they're going to incentivize working.
Jack Kelly (23:10): It almost seems like I'm not being over the dramatic. It always seems like Stockholm syndrome, where you and I are working in Nvidia and we're making money, and we're excited about it, but now we have a taste of it. We want to make more money, so we're going to work harder. And then if they tell you to work more hours, yep, we're going to work more hours, and we're going to want more hours, and we don't leave, and we're staying in the place, and they have food put out for us, so we don't even have to leave the office, or they do everything. So you know, you have, you know, you're just there and working and working and working, then after a while, like that becomes your life, and you just keep going,
Rick Chen (23:46): Yes. Can you imagine if you're on the other side, if you are at a company that's not doing well, and you're thinking, oh, man, like, what if I stay longer and work harder than we all our shares could increase, and then we could get back more comp for everyone. Or alternatively, it's like, oh gosh, what if I leave right when in its little trough, but it bounces back right after I leave, then I kind of lock in my quote, unquote loss? That is all part of that psychology, right, in terms of what's going to keep people there or not?
It's a hard calculus that I think folks need to realize. You really need to do an inventory of what matters most for you. And sometimes, it's not necessarily going to be chasing that stock-based comp or that total comp. Sometimes you have to say, hey, actually, I'm not growing in this role, or actually, this work culture is just killing me. It's better for me to leave to save that insanity, even if I'm going to quote, unquote leave some dollars on the table.
Jack Kelly (24:50): That's such a crazy story, isn't it?
Rick Chen (24:52): It is indeed. For those of you that are listening and thinking, gosh, I want to work at Nvidia, or I want to see what it's like, or how many more people are millionaires, a good way to kind of get into that headspace is to go on Blind and actually see these thousands of Nvidia professionals talk about what it's like to work there.
