How did DeepSeek outsmarted the competition?

A question we are often asked by startups is: 'how can we compete with our much bigger, more capitalised competitors when almost everything appears to be against us?'

How indeed. Gaining a foothold in a category is obviously where a great strategy comes into play; the chosen approach (if chosen carefully and with deep insight 'free' from bias) is the blueprint on which successful ventures are based.

A couple of years ago, this was the same question that was asked by DeepSeek's founder Liang Wenfeng as he plotted to pivot his company into the messy AI race.

Just this week, shockwaves have reverberated around the world with news that this tiny Chinese AI startup have created an LLM model that performs just as well - on multiple fronts - as some of the best US-models out there, but at a fraction of the cost.

So how did DeepSeek compete so successfully with very little funding and limited access to much-needed hardware?

According to an article in Wired:

“Unlike many Chinese AI firms that rely heavily on access to advanced hardware, DeepSeek has focused on maximizing software-driven resource optimization,” explains Marina Zhang, an associate professor at the University of Technology Sydney, who studies Chinese innovations. “DeepSeek has embraced open source methods, pooling collective expertise and fostering collaborative innovation. This approach not only mitigates resource constraints but also accelerates the development of cutting-edge technologies, setting DeepSeek apart from more insular competitors.”

Recruiting a young team

Deep Seek purposefully recruited young Phd students with no commercialisation experience who were eager to prove themselves.

'The hiring strategy helped create a collaborative company culture where people were free to use ample computing resources to pursue unorthodox research projects. It’s a starkly different way of operating from established internet companies in China, where teams are often competing for resources.'

Having a strong mission

Deep Seek wasn't founded to make money, DeepSeek was created to “solve the hardest questions in the world.” Young talent signed up to join in that audacious mission; not to get a nice salary or a 13th cheque at the end of the year, but be a part of history.

'The fact that these young researchers are almost entirely educated in China adds to their drive, experts say. “This younger generation also embodies a sense of patriotism, particularly as they navigate US restrictions and choke points in critical hardware and software technologies,” explains Zhang. “Their determination to overcome these barriers reflects not only personal ambition but also a broader commitment to advancing China’s position as a global innovation leader.”'

'Cool runnings'

Remember the movie Cool Runnings? The story of the Jamaican national bobsled team that competed at the 1988 Winter Olympics?

When the constraints seemingly preventing success are so enormous the effect can either be to totally demotivate a team; or it can inspire them to unthinkable greatness because they had nothing to lose. In the case of Deep Seek, it was the latter.

When faced with severe US government restrictions on access to much-needed chips. Deep Seek was forced to come up with creative ways to overcome the challenges.

“They optimized their model architecture using a battery of engineering tricks—custom communication schemes between chips, reducing the size of fields to save memory, and innovative use of the mix-of-models approach,” says Wendy Chang, a software engineer turned policy analyst at the Mercator Institute for China Studies. “Many of these approaches aren’t new ideas, but combining them successfully to produce a cutting-edge model is a remarkable feat.”

The Deep Seek story is a great reminder that human creativity is still the most vital elixir in any quest to create the future. It's easy to spot a team that's set for failure...they tend to lack energy, fire and struggle to get their creative-juices flowing.