Headlines often talk about companies disrupting industries but that is only part of the story. The other part of the story is what the big companies did or did not do. What were the assumptions or rational behind the little company that grew to become a disrupter. The good news is what we saw in DeepSeek happens in the business community on a regular basis. Large companies grow become monopoly like, seemingly having it all and then slowly something changes to level the playing field. Once that happens, the large company has to allocate more resources to maintain its position.

In an article by Cade Metz and Mike Isaac of the New York Times News Service, when DeepSeek revealed in had created an AI system that could match the big players from the US in AI, Silicon Valley was shocked. They were surprised because Silicon Valley’s belief system was to do AI would cost billions and billions of dollars, which means that only a few could compete.

At Meta, the experts inside the company did a reverse engineering of how DeepSeek works and they discovered it was related to something Meta did a few years ago. Before 2023, Meta was working on its version of AI called Llama, in 2023 it gave it away or open sourced it. This means developers from around the world could use it, to build on it, to make it better and move things forward. Meta saw this as a good thing.

DeepSeek used parts of that technology as well as other AI tools widely available on the internet through a software development method called open source. The reason Meta released Llama on open source is because it makes its money selling online ads, not AI software.

Meta has created several war rooms where employees are reverse engineering DeepSeek’s technology. The purpose is to find ways to lower the cost of trainings its software and apply it to Meta’s own AI. Remember Meta owns Facebook, Instagram and WhatsApp.

Yann LeCun, who is Meta’s chief AI scientist says the correct way to look at what has happened is Open source models are surpassing proprietary ones.

If Mr. LeCun is correct, the raising of billions of dollars to fund the expensive way is that good?

Linking to dividend paying stocks, all companies have a mixture of internal and external systems. but only larger profitable companies have the resources necessary to analyze all the successes of the competition. What is the competition doing? how is it executing? how does that affect us and why are we worried? There are many things to be concerned with for every country, but the competition has the same issues. Why does the strategy of the company you invested in continue to work? Sometimes the answers can be summed up in a 90 second clip and often times that is good to allow you to continue to hold your investments.

There are more questions than answers, till the next time – to raising questions.