Nvidia had a supercomputer and great hardware design software tools that were a trade secret and basically behind an off limits curtain in the center of their office and it helped them get chips out rapidly and on first turn. First turn means the first silicon coming back is good without requiring fixes and another costly turn.
I'd say 3dfx weren't poised to industrialize as well as Nvidia and they just couldn't keep up in the evolutionary race.
I'm not sure I understand where your worse is better idiom fits because 3dfx was better and Nvidia was worse but iterated to get better than 3dfx and won the day. Truly if worse was better in this case 3Dfx would still be around?
On the other hand triangle based rendering is a case of worse is better and Nvidia learned that and switched course from their early attempts with nurb based primitives.