TL;DR: Open computing, which emphasizes collaboration and transparency, is vastly more efficient and scalable than closed networks. DeepSeek's recent success, similar to past innovations like Linux and Android, highlights again how open systems drive smarter, more cost-effective solutions and challenge traditional proprietary models.
Knowledge is like a garden: if it is not cultivated, it cannot be harvested - African proverb
Since our beginnings at Sentinel Global, we have championed the advantages of open computing – our belief that openly developed technologies will drive efficiencies through better collaboration, transparency, and innovation. Sentinel’s Managing Partner, Jeremy Kranz, was one of the first venture investors to actively specialize in open source in the 1990s. Now, the recent developments surrounding DeepSeek, a Chinese AI startup, serve as a compelling case study. Few examples better illustrate how open computing not only disrupts outdated practices in technology and venture funding but also highlights the undeniable advantages of open-source development.
DeepSeek: A Success Story in Actually Open AI
DeepSeek spun out of the Chinese hedge fund High-Flyer in 2023 with the goal of building highly efficient AI systems. Their flagship platform, DeepSeek-R1, released in early 2025, has gained attention for delivering competitive results on a purported budget of $6 million. Instead of following the traditional tech VC playbook – that is, building massive, proprietary systems requiring immense hardware resources and blitzscaling – DeepSeek embraced open AI frameworks and focused on maximizing software-driven efficiency.
Their achievements are, on the surface, very impressive. By prioritizing algorithmic optimizations over hardware dependence, DeepSeek-R1 has demonstrated faster training cycles (and a lower carbon footprint) than many proprietary competitors. For instance, early benchmarks suggest their models achieve up to a 30% improvement in efficiency over industry standards.
This success challenges the assumption that innovation in AI must rely on some sort of trade embargoed, hardware arms race. DeepSeek’s software-focused, open approach demonstrates that it’s possible for an ambitious, nimble team to achieve remarkable results by optimizing algorithms.
Of course, questions remain. For instance, while DeepSeek benefited from an unknown quantity of NVIDIA H-100 GPUs, it’s unclear how they secured access to these advanced chips amid export controls. Similarly, while their stated $6 million training cost is eyebrow-raisingly impressive, replicating that level of efficiency could depend on factors not yet fully transparent. Still, their work proves that success in AI increasingly depends on smart strategies and open ecosystems – not just deep pockets.
The Principles of Open Computing in Reality
At Sentinel, we identified early on that that the bulk of future enterprise value will be built on top of open computing systems and networks, DeepSeek’s story embodies several core tenets of our thesis:
Global Collaboration Drives Innovation
By leveraging open-source frameworks, DeepSeek tapped into the collective expertise of the global developer and research community. This collaborative model allowed them to build on existing innovations, reducing redundancy and accelerating development. For example, DeepSeek’s adoption of Hugging Face’s transformers libraries saved them years of foundational work.
Efficiency Over Exclusivity
Rather than pouring resources into proprietary systems, DeepSeek focused on optimizing what was already available. Their approach underscores that the best solutions often come from working smarter and not just spending more.
Adaptability Through Openness
Open-source frameworks allowed DeepSeek to remain flexible, updating their models as new techniques emerged. This adaptability is critical in a fast-moving field like AI, where static systems quickly become obsolete.
Transparency and Communication
Open-source systems inherently promote transparency, fostering freer interactions among users and collaborators. While there are still some open questions about DeepSeek’s operations, their willingness to share their model represents a step forward in accountability. Transparency also builds trust, a critical element in a rapidly evolving technological landscape.
Not The First Open Tech Rodeo
DeepSeek’s success isn’t just a one-off. It’s part of a pattern showing the superior power of Open Computing – although VCs and startups often forget this important pattern. History is full of examples where open ecosystems have reshaped entire industries:
Linux revolutionized operating systems by proving that open-source software could compete with (and outperform) proprietary giants like Microsoft.
The Android operating system is based on the open-source Linux kernel. Its open-source nature has allowed manufacturers and developers worldwide to build on it, making it the most widely used mobile operating system globally
The rise of the internet itself was built on open protocols like HTTP and TCP/IP, which enabled collaboration and interoperability on a global scale.
More recently, Stability AI’s release of Stable Diffusion, an open-source generative image model, has enabled widespread customization and deployment of advanced AI tools. This has led to innovations in industries like gaming, e-commerce, and design, with developers creating countless applications, from AI-powered art tools to video game asset generators.
DeepSeek is simply the latest chapter in this story. Honestly, it’s sometimes confusing why history keeps repeating its blitzscaling, growth-at-all-costs model when more efficient and cost-effective open computing models repeatedly prove investors wrong..
The Broader Implications of DeepSeek’s Work
DeepSeek’s achievements hold lessons for technology builders today. They’ve shown that success doesn’t require proprietary control or massive capital investment. Instead, it requires:
A focus on efficiency over resource accumulation.
A nimble and educated team capable of leveraging open-source tools.
A willingness to challenge traditional assumptions about innovation.
At Sentinel Global, we firmly believe the future of technology lies in the principles of open computing. It’s not just about building better tools more efficiently; it’s about creating an environment where innovation is accessible to everyone. Founders, investors, and policymakers should prioritize open ecosystems, contribute to open-source projects, and rethink funding models to support collaborative innovation.
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