Meet the hedge fund manager who founded DeepSeek, the Chinese AI startup that began as a hobby and is now laying waste to U.S. stocks
DeepSeek founder Liang Wenfeng doesnât fit the profile of an artificial intelligence pioneer thatâs common in the popular imagination. Unlike OpenAI CEO Sam Altman, for example, heâs not a Silicon Valley entrepreneur.
Instead, Liang hails from the world of finance. After graduating from Zhejiang University, he
cofounded the quantitative hedge fund High-Flyer in 2015
and incorporated AI in its trading strategies to predict market trends and help make investment decisions.
According to the
Financial Times
, he began buying thousands of Nvidia graphics processors in 2021âbefore the Biden administration began limiting U.S. exports of AI chips to Chinaâas an AI side project. At the time, acquaintances viewed it as a quirky hobby that didnât look like it would go anywhere.
âWhen we first met him, he was this very nerdy guy with a terrible hairstyle talking about building a 10,000-chip cluster to train his own models. We didnât take him seriously,â one of Liangâs business partners told the
FT.
âHe couldnât articulate his vision other than saying: âI want to build this, and it will be a game change.â We thought this was only possible from giants like ByteDance and Alibaba.â
High-Flyer and DeepSeek didnât immediately respond to requests to interview Liang.
Then he started DeepSeek in 2023, aiming to develop artificial general intelligence, or a level of AI that matches human intelligence.
DeepSeek is now
laying waste to the U.S. stock rally
, as its development of
cutting-edge AI
at a fraction of the cost that rivals like OpenAI and
Google
are spending has raised doubts about the hundreds of billions of dollars that are slated for investment in the sector and elsewhere.
On Monday, shares of Nvidia sank 17%, leading a selloff that sent the
Nasdaq
down 3% and the S&P 500 down 1.8%. Thatâs after the so-called Magnificent Seven tech companies have driven the bulk of U.S. stock gains, after the release of OpenAIâs ChatGPT in late 2022 sparked an AI boom.
Companies outside the tech world eventually joined in the rally but are now retreating too.
Constellation Energy
, which has been the beneficiary of AI data centers sucking up massive amounts of electricity, plunged 20% on Monday.
DeepSeekâs moat, according to Liang
While DeepSeek was initially seen as a side project, Liang, 40, is personally engaged in the company and its research, according to the
FT.
He also is dedicated to making DeepSeek a homegrown leader in AI, recruiting talent from top Chinese universities and paying handsomely, on the scale of local tech heavyweights like TikTok parent ByteDance.
In a July 2024 interview with
Waves
republished in the
China Academy
, Liang spelled out some of his ambitions for DeepSeek and Chinaâs overall AI strategy.
âFor years, Chinese companies have been accustomed to leveraging technological innovations developed elsewhere and monetizing them through applications,â he said. âBut this isnât sustainable. This time, our goal isnât quick profits but advancing the technological frontier to drive ecosystem growth.â
He acknowledged that innovation requires a lot of money and said China previously adopted existing technology because its economy was in an earlier stage of development.
But thatâs not the case now, as ByteDance and Tencent have become global players and are generating immense profits.
âWhat we lack isnât capital but confidence and the ability to organize high-caliber talent for effective innovation,â Liang said.
DeepSeekâs open-source model contrasts with OpenAIâs, but he doesnât consider sharing his companyâs breakthroughs as a disadvantage.
Adopting a closed-source model wonât prevent competitors from catching up, Liang added, and being open-source actually provides an edge.
âTherefore, our real moat lies in our teamâs growthâaccumulating know-how, fostering an innovative culture,â he explained. âOpen-sourcing and publishing papers donât result in significant losses. For technologists, being followed is rewarding. Open-source is cultural, not just commercial. Giving back is an honor, and it attracts talent.â
Innovation is a matter of belief
Liang also described DeepSeek as a bottom-up company where a natural division of labor emerges without any preassigned roles or rigid hierarchy, facilitating free collaboration. But once an idea shows potential, management allocates resources from the top down.
DeepSeek also doesnât place limits on accessing computing resources or personnel, he added, saying anyone with a good idea can tap into âtraining clustersâ anytime. Even meeting rooms can be easily accessed to encourage serendipitous exchanges between colleagues and creative connections.
âI believe innovation is, first and foremost, a matter of belief,â he said. âWhy is Silicon Valley so innovative? Because they dare to try. When ChatGPT debuted, China lacked confidence in frontier research. From investors to major tech firms, many felt the gap was too wide and focused instead on applications. But innovation requires confidence, and young people tend to have more of it.â
