There's a moment in every successful company's history where survival hangs by a thread. For Nvidia Corp. (NVDA), that moment came in the mid-1990s when CEO Jensen Huang had to fly to Japan and tell a major client that his company couldn't deliver what it promised, was about to run out of money, and needed $5 million just to stay alive.

The remarkable thing? He got the money.

Confessing Failure to Sega

In a recent appearance on "The Joe Rogan Experience," Huang described the gut-wrenching meeting with Sega boss Shoichiro Irimajiri. Nvidia had been contracted to build a graphics chip for Sega's upcoming Dreamcast console, but the technology simply wasn't working.

"First, the technology that we promised you doesn't work," Huang recalled telling Irimajiri. "Second, we shouldn't finish your contract because we'd waste all your money and you would have something that doesn't work. And I recommend you find another partner to build your game console."

Not exactly the kind of pitch that inspires confidence. But Huang wasn't done.

The Audacious Ask

After admitting failure, Huang made an even bolder request. He asked Sega to convert the final $5 million payment on the contract into an equity investment instead. Without that cash injection, Huang told Irimajiri, Nvidia would "vaporize overnight." The company would be dead, instantly.

Huang didn't sugarcoat the risk. He admitted to Irimajiri that the investment was "most likely to be lost," but argued that without it, Nvidia would have "no chance" at all. The pitch was essentially: give us money knowing we just failed you, understanding you'll probably lose it, because it's our only shot at survival.

Irimajiri took a few days to consider. Then he came back with a simple answer: "We'll do it."

The Pivot That Changed Everything

That $5 million lifeline gave Nvidia the breathing room it desperately needed. The company abandoned its troubled NV1 chip and redirected its efforts toward developing the RIVA 128, a graphics processor that launched in 1997. The RIVA 128 finally put Nvidia on the map in PC gaming and set the foundation for everything that followed.

A Trillion-Dollar What-If

Here's where the story gets bittersweet. Sega sold its Nvidia stake for about $15 million after the company went public in 1999. Not a bad return on a $5 million bet on a failing company. But Huang noted that if Sega had held onto those shares, they'd be worth roughly $1 trillion today, given Nvidia's multi-trillion-dollar valuation in the AI boom.

The contrast between the two companies' trajectories is striking. Sega exited the console business after the Dreamcast flopped in 2001 and reinvented itself as a third-party game publisher. Meanwhile, Nvidia has become the dominant supplier of GPUs powering artificial intelligence projects around the world, transforming from a gaming chip company on the brink of collapse into one of the most valuable tech companies on the planet.

Sometimes a $5 million bet on a company that just admitted it failed is exactly the kind of gamble that changes history. Irimajiri gave Nvidia a second chance, and the company made the most of it.