DeepSeek's Deep Impact on Wealth Creation and Wealth Destruction
How DeepSeek’s Open-Source AI Is Leveling the Playing Field for Small Businesses and Leveling the Portfolio of Passive Investors
DeepSeek is Disrupting the AI Industry
In the fast-moving world of artificial intelligence, innovation is often tied to sky-high costs and cutting-edge hardware. Yet, DeepSeek, a Chinese AI startup, has flipped this narrative with its groundbreaking AI model, DeepSeek-R1, developed for under $6 million using less advanced hardware. Rivals like OpenAI’s ChatGPT and Meta’s Llama have dominated the conversation, but DeepSeek’s low-cost, high-performing model is shaking up the industry and challenging U.S. dominance. In the last 24 hours more than $1 Trillion evaporated from the market caps of darling stocks of the last two years like NVIDIA and MSFT, while unleashing trillions of dollars of new potential opportunity and power for small business owners at fractions of a penny on the dollar.
In today’s newsletter, we’ll break down the impact of this disruptive innovation, the opportunities it unlocks, and the practical steps business leaders can take to stay ahead.
The Rise of DeepSeek
DeepSeek-R1 is not just another AI model. It’s a direct challenge to the conventional wisdom that building powerful AI requires billions of dollars and cutting-edge infrastructure. DeepSeek’s engineers have achieved comparable—if not superior—performance to leading models like ChatGPT and Llama in tasks such as programming, reasoning, and content generation.
What sets DeepSeek apart is its affordability and accessibility. The company’s open-weight approach allows businesses to adapt and integrate the model into their workflows without the need for massive budgets. This democratization of AI is a potential game-changer for small businesses, underserved markets, and startups, leveling the playing field in a way previously thought impossible.
But it’s not just about accessibility. DeepSeek’s efficiency-first philosophy is sparking conversations across the tech industry, forcing U.S. giants like Nvidia and OpenAI to reevaluate their resource-intensive strategies.
What are the “Known-Knowns” Right Now
1. Cost Efficiency
DeepSeek has proven that powerful AI doesn’t need to come with a hefty price tag. While companies like OpenAI invest billions in development, DeepSeek has delivered a rival product at a fraction of the cost. This approach is already disrupting the high-expense paradigm of AI model development.
2. Performance
Despite its low budget, DeepSeek-R1 rivals the top players in benchmarks. Whether it’s coding assistance, language translation, or logical reasoning, DeepSeek has demonstrated it can go toe-to-toe with the likes of ChatGPT.
3. Market Impact
The launch of DeepSeek has already rattled global markets, causing stock declines for AI-linked companies such as Nvidia. As the startup gains traction, the ripple effects are being felt across Silicon Valley and Wall Street.
What are the “Known-Unknowns” We Still Need to Monitor
1. Sustainability
While the cost efficiency of DeepSeek’s model is impressive, questions remain about its veracity and its long-term scalability. Can this low-cost strategy hold up when applied to more complex or large-scale applications? Regardless of the answer, today, a game-changing shift in how the development and investment surrounding AI moving forward will play out is underway.
2. Data Transparency
DeepSeek has not disclosed the full details of its training data. This lack of transparency raises concerns about reproducibility, bias, and ethical implications, which could impact adoption rates, especially in markets with strict regulations. Early tests surfaced on X showing that true to form it’s model has already been trained to censor historical references to Tiananman Square protests in 1989 so while the technical architecture may be a leap forward the race for a values-infused dominant platform between China and the U.S. is just getting underway.
Promises
1. Democratization of AI
By making AI affordable and accessible, DeepSeek is paving the way for small businesses, nonprofits, and startups to leverage advanced tools previously out of reach. This could empower new innovation in industries ranging from healthcare to education and the corner store, family restaurant, and auto repair shop.
2. Innovation Shift
DeepSeek is challenging the notion that brute computational power is the only path to AI advancement. By prioritizing efficiency and cost-effectiveness, it is pushing the industry to rethink its development strategies.
What This Means for Business Leaders
The rise of DeepSeek is more than a headline—it’s a call to action for CEOs, investors, family offices, business owners, and decision-makers. If you want to stay competitive in the age of AI disruption, here are three recommendations to guide your strategy:
1. Adopt Cost-Efficient Models
The days of needing billion-dollar budgets for AI integration are over. Leaders should evaluate affordable AI solutions like DeepSeek to reduce operational costs and improve ROI. This is particularly important for small and mid-sized companies looking to close the gap with larger competitors.
2. Monitor the Competitive Landscape
DeepSeek’s rapid rise is a reminder of how quickly the AI market can shift. Stay informed about emerging models and breakthroughs to anticipate changes in your industry. Regularly assess how competitors are leveraging new tools to avoid being left behind.
3. Invest in Adaptability
The pace of AI evolution is only accelerating. To keep up, foster a culture of innovation within your organization. Encourage your teams to experiment with new technologies, pivot quickly, and adopt an agile approach to AI integration.
The Broader Implications of Exponential Innovation Cycles
DeepSeek’s disruption extends beyond the business world. Its success could have geopolitical ramifications, signaling China’s growing influence in the AI space and challenging U.S. dominance in technology. This shift could redefine global AI leadership and spur innovation-driven competition between nations.
For investors, this presents both risks and opportunities. While established players like Nvidia may face headwinds, emerging startups like DeepSeek offer new avenues for growth. As AI continues to evolve, those who can identify and act on these trends will be best positioned to benefit.
