DeepSeek: The Entrepreneur's Challenge

DeepSeek: The Entrepreneur's Challenge
Thomas Edison and his "Kinescope" early movie projector.

For over two centuries, America has been the home of entrepreneurs—lone inventors or small teams that created the technological and economic breakthroughs that built this great country.

From those New England shipbuilders who created the Yankee Clipper, a marvel of new technology, the Marconi sails, to the sleek hull design that sliced through the water at speeds unheard of at the time. To Cyrus McCormick, who invented the mechanical reaper, which allowed enough wheat and grains to be harvested to feed a growing population. To Thomas Edison, creator of the electric light. To Steve Jobs and Steve Wozniak, who invented an economical, easy-to-use personal computer, the Apple II, accessible to everyone.

America's economic history is a litany of small groups and lonely individuals who struggled to bring to market a new product or service that would revolutionize their industry or field. America, you see, was the epicenter of personal freedom and economic liberty. The place where individuals, many without credentials, were allowed to shine, to revel in a place without undue restrictions or hindrances. Where economic and intellectual liberty was our watchword.

Regrettably, to a large degree, all that began to change a couple of generations ago. By the time we reached the 21st Century, America's model of invention and innovation had transformed. No longer did we celebrate the lone inventor and the small cadre. Now, we look to their "funding." What's their business plan? How long will it be before a project becomes profitable? How big is their war chest? Do they have the academic credentials to support such a project? We could go on and on, you know, the drill.

This is classic B-school thinking, and there's nothing wrong with that. It is a proven method of providing corporations with the focus and direction needed to achieve success. Like many of you, I've worked for large corporations that have used this method to bring innovations to the marketplace.

However, the issue here is that we now believe that this is the ONLY route to innovative success. Gather the people, resources, and funding together, and success will be automatic. And if, at first, you don't succeed, add more of each ingredient: people, resources, or funding.

But that's not how innovation works. I've sat in enough product development meetings to realize that even in these places of groupthink, it's almost always an insight provided by one member of the committee that provides the spark that leads to ultimate success. I've watched as a lone individual shows the group how to reach their goal.

There have even been times when that individual's insight was so profound that, given another environment, their thinking would have made them wealthy. However, the corporate parent is almost always protected by non-disclosure and trade-secret agreements. While that individual entrepreneur receives only their corporate salary.

DeepSeek

This week, entrepreneurship was turned upside down when a group of techies from the collective capital of the world, China, produced an out-of-the-box, small-group entry into the Artificial Intelligence space. This group is the very definition of bootstrap entrepreneurs. They are a group of young innovators who operated on a tight budget (reportedly less than $10mm). Moreover, they could not use the most advanced American AI chips and components because of US sanctions against China.

In short, the DeepSeek team is everything that the B-School formula warns us against. They lack the requisite funding, they don't have access to the most advanced components, and they likely don't have sufficient academic credentials (although I'm speculating here). Any American Venture Capitalist would likely throw them out of its office based on these deficiencies alone.

Ironically, from the American perspective, China is the home of social oppression and economic hardship. DeepSeek was allowed to function in China, ultimately creating one of the most innovative new AI applications in the market and the most popular App in Apple's App Store. Perhaps the Chinese have learned from the American model of free enterprise and innovation.

Now, if we can remember our nation's history...

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Jamie Larson
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