Good morning.
I’ve been looking for evidence that the threat of recession is causing companies to pull back on investments in technological transformation or in ESG. But I can’t find much. The best companies seem to be viewing a downturn as their chance to build competitive advantage. At the Fortune Global Forum dinner in San Francisco last night, McKinsey’s Alex Singla quoted racing legend Ayrton Senna:
“You can’t overtake 15 cars in sunny weather…but you can when it’s raining.”
Nvidia CEO Jensen Huang was the featured guest at the dinner and treated those attending to a rollicking discourse on how A.I.—powered by Nvidia products—is about to take over the world. If Huang felt any concern about the impending recession, he certainly didn’t show it. Instead, in his interview with Fortune’s Michal Lev-Ram, he gave one the sense that the world was on the verge of a kind of Cambrian explosion, with Nvidia technology at its core:
“Every industry is about to enjoy their iPhone moment…Every product will have software running inside that has artificial intelligence and perception and some reasoning about what it is trying to do, and it goes off and does it. You don’t have to step-by-step-by-step program it, you just tell it what to do…Everything will be software defined. Buildings will be software defined, warehouses will be software defined. Everything will be.”
Earlier in the day, I was at Oracle’s CloudWorld conference in Las Vegas—as was Huang, coincidentally. While he was there, Oracle announced plans to deploy tens of thousands of Nvidia’s top-of-the-range GPUs (graphics processing units) to power A.I. in the Oracle cloud—a testament both to Nvidia’s central role in A.I. computing and Oracle’s rising position in the cloud business. I had the opportunity to talk with Oracle CEO Safra Catz, who was as ebullient about her company’s place in this brave new world as Huang was about his. When I asked her how a recession might affect that business, she said it would only increase the company’s advantage:
“Many of the companies who are paying tens of millions of dollars to our competitors will actually cut their bill by 60% by coming to Oracle. When technical people give us a chance, we’re winning.”
I asked if being late to the cloud business put Oracle in a better position than its competitors. Her answer:
“I know this sounds insane, but yes. You know why? Because first of all, we got to pick some of the best people who had done it before. And we said to them, ‘Please don’t do what you did. Don’t copy. We want you to build it as if you knew then what you know now.’”
It was the first time I had interviewed Catz, who generally avoids the press. She told me:
“I don’t usually do a lot of public stuff. We have Larry Ellison. He’s the real genius of this operation. Seriously. Do not let titles fool you. There are visionary founders. And then there are these unique folks who are not only visionary founders, but unbelievable businesspeople. He’s one of those…I know I’m a manager, and I’m not Larry Ellison. Believe me, I’m not confused.”
That may be true. But I came away convinced that she is the competitor that other cloud companies should keep a close eye on.
I was at the Oracle event for a fireside chat with Deloitte CEO Joe Ucuzoglu, sponsor of this newsletter. I asked him about the issue I wrote about here yesterday: Are companies pulling back on their ESG commitments, either because of an impending recession or because of political pushback? His response:
“We live in a society that more and more is polarized and wants to pull the debate toward the margins. But whether you think business’s purpose is to take really good care of communities or you think that business’s purpose is to deliver extraordinary returns to shareholders, those things actually aren’t that far apart. If you’re not talking about next quarter, if you’re talking about a long-term time horizon, the businesses that are looking at where society is going, that are headed toward a decarbonized future, that are headed toward a fundamental prioritization of ESG and humanity and the type of society that we all want to live in…those who find a way to put that into their business models will actually be more successful at driving returns for their shareholders in the long term.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Kakao co-CEO
The problem with being an “everything app” is that, when you go down, chaos ensues. Hence the resignation of Kakao co-CEO Whon Namkoong, following a days-long outage of the ubiquitous-in-South Korea app. Namkoong will stay with the company to investigate the incident, which was caused by a data center fire and knocked out everything from banking to delivery services in the country. Fortune
iPhone production
Apple’s share price fell slightly yesterday following a report that the company’s cheaper large-screen handset, the iPhone 14 Plus, isn’t doing so well. The Information reported that Apple had told a supplier to pause production of a key component for the device, which is $200 cheaper than the similarly girthsome—and apparently more popular—iPhone 14 Pro Max. CNBC
Hunting Kwon
The FT has a fascinating piece on retail investors who have turned vigilante in the hunt for Do Kwon, head of the collapsed crypto platform Terraform Labs. Kwon denies any wrongdoing but also won’t say where he is. South Korean authorities want him on fraud charges, and members of the “UST Restitution Group” are checking out leads in Dubai, Russia, and elsewhere. Financial Times
AROUND THE WATERCOOLER
MicroStrategy’s Bitcoin king just saw his stash fall to a grim new milestone, by Shawn Tully
Stephanie Ferris tapped as next CEO of FIS, making her one of the most powerful women in fintech, by Luisa Beltran
Germany fudges exit from nuclear power, kicking energy crisis into next winter, by Christiaan Hetzner
When to expect the housing market downturn to conclude, according to Wells Fargo, by Lance Lambert
This edition of CEO Daily was edited by David Meyer.
This is the web version of CEO Daily, a newsletter of must-read insights from Fortune CEO Alan Murray. Sign up to get it delivered free to your inbox.