A Call to Action
DeepSeek’s emergence as a cost-efficient, high-performing AI leader is a wake-up call for the industry. By focusing on affordability, accessibility, and efficiency, the startup is not only disrupting traditional AI models but also creating new opportunities for businesses of all sizes.
For CEOs and investors, the message is clear: adapt to this new reality or risk being left behind. In the words of Patrick Moorhead, an AI analyst, “DeepSeek isn’t just another startup—it’s a blueprint for the future of AI development.”
Why DeepSeek-R1 is not just another AI
In the fast-moving world of artificial intelligence, innovation is often tied to sky-high costs and cutting-edge hardware. Yet, DeepSeek, a Chinese AI startup, has flipped this narrative with its groundbreaking AI model, DeepSeek-R1, developed for under $6 million using less advanced hardware. Unlike older A1 models, which were typically rule-based and limited to specific tasks, R1 models represent a leap forward in general-purpose learning and reasoning, comparable to OpenAI’s ChatGPT and Meta’s Llama. Rivals have dominated the conversation, but DeepSeek’s low-cost, high-performing approach is shaking up the industry and challenging U.S. dominance.
DeepSeek’s affordability and open-weight structure have democratized AI, making it more accessible to businesses globally. Its low development costs disrupt the traditionally high-expense AI model paradigm, while its performance rivals industry leaders in tasks like programming and reasoning. However, questions linger about its sustainability and the transparency of its training data. Despite these uncertainties, DeepSeek’s innovation promises to empower small businesses and underserved markets, offering a path for organizations to focus on efficiency over brute computational power.
Key DeepSeek Improvements
Cost Efficiency: DeepSeek-R1’s low-cost development challenges the high-expense AI model status quo.
Performance: Matches or outperforms leading AI models like ChatGPT in key tasks.
Market Impact: The emergence of DeepSeek has disrupted tech markets, even triggering over $1T stock declines yesterday for U.S. giants like Nvidia and MSFT.
Strategic Takeaways for CEOs and Business Owners
Adopt Cost-Efficient Models: Explore affordable AI solutions like DeepSeek to reduce operational costs.
Monitor Competitive Landscape: Stay informed about emerging AI models to maintain a competitive edge.
Invest in Adaptability: Prepare for rapid changes in AI by fostering innovation and agility within your organization.
The A.I. Cold War 2.0 Has Just Hit a Tipping Point
Legendary VC Marc Andreeson called this a “Sputnik moment” for the AI arms race between China and the U.S. and I believe he is right. DeepSeek, a Chinese AI startup, has taken the artificial intelligence world by storm with its revolutionary DeepSeek-R1 model. Developed for under $6 million using less advanced hardware, the model shattered records in January, achieving the fastest user adoption rate in AI history. Unlike other leading models like OpenAI’s ChatGPT or Meta’s Llama, DeepSeek-R1 is open-sourced, making its core technology accessible to developers and businesses worldwide. This bold move has not only disrupted the dominance of proprietary models but also ushered in a new era of democratized AI.
By open-sourcing its high-performing large language model (LLM), DeepSeek has commoditized LLM training at an unprecedented scale, dramatically lowering the cost barriers for small and medium-sized businesses. For non-technical people “open-sourcing” means distributing its code base publicly to the world for free, allowing anyone to build something on top of it to improve the protocol).
For organizations operating with tight budgets, this breakthrough means they can now integrate cutting-edge AI capabilities into their workflows, combining them with their unique human expertise to create proprietary solutions.
The result? A surge of innovation across industries, as businesses of all sizes are empowered to harness AI once available only to the largest tech firms.
DeepSeek’s impact is multifaceted. Not only has it set new benchmarks in cost efficiency and user growth, but it’s also ignited a paradigm shift in how AI models are developed and deployed and stoked the competitive nature of our American DNA as we race again for the open ground to infuse our values of individual sovereignty, liberty, free speech, and equal opportunity into the dominant model of scaling artificial intelligence. Open-sourcing LLM intelligence at this scale significantly reduces reliance on expensive computational resources, fostering a focus on creativity, adaptability, and problem-solving over raw computing power.
Final Takeaways for CEOs and Business Owners
Leverage Open-Source AI: Tap into affordable, open-sourced models like DeepSeek-R1 to build custom AI solutions tailored to your business.
Level the Playing Field: Use AI’s accessibility to compete with larger firms by integrating proprietary human expertise into your workflows on an AI Agent Platform and open-source model that you own.
Focus on Innovation: Take advantage of the reduced cost barriers to prioritize creative applications of AI in your organization.
Yours in Wealth and Health,
Chris J Snook
Sources
[1] DeepSeek Chinese AI chatbot sparks market turmoil for rivals
[2] DeepSeek's latest model suggests AI expertise may surpass computing needs
[3] What is DeepSeek? The Chinese OpenAI rival sparking chaos in tech markets
[4] DeepSeek AI: What you need to know about the ChatGPT rival
[5] DeepSeek’s AI Breakthrough: Global Impact on Tech Stocks
[6] What is DeepSeek? China ChatGPT rival rattles Nvidia, AI stocks
[7] AI Investment Potential Undeterred By DeepSeek News
[8] Chinese AI Startup DeepSeek Shakes up Silicon Valley, Wall Street
[9] How DeepSeek's origins explain its AI model overtaking US rivals
[10] DeepSeek AI disruption will 'radically shift costs down' says Moor
[11] What is DeepSeek? Here's a quick guide to the Chinese AI company