The benefit of being a category queen is that: You identify your category’s evolution early You get to convert your advantage to serve you in the emerging new category
The Pick-and-Shovel strategy is a nod to the California gold rush in the 1800s, where there were two types of people: Those who looked for gold, and those who sold the tools (picks and shovels) to mine it.
In the world of AI, Nvidia is in the same supply chain business. And not just by providing the hardware and data centers (Chips) to support all the AI players, but by selling builders access to their computation services and software to actually build and train their AI models (Systems).
You have two enemies when your category evolves: Complacency: falsely believing that you can sustain your current competitive advantage (see The Innovators Dilemma) Overreaching: abandoning your advantage and trying to build new capabilities from zero
Through these three hidden gems, Nvidia demonstrates that they have been brilliant at creating scale for their business through partnering, investing, co-creating, and teaching their customers and partners their technologies to solve real-world problems.